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The application is brought under section 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), section 1337H of the Corporations Act 2001 (Cth), section 86A of the Trade Practices Act 1974 (Cth) and section 12GK of the Australian Securities and Investments Commission Act 2001 (Cth). The three proceedings in this court are substantially similar. They are founded upon claims of misleading and deceptive conduct and non-disclosure by SOG of its true financial position prior to the appointment of the administrators. The principal reason relied upon by SOG and the administrators seeking to transfer the actions to the WA Supreme Court is that there are currently two major pieces of litigation before that court in which the key issue is the alleged non-disclosure by SOG to the market of relevant financial information and the recovery of damages or compensation as a consequence of the non-disclosure. These actions are known as the "Auditor Action" and the "Shareholder Action". I will refer to them in more detail later. The plaintiffs in these proceedings oppose transfer, principally upon the ground that there is no commonality or overlap with the Western Australian proceedings. They say that they do not wish to be embroiled in costly and complicated proceedings in Western Australia which they contend to be unrelated to the present actions. In Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 714, Street CJ described the question as a "nuts and bolts" management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute. There is no principle to be enunciated other than the necessity of applying the specific considerations stated in the cross-vesting legislation; the primary amongst them being the pursuit of the interests of justice. Rogers A-JA, with whom Kirby P agreed, said at 727 that the only "lodestar" that a judge may steer by is what to do in the interests of justice. His Honour observed that it is inapt to speak in terms of onus. Rogers A-JA also referred, at 729, to the expense and inconvenience which must be taken into account in determining which court is the more appropriate. His Honour also observed, at 725, that it is important to give full effect to the imaginative and detailed code laid down by the cross-vesting legislation for ensuring that throughout Australia, disputes are dealt with by the one court and that be the court which is most appropriate for the particular dispute. In BHP Billiton Limited v Schultz [2004] HCA 61 ; (2004) 221 CLR 400 , Gleeson CJ, McHugh and Heydon JJ observed, at [7], that the criterion for transfer established in section 5 is that it is in the interests of justice that the proceedings be determined in the other court. Their Honours, at [13], referred, with apparent approval, to the remarks of Street CJ in Bankinvest . Their Honours also went on to say, at [14], that the exercise is not one of determining whether the particular court's jurisdiction has been regularly invoked; rather, the court hearing such an application is required to ensure that cases are heard in the forum dictated by the interests of justice. Their Honours went on to say that there is a statutory requirement to exercise the power of transfer whenever it appears that it is in the interests of justice that it should be exercised. It is not necessary that it should appear that the first court is a clearly inappropriate forum. It is both necessary and sufficient that, in the interests of justice, the second court is the more appropriate one. It should also be noted that their Honours remarked, at [15], that the interests of justice are not the same as the interests of one party and there may be interests wider than those of either party to be considered. The other legislative provisions on which SOG and the administrators rely state the criteria for the exercise of the power to transfer proceedings in terms which may be said to be less prescriptive than under the cross-vesting legislation. The power to transfer under the Trade Practices Act is stated in discretionary terms. Mr Weaver is one of the respondents to the proceedings and is one of the administrators of SOG. It is convenient to refer to the content of Mr Weaver's affidavit. SOG was a listed company with substantial gold and other mining assets and operations in Western Australia. It also had a treasury department which speculated in gold-hedging and derivative contracts. SOG collapsed in August 2004, some four years after it became known to SOG that its then finance director had conducted extensive unauthorised derivative trading, which had substantially exposed the SOG group. The administration gave rise to the decision of the High Court in Sons of Gwalia Ltd v Margaretic [2007] HCA 1 ; (2007) 231 CLR 160 , in which it was held that shareholders are entitled to have their admitted claims against a relevant company rate pari passu for any distribution. As a result of that, the shareholders of SOG were invited to submit proofs of claims. There were a large number of shareholder claimants and the administrators determined that they would need to put forward to the creditors an efficient process for dealing with the shareholder claims. The process which was developed is described in the affidavit and it is sufficient to say that it was proposed that shareholders would be invited to participate in representative proceedings against SOG and certain of its auditors and directors, and that participating shareholders would permit any proceeds of that litigation to be paid into a pool for distribution to the creditor group as a whole. The Shareholder Action has now been commenced and was filed in the WA Supreme Court on 28 November 2008. The process which was established by the administrators is set out in the Administrators' Report to Creditors of 7 December 2007. The then-proposed Shareholder Action and participation agreements are described in some detail in section 7 of the report. I do not need to refer to this in any detail. In section 7 of the report, the administrators said that, assuming the conditions precedent referred to earlier were met or otherwise waived, the claims of shareholder claimants would not be adjudicated upon. They would, instead, undergo an assessment process. Shareholder claimants would provide signed witness statements setting out their claim. The claim would be assessed by the administrators applying quasi-judicial standards; this is further explained in [19] of Mr Weaver's affidavit and three different courses of action are open. I will refer to the relevant parts of the proceeding brought by Mrs Robbins. Paragraph 5 of the statement of claim alleges positive and negative representations said to have been made by SOG to the applicant, as well as to members of the public and to other shareholders of SOG. These representations are said to relate to the solvency of SOG, its financial position, the valuation of its assets and the extent and nature of its liabilities and profits, as well as to particulars of SOG's foreign exchange, gold hedge books and hedging activities. The particulars of the representations are set out in some detail in [7]. They include allegations that SOG did not reveal, during the period from July 1999 to about June 2000, that there was unauthorised speculative derivative trading undertaken by SOG's Chief Financial Officer from which SOG made losses and that SOG did not have the ability to meet the close out costs of those unauthorised transactions. The particulars also include a statement that the 1999 Annual Financial Report of SOG did not disclose relevant matters in relation to indexed put-option contracts and the United States dollar-call options. It is also alleged that SOG's 1999 Annual Financial Report did not reveal the relevant operating loss or contain an opinion to the effect that there was significant uncertainty as to whether SOG could continue as a going concern. In [9], Mrs Robbins pleads that, as a consequence of the representations and negative representations, she acquired and/or continued to hold shares in SOG. The claim is framed under section 12DA of the ASIC Act , section 1041H of the Corporations Act , and section 52 of the Trade Practices Act . A further claim is made in [17] which is apparently made in the alternative. This claim is that SOG was in breach of its disclosure obligations under section 674 of the Corporations Act . The particulars of the non-disclosure are those which are set out in [7] and to which I have already made some reference. In [19], Mrs Robbins pleads that she intended to sell shares in SOG and to utilise the net sale proceeds to acquire shares in Newcrest Mining Limited. The statement of claim then sets out in [20] and following a number of alleged conversations between Mrs Robbins' husband and an officer of SOG. There are a number of conversations which are pleaded and particularised. There is also a further conversation with another officer of SOG on which Mrs Robbins relies to support a claim of misleading and deceptive conduct. In [26], Mrs Robbins alleges that, as a result of the misrepresentations, she did not sell her shares in SOG and subsequently acquired further shares. The claim which is therefore made is a claim for the lost opportunity to purchase and profit from the acquisition of shares in Newcrest. SOG and the administrators have filed a defence to the statement of claim. In [4], they admit that SOG failed to disclose certain relevant information to the ASX on 15 May 2000, but otherwise, they deny the allegations made in [5], [6], [7], and [8] of the statement of claim. Importantly for present purposes, the defence pleads, in [36], that had the information which was said to have been required to have been disclosed been notified to the ASX on or after the relevant date, certain consequences which are set out in [39] --- [50] would have occurred in consequence of the notification to the ASX. In particular, the consequences would have been that SOG would have been the subject of a trading halt and that the ASX would have suspended the securities of SOG from quotation in order to prevent an uninformed market in SOG's securities from developing or continuing, as a result of uncertainty as to whether SOG could continue as a going concern. The defence also pleads, in [50], in the alternative, that if the securities were still quoted after 15 May 2000, then, upon notification to the ASX, the market price of the securities in SOG would have collapsed and would have remained at no more than a nominal amount. Paragraph 51 goes on to plead that, as a consequence, Mrs Robbins would not have been able to sell her shares in SOG or would only have been able to sell them for a nominal amount and accordingly, that she would not have had proceeds from the sale of the shares to invest in other securities. The essential elements of the proceeding, which is a representative action, are set out in [24] of Mr Weaver's affidavit of 18 June 2008. The substance of it is that SOG contravened section 1001A of the Corporations Act by failing to make continuous disclosure to the ASX; and that information which SOG should have disclosed included information about the derivative contracts known as "Indexed Put Options", certain USA dollar-call options, and the unauthorised trading of SOG's finance director during the 2000 financial year. That information is said to be relevant to SOG's financial position, its future survival, and to the price of its shares. It is also said that SOG did not make disclosures and that statements made in SOG's annual reports for the financial years ending 1999 and 2000 conveyed an inaccurate impression of SOG's true financial position. Claims are also made that the directors breached their duties to SOG to act in good faith and for proper purposes, in contravention of section 181 of the Corporations Act . Particular named auditors are said to have been knowingly involved in the breaches. It is also important to note that the statement of claim in the shareholders action includes a claim of misleading conduct. This appears in part E of the statement of claim under the heading Misleading and Deceptive Conduct. The Auditor Action is sufficiently described in [37] --- [39] of Mr Weaver's affidavit. These proceedings are brought against the former auditors of the SOG group, in particular, partners of that firm and certain former directors of SOG. A summary of the heads of claim in the Auditor Action are as follows: Both the Auditor Action and the Shareholder Action are case-managed in the WA Supreme Court by Le Miere J. The solicitors for the administrators wrote to the Associate to his Honour on 15 January 2009 informing him of the transfer application and asking his Honour whether he would be prepared to hear the appeals made by the applicants in the present proceedings. By letter dated 20 January 2009, the Associate to Le Miere J wrote to the solicitor for SOG and the administrators stating that his Honour is able and willing to hear the present proceedings if they are transferred to the WA Supreme Court. The principal reasons for this are as follows. First, there is a substantial overlap between the issues that are raised in these proceedings and those that are the subject of the Shareholder Action. There is also an overlap with the issues raised in the Auditor Action. It is true that the applicants in these proceedings seek to characterise them as a discrete action, which is not founded upon the non-disclosures that are the subject of the Shareholder Action. However, in my view, that is based on a misconception of the issues raised in the present proceedings and what they will involve. The essential issue in these proceedings, and in the Shareholder Action, is what the true value of the SOG shares was at the relevant time. In these proceedings, the relevant time is that at which the applicants say they would have sold the shares. That issue forms part of the subject matter of the Shareholder Action and will be the subject of extensive expert evidence. Not only is that issue an essential aspect of the applicants' claims in the present proceedings, it is squarely put in issue by [36] and [39] --- [50] of the defence, to which I have referred above. I do not consider that the reliance on the misrepresentations pleaded in the present proceedings is a factor which makes these actions "stand-alone" proceedings. What the applicants contend is that if they had been told the correct position by the officers of SOG, they would have sold their shares, they would not have purchased any further shares, and they would have invested in Newcrest. However, the information which they say should have been provided was information which would have been required to be disclosed to the market generally. That raises the essential issues that are the subject of the Shareholder Action and, indeed, the Auditor Action. Second, the administration of SOG is huge and complex. It involves a large number of claims from shareholders and non-shareholders. The value of the claims admitted by the Administrators is approximately $836,000,000. The value of the shareholder claims is approximately $577,300,000. It is in the interests of justice that account be taken of the scheme and the need to avoid unnecessary duplication of the costs. Moreover, as their Honours observed in BHP Billiton v Schultz , the interests of justice are wider than those of the parties to the proceedings and, here, it is important to take into account the interests of the creditors generally. It cannot be in the interests of the creditors of SOG to have two related proceedings running in two separate jurisdictions. The observations made by Rogers A-JA in Bankinvest also support this factor as a relevant one to take into account in determining the interests of justice. Indeed, it would seem to me that there is a benefit to the applicants in these proceedings in having their matters heard by the court that is hearing the Shareholder Action and the Auditor Action. The applicants will obtain the benefit of the extensive discovery to be given in that case as well as the benefit of expert evidence to be called as to the true value of the SOG shares. Although the applicants do not wish to be joined in, or party to, the Shareholder Action, another course which would be open would be for their proceedings to be heard after the Shareholder Action and the Auditor Action have been determined. An order could be made for evidence in the earlier proceedings to stand as evidence in the later actions. Moreover, there is no benefit to the applicants in having their case determined in this court, even if it could be determined prior to the proceedings in the WA Supreme Court. This is because the administrators have stated unequivocally that no further dividend will be paid to creditors until after the determination of the Shareholder Action and the Auditor Action. I do not think that anything turns on the fact that the present proceedings are brought by way of an appeal from the liquidator's rejection of the applicants' proofs of debt. This does not detract from the proposition that there is a fundamental overlap between the proceedings in this court and the Western Australian proceedings. Nor is the applicants' position advanced by the submission put to me by Counsel for the applicants that the particulars of the representations and negative representations set out in [7] of the statement of claim are taken from the administrators' report. Nor is the position advanced by the suggestion that the administrators have accepted a large number of other proofs while rejecting the proofs that have been lodged by the applicants. It seems to me that the short answer to this submission is that the administrators have not admitted the claims made by the applicants in the other proceedings. They have received proofs of claim but, whether or not the plaintiffs in the Shareholder Action will receive a dividend, will depend on the outcome of the Shareholder Action. This will include a determination of whether or not the non-disclosures and misrepresentations, which are the subject of the Shareholder Action, are proved in the litigation. It follows that I will make orders in terms of the amended notices of motion handed up in court this morning. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson J. | application to transfer proceedings to supreme court of western australia two related proceedings currently before supreme court of western australia "nuts and bolts" management decision which court, in the pursuit of the interests of justice, is the most appropriate forum interests of justice wider than those of parties to proceedings interests of creditors taken into account expense and inconvenience substantial overlap between issues in current proceedings and proceedings in western australia application to transfer granted practice and procedure |
2 The background and the nature of the principal proceeding is set out in the judgment given by me in relation to an application by the applicants for an asset preservation order: see KGL Health Pty Limited v Mechtler [2007] FCA 1410. I will not repeat those matters here. 3 The Amended Cross-Claim alleges that, in breach of a lease ("the Lease") with Rosanza, Peninsula Hospital Management Pty Limited ("Peninsula") as lessee, has failed to pay rent, GST, outgoings, insurance premiums and interest in the amount of $419,129.40 to Rosanza. 4 In paragraph 1 of the Defence to the Amended Cross-Claim, the cross-respondents admit that they are in breach of the Lease because Peninsula failed to pay the above amount. However, that admission is made subject to paragraphs 8 and 9, which deny that Rosanza is entitled to any relief sought due. This non-entitlement, it is said, is due to Peninsula's claims in the principal proceeding, or to the contention that the rent and other payments due under the Lease were abated to nil from the commencement of the Lease by reason of clause 11. 5 I will deal with each of these matters in turn. 7 As noted above, the admission of breach in the Defence to the Amended Cross-Claim is made subject to paragraph 8, which relies on the applicants' claims in the principal proceedings as a defence to the Amended Cross-Claim. On one view, this could be construed as a defence of set-off. A set-off is essentially in the nature of a cross-claim for debt or damage, but it operates as a defence to a principal claim: see Jacob IH, Bullen and Leake and Jacob's Precedents of Pleading (12 th ed, Sweet & Maxwell, 1975) p 1296-1297. A defence of set-off should plead the facts giving rise to the debt or claim as if they were set out in the Statement of Claim. It should also expressly state that the defendant will seek to set-off such a debt or claim in extinction or diminution of the plaintiff's claim. The appropriate course of pleading in such circumstances is to admit the claim subject to set-off. It is not unusual to plead a cross-claim both as a set-off and counterclaim, and this can conveniently be done by referring a counterclaim back to the paragraphs of the pleading where the facts and matters giving rise to the set-off are pleaded. 8 One difficulty with a set-off defence by the cross-respondents is found in clause 3.22 of the Lease, which provides that "[Peninsula] must make all payments under this lease without set-off or counterclaim and without any deduction. " Accordingly, although it is a matter to be determined at the final hearing in these proceedings, it would be considerably difficult to establish a set-off defence to the Amended Cross-Claim. (Emphasis added. Resolution of this question depends on whether it is reasonably open for the cross-respondents to contend that the carrying out of "unauthorised work" on the premises, which they allege resulted in the premises being unfit for use as a private hospital, can be described as total and partial destruction or damage so as to be unfit for reasonable occupation and use by Rosanza within the meaning of clause 11 of the Lease. 11 Rosanza submits that the correct construction of clause 11 is that it relates only to physical damage or destruction , and that the carrying out of the works and alterations is not damage or destruction which renders the premises unfit for reasonable occupation. The unfitness of the premises, it is said, must derive from either damage or destruction, not from other reasons such as the carrying out of the works where there has been a failure to obtain the necessary statutory authority. Rosanza contends that the paragraph 9 of the Defence to the Amended Cross-Claim should be struck out pursuant to O 11 r 16 of the Federal Court Rules 1979 (Cth). 12 While I can see some cogency in Rosanza's submission, I consider that it is not beyond reasonable argument that, if the premises can be proven to be unfit for reasonable use and occupation as a result of carrying out the unauthorised works, then this constitutes damage causing the unfitness. Accordingly, I do not consider that Rosanza should succeed on its submission. Reliance on clause 11 of the Lease is clearly expressed in paragraph 9 of the Defence to the Amended Cross-Claim, and I believe this submission should be open to ventilation at the final hearing because the application of clause 11 may turn on the precise nature and extent of the works carried out, their impact on the premises and the consequences of the breaches being enforced. Each of these considerations will depend to some extent on the detailed evidence adduced and tested at the final hearing. 13 Another issue concerns the possible availability of an abatement defence under s 87 of the Trade Practices Act 1974 (Cth) ("TPA"). When this motion came on for hearing before me, the applicants (including Peninsula, the first cross-respondent) indicated that they will assert an entitlement to relief under s 87 of the TPA. In particular, they will argue that the provisions of s 87 are sufficiently extensive to allow the Court to order that the rent payable under the Lease should be abated retrospectively, and that s 87(2)(a) enables the Court to declare any part of a contract be void ab initio . In response, Rosanza argues that because the applicants did not specifically mention s 87 in their Application or Statement of Claim, they should not be able to rely on it. 14 In my view, the terms of s 87 of the TPA are sufficiently broad to permit a reasonable argument by the applicants that, if the Lease is declared void ab initio , there is no present obligation to pay the rental as claimed. Although the applicants failed to plead s 87 with reference to abatement, I consider that relief under it could arguably be available. Accordingly, I will allow the Defence to the Amended Cross-Claim to be varied so as to include a reference to s 87 of the TPA as a basis for responding to the claim for outstanding rent. I grant leave to the cross-respondents to amend the Defence to the Amended Cross-Claim in order to include its reliance on s 87 of the TPA. 16 In view of the fact that the Defence to the Amended Cross-Claim was not clearly framed to indicate reliance on s 87 of the TPA, I consider that, although Rosanza's motion has been dismissed, each party should pay its own costs. | application for summary dismissal and to strike out defence to amended cross-claim defence of set-off defence of abatement relief of abatement within scope of s 87 of the trade practices act 1974 (cth) practice and procedure |
The Tribunal had affirmed a decision of a delegate of the first respondent to refuse to grant the appellants a protection (Class XA) visa. On 3 September 2004 the appellants lodged an application for a protection visa with the Department of Immigration and Multicultural Affairs (as it was then known). A delegate of the first respondent refused the application for the visa on 16 September 2004. On 27 September 2004 the appellant applied to the Tribunal for a review of that decision. 3 The appellant husband claimed to be a member of an underground political group in Laos called 'Democratic Government (Underground)' which he claimed had been working secretly in Laos since 1998 with an aim of fighting against the Lao People's Revolutionary Party and to dispel the Vietnamese Communist Party from Laos. The appellant husband claimed he was recruited to this group in 1999 by his maternal uncle who was a member of the Royal Lao government prior to 1975, and who had since this time fought against the new regime. 4 The appellant husband claimed that Democratic Government (Underground) was involved in a bombing campaign which had commenced in November 1999. He claimed his duties were to provide a safe house for members, a contact point between members, a map of the city, and information relating to the party and the government. He asserted there was no identity card or financial reward for this membership. He claimed that he was summoned by local village authorities before he left for Australia and that the authorities attended his home at night. The appellant husband claimed that his life will be at risk if he returns to Laos and the authorities will not protect him as the country is under one party rule. They gave evidence with the assistance of a Lao speaking interpreter. The Tribunal took evidence from the appellant's wife first without the presence of the appellant husband. She was questioned on her knowledge of her husband's claims. The appellant husband was then questioned by the Tribunal in relation to his claims. 6 The appellant husband's written response to the hearing invitation to the Tribunal had indicated that the appellants wished for the Tribunal to take oral evidence from two witnesses, namely Mr Sacsady and Miss Arounsavat in accordance with s 426 of the Migration Act 1958 (Cth) ('the Act'). In addition, at the hearing the appellants orally requested the Tribunal to obtain evidence from a relative of the appellants, Mr Arounsavat, who was assisting in the appellants' application. The Tribunal told them that it accepted that the Laos government mistreated persons who it viewed as being against it and accepted that the first named applicant had joined Laos organisations in Australia thus there did not seem to be any need to take oral evidence about those matters. The Tribunal stated that it had to decide whether it believed that the first named applicant did what he said he did in Laos and whether he had joined the organisations in Australia simply to strengthen his refugee claims. The Tribunal invited all three witnesses to give any evidence about those and any other matters in writing. There is no doubt that the Tribunal at the specific request of the appellants obtained evidence from the witnesses and, as is apparent from the extracts of the Tribunal's reasons which I set out later, treated the letters as evidence before it. The Tribunal found that as the appellants did not make claims about the matters of speculation raised by the witnesses, the matters raised by the witnesses did not require consideration by the Tribunal. 9 In addition, the Tribunal found that the appellant husband was not a credible witness. It found he gave evidence in a hesitant and cautious manner which did not appear spontaneous or natural. Further, there were inconsistencies between the oral evidence of the appellant husband and the appellant wife and other aspects of the oral evidence of the appellant husband were not convincing or plausible. 10 The Tribunal found it implausible that the appellant husband went from having no political involvement to being involved in a group which was engaged in violent acts in pursuit of its objectives and putting himself and his family at risk. The Tribunal considered independent country information and found implausible the evidence relating to the location of the group. The Tribunal considered the claims relating to the bomb blasts and found the evidence in the protection visa application contradicted the appellant husband's oral evidence. The Tribunal found evidence about how the appellant felt about being involved in a group that conducted bomb blasts unconvincing and that the manner in which he gave his evidence did not appear genuine. The Tribunal considered his evidence in relation to his return to Laos after the trip to Cambodia referred to in his protection visa application and noted that he gave no plausible explanation for not seeking protection in Cambodia. 11 On the basis of these problems with the evidence of the appellant husband the Tribunal concluded that he was 'thoroughly lacking in credibility' and invented the claims that he joined the underground government group. The Tribunal did not accept that he assisted the group in any way. No weight was given to the evidence of the appellant wife or to the evidence of the three witnesses who gave evidence following the actual hearing. 12 The Tribunal accepted that the appellant husband joined some Lao organisations in Australia but as it found he was an unreliable witness, it was not satisfied he engaged in the conduct other than for the sole purpose of strengthening his claims for refugee status. Consequently, the Tribunal disregarded this conduct pursuant to s 91R(3) of the Act. 13 In its conclusion, the Tribunal found the appellant husband did not have a well-founded fear of persecution in Laos for a Convention reason. Given that no independent Convention claims were made by or on behalf of the second or third appellant, the Tribunal therefore affirmed the decision not to grant visas to any of the appellants. 15 The first ground asserted a failure by the Tribunal to comply with s 424 of the Act by inviting the appellants to give oral and written evidence and then failing to consider the written evidence of the three witnesses provided subsequent to the actual Tribunal hearing. The second ground also challenged the failure by the Tribunal to consider the three witnesses' evidence, but in terms of a failure to consider claims raised by those witnesses and conduct a proper review under s 414. The third and final ground contended the Tribunal failed to comply with s 424A of the Act. 16 In relation to the three witnesses' evidence, the Federal Magistrate noted that s 426(3) of the Act indicated the Tribunal must have regard to the appellants' wishes in requesting witnesses but there was no obligation on the Tribunal to hear the witnesses requested by the appellants. The Federal Magistrate considered that the Tribunal was explicit in finding that the evidence from the witnesses was not relevant and accordingly it was no longer required to consider the material as s 424 was not engaged. 17 In relation to the second ground, the Federal Magistrate again accepted that a fair reading of the decision demonstrated the Tribunal did have regard to the evidence of the three witnesses. In addition, there was no suggestion that the types of claims raised by the three witnesses were made by the appellants, or linked to the claims of the appellants, and thus need not have been considered as claims made by the appellants. Further, there was no evidence which identified the relationship between the evidence of the witnesses and the claims of the appellants. 18 With regard to the final ground, his Honour found there was no breach of s 424A of the Act. As this ground is not pressed on appeal and as the submissions made below have no other relevance to my deliberations, I need not rehearse the contentions put before the Federal Magistrate on this final ground. Leave is required to raise this ground of appeal. 21 The relevant matters to be considered in an application for leave to adduce a new ground of appeal are those outlined in VAAC v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 74 ; (2003) 129 FCR 168 at [21] - [38] ; and NAJT v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 134 ; (2005) 147 FCR 51 at [154] - [175] . 22 The only reason to refuse leave in this proceeding to raise the new ground of appeal would be if I came to the view that the new ground is without merit. This is ultimately the view I have reached. 23 The appellants argued that at the Tribunal hearing, the Tribunal Member gave an oral invitation to the appellants' three witnesses to give written evidence following the hearing. It was contended that this invitation was pursuant to subs 424(2) of the Act, which specified the manner in which this written evidence, being 'additional information', was to be given in accordance with subs 424B(1). 24 Subsection 424(3)(a) requires an invitation under subs 424(2) to be given, 'by one of the methods specified in s 441A ', relevantly in writing, by way of a document either handed to the person, or delivered by either post or other electronic means. 25 It was then contended that as the Tribunal made the invitation orally and not in writing, the Tribunal failed to comply with s 441A , and rendered any specification under subs 424B(1) nugatory. 26 Looking at the decision of the Tribunal, in my view it is clear that the Tribunal was not acting pursuant to nor did it need to rely upon s 424(2) of the Act. The Tribunal was entitled to and did either act pursuant to s 426 of the Act (responding to a notification under s 426(2) in relation to two witnesses), or pursuant to its power to receive evidence sought to be placed before it by the appellants in circumstances where the appellants did not strictly comply with s 426(2) (in relation to the evidence of Mr Arounsavat). This being the true characterisation of the Tribunal's approach immediately disposes of this proposed ground of appeal, as unless the Tribunal did invite a person to give additional information under s 424(2) , s 424(3) is not enlivened. There is no similar statutory obligation under s 426 or in the Tribunal exercising its power to receive evidence sought to be adduced by any applicant that there be an obtaining of evidence by any request in writing. 27 This characterisation of the events is consistent with the nature of the review process undertaken by the Tribunal, which is an inquisitorial process. 28 In determining an application for review, the Tribunal may exercise all the powers and discretions conferred by the Act on the person who made the decision under review. Those powers are set out in a subdivision entitled 'Code of procedure for dealing fairly, efficiently and quickly with visa applications' (see Pt 2 Div 3 Subdiv AB of the Act). 29 The Tribunal, in carrying out its functions under the Act, is to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick, and in reviewing a decision is not bound by technicalities, legal forms or rules of evidence and must act according to substantial justice and the merits of the case (see s 420). 30 Section 424 of the Act provides that the Tribunal may get any information that it considers relevant and that if it gets such information it 'must have regard to that information in making the decision on the review'. By s 424(2) the Tribunal may invite a person to give additional information. This is just one method by which the Tribunal may gather information. Where such a method is adopted, an invitation is to specify the way and period in which the additional information is supplied, and the invitation must be given by a method specified in s 441A of the Act. The obtaining of any information can occur at any time during the process of review. 31 Then there is the process described in s 426. By s 426 an applicant can notify in writing the Tribunal that the applicant wants the Tribunal to obtain oral evidence from persons named in the notice. The Tribunal is obliged to consider and have regard to the applicant's wishes, but is not obliged to obtain evidence 'orally or otherwise' from such a person named in the notice. The provision puts the responsibility on the Tribunal, who has the power to summon a person to appear before it to give evidence (see s 427(3)). It is the Tribunal, not the applicant, who obtains the evidence. 32 The obtaining of evidence by the Tribunal can occur at any stage of the review, although where the applicant requests the Tribunal to obtain evidence, pursuant to s 426 , this will necessarily occur after the applicant is invited to appear before the Tribunal. As I have indicated, the power of the Tribunal to coercively obtain evidence from a person comes from s 427(3) , but there can be no doubt that the Tribunal by virtue of its general powers of procedure could obtain and receive evidence without coercive force if a person is willing to give evidence. 33 In my view, there is a distinction to be drawn between the Tribunal on its own initiative inviting a person to give additional information and the Tribunal obtaining evidence at the request of an applicant. In this case, the position is clear that the appellants did in fact request that the three witnesses give evidence, and that the Tribunal made no 'invitation' to any person to actually give additional information pursuant to s 424(2). This conclusion follows in the circumstances of this case whether or not the requirements of s 426 were adhered to by the appellants, or even possibly waived by the appellants. 34 In context, when the Tribunal said it 'invited' all three witnesses to give evidence about certain matters in writing, this was not an 'invitation' to a person by reference to s 424(2) of the Act, but simply an indication as to the specific aspect of evidence the Tribunal was prepared to receive and the form in which it was to be received, namely in writing. It was quite clear that by the stage the Tribunal made this request, the appellants had themselves sought to put the evidence of the three witnesses before the Tribunal, and the Tribunal was simply responding to such a request, whether pursuant to s 426(2) of the Act or otherwise. Effectively, the Tribunal, after being asked by the appellants to receive evidence of the three witnesses to be called on their behalf, accepted such a request but subject to certain constraints or conditions. 35 It is clear that the appellants notified the Tribunal under s 426(2) that they wanted the Tribunal to obtain oral evidence from two witnesses. The other witness, Mr Arounsavat, was recorded in the notice to the Tribunal as a person whom the appellants wished to bring to the hearing. An oral request was made to the Tribunal to obtain oral evidence from Mr Arounsavat. In relation to the two witnesses other than Mr Arounsavat, pursuant to s 426(3) , the Tribunal did consider the appellants' request to obtain evidence from the witnesses. The Tribunal obtained evidence (in the form of letters) from those witnesses who were proffered by the appellants. No coercive power under s 427(3) needed to be employed by the Tribunal as the appellants were providing the letters to the Tribunal. The Tribunal decided not to take oral evidence (as it was entitled to do pursuant to s 426(3)) , but to permit the appellants to proffer in writing such evidence from the witnesses. It nominated the two issues it considered relevant to its determination, namely whether the first appellant did what he said he did in Laos, and whether he had joined organisations in Australia merely to strengthen his refugee claim. 36 It was argued that in relation to Mr Arounsavat, who was not listed in the notice as a person the appellants wanted the Tribunal to obtain oral evidence from, that s 426 cannot apply. In these circumstances, I agree that s 426(3) could not be enlivened. However, the Tribunal obviously treated the request for Mr Arounsavat to be obtained to give evidence in the same way as it did the other written notifications under s 426(3) , and although not statutorily required to consider the oral request, did consider it and acted accordingly. This was not in the circumstances of the case the Tribunal inviting a person to give additional information, but was the Tribunal exercising its power to receive specific evidence and in a particular form from Mr Arounsavat, a witness nominated by the appellants. 37 Therefore, the obtaining of the evidence from the three witnesses was, in my view, clearly not by inviting persons to give additional information as contemplated by s 424(2). Consequently, the Tribunal could make the request in the manner it did without complying with s 441A. 39 It was contended by the appellants that on a correct reading of the Tribunal's reasons, the Tribunal disregarded the evidence of the three witnesses because the Tribunal found the witnesses advanced claims about the appellants that the appellants had not advanced themselves 'in their protection visa application, in their review application, prior to the Tribunal hearing and at the Tribunal hearing'. 40 It was contended that the Tribunal acknowledged the relevance of the evidence provided by the witnesses when it described their evidence as 'certain assertions ... about what the applicants would face if they returned to Laos'. It was asserted that the Tribunal found that because the claims made by the witnesses were about matters the 'applicants themselves had not explicitly or implicitly claimed to fear', they did not require consideration by the Tribunal. 41 The appellants then contend that by failing to have regard to the evidence (which the appellants characterised as 'additional information') provided by the witnesses about the appellants' application as required by subs 424(1) of the Act, the Tribunal's decision was affected by jurisdictional error. 42 Further, it was contended that the Tribunal failed to conduct a review as required by s 414 of the Act. 43 As I indicated previously, the Federal Magistrate found that there was no evidence before the court which identified the relationship between the witness statements and the appellants' claims and thus the necessary link between the claims made by the appellants and the evidence given by the witnesses was not established. 44 It was contended by the appellants that his Honour erred in law in finding that some link must be established between the claims expressly articulated by the applicant and other claims that clearly arise on the material before the Tribunal. It was contended that in NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No. 2) [2004] FCAFC 263 ; (2004) 219 ALR 27 at [60] , the Full Court confirmed that a Tribunal is required to consider claims that clearly arise on the material before it when conducting a review, and the Full Court did not limit this requirement to those claims the applicant adopted or which were aligned with the claims advanced by the applicant. 45 It was then contended that his Honour erred in finding that there was no evidence which identified the relationship between the statements of the witnesses and the appellants' claims. It was argued that the relationship was clearly made out by the appellants having requested the witnesses give evidence before the Tribunal and by the content of the witnesses' evidence, and that that evidence contained information specific to the appellants and made specific claims about the consequences the appellants faced if they were made to return to Laos. As such, it was submitted, the learned Federal Magistrate erred in finding that the Tribunal had not failed to conduct a review as required by s 414 when it did not consider all the claims that clearly arose on the material before it. 46 It seems clear to me that whether or not it was obliged to do so, it is apparent from the Tribunal's decision that it did have regard to the evidence supplied by the three witnesses. The content of the material supplied by the witnesses was set out comprehensively in the Tribunal's reasons and the Tribunal's substantive consideration of that material is also apparent. In the relevant passage the Tribunal notes that the witnesses' statements were directed to the likely consequences to the appellants of a return to Laos and concludes that the witnesses 'went beyond giving evidence about matters they had knowledge about and speculated about what they thought would happen to the applicants in Laos'. The witness statements were effectively discounted as being speculative. 47 Therefore, even if the statements did cover claims other than those of the appellants, the Tribunal found the statements were speculative and therefore could not be relied upon. It would not matter then whether the evidence of the witnesses purported to support the claims of the appellants; they were of such quality that the Tribunal could not rely upon them for any purpose, even if they did canvass other claims or matters. 48 In the terms of the Full Court decision in NABE , the claims said to arise out of the letters of the three witnesses were not claims that clearly arose from the material before the Tribunal in view of the evidence's speculative nature as found by the Tribunal. The Tribunal, having reviewed all the material before it, including the unreliability of the appellant husband, gave no weight to the three witnesses the appellants sought to rely upon. This, the Tribunal was entitled to do. 49 It is worthwhile setting out the relevant part of the Tribunal's reasons, which in my view show clearly the approach of the Tribunal as outlined above. Mr Sacsady stated that the first and second named applicant had 'declared' themselves to be against communism and would be punished as 'political criminals'. However, the second named applicant has made no such claim. The only fear of harm she claimed to have was related to her husband allegedly accommodating members of the underground group in their home in Laos. She did [not] claim that she would be viewed adversely by the Lao government for any other reason or that she feared harm fro any other reason. Mr Arounsavat stated that if the applicants returned to Laos the first named applicant would not be able to return to teaching, the second named applicant would not be able to continue to operate her business and the third named applicant's education would be negatively affected. No such claims were made by the applicants and in fact the second named applicant stated in the protections visa application that her occupation in Laos was 'home duties'. Ms Arounsavat asserted that the applicants would face certain financial and social difficulties if they returned to Laos. Again no such difficulties were claimed by the applicants. There is nothing in the letters to indicate that the applicants had made such claims to Mr Sacsady, Mr Arounsavat or Miss Arounsavat. Although Mr Arounsavat assisted the applicants with their application and was listed as the applicants' adviser in the review application, he was invited to write to the Tribunal in his capacity as a witness not as an adviser. Further, nothing in his letter indicates that he was advancing the matters referred to in the last paragraph of his letter upon the instructions of the applicants in his capacity as their adviser. The Tribunal concludes that Mr Sacsady, Mr Arounsavat or Miss Arounsavat went beyond giving evidence about matters they had knowledge about and speculated about what they thought might happen to the applicants in Laos . The applicants had the opportunity to make their claims in their protection visa application, in their review application, prior to the Tribunal hearing and at the Tribunal hearing. As they neither explicitly nor implicitly made claims about the above matters raised by Mr Sacsady, Mr Arounsavat and Miss Arounsavat they do not require consideration by the Tribunal. The Tribunal does not accept that he did so or that he assisted the group in any way. Having found him to be an unreliable witness, the Tribunal gives no weight to the second named applicant's evidence or the letters from the first named applicant's father and godfather. There is nothing in the evidence of Mr Sacsady or Miss Arounsavat which indicates that they have independent or personal first hand knowledge of the applicant's involvement with the group thus their evidence is of no weight in that regard. In his written evidence, Mr Arounsavat states '... in knowing that Khongmany has proactively helped his uncle ...'. It is not clear from this whether Mr Arounsavat is claimed to know that the first named applicant was involved with the uncle in Laos because that is what the first named applicant has told him or because he has some other independent knowledge of this. Given that Mr Arounsavat states he came to Australia in 1988 and has not been able to return to Laos it seems unlikely he would have any first hand knowledge that the first named applicant was associated with his uncle's group in Laos. In any event, as the Tribunal has found the first named applicant to be an unreliable witness, it gives no weight to this aspect of Mr Arounsavat's evidence. However, as it has found the first named applicant to be an unreliable witness who invented his claims about his political activities in Laos, it is not satisfied that he engaged in that conduct other than for the sole purpose of strengthening his claim that he is a refugee . Accordingly, pursuant to s 91R(3) the Tribunal must disregard the first named applicant's conduct in Australia in assessing his claim to be a refugee. Having regard to the passages referred to above, this may have been one basis for the decision, but a fair reading of the Tribunal's reasons as set out above indicates that the Tribunal did in fact consider the evidence and that the substantive basis for disregarding the evidence was its speculative nature. 51 The appellants did seek to persuade me that characterising the evidence as speculative was in error. In my view, it is not for this Court or the Federal Magistrate to reconsider the evidence or the Tribunal's characterisation of it in this regard. In any event, it seems to me that the Tribunal was, as it explained, justified in reaching the conclusion that the evidence was speculative and to be given no weight. This was a finding of the Tribunal which was open to it and is not capable of review. 52 I should say that it may well be that the passage in the reasoning of the Tribunal where it is said that the three witnesses did not 'require consideration', should be read as not requiring 'further consideration'. The Tribunal did assess the evidence given by the three witnesses, and noted that it was not related to the claims or individual circumstances of the appellants. Indeed, in some cases it was contradictory to the appellants' evidence. The Tribunal thus concluded that the witnesses were merely speculating based on general knowledge of country conditions rather than working from any actual knowledge of the appellants' own circumstances. Accordingly the evidence of the three witnesses did not require 'further' consideration. However, it seems to me this would have been the appropriate case to refuse relief if the only jurisdictional error was a failure to comply with s 441A: see generally Re Refugee Review Tribunal; Ex parte Aala [2000] FCA 57 ; (2000) 204 CLR 82 and SZBYR v Minister for Immigration and Citizenship [2007] FCA 26 ; (2007) 235 ALR 609. 54 In the present case, the asserted jurisdictional error of failure to comply with s 441A could have made no difference to the outcome of the application for review. In the supplementary submissions of the appellants, it was contended that in granting relief a useful result can ensue, namely that the appellants will be able to put their claims for protection before the Tribunal, including the evidence of the appellants' witnesses. However, each of the three witnesses provided their evidence to the Tribunal. Even if the Tribunal had been obliged to make the invitations in writing, the Tribunal could still have specified the scope and manner of giving the evidence in the way it in fact did. There is no reason to conclude that the evidence provided by the three witnesses would have been any different to that actually provided by those witnesses. 55 The appellants themselves had ample opportunity to put their case --- it is not suggested that they would or could have put their case any differently. The Tribunal rejected the husband appellant's account of the actions he had taken in Laos, and found that he had not been a member of a violent opposition group. None of the witnesses had any involvement with the appellant in the period he was in Laos, and none could corroborate the appellants' version of events in this regard. No remedy concerning the Tribunal's failure to issue the invitations in writing could remedy the fact that the Tribunal rejected the appellants' claims to an imputed political opinion as a result of the appellant husband's activities in Laos, even after taking into account the three witnesses' evidence. The fact is that having taken all the evidence into account (including that of the three witnesses), the Tribunal still affirmed the decision not to grant protection visas. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | where appellants indicated that they wished for the tribunal to obtain evidence from certain witnesses where the tribunal did not take oral evidence from witnesses but invited the witnesses to give evidence in writing whether there was failure to comply with s 441a of the migration act 1958 (cth) whether the tribunal failed to have regard to witnesses' evidence in breach of s 424(1) and s 414 exercise of discretion to refuse relief even if jurisdictional error found migration |
The Full Court, constituted by five judges, allowed an appeal by New Zealand from an order of the Court which set aside orders made by a magistrate that the respondents be surrendered to New Zealand. The Full Court confirmed the magistrate's orders. 2 The respondents have applied for the orders of the Full Court to be stayed for 10 days to allow the respondents to remain at liberty pending the making of an application for special leave to appeal to the High Court. A single judge may hear and determine an application to stay an order of the Full Court (s 25(2)(d) of the Federal Court of Australia Act 1976 (Cth)). 3 New Zealand, by its counsel, has confirmed that, in accordance with the requirements of the Extradition Act 1988 (Cth), the respondents will not be removed to New Zealand before any timely application which they may make for special leave to appeal to the High Court is heard and determined. I therefore consider it appropriate to approach the question of whether a stay of the orders of the Full Court should be granted on the basis that the discretion to order a stay should only be exercised if the circumstances justify a departure from the ordinary rule that a successful litigant is entitled to the benefit of a court's judgment pending the determination of any appeal ( Federal Commissioner of Taxation v Myer Emporium Ltd [1986] HCA 13 ; (1986) 160 CLR 220 per Dawson J at 222-223). It would not be appropriate to order a stay simply to preserve the status quo ( Edelsten v Ward (No 2) (1988) 63 ALJR 346). 4 The test of whether the circumstances relied upon are sufficient to justify a departure from the ordinary rule must, I consider, be no less strict than the statutory test for the grant of an order for release on bail under s 35(6)(g)(iv) of the Extradition Act ; that is, there must be special circumstances justifying such a course. 5 In considering whether the above test is satisfied in this case it is appropriate to note that special leave to appeal to the High Court is not readily granted. Apart from the exceptional case in which special leave to appeal to the High Court is granted, a final judgment of the Full Court of this Court is conclusive of any issue arising under the Extradition Act (cf Rahme v Commonwealth Bank of Australia [1993] HCA 62 ; (1993) 117 ALR 618 per Deane J at 620). It is always difficult to assess the likelihood of an application to the High Court for special leave succeeding. Nonetheless in this case I consider it appropriate to give some weight, but not overriding weight, to the fact that the judgment of the Full Court was a unanimous judgment of five judges based on established authority. For this reason it may be assumed that the respondents' application to the High Court will face particular difficulty. 6 The respondents have placed primary reliance on factors which can, I think, be categorised under three headings. First, their previous conduct in the sense that they have been on bail for a long time; have a good record of compliance with conditions of their bail; and have voluntarily attended before this Court on the hearing of their appeal and when judgment was delivered this morning. Secondly, that they seek a stay for a relatively short period of time. Thirdly, that they are both in poor health, including poor psychological health and may face more than usual problems should they be incarcerated. However, the Court is obliged to apply the direction of the legislature which places a significant onus in a case such as this on an applicant for bail. It is to be remembered that Australia has continuing obligations to New Zealand which are reflected in the terms of s 35(6) of the Act. The present application is not brought under s 35(6) of the Extradition Act but Australia's obligations to New Zealand are the same as the obligations to New Zealand to which I referred in Heslehurst . 9 Having given anxious consideration to the material upon which the respondents rely in support of their stay application, I am not satisfied that the material demonstrates the exceptional circumstances necessary to warrant the grant of the stay which they seek. It is open to them to follow the course envisaged by the Extradition Act (ie to make an application to the High Court for bail) with little delay. If such an application is made and it succeeds, the time that they will spend in custody because of the failure of this application for a stay of the Full Court's orders will be brief. 10 The application to stay the orders of the Full Court pronounced this morning is dismissed. | application by respondents in full court appeal to stay orders made by the full court allowing their extradition to new zealand whether circumstances justify a departure from ordinary rule that the appellants entitled to benefit of the full court's judgment consideration of respondents' previous conduct while on bail consideration of period of time for which stay is sought consideration of health of respondents held: circumstances do not justify stay of orders extradition |
Her mother applied for a protection visa on 19 March 2001 with the appellant included as a dependent without separate claims of her own. The application was refused on 2 April 2001. That refusal was affirmed by the Tribunal on 27 June 2003. The Federal Magistrates Court of Australia (the "Federal Magistrates Court") dismissed an application for review and the Full Court of the Federal Court of Australia dismissed an appeal from that decision. The High Court of Australia (the "High Court") refused special leave to appeal. The appellant's father arrived in Australia on 4 September 1997. He applied for a protection visa on 16 October 1997. The application was refused on 11 November 1997 and that refusal was affirmed by the Tribunal on 15 November 1999. An application for review before the Federal Court was dismissed on 15 August 2000. He made an application for Ministerial intervention. That application was refused. He lodged another application for a protection visa on 5 October 2001 on the footing that his original application was invalid. The application was accepted for consideration but was refused on 26 March 2002. That refusal was affirmed by the Tribunal on 30 June 2003. The Federal Magistrates Court dismissed an application for review and the Full Court of the Federal Court dismissed an appeal from that decision. The High Court refused special leave to appeal. Another application for Ministerial intervention was made by the appellant's mother and father on 4 January 2006. The application was unsuccessful. The appellant made an application for a protection visa on 17 May 2007 and lodged in support of that application a statement and other supporting information and documents. The appellant relies on the factual foundation previously identified by her parents as the basis for a claim that she holds a well-founded fear of persecution for a Convention reason, namely, her membership of a social group. On 15 June 2007, the appellant's application was refused. On 16 July 2007, the appellant applied for review of the delegate's decision before the Tribunal. On 17 August 2007, the Tribunal invited the appellant to give evidence at a hearing before the Tribunal and to provide further information in accordance with s 424 of the Migration Act 1958 (Cth) ("the Act"). On 22 August 2007, the appellant was invited to provide further information in accordance with s 424 of the Act and on 13 September 2007 the appellant gave oral evidence before the Tribunal. The appellant presented arguments in support of the application for review with the assistance of a Bengali interpreter. The appellant's father also gave oral evidence at the hearing. On 20 September 2007, the Tribunal wrote to the appellant in accordance with s 424A of the Act and invited the appellant to comment on a range of information which the Tribunal considered would be the reason or at least part of the reason for its decision. The Tribunal received a response to that letter on 15 October 2007. On 20 November 2007, the Tribunal affirmed the delegate's decision. The reasons for the decision were handed down on 11 December 2007. She is a member of the Bihari ethnic group. She has resided at the Mohammadpur Geneva Camp Dhaka from the time she was born until she left Bangladesh in January 2001 for Australia. She is stateless due to her membership of the Repatriate Bihari community. When her father left Bangladesh, the Bangladeshi community, supported by Awami League activists, harassed and tortured the appellant's mother on several occasions. On 29 July 1999, Bangladeshi locals together with Awami League activists attacked the camp and abducted the appellant and her mother together with some other females in the Bihari community. They were detained and tortured physically and mentally for three days before being thrown on the street unconscious. The police were reluctant to accept and register a complaint from the appellant's mother due to the support by the police of Bangladeshi locals. The camp was again attacked on 5 October 2000 by Bangladeshi locals. About ten people were burnt to death including the appellant's sister. The appellant stated that her mother was "senseless and unconscious" for several months after this incident. Friends of the family and an agent organised for the appellant and her mother to leave Bangladesh. The appellant claimed in her application and throughout the review proceedings that circumstances in Bangladesh had changed significantly since the Department considered her parents' applications. In her application she asserted that she feared she would be persecuted should she return to Bangladesh. Thus, she contended she held a well-founded fear of persecution for a Convention reason, that is, her membership of a social group. The appellant also adopts the claims made in her father's statutory declaration. In that declaration her father described how in 1970 the local Bengali community started fighting with the Bihari community. A "brutal liberation" began in East Pakistan which the Bihari community did not support. When independence was achieved, local Bengali communities persecuted the Bihari community which continued to support Pakistan and refused to acknowledge the independence of Bangladesh. The appellant's father, and the appellant, contended that Biharis have been living in Geneva camps for thirty years because Pakistan will not receive them. There have been ongoing hostilities between the Bihari community and the Bangladeshi community. Her father claimed to be a particular target because he was a spokesperson for the Biharis. Her father was involved in a large demonstration in July 1994 after which he claimed the police filed particular proceedings against him. He claimed that he was forced to go into hiding and that police and Awami terrorists continued to search for him so as to kill him. The information about which the Tribunal sought comments concerned these matters: The letter set out information that the Bangladeshi government does not issue international travel documents to camp-based Biharis. The letter noted that independent information indicated that Biharis in camps live in a state of destitution. The letter asked for comment concerning information contained in the passport of the appellant's mother. That passport revealed multiple trips out of Bangladesh and an entry indicating that the appellant's mother exchanged money for travelling expenses. The letter set out apparent inconsistencies between the appellant's claims in her statement to the Department and the claims made by the appellant's father at the hearing. The appellant's father had said that the appellant's mother lived with a wealthy family which was inconsistent with the appellant's claim that she and her mother lived in the Geneva Camp. The letter also set out an apparent inconsistency in that the appellant's father had said that the appellant's mother had travelled to India in November 2000 with a wealthy family which seemed to be inconsistent with the appellant's statement that her mother was unconscious for several months after the attack in October 2000. The letter noted that the passport of the appellant's father was issued by the Bangladesh High Commission in Canberra on 21 January 1998. It revealed a permanent address of 4/5 South Kallanpur Mirpur Dhaka. The Tribunal noted that this is the address on the appellant's father's birth certificate. The appellant's father gave evidence that he had submitted the documents to the High Commission to satisfy officers of his identity and place of residence. The Tribunal noted that independent information indicated that Biharis who have accepted Bangladeshi citizenship are not targets of abuse or mistreatment. The Tribunal noted that the appellant's parents applied for and were issued with Bangladeshi passports and have renewed those passports since their arrival in Australia. The Tribunal noted that the appellant's birth certificate shows that she was born in a hospital and her father was a businessman living in Kallanpur, which appeared inconsistent with the appellant's father's claims that at the time of the appellant's birth, the appellant's father was living in a refugee camp and did not have a job. The Tribunal noted that the appellant's mother's passport, her father's passport, the appellant's birth certificate, and her father's birth certificate all show that the family's place of residence was 4/5 South Kallanpur Mirpur Dhaka, not the Geneva Camp. The Tribunal noted that documents submitted by the appellant's father to support his claim that he resided at the Geneva Camp did not impress the Tribunal as identity cards he presented dated 1978 and 1997 were printed on "pristine paper" and depicted contemporary photographs of the appellant's father. The Tribunal noted that independent information indicated that Biharis living in camps are deprived of education, yet, the appellant's mother and father both provided Higher School Certificates and Secondary School Certificates from schools outside of the camps. The Tribunal also noted that independent information indicated that Biharis living in camps are deprived of employment, yet the appellant's father lodged a visa application which recited that he was a cook and his passport recorded that his occupation was "private service". The Tribunal noted that the protection visa application lodged by the appellant's father in 1997 stated that he was a Bangladesh citizen at birth, he was a cook, and he resided at 4/5 South Kallanpur Dhaka. The appellant's father did not claim in that material that he was a Bihari living in a refugee camp or that he had been involved in political violence. The Tribunal noted that the appellant's father had previously admitted to the Tribunal (differently constituted) that he had submitted documentation to the Tribunal which was false. The Tribunal also noted that in his second visa application, the appellant's father made a number of additional claims that were not in his first application. The Tribunal noted that independent evidence indicated there to be a very high level of document fraud in Bangladesh. The Tribunal also noted that the appellant's father had entered Australia on a false passport and under that identity was issued with a business visa. This passport was separate from his Bangladesh passport in his own name. The Tribunal referred to independent information which indicated that Biharis speak the Urdu language, yet the appellant's father had requested a Bengali interpreter to be available at both Tribunal hearings and the appellant spoke to the interpreter in Bengali. This information sought by the Tribunal demonstrates the field of the Tribunal's concerns arising out of its analysis of the oral evidence, statements and other documents lodged by the appellant with the Tribunal in support of her review application. The letter advised the appellant that the information about which the Tribunal was concerned might lead the Tribunal to conclude that the appellant's family had not lived in a Bihari camp and therefore the foundation facts in support of the appellant's contention that she held a well-founded fear of persecution for a Convention reason, might be rejected as untrue. In response, by her letter of 15 October 2007, the appellant said these things (AB283). Her parents had used false passports to travel to Australia because the Bangladeshi government does not issue international travel documents to camp-based Biharis. The appellant's mother had travelled outside the camp because she had accompanied a wealthy family as a housemaid. The appellant retracted her claim that her mother was unconscious for some months. The appellant said that her birth certificate had been obtained years after her birth in order to enrol at a school in Australia. Her parents had used a false address because they would not otherwise have been able to obtain a birth certificate and secure a place in school for the appellant. The appellant's father lost his identity card and requested the documents after his relocation to Australia. The appellant contended that her parents' education did not mean that she and her parents had not lived in the refugee camp. She contended that some Bihari children were enrolled in schools and the rate of enrolment is between ten and twenty per cent. The appellant said that her father recited in his visa application that he was a cook because his migration agent had told him that his passport must match his visa application and the occupation recited in his passport was "private service". Finally, the appellant contended that her parents learned Bengali at school and that she speaks Bengali because most of her friends speak Bengali. The Tribunal did not accept that the appellant was a Bihari who lived with her parents in the MGR camp, for a number of reasons. First, independent country information addressed the circumstances in which Biharis might remain stateless. Biharis have an opportunity to avail themselves of Bangladeshi citizenship and assimilate within Bangladeshi society. Those Biharis who do not take up that opportunity or are prevented from doing so, remain stateless. Second, the appellant placed her parents' passports before the Tribunal which indicated that her parents had accepted Bangladeshi citizenship and had renewed Bangladeshi passports whilst living in Australia. Third, independent country information suggested to the Tribunal that the Bangladeshi government does not issue travel documents to camp-based Biharis (which includes Biharis in the MGR camp) and the Tribunal did not accept the explanation contained in the appellant's response to the s 424A letter that her parents had been able to obtain Bangladeshi passports whilst living in the camp, by using a false address. Fourth, the appellant's father had recited in his first protection visa application that he had been a Bangladeshi citizen since birth which gave rise to the finding that the appellant's father would not have asserted, as a fact, Bangladeshi citizenship if he had been a Bihari who had been living in the MGR camp awaiting resettlement in Pakistan consequent upon refusing Bangladeshi citizenship. Fifth, the appellant's father had given evidence before the Tribunal, consistent with independent country information available to the Tribunal, that Biharis have no work rights and are unable to obtain employment other than in respect of menial tasks. Biharis in camps are deprived of employment. The Tribunal found that this evidence was inconsistent with other evidence of the appellant's father that before he came to Australia he had been a cook. The Tribunal made adverse findings that the various explanations of the appellant and her father, offered to the Tribunal as to the circumstances which enabled him to have worked as a cook, were untrue. Sixth, the Tribunal found the evidence concerning the level of education obtained by the appellant's mother to be inconsistent with independent country information regarding the access of camp-based Biharis to education. Seventh, the passport of the appellant's mother indicated that she had left Bangladesh on numerous occasions and that she had exchanged money for travelling expenses. The Tribunal found that these circumstances were inconsistent with independent evidence that Biharis in refugee camps, live in a state of destitution. The Tribunal rejected the explanation that the appellant's mother was able to travel as a house maid accompanying a wealthy employer on trips, as implausible. The Tribunal found that if the appellant's mother were a dependent house maid, it is unlikely that she would have been exchanging money for travel. The Tribunal considered that travel by the appellant's mother at the relevant dates was inconsistent with claims that she had been unconscious having been attacked in the camp in October 2000 by Bangladeshi locals. Eighth, independent country information available to the Tribunal suggested that Biharis are Urdu-speaking citizens. However, the appellant and her father requested a Bengali interpreter for the hearing and during the hearing they engaged with the interpreter and communicated as between themselves in the Bengali language. The Tribunal found that if the appellant and her parents were Biharis, they would have communicated as between themselves in Urdu, notwithstanding other languages they had learnt in the course of schooling. Finally, the Tribunal found that the appellant's father was not a witness of truth as he had by his own admission provided falsified documents to the Tribunal (differently constituted) during the course of his own Tribunal hearing. Explanations of information contained in the Birth Certificate of the appellant suggested to the Tribunal that the appellant's father was willing to assemble and provide information regardless of its truth in order to strengthen claims. Although the appellant had filed an application for review on 4 January 2008 relying upon three grounds of denial of procedural fairness by the Tribunal and one ground consisting of a failure on the part of the Tribunal to realise the genuine issue of persecution, the appellant relied upon three grounds contained in a further amended application put before the Court at the hearing on 30 June 2008. The grounds for review are these: The Tribunal committed jurisdictional error in making a critical finding about the applicant's father not being a Bihari in circumstances where the information considered by the Tribunal did not support such a finding. The Tribunal found that "the fact that the applicant's father stated he was a cook when he first arrived in Australia is inconsistent with the applicant's claim that her father was a Bihari living in a camp would not have been able to obtain employment as a cook". The information considered by the Tribunal indicated that "most Biharis due to a lack of education and impoverished conditions do menial jobs which hardly pay enough to sustain them and their family". The Tribunal further committed jurisdictional error in circumstances where its s 424A letter did not explicitly tell the applicant the relevance to the review of the information which it had about the significance of the applicant's mother attending school. In its s 424A letter the Tribunal indicated that it had information that the applicant's mother completed her primary and secondary education at schools outside the camps. The Tribunal did not accept the applicant's explanation because it did not "explain how her mother was able to obtain a secondary education at a school outside of a camp that would have required the payment of tuition fees". In the preceding circumstances the Tribunal's explanation of the relevance of the information to the review was ambiguous which, in turn, misled the applicant. The Tribunal committed jurisdictional error by taking the applicant's conduct into account in determining the applicant was not a refugee notwithstanding the Tribunal was not satisfied that the applicant engaged in conduct other than enhancing the applicant's claim to be a refugee contrary to section 91R(3) of the Migration Act . The Tribunal found the fact that [the] applicant's father was willing to provide information to the applicant's school in Australia regardless of its truth indicates that he would be willing to provide any information to the Tribunal to strengthen his claim to refugee status. The appellant contended that the Tribunal's reasoning of necessary inconsistency between the statement of the appellant's father on arrival in Australia that he was a cook, and a claim to be a Bihari who had lived in a refugee camp, did not support a finding of lack of truth. The conclusion relied on a general abstracted proposition that no Bihari living in a refugee camp would be able to find employment as a cook. FM Smith concluded that the Tribunal's finding concerning the appellant's father's occupation was simply one of a number of findings which supported the Tribunal's ultimate conclusion as to credit . The only finding, amongst the Tribunal's factual findings supporting the ultimate conclusion, challenged by the appellant as unreasonable, illogical or unsupportable (that is, no evidence to support the finding) was the finding as to the occupation of the appellant's father. FM Smith found not only that the findings as to truth or otherwise were open on the evidence, but that the "cumulative" effect of the evidence presented a cogent basis for disbelieving the claims of the appellant's father and therefore those of the appellant. This second limb of the lower Court's conclusion as to cogency reflects a view of the merits. Nevertheless, the essential point is that the Tribunal's findings on the ultimate question were open to it in the performance of its fact-finding role as were the conclusions to be drawn from those facts. As to the second ground, the appellant contended that the Tribunal by its s 424A letter failed to make clear to the appellant the relevance of information concerning the educational background of the appellant's mother to the review question of whether the appellant held a well-founded fear of persecution by reason of her membership of a Bihari group. The appellant contended that she and her parents misunderstood the scope of the Tribunal's concern believing that the Tribunal wanted information about how an education might have been obtained by a Bihari living in a refugee camp whereas the Tribunal also wanted information about how such a Bihari might have been able to pay for an education in primary and secondary schools outside a refugee camp. That misunderstanding was said to arise out of the s 424A letter in contravention of s 424A(1)(b) of the Act. The Tribunal's letter noted the following: Biharis living in camps are deprived of an education because it is either unavailable or unaffordable; education is unaffordable because secondary schools require payment of fees "so sending children to schools outside the camps was too expensive for Biharis"; and, since the appellant's mother had told the Tribunal that she had obtained a primary and secondary school education, that information was relevant to the factual question of whether she was a Bihari who had lived in a camp and therefore relevant to the truth of the appellant's claims. FM Smith found that the Tribunal's letter plainly raised both topics and sufficiently explained the relevance of the opportunity available to Biharis living in camps obtaining schooling and the relevance of the cost of that schooling. As to ground 3, the appellant contended that the Tribunal impermissibly took into account in determining the truthfulness of the appellant's claims, the conduct of the appellant's father in Australia of obtaining a false Birth Certificate for the appellant for presentation to an Australian school. Taking that conduct into account was said to be impermissible because s 91R(3) required such conduct to be disregarded. The appellant contended that since there was no such finding, the relevant conduct of the appellant's father ought to have been disregarded. FM Smith found that the Tribunal had taken the conduct into account so as to determine the creditworthiness of the appellant's father . FM Smith concluded that that conduct was not conduct of the appellant or conduct undertaken standing in the shoes of the appellant notwithstanding that the appellant was able to enter school by reason of the conduct and was thus the beneficiary of the conduct. It was the conduct of another, albeit as guardian of the child. The grounds of appeal before this Court are these (AB76): Honourable Federal Magistrate failed to find the jurisdictional error made by the Tribunal thus the appellant didn't receive fair justice from the Court below. A significant jurisdictional error made by "the tribunal" by failing to take in to account the fact that the appellant's father belongs to an Ethnic group in Bangladesh named Bihari. The tribunal didn't comply with 424A of the Migration Act thus have committed a jurisdictional error. As to the first ground, the appellant asserts jurisdictional error on the part of the Tribunal and a failure by the Federal Magistrates Court to afford her "fair justice". There is no content to these assertions. As to the second ground, the appellant asserts, in effect, that a material fact was ignored by the Tribunal, namely, her father's membership of the Bihari ethnic group in Bangladesh, in reaching its decision. That, of course, was the very matter extensively examined by the Tribunal in determining whether the appellant's claims were true. In written submissions, the appellant challenges some of the findings of the Tribunal as self-contradictory. I will treat these written submissions as a contention that the findings are unsupported by evidence or alternatively that the reasoning of the Tribunal is illogical or irrational. The appellant says that the Tribunal did not accept the explanation of her father as to the circumstances in which he obtained a Bangladesh passport and, in effect, wrongly rejected that explanation in concluding that her father's claims and those of the appellant were untrue. However, the conclusions were plainly open to the Tribunal on the evidence. The Tribunal had regard to the explanation offered by the appellant's father and was not prepared to accept it. Secondly, the appellant challenges, as she did before FM Smith, reliance by the Tribunal on the circumstance that her father asserted that he was a cook doing work in the catering industry as demonstrating inconsistency with a claim to be a Bihari and to have lived in a refugee camp. However, the Tribunal was entitled to take into account the assertions as to the employment history of the appellant's father and consider whether that history had any relationship with the circumstances of Biharis living in camps in Bangladesh. That matter was one consideration within many factual circumstances taken into account by the Tribunal in performing its fact-finding role. Those findings were open to the Tribunal. The conclusions as to credit arising out of the Tribunal's analysis of the factual matters were also open to the Tribunal. The appellant also contends that the Tribunal failed to attribute any weight to 10 particular documents and thus failed to accord natural justice to the appellant. Further, the appellant says that the Tribunal failed to advise her that the Tribunal would not attribute any weight to the documents. The documents were these: Excerpts from "Internment Camps of Bangladesh" (Appeal book pages 45 --- 54). "Citizens of no where: Who Are The Biharis and Why Are They Forgotten" --- Appeal book pages 55 --- 56). Excerpts from "Biharis in Bangladesh" (Appeal book pages 57 --- 59). Bangladesh 2004: Bihari Mother and Child (Appeal book page 63). On the present situation in Bangladesh State of Emergency declared (Appeal book pages 67 --- 71). Military called as political crisis continues (Appeal book pages 72 --- 73). Bangladesh Votes Needed Not Violence (Appeal book pages 74 --- 75). The question of the weight to be attributed to these documents in undertaking the fact-finding role is entirely a matter for the Tribunal. The factors that influenced the Tribunal in reaching its findings on particular issues and the ultimate finding of fact as to credit and thus truth have been clearly identified by the Tribunal. The Tribunal chose to attribute weight and give emphasis to the particular matters it identified. There is no jurisdictional error on the part of the Tribunal in the way it approached that analysis or its election to attribute weight in the way it did. As to the third ground of appeal to this Court, the appellant contends that the Tribunal had regard to country information concerning the Bihari community in Bangladesh and preferred aspects of that information to the evidence of the appellant's father in determining credit and the truth or otherwise of the foundation claims. However, the Tribunal reached its findings of fact having regard to the evidence given and claims made by the appellant's parents which were found to be centrally inconsistent with membership of the Bihari community and residence in the camp. Those conclusions were plainly open to the Tribunal. The appellant also relies on the grounds of challenge agitated before FM Smith in relation to s 424A of the Act. I am satisfied that there is no error in the reasoning of FM Smith on that question, in terms of the reasoning as I have outlined it, in these reasons. At the hearing of the appeal, the appellant's father appeared for the appellant. An order was made appointing the appellant's father as tutor in accordance with Order 43, rule 2 of the Federal Court Rules . The material relating to the visa applications of the appellant's parents was also before the Tribunal in conducting its review of the appellant's application. At the hearing of the appeal the appellant's father again relied on the three grounds of contended error argued before the Federal Magistrates Court, that is, an unsupported finding concerning the employment of the appellant's father giving rise to an adverse finding on credit; the application for renewal of Bangladeshi passports; and a contended anomaly concerning the education of the appellant's mother. At the hearing, the contended jurisdictional error on the part of the Tribunal was said to be that the Tribunal reached findings of fact on these and other topics based entirely on its acceptance or belief that false documents had been brought into existence by the appellant's parents, without the Tribunal asking for other material corroborative of the claims or without the Tribunal making its own enquiries to verify information put to the Tribunal. The appellant contended that the Tribunal, wrongly, failed to tell the appellant's father what other material might be required of the appellant to establish membership of the Bihari group. The Tribunal, it is said, could have made enquiries of the Bangladesh High Commission or Bihari community representatives. Nor did the Tribunal, it is said, put to the appellant the appraisal process or line of thinking on these issues. There are a number of difficulties with these contentions. First, the appellant's father had acknowledged to a previous Tribunal that the relevant documents were fraudulent and the Tribunal was satisfied that he was a party to the falsification of the documents (AB386). At AB602, the Tribunal noted that the appellant's father had admitted that his friends had falsely put particular documents together for him. Moreover, these matters were raised by the s 424A letter of 20 September 2007. Second, the Tribunal is not required to make enquiries to verify contentions or to make out a case for the appellant ( Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389 at [78]). Two further matters require comment. First, although the appellant was previously included as a dependent in her mother's application for a protection visa, the appellant remains entitled to make an independent application for a protection visa: Soondur v Minister for Immigration & Multicultural Affairs (2002) 122 FCR 578 per Gray, Carr and Goldberg JJ. The respondent makes no challenge to the competency of the application. Second, there seems to be no authority on the question of whether the scope of the inquisitorial role of the Tribunal might be different or whether the Tribunal might be required to make particular enquiries, in discharging the statutory duty of review, when the application for review is made by or on behalf of a minor. In this case, however, the question does not arise because the application was made by the appellant in reliance on the circumstances and claims of her parents and her father had the carriage and prosecution of the application for a protection visa on her behalf and also in relation to all subsequent challenges by the appellant. The appellant's interests before the Tribunal were represented by her father as next friend. Accordingly, it follows that none of the grounds of appeal to this Court have been made out. It therefore follows that the appeal must be dismissed with an order that the appellant pay the first respondent's costs of and incidental to the appeal. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application by a minor for a protection visa under the migration act 1958 (cth) formerly having been included as a dependent within her mother's application for a protection visa, without separate claims on behalf of the minor consideration of whether findings of fact made by the refugee review tribunal were supported by evidence consideration of contended inconsistencies in the evidence supporting findings of the tribunal consideration of contentions of illogicality and unreasonableness in the process of reasoning consideration of the appointment of the appellant's father as tutor pursuant to order 43, rule 2 of the federal court rules immigration |
He entered Australia in June 2005 pursuant to a tourist visa that permitted him to remain in the country for a period of six months. 3 In early September 2005, the Australian Security Intelligence Organisation (ASIO) rang Mr Parkin and invited him to speak to them. This invitation was declined. 4 Subsequently, ASIO staff prepared a security assessment concerning Mr Parkin. The security assessment was an adverse security assessment for the purposes of the Australian Security Intelligence Organisation Act 1979 (Cth) ('ASIO Act') in that it contained a recommendation that certain administrative action be taken which would be prejudicial to Mr Parkin: see s 35. 5 The respondent, who is the Director-General of Security appointed pursuant to s 7 of the ASIO Act ('Director-General'), then issued the adverse security assessment. On or about 8 September 2005, the adverse security assessment was provided to the Minister for Immigration, Multicultural and Indigenous Affairs (the Minister). The adverse security assessment as issued contained a recommendation that Mr Parkin's visa be revoked in accordance with s 116 of the Migration Act 1958 (Cth), which provides circumstances in which the Minister may cancel a visa. 6 By way of a document dated 10 September 2005, the Minister cancelled Mr Parkin's visa. On about 17 September 2005, Mr Parkin was removed from Australia by the Minister and returned to the United States. 7 It appears that from 13 September 2005, a number of complaints were made to the Inspector-General of Intelligence and Security ('Inspector-General') concerning Mr Parkin's adverse security assessment and subsequent removal from Australia. The complaints were well publicised, including in the media and in Federal Parliament, and it is unnecessary to go into detail about them here. In general terms, they concern Mr Parkin's activities as a non-violent political activist and in particular his stance against the war in Iraq and the commercial activities of companies doing business in Iraq. The complaints raise the possibility of external influence on the respondent and ASIO in preparing the adverse security assessment. Further complaints appear to have been made about the issuing of the visa to Mr Parkin in the first place and the alleged failure by ASIO to give Mr Parkin the opportunity to present his case. 8 In response to these complaints, the Inspector-General has, pursuant to s 8(1) of the Inspector-General of Intelligence and Security Act 1986 (Cth) ('Inspector-General Act'), conducted an investigation into the treatment by ASIO of Mr Parkin. The report of that investigation is dated 29 November 2005 and it is a public document. It is clear from the report that the Inspector-General had regard to the adverse security assessment and other relevant records held by ASIO. However he considered that the public interest required him not to divulge the assessment or any of its contents in the report. The protection of collection methodologies and various sources means that there are appropriately circumstances in which disclosure cannot be made. In balancing security aspects against natural justice considerations, there are circumstances where it has traditionally been accepted that it is in the overall public interest for security considerations to be given precedence. The current situation is one such occasion. Even to attempt to allude in general terms to the elements of the security assessment would be problematic in this way. 11 The report refers to a further document prepared by the Inspector-General. It is entitled "Comments on ASIO security assessment in respect of Mr Scott Parkin" and apparently discusses some details of the adverse security assessment. This document is classified and has not been provided to Mr Parkin or, for that matter, to the Court. In or about September 2005, the Department of Immigration, Multicultural and Indigenous Affairs ('Department') determined that both men were entitled to be recognised as refugees in accordance with the Refugees Convention. Subsequently, at a time unknown to them, the Director-General prepared adverse security assessments in respect of each man (it may be that there is a single assessment which applies to both men). These assessments were then provided to the Department which has refused to grant visas to Mr Sagar and Mr Faisal. The Department has written to each man explaining that he is not eligible for protection as a refugee because of the adverse security assessment prepared in respect of him. 13 The preceding paragraph is a recitation of the matters pleaded in the amended statement of claim of Mr Sagar and Mr Faisal. There is no further material before the Court in respect of them, although recent media reports give more information about their present circumstances. The matters in those reports are not presently relevant. It is not clear if either man was provided, as Mr Parkin was, the opportunity to speak to ASIO prior to the preparation of the adverse security assessments. Nor does it appear that either has sought or obtained a review of his adverse security assessment from the Inspector-General. Finally, there is no explanation by way of defence of any activities carried out by either man, in contrast to the reliance Mr Parkin places on his being a non-violent political activist. 14 I was told from the bar table that the Inspector-General had commenced of his own motion an investigation into the cases of Mr Sagar and Mr Faisal. This investigation apparently ceased when the current proceedings were brought. The Inspector-General Act provides in s 11(3) that where the Inspector-General investigates a complaint, and a review of the subject matter of that complaint is sought in a court or tribunal, the Inspector-General must, absent special reasons, cease his investigation. There is nothing on the face of the Inspector-General Act to suggest that the Inspector-General cannot continue an investigation commenced on his own motion as opposed to one commenced by reason of a complaint. Apparently the Inspector-General is concerned about contempt of court. As no argument was addressed to that point, it would be inappropriate for me to resolve it. Messrs Sagar and Faisal commenced a claim on 28 February 2006. The applicants seek orders quashing, first, the decisions to make the adverse security assessments and, secondly, the decisions to provide the adverse security assessments to the Department, of which the Minister is head. They seek further orders by way of declaratory relief. First, declarations that the adverse security assessments were not made in accordance with law. Secondly, declarations that the Director-General contravened s 20 of the ASIO Act, which requires him to take all reasonable steps to ensure that ASIO acts free from irrelevant considerations, by failing to make a lawful security assessment about the applicants. Thirdly, declarations that the Director-General contravened s 20 of the ASIO Act in providing the security assessments to the Department. 16 Mr Parkin does not deny that whilst in Australia he engaged in political activism. However, he says that nothing he did falls within the definition of "politically motivated violence" in s 4 of the ASIO Act. This is important because the definition of "security" in the same section includes within its meaning the "protection of, and of the people of, the Commonwealth and the several States and Territories from ... politically motivated violence" . So much was conceded in, and accepted by, the High Court in Church of Scientology Inc v Woodward [1980] HCA 38 ; (1982) 154 CLR 25. There are limits on the scope of that review but the usual administrative law remedies would be available to the applicants if they are able to establish jurisdictional error. 18 The primary difficulty that each of the applicants faces in bringing his claim is that he has not seen his adverse security assessment and alleges that he does not know the facts or reasoning by which the Director-General made the adverse security assessment. Without this material, it will be difficult, if not impossible, for the applicants to make out their claim that the adverse security assessments were not made in accordance with law. It is therefore critical to the applicants that the Court order discovery of, at very least, the adverse security assessments. I therefore ordered, on 1 June 2006, that the parties make submissions on discovery, which they have subsequently done both in writing and at the hearing on 20 July 2006. It is governed by Order 15 of the Federal Court Rules . In particular, r 15.15 provides that the Court will not make an order for discovery "unless satisfied that the order is necessary at the time when the order is made. " The exercise of this discretion is usually seen as involving the balancing of competing interests. It forms part of English legal procedure because the public interest in securing that justice is done between parties is considered to outweigh the private and public interest in the maintenance of confidentiality. Further factors include whether discovery would constitute a "fishing exercise" and whether there are policy reasons not to order it. The Director-General is appointed pursuant to s 7 and, by virtue of sub-s 8(1), controls ASIO. 22 Part IV of the ASIO Act concerns security assessments. 24 It is necessary to have regard to the meaning of "prescribed administrative action". They do not deny that their adverse security assessments relate to the matters in paragraph (b) of the definition of "prescribed administrative action", as the adverse security assessments recommended, in Mr Parkin's case, the cancellation of his tourist visa by the Minister pursuant to the Migration Act and, in the case of Mr Sagar and Mr Faisal, the refusal by the Minister to grant a visa under the Migration Act . It therefore follows that the remainder of Part IV (other than the irrelevant sub-sections) does not apply to them. 27 Notwithstanding this, it is necessary to consider the remainder of Part IV because the Director-General submits that the nature of some of the matters excluded by s 36 evinces a legislative intent that bears on whether the Court should exercise its discretion to order discovery in this case. Put simply, the Director-General says that the ASIO Act does not intend that a person in the position of the applicants should have access to his or her security assessment and that for the Court to order discovery of the security assessment would be to circumvent this intention. 28 Division 2 of Part IV concerns the furnishing of security assessments. It provides, in ss 37 and 38 read together, that the agency to which a security assessment has been furnished is to provide to its subject a notice to which a copy of the assessment is attached, (which will include the material relied on in making the adverse security assessment) and certain prescribed information concerning rights of review. However, there is an exception to this requirement contained in sub-s 38(2). This sub-section permits the Attorney-General to certify either that the withholding of a notice to the subject of the assessment is "essential to the security of the nation" or that disclosure to any person of the statement of grounds that is otherwise to be provided with the security assessment would be prejudicial to the interests of security. If the Attorney-General makes the former certification, then there is no requirement on the agency to provide the security assessment to its subject. If the Attorney-General makes the latter certification, the assessment given to the subject "shall not contain any matter to which the certificate applies". 29 Division 4 of Part IV provides for the review of security assessments by the Administrative Appeals Tribunal. Such review would of course be subject to the provisions of the Administrative Appeals Tribunal Act 1975 (Cth), including s 39A(5) which provides for private hearings for security assessment reviews. 30 I must also refer to sub-s 37(5), which is contained in Division 2 of Part IV. The Director-General, however, says that the intention of the Act is to preclude a non-citizen who is the subject of an adverse security assessment from receiving a copy of the assessment or the material relied on in preparing it, or from having that assessment reviewed by the Administrative Appeals Tribunal. This, he submits, should be taken into account in determining whether the Court should exercise its discretion to order discovery. 32 Division 2 of Part IV of the ASIO Act is only concerned with the provision of a security assessment to the subject of the assessment. In addition, nothing within that Division or elsewhere in the Act prohibits the provision of an assessment to its subject. Even where the Attorney-General certifies that withholding a security assessment is essential to the security of the nation, sub-s 38(4) merely provides that this "does not require a notice to be given in relation to a security assessment" . And if the Attorney-General certifies that disclosing the statement of grounds would be prejudicial to the interests of security, sub-s 38(5) provides that the assessment must still be provided, but without the certified material. It may be true to say that there is a legislative intention not to provide the non-citizen subject of an adverse security assessment with a copy of that assessment, but it goes too far to imply into the ASIO Act an intention not to allow discovery of such a document if the justice of the case otherwise requires it. Two points need to be made in this regard. First, discovery is not the same thing as production. It may be that a litigant is entitled to know what documents exist that are relevant to a dispute, even if he or she cannot compel production of those documents. Secondly, production may not be to the litigant himself or herself. A court may place confidentiality orders on the production of the discovered material, which may exclude the litigant from access to them. On these matters, the ASIO Act is silent. 33 It follows that the Director-General's submission that discovery would circumvent the ASIO Act and therefore constitute an abuse of process must fail. Some assistance was sought to be derived from cases where discovery had been given to a party before he was required to give particulars of his claim ... but in cases of that kind there is either an anterior relationship between the parties which entitles one to obtain information from the other, or sufficient is shown to ground a suspicion that the party applying for discovery has a good case proof of which is likely to be aided by discovery. This is not such a case. This is a case where a bare allegation is made ... and, the paragraph being denied, the applicant seeks to interrogate the [respondent] and ransack his documents in the hope of making a case. That is mere fishing. There are two significant reasons for this. The first is that the Federal Court Rules do not, as most jurisdictions traditionally did, provide for discovery as of right. The second is the introduction in 1988 of Order 15A and its equivalents in other jurisdictions which permit preliminary discovery and discovery against a non-party. These considerations led Burchett J (with whom Lockhart and Gummow JJ agreed) to conclude in Caltex Refining Co Pty Ltd v Amalgamated Metal Workers Union (1990) 51 IR 113 at 116 that " This [fishing] objection to applications for discovery of documents does not now have the weight it was once thought to have. Perhaps it should be seen as a metaphor with more colour than substance. But I do not think it is an impermissible fishing expedition. The purpose of the discovery that is sought is not for the applicants to determine if they have a case. If the applicants are right that they have no idea why the adverse security assessments have been made, then it follows that they must have a case that is at least arguable. Their case is that, because they have done nothing to constitute a threat to national security, any finding that they are such a threat must have been made in error. The purpose of discovery is to determine the nature of that error, not whether it exists. The classes of document sought are not overly broad and can be stated simply. The existence of the security assessments is admitted and the existence of documents supporting them can be readily inferred. The 'fishing' allegation does not dissuade me from ordering discovery. So far, I have not had to consider whether the applicants would be entitled to have produced to them or to their legal advisers the documents sought in discovery. That question was not addressed in argument. If I were satisfied that under no circumstances could they compel production of the documents sought, then I would be inclined against ordering discovery on the ground that it would be futile. For the same reason that a court will not grant leave to hear an appeal that is doomed to fail, it should not generally order discovery of a document production of which can never be compelled. Courts do not make nugatory orders. 39 In this case, I cannot be satisfied that the documents sought would be immune from production. To reach that degree of satisfaction is a very high threshold indeed. One of the purposes of a court ordering discovery is to allow the party to whom discovery is made to challenge any claims for privilege. This occurs all the time in the context of legal professional privilege. The discovering party will make a list or affidavit of documents, including, where appropriate, setting out grounds why certain documents are privileged from inspection. If its opponent, upon examining those grounds, believes that the privilege claim should not be upheld, it may bring appropriate proceedings to challenge the claim. The same is true in this case. It may be that every document discovered by the respondent is privileged or its production is otherwise not compellable. This can only be determined once discovery has taken place and the applicants given the opportunity to challenge any assertion of privilege. 40 In Church of Scientology v Woodward [1980] HCA 38 ; (1982) 154 CLR 25, the High Court had to consider a claim that the Director-General of ASIO did not have a reasonable basis for believing that members of the Church of Scientology were a security risk and therefore had no power to investigate them. It was accepted that judicial review of the ASIO Act was available. 41 The Court noted that discovery and production were critical issues in any judicial review proceeding under the ASIO Act. Brennan J said, at 75, that "[i]t would be an unusual case, however, if a plaintiff without discovery against the Director-General could discharge the burden of proving that [ASIO] had engaged in the particular activity of which he complains". But the veil is not penetrated merely by a plaintiff's deposition that he is not a security risk. These obstacles arise in part because "of the restrictions imposed upon discovery in aid of proving, and upon the admission of evidence in proof of, what is and what is not relevant to security". 43 It is apparent from these passages that what Brennan J had in mind was not merely discovery, but the dual process of discovery and production. His use of the word discovery appears to be a short-hand reference to this dual process. Because the Court in Church of Scientology did not need to decide whether to order discovery, Brennan J's obiter remarks were directed to difficulties generally in bringing review proceedings against ASIO. They were not directed to the important distinction between discovery and the subsequent production of non-privileged discovery documents. Mason J's judgment also refers to the difficulties in bringing this type of claim. The Church of Scientology case may have critical implications for the parties at the production stage, but it is not determinative of the discovery question. Is there a live issue between the parties? In order to make out their respective claims, the applicants will need to demonstrate jurisdictional error on the part of the Director-General. They will need to show that there was no evidence on which ASIO could have formed the opinion that the applicants were security threats. Given the extreme difficulty of this task, the Court should not be satisfied that the applicants have a good case proof of which may be aided by discovery. 46 I am not persuaded by this argument. The applicants' claim is that they have done nothing to justify their security assessments. Therefore ASIO must be wrong to conclude that they are security threats. In order to demonstrate this to a court they need to understand why and on what basis ASIO has formed the view that it has. It stands to reason that they do not yet have the evidence to demonstrate this; that is why they have sought discovery. The Director-General's argument is circular. It is, in effect, that because the applicants do not have the evidence they need, they therefore have no case and so do not need that evidence. In the circumstances of these applicants, it is not possible to say whether they do or do not have any chance of making out a good case. It would be premature at this stage to say that there is no live issue between the parties. The applicants say that they have good reason for bringing their claims. They are entitled to call on the aid of the Court to assist them in determining if they are right and, if so, the detail of those claims. They should not be shut out just because their claim involves the denial of a state of affairs they cannot explain, as opposed to a positive averment. No sufficient reason has been advanced why discovery should not be ordered. 48 The parties should confer as to the appropriate orders for discovery. If they are unable to agree by 17 November 2006, they should each by 1 December 2006 file written submissions as to the orders that should be made. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg. | discovery adverse security assessment whether intention in australian security intelligence organisation act 1979 (cth) that subject of adverse security assessment not be permitted discovery of it whether discovery would be fishing exercise of discretion practice and procedure |
That trademark has, on the evidence, a particular market recognition for hair care products and more particularly for hair styling irons. The evidence establishes that there is a particular repute and a good repute associated with hair styling irons manufactured by Jemella Limited and distributed by Jemella Australia in this country. 2 Jemella Australia has brought proceedings against one David Bowman and one Scott MacKinnon in this Court in respect of an alleged infringement of the rights associated with the trademark and with its enjoyment of those rights in this country. Although they are separate proceedings, they raise a common issue of law and, at least at an interlocutory stage, it was convenient to hear applications made by Jemella Limited for interlocutory relief against each of the Respondents Bowman and MacKinnon together. The nature of the relief sought against each of Messrs Bowman and MacKinnon is as follows. 1. 2. An order that, until further order of the court, the Chief Executive Officer of the Australian Customs Service be restrained until further order from releasing goods referred to in a particular paragraph in the substantive application which goods are referred to in a notice of seizure to objector, there is then a date in respect of the notice of seizure which is 20 April 2008, in each case. 3. Alternatively, pursuant to O 25 r 2 of the Federal Court Rules , within 10 working days of the release of the goods referred to in the application to Mr Bowman, or as the case may be Mr MacKinnon, by the Chief Executive Officer of the Australian Customs Service, that Respondent must deliver up the goods to the solicitor for Jemella Australia, until further order of the court. 4. Provision is also sought for an order in respect to the costs of the application and for the giving of directions in respect to the further conduct of the proceeding. 3 One finds in the way in which the interlocutory relief sought is cast the occasion for hearing the applications together. Jemella Australia, very properly, has drawn to the attention of the court a potential difficulty apprehended in respect of the meaning and effect in the circumstances of each of these cases of s 137(1) of the Act. 4 It is convenient to set out the whole of s 137. Note: For objector , notified trade mark and seized goods see section 6. (2) The court hearing the action: (a) may, on the application of a person, allow the person to be joined as a defendant to the action; and (b) must allow the Customs CEO to appear and be heard. (3) In addition to any relief that the court may grant apart from this section, the court may: (a) at any time, if it thinks it just, order that the seized goods be released to their designated owner subject to the conditions (if any) that the court considers fit to impose; or (b) order that the seized goods be forfeited to the Commonwealth. Note: For seized goods and designated owner see section 6. (4) If: (a) the court decides that the trade mark was not infringed by the importation of the goods; and (b) the designated owner of the goods, or any other defendant, satisfies the court that he or she has suffered loss or damage because the goods were seized; the court may order the objector to pay to the designated owner or other defendant compensation, in the amount determined by the court, for any part of that loss or damage that is attributable to any period beginning on or after the day on which the action was brought. (5) If, after 20 working days from the day on which the action was brought, there is not in force at any time an order of the court directed at the Customs CEO preventing the goods from being released, the Customs CEO must release the goods to their designated owner. (6) If the court orders that the goods be released, the Customs CEO must, subject to section 140, comply with the order. 5 The apprehended difficulty arises in this way. The notice given by the Customs to Jemella Australia is dated in each instance 20 April 2008. Affidavit evidence read before me deposes to, again in each instance, Jemella Australia's receipt of a notice from the Customs on or about 28 April 2008. 6 An examination of the material exhibited to the affidavit concerned gives reasonable confidence for a conclusion that the statement "on or about 28 April" was overly imprecise. Rather, I am satisfied from the evidence that Jemella Australia received the notice from the customs in each case on 28 April 2008. 7 Section 137(1) permits an objector to give notice of the bringing of an infringement action to the Customs within what is called the "notified period". That notified period is a period of 10 working days, specified in the notice given to the objector. These notices specify a period of 10 working days from the date the notice is given. The date on which the notice was given was 28 April 2008. Section 137(1) contemplates that a notice may be given either within that notified period, or if the Chief Executive Officer of Customs is satisfied in the circumstances of the case that it is fair and reasonable to do, within a further period of working days, not exceeding 10. 8 The difficulty which arises in this case is that, at least on the face of s 137(1), that extension must be granted by an application which is made within the notified period, or at least, that the Customs Chief Executive Officer achieves the requisite state of satisfaction and makes the extension decision within that notified period. It suffices to note that the extension that was at least purportedly granted in each instance by the Chief Executive Officer of Customs was not granted within the period of 10 working days from 28 April 2008. 9 The effect of the Act is that in the ascertainment of what amounts to a working day one looks to days which are working days in the Australian Capital Territory. In Queensland, but not in the Australian Capital Territory, a Labour Day public holiday fell in early May. It may very well be that it was a failure to appreciate the difference in the occasion for the observance of that public holiday between the Australian Capital Territory (where it is observed in October) and Queensland that resulted in the absence of an application and extension procedure occurring within the 10 working day period. 10 Be that as it may, two matters flow from the events which have occurred. Firstly, the Customs, at least on the evidence inferentially, still retain the goods concerned. That is because on the face of things the Customs have acted in accordance with the extension decision purportedly made. That means that today is the last day in respect of which an order under section 137(5) of the Act might be made on that assumed state of affairs. 11 The other matter which flows is a question of statutory construction. That question is whether or not, in the events which transpired, there was an invalid extension of time under s 137(1). That particular issue having been drawn to my attention, it seemed to me appropriate, in the circumstances and having regard to the potentially limited timeframe for the making of an order under s 137(5), that notice of the question which had arisen be given to the respondents and also to the Chief Executive Officer of the Australian Customs Service, before any final decision was made in respect of the meaning and effect of that provision in the circumstances. I note that Sackville J followed a similar course of giving notice of a question concerning the meaning and effect of s 137(5) of the Act in Chanel Ltd v Kim (2007) 166 FCR 1. I therefore gave directions for the giving of notice concerning the issue and the making of submissions in respect of it, to the Respondents and the Chief Executive Officer of Customs. 12 I am satisfied on the evidence before me that such notice has been given. I am further satisfied on the evidence that the existence of the proceedings has not only been drawn to the attention of the Chief Executive Officer of Customs but that there has been an opportunity for the Chief Executive Officer to take advice from the Australian Government Solicitor in respect of the question. 13 It suffices to note that correspondence has been directed to the Court from the Australian Government Solicitor, the effect of which is that the Chief Executive Officer is aware of the submissions made in respect of the provisions at s 137(1) by Jemella Australia, but does not wish to make any submission concerning the meaning and effect of that section on his own behalf. I am also satisfied on the evidence that the substantive applications have been served both on Mr Bowman and Mr MacKinnon. I note that in respect of Mr Bowman there was an appearance on his behalf by a firm of solicitors in Echuca at the first return date of the application. That appearance was not repeated on the adjourned date when substantive submissions were made in respect of the meaning and effect of s 137(1). 14 On behalf of Jemella Australia the submission which is made is that one ought not to regard the references in s 137(1) to a 10-day period as rigid. In aid of that particular construction reference is made to a passage in the reasons for judgment of the New South Wales Court of Appeal in Tasker v Fullwood (1978) 1 NSWLR 20 at 23, which was approved by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 29 ; (1998) 194 CLR 355 at 390. Little, if any, assistance, will be derived from the terms of other statutes or any supposed judicial classification of them by reference to subject matter. The task of construction is to determine whether the legislature intended that if only to comply with the stipulated requirement would invalidate the act done, or whether the validity of the act would be preserved notwithstanding non-compliance: the Franklin Stores Pty Ltd case. The only true guide to the statutory intention is to be found in the language of the relevant provision and the scope and object of the whole statute: Hatton v Beaumont. The intention being sought is the effect upon the validity of the act in question, having regard to the nature of the precondition, its place in the legislative scheme and the extent of the failure to observe its requirement: Victoria v The Commonwealth. It can mislead if one substitutes for the question thus posed an investigation as to whether the statute is mandatory or directory in its terms. It is an invitation to error, not only because the true inquiry will thereby be sidetracked, but also because these descriptions have been used with varying significations. In particular, it is wrong to say that, if a statute is couched in directory terms, the act will be invalid, unless substantial performance is demonstrated; the Franklin Stores Pty Ltd case. A statute which, on its proper construction, does not nullify the act in question, even for total non-observance of the stipulation, is also described as directory in its terms: Victoria v The Commonwealth (internal footnote references omitted). 15 I approach the question of the construction of s 137(1) with this guidance firmly in mind. 16 Neither in the helpful submissions made on behalf of Jemella Australia, nor as a result of my own researches has any authority directly impinging on the construction of s 137(1) of the Act been disclosed. Section 137(1), for example, makes it quite clear that an action for infringement must be brought within the 10-day period specified in the notice or with any extended period granted by the Customs Chief Executive Officer, provided the objector has applied for an extension "before the end of the notified period". There would have been no difficulty about incorporating similar language in s 137(5). 17 In the Chanel case Sackville J was confronted with a case which required the construction of s 137(5) of the Act. In that case which concerned a consignment of scarves bearing the applicant's trademark which had been seized by the Customs, the applicant applied for an order to restrain the Customs from releasing the scarves to the respondent. The question which arose for decision was whether it was possible for an order to be made where, as was the case there, more than 20 days had elapsed from the date on which the applicant had commenced its action for infringement of its trademark. It suffices to note that his Honour found that s 137(5) of the Act was not intended to be an exhaustive statement of the circumstances in which this court might make an order preventing the Chief Executive Officer of Customs from releasing seized goods. In other words, it was possible, albeit not under s 137(5), but under more generally conferred powers even after a lapse of the 20 day period, to make an order which prevented the Chief Executive Officer of Customs releasing seized goods. 18 One sees then from the passage which I have quoted from Sackville J's judgment in the Chanel case some indication of a view that there is a degree of rigidity in relation to the 10-day period that one sees in s 137(1). 19 No particular guidance as to the construction of the provision is to be obtained either from the relevant explanatory memorandum or the relevant second reading speech. Section 137(1) falls with Pt 13 of the Act. That part is directed to the importation of goods infringing Australian trademarks. The place of s 137 in that part seems to be to provide a means by which an objector may secure a holding of allegedly infringing goods in the Customs zone, pending the hearing and determination of an infringement application. 20 There is utility in that provision in that it preserves the subject matter of a proceeding and in particular preserves the utility of an infringement proceeding by preventing the passage of allegedly infringing goods from the Customs zone into domestic trade and commerce. 21 That particular quality does though raise for consideration another feature of s 137 and the time limits which one finds in s 137(1). It seems to me that one sees in s 137(1) a Parliamentary value judgment, a balance which has been struck by the Parliament between the interests of an importer in having goods pass into domestic trade and commerce and the interests of the holder of a registered Australian trade mark or another person qualified to be objector, which person is obviously interested in the prevention of the passage of goods which are infringing into Australian domestic trade and commerce. 22 There are, therefore, readily identifiable and potentially conflicting commercial purposes which are resolved by the Parliamentary value judgment that I have mentioned. The time that is specified prime facie is quite short. It seems to me that that time represents Parliament's view of a reasonable proportionality between potentially conflicting commercial interests. In those circumstances it seems to me unlikely that Parliament envisaged that there would be any ability for there to be what one might term "slippage" in the time limit prima facie specified in s 137(1). The language of s 137(1) also tends to reinforce that particular impression gleaned from evident purposes in the statute. Sackville J was plainly of the view that the language of s 137(1) had that quality. 23 In my opinion it is not the case though that a failure to institute a proceeding within the 10-day period renders the infringement application incompetent. Part 13 serves a very particular purpose, but it is not in any way exhaustive of the circumstances in which an infringement application may be brought in this court. 24 In short then my opinion is that there was no occasion for the granting of an extension of time to Jemella Australia by the Chief Executive Officer of Customs. It seems to me that what follows from that is that there is no engagement of the particular mechanism found in s 137(5) for the making of an order directed to the Chief Executive Officer of Customs. That is not to say that the court has no power to make such an order, see the Chanel case. 25 The evidence before me satisfies me firstly that there is a serious question to be tried in respect of infringement. There is evidence of a confidential nature in respect of particular identifying qualities of the hairstyling irons, which would lead one to the at least tentative conclusion that the goods which have been seized by the Customs have about them an absence of relevant identifiers. Further, in each instance, the volume of the goods concerned is such that they are unlikely to be merely for personal consumption, but rather there is a likelihood from the volume alone that they are intended to be articles of commerce in this country and have been imported for that purpose. 26 Jemella Australia has made reference to evidence in each case of what is said to be other indicia which suggest that the articles concerned are infringing and have been imported for commercial purposes. It is not necessary, in my opinion, to refer to that evidence, because it seems to be plain enough from the evidence of identification and volume that they are intended for commerce in this country. 27 The balance of convenience, in my opinion, does favour the retention of the goods by the Customs pending the hearing and determination of the substantive infringement proceedings. It also favours the granting of the interlocutory relief which is sought against each of the Respondents, Bowman and MacKinnon. 28 Thus, while there is no occasion for the exercise of the power conferred by s 137(5) of the Act , there is occasion, nonetheless, for the exercise of more generally conferred power to keep the goods in the Customs zone and I do propose to make an order directed to the Chief Executive Officer of Customs to achieve that end. I particularly also have regard to the time, albeit outside the particular statutory time limit, within which Jemella Australia has moved in its endeavour to secure the rights which it enjoys. I do not, on the evidence, regard Jemella Australia as having rested on its rights. It seems to me that quite understandable human error as to when public holidays fall in this country has intruded on the adherence to the particular scheme found in s 137 of the Act. 29 I note that Jemella Australia, by its counsel, has given the usual undertaking as to damages in respect of both the orders sought as against Mr Bowman and Mr MacKinnon, as well as in respect of the orders sought in respect of the Chief Executive Officer of Customs. In the circumstances it is unnecessary to consider the alternative relief sought under O 25, r 2 of the Federal Court Rules . I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | trade marks customs application for injunction under s 126 trade marks act restraining use of trade mark where allegedly infringing goods seized by customs application for order restraining customs from releasing seized goods whether the extension of time given by customs under s 137(1) trade marks act was valid where failure to apply within limits specified in s 137(1) trade marks act renders extension of time invalid where circumstances warrant injunction restraining use of trade mark and retention of goods by customs intellectual property |
The trial is listed to commence on 10 September 2007. 3 The evidence before the Court, with the exception of the documents referred to in pars [14] to [16] below, is found in two affidavits sworn by Mr James Valos, the applicant's Australian solicitor, and in the exhibits to those affidavits. Any factual matters to which I refer in these reasons is derived from those affidavits save where otherwise indicated. 4 On 28 June 2006 in the Athens Court of First Instance, a United States of America Drug Enforcement Agency agent, Mr John Livanis, gave evidence that he had received information from Australian authorities in respect of a number of telephone conversations between the applicant and others alleged to be involved in the sale of drugs in Greece. Just before May 2005, information came to my department from people of our department, but also from the Australian authorities. The information was about a network that was trafficking various kinds of drugs, based in Greece, but was in Australia in various places in Western Europe but also in Latin America. Thus, from May 2005 until September 2005 my department commenced the first investigations to verify this information. During this time, from the investigations we performed, we arrived to three names, namely Dimitrios Samsonidis, Constantinos Skouras and Andreas Stathopoulos, who were said to be heads of the network. What we found was that these three had an extensive police record relating to drug trafficking and violence. We knew that Samsonidis was in Australia at the time and that Skouras and Stathopoulos were in Greece. Moreover, we had been informed by the Australian authorities that, from 1988 until that moment, Samsonidis was in a criminal organisation network for trade of heroin in large quantities and methamphetamines, and for money laundering derived from drug trade and for importing drug precursors for the production of methamphetamines. Samsonidis was happy on the phone after he heard this and that he asked Skouras if the Americans were OKAY and that they were not playing games against them, Skouras replied that the agreement for the transaction was good and Samsonidis replies that 'this is good news' and Skouras replied that 'I saw the one thousand eggs' and then Samsonidis told Skouras that he is organising to come to Greece. Next Skouras asked him if everything was ok and Samsonidis replied yes and that he had spoken to his people. Samsonidis asked if the Americans have a good reputation and Skouras told him 'we can take it and bury it for a year' and then that 'they (the Americans) want the others and that after that they disappear and that it hasn't cost us anything', Samsonidis finally said that he organised [illegible] at his offices in Australia. The Australian authorities informed us that they had heard the latter among the abovementioned and that they were a summary of everything that had been said between them. Although some material had been forwarded by the AFP to them, there was other material which they anticipated was yet to be received. 8 The letter, which was on the letterhead of the AFP, was dated 21 May 2007. It is not clear from the letter to whom it was addressed. The subject of the letter was "STATUS OF MUTUAL ASSISTANCE REQUEST". The package contains volunteered information and witness statements that did not require the approval of the Minister. Ministerial approval is not required in relation to this material. The request was made on behalf of your office in Athens. Material sought by the Greek authorities under this category includes telephone records, audio recording and transcripts, bank records, witness statements and documents authorising the interception and recording of telephone conversations. This material can be provided to the Greek authorities under section 13A of the Mutual Assistance in Criminal Matters Act 1987. Under the Act, Ministerial approval is required before the material can be released by the AFP. Urgent Ministerial approval is currently being sought for the release of this information. This material can be provided to the Greek authorities without Ministerial approval. They will stand trial on 23 May 2007 before the 6 th Athens Three-Member Appeals Court for felonies (Criminal High Court of Justice). Consequently, the forwarding of this material to Greek Authorities is extremely urgent . The subject was the same as on the letter of 17 May 2007 and the text of the letter was in identical terms to the earlier letter save that it added that on a day in May 2007 which was not identified, "... the Ministerial approval [sic] the release of this information to the Greek Authorities". The transcript recorded the evidence of Mr Mark Anthony John Creighton, a federal agent of the AFP. (e) A letter from the Attorney-General's Department to the Greek Ministry of Justice dated 13 June 2007. The subject was "Request for mutual assistance in the matter of Samsonidis and Skouras". In addition to the TI material, in May 2007 the AFP provided Greek authorities with other relevant material it obtained during its investigations in Australia. This material should only be used for the purposes for which it was sought and which was set out in the mutual assistance request. Please contact me if you want to use the material for a purpose other than that for which it was obtained. Thank you for your continuing assistance in mutual assistance matters with Australia. The subject and the first three paragraphs of the letter were in identical terms to the earlier letters of 17 and 23 May 2007 from the AFP to the Greek Ministry of Justice. They will stand trial on 16 July 2007 before the 6 th Athens Three-Member Appeals Court for felonies (Criminal High Court of Justice). Consequently, the forwarding of this material to Greek Authorities is extremely urgent . In substance, the advice received was that the Three-Member Criminal Appeals Court of Athens might use evidence which had been unlawfully obtained against the applicant, but that the court also had a discretion to reject it. The advice from the Greek lawyers was that it would be "particularly useful" for the Federal Court of Australia to declare that the provision of the material by the Australian authorities to the Greek authorities was unlawful and improper. 12 Mr Valos also asked the applicant's lawyers in Greece to ascertain what material had been placed on the Athens Court file and he was told that the only material currently on the file was the material previously forwarded to him on 26 July 2007. 14 On 2 October 2006, Greece made a request to Australia for mutual assistance under the Mutual Assistance in Criminal Matters Act 1987 (Cth) ("the Mutual Assistance Act"). That request was marked "EXTREMELY URGENT --- SECRET". It came from the Greek Ministry of Justice and was addressed to the Attorney-General's Department. The subject of the request was for judicial assistance of the Public Prosecutor, Court of Appeals, Athens in relation to a case involving the applicant. Greece provided further clarification of the request under cover of a letter dated 8 December 2006. These requests were tendered in evidence by the Commissioner, AFP and the Attorney-General. 15 On 21 May 2007 the Minister for Justice and Customs signed two authorisations pursuant to the provisions of the Mutual Assistance Act. These authorisations were tendered in evidence as confidential exhibits by the Commissioner, AFP and the Attorney-General. One authorisation was to produce documents or other articles under subs 13A(1) of the Mutual Assistance Act. The authorisation is confidential and its terms are set out in the first part of a confidential schedule to the reasons which is only to be made available to solicitors and counsel for the parties. 16 The other authorisation was to provide material lawfully obtained to a foreign country under subs 13(1) of the Mutual Assistance Act. That authorisation is confidential and its terms are set out in the second part of the confidential schedule to the reasons. 17 The applicant initially sought relief against the Commonwealth Director of Public Prosecutions but did not pursue that relief in the course of the hearing. The applicant consented to the application against the Commonwealth Director of Public Prosecutions being dismissed. 18 In his amended application the applicant sought writs of mandamus and writs of certiorari and declaratory and injunctive relief in relation to the decisions and conduct of the respondents in providing material to Greek authorities and in relation to the lawfulness of the provision of the materials arising under the provisions of the Mutual Assistance Act and the Telecommunications (Interception and Access) Act 1979 (Cth) ("the TIA Act "). 19 The applicant summarised his claim under six complaints. The information given to Mr Livanis by the AFP was provided unlawfully and was prohibited by the TIA Act . The information provided to Mr Livanis has been used in evidence in proceedings in Athens against the applicant following upon a request from Greece to provide information under the provisions of the Mutual Assistance Act. The AFP provided material to Greece on or about 17 May 2007 ("the May material") without the approval of the Attorney-General as required by s 13A of the Mutual Assistance Act so that the provision of the May material was unlawful. On or before 31 May 2007, the Attorney-General authorised the taking of evidence and production of documents under s 13 of the Mutual Assistance Act in furtherance of the request from Greece. The Attorney-General gave no notice of the proposed decision to the applicant who claims he was entitled to receive notice of the proposed decision. The Attorney-General made application to the Magistrate for orders under s 13 of the Mutual Assistance Act. The applicant was not given any notice of that application and the Magistrate gave no consideration to giving notice of the application to the applicant. The applicant contended that this process was a formalisation by the Attorney-General of the provision of the information given to Mr Livanis. On or about 31 May 2007, the Magistrate took evidence on oath and required the production of documents or other articles under s 13 of the Mutual Assistance Act ("the June material"). In June 2007 the Attorney-General provided the June material to Greece. The applicant contended that the provision of the June material was unlawful because he was not given notice of the hearing and was not given the opportunity to be heard at it. He also contended that the provisions of the Mutual Assistance Act were not complied with because the use of the s 13 procedure was not authorised by the Act. He contended that the provision of material obtained under the TIA Act was prohibited by that Act. In substance, he contended that there was no authorisation for the material to be provided to Greece. On or about 19 June 2007, an AFP agent, Mr Creighton, provided to Greece a statement containing warrant interception and information obtained by the AFP under the TIA Act and the applicant contended that the provision of this material contravened s 63 of that Act. The TIA Act was the subject of recent consideration by a Full Court of the Federal Court in Commissioner, Australian Federal Police v Samsonidis [2007] FCAFC 54. That proceeding involved an earlier application by the applicant in which he sought from the AFP the material supplied to Mr Livanis and the telephone intercepts which formed the basis of Mr Livanis' evidence in Greece. Ultimately the applicant gained access to that material from the court file in Greece. Chapter 2 of the TIA Act deals with the matter of the interception of telecommunications. It commences with s 7(1) , which contains a sweeping prohibition. The balance of the chapter is largely concerned with the exceptions to that prohibition. Relevantly to the present matter, there is a pattern in the chapter of providing for an exception, and then limiting the extent to which information obtained as a result of the application of the exception may be used, communicated etc. Thus it may be seen that the area marked out by each exception is tightly defined and guarded. Each seepage of information beyond any such area should rightly be regarded as a failure to achieve the object to which the preamble refers, and which is given practical expression in s 7(1) and the "special circumstances" to which subsequent provisions of Chapter 2 relate. It is those terms which should, save in a very clear case, be treated as embodying legislative purpose. Relevantly to the present matter, I can think of no reason why the purpose of the legislation should be seen as anything other than preventing the communication, use etc of lawfully intercepted information save in the specific circumstances for which the TIA Act itself provides. Section 63 operates subject to Part 2 - 6 , in which words I discern a purpose that only the provisions of that part should qualify the otherwise absolute prohibitions set out in the section itself. What was in issue was the lawfulness of the further communication of the intercepted telephone conversations after they were intercepted and recorded. Section 7(1) provides that "Subject to this section, this Act applies to all foreign countries". The Requested State, if so requested, shall keep the application for assistance, the contents of a request and its supporting documents, and the fact of granting of such assistance, confidential. If the request cannot be executed without breaching confidentiality, the Requested State shall so inform the Requesting State which shall then determine whether the request should nevertheless be executed. The Requesting State, if so requested, shall keep confidential information and evidence provided by the Requested State, except to the extent that the evidence and information is needed for the investigation and proceeding described in the request. The Requesting State shall not use information or evidence obtained, nor anything derived from either, for purposes other than those stated in the request without the prior consent of the Requested State. Further, there is no evidence as to the identity of the person who supplied that information to him. As Mr Ginnane, Senior Counsel for the Commissioner and the Attorney-General submitted, the transcript of Mr Livanis' evidence to the Athens Court does not prove the truth of the statements made by him in relation to the intercepted telephone conversations and there is no evidence that the AFP provided the information to Mr Livanis for the purpose of the proceeding in Athens. 33 The applicant submitted that it was clear that Mr Livanis had transcripts or access to transcripts of the intercepted telephone conversations. That may be true, but I do not consider that there is sufficient evidence from which I can infer that the purpose for which the transcripts were provided to Mr Livanis was unlawful. The evidence of Mr Livanis does not establish or prove the source of his information nor the purpose for which the AFP, if indeed it was the AFP, made contact with him. Indeed, if any inference is to be drawn from Mr Livanis' evidence, it is that the AFP communicated the transcripts or contents of the intercepted telephone communications for a "permitted purpose" and for no other purpose within s 67(1) of the TIA Act , namely for a purpose connected with an investigation by the AFP of "serious offences" as defined in the TIA Act . Assuming for present purposes (although it is not established on the evidence) that the AFP communicated the intercepted telephone conversations to Mr Livanis, I consider that such communication was for a purpose "connected with" its investigation of the applicant in relation to the alleged offences to which I have referred in par [35] above. The communication to Mr Livanis, in order for it to be lawful, did not have to be for the purpose of the Australian investigation but rather a purpose "connected with" that investigation. I am satisfied that, on the assumption that the AFP communicated the intercepted telephone conversations to Mr Livanis, it did so for the purpose of assisting Greek authorities who had charged the applicant with the commission of offences either the same as, or similar to, the alleged offences under Australian law which the AFP was investigating. 37 Mr Judd, Senior Counsel for the applicant submitted that the evidence established that the communication to Mr Livanis was for a foreign purpose, namely to assist in the Greek prosecution. But that submission does not mean that it was not for a purpose "connected with" the AFP's investigation of offences alleged to have been committed under Australian law by the applicant. Nor does it give sufficient content to the words "connected with" in the definition of "permitted purpose". Mr Judd invited me to infer that the purpose of the communication was for a foreign purpose and therefore an improper purpose. He submitted that the AFP had to establish that the communication was for a proper purpose and that there was a shift in the evidentiary burden having regard to the information available to the AFP and what the evidence disclosed. 38 I do not accept the submission that if the purpose of the communication was for a foreign purpose it was an improper purpose. Further, it was for the applicant to establish or prove that the purpose for the communication was improper and unlawful. On the material before me it is open to me to infer that the communication to Mr Livanis was for a purpose connected with the Australian investigation and I am satisfied that this is the inference I should draw. 39 The relevant inquiry to make in relation to whether the communication of lawfully intercepted information has been for a permitted purpose is not to ask only about the purpose which was achieved by the communication but also to ask, whether the purpose of that communication was "connected with" an investigation by the AFP of a prescribed offence. Senior Counsel for the applicant submitted that the words "connected with" did not mean just "related to" but rather referred to something that was likely to advance the investigation of the Australian authorities. He submitted that the connection must have a purpose in advancing the Australian investigation and that what the AFP did was no more than assist the Greek authorities with a prosecution and that it would torture the word "connection" to link the assistance given to the Greek authorities with the Australian investigation. 40 I do not accept this submission. I am satisfied that for some time prior to the time Mr Livanis gave his evidence to the Athens Court on 28 June 2006, the AFP was conducting an investigation into alleged breaches of Australian law by the applicant. I am prepared to infer that details of the intercepted telephone conversations, which were "lawfully intercepted information" for the purposes of s 67 of the TIA Act , were communicated to Mr Livanis, a member of the American Drug Enforcement Agency, in connection with the investigation by the AFP of alleged offences against Australian law. I consider that the phrase "connected with" has a similar connotation to the phrase "related to" or "in relation to" and does not include a component of advancing, helping or aiding the progression of the investigation in Australia by the AFP. 41 I consider that this construction of the phrase "connected with" in the definition of "permitted purpose" is consistent with other cases which have considered this phrase. In my opinion, the power to make an order for the payment of money is at best no more than a power to make such an order as can reasonably be thought to have a real connexion with the making, variation or avoidance of the contract or arrangement which has been varied or avoided. The term "agriculture" was defined as including certain operations "connected with" certain other operations. As Sheppard and Burchett JJ observed in Australian National Railways Commission v Collector of Customs (SA) at 378, the meaning of the word 'connection' is wide and imprecise, one of its common meanings being 'relation between things one of which is bound up with, or involved in, another': Shorter Oxford English Dictionary . This requires, to use the language in Pozzolanic , at FCR 289, a 'value judgment about the range of the Act'. It will be a question of fact as to what is the close or real connection but I do not consider that it must be established that the connection must have a purpose of advancing, helping or aiding the Australian investigation. It is a sufficient connection that the purpose of the communication was to assist the Greek authorities in relation to the prosecution of the applicant in Greece, in relation to the same or similar offences which the AFP was investigating in Australia. 46 As I have noted earlier, there is no evidence which enables me to determine the circumstances under which the contents of the intercepted telephone conversations were communicated to Mr Livanis. Accepting for the purpose of the analysis what Mr Livanis said to the Athens Court, it is apparent that by May 2005 the American Drug Enforcement administration and the AFP were investigating a network that was trafficking various kinds of drugs in a number of countries, including Greece and Australia. It is apparent from Mr Livanis' evidence that the American Drug Enforcement administration and the AFP were exchanging information about this network. I am prepared to infer from Mr Livanis' evidence that if indeed it was the AFP that communicated to him the details of the intercepted telephone conversations that such communication had a close and real connection with the AFP's investigations in Australia in relation to contraventions of Australian law by the applicant and others. 47 It follows that I am not satisfied that the applicant has made out the proposition that the AFP communicated details of the intercepted telephone conversations for a purpose which was not a permitted purpose within the meaning of s 67 of the TIA Act or that such communication as the AFP made was unlawful. When those authorisations were tendered by Senior Counsel for the AFP and the Attorney-General in the course of the hearing, Senior Counsel for the applicant accepted, quite properly, that the authorisation under s 13A(1) of the Mutual Assistance Act was a sufficient authorisation enabling the provision of what was called the May material to the Greek Ministry of Justice. It follows, that the provision of the May material was lawful and the applicant is not entitled to any relief in respect of the communication or provision of the May material. There was also enclosed the authorisation signed by the Minister for Justice and Customs pursuant to s 13 of the Mutual Assistance Act referred to in par [15] above). 50 It was not open to the Minister to authorise the provision of that material pursuant to s 13A of the Mutual Assistance Act, as material obtained under the TIA Act was expressly excluded from the definition of the material which could be provided under that section. Accordingly, in order for the material to be provided the Minister had to have recourse to s 13 of the Mutual Assistance Act. As noted earlier in par [10(f)] above, Mr Creighton's witness statement was sent by the AFP to the Greek Ministry of Justice on 19 June 2007. The applicant relied, in particular, on subs (4) of s 13 (par [29] above). He also submitted that in exercising her discretion under subs (3) of s 13 (par [29] above) whether to take the evidence of a witness in the presence or absence of the applicant, the Magistrate should have given the applicant a hearing in relation to the exercise of that discretion. The applicant relied on Johns v Australian Securities Commission [1993] HCA 56 ; (1993) 178 CLR 408 in support of his submission. relating to matters requiring the non-disclosure of information by the A.S.C. He contended that the statutory scheme in the Mutual Assistance Act did not interfere with his right to be heard. In Johns v Australian Securities Commission (supra), it was held that the delegate of the Australian Securities Commission should have given Mr Johns an opportunity to be heard before she decided to allow the transcripts of Mr Johns' evidence before the Australian Securities Commission to be made available to the Royal Commission. It was clear in that case that the decision to allow the use of the transcripts of Mr Johns' evidence in public hearings were prejudicial to his interests. 54 However, I consider that the statutory scheme under the Mutual Assistance Act is significantly different from the facts and circumstances which underpin the decision in Johns v Australian Securities Commission (supra). As noted earlier in par [28] above, the Mutual Assistance Act applies to Greece with whom Australia has entered into a Mutual Assistance Treaty. Accordingly, the Mutual Assistance Act applies subject to the limitations, conditions, exceptions or qualifications that are necessary to give effect to that Treaty. Article 9 of the Treaty (par [28] above) required the relevant Australian officers to keep the request from Greece confidential. Further, the relevant Australian officers were required by Article 9 to keep confidential the evidence provided by Australia. It is apparent from the request for assistance from Greece that it required confidentiality to be applied to its request and to the evidence provided. 55 Such confidentiality could not have been maintained if the Magistrate or the Attorney-General were obliged to inform the applicant of the request or invite his participation in the Mutual Assistance Act s 13 proceeding. In exercising the discretion committed to her in s 13(3) of the Mutual Assistance Act, the Magistrate was obliged to take into account the application of s 7(3) of the Mutual Assistance Act and the confidentiality sought by Greece. Section 13(4) does not take the matter any further as the discretion to allow a person in the position of the applicant to have legal representation at the proceeding was dependent upon the Magistrate deciding whether or not to take evidence in the presence or absence of the applicant. 56 Further, I consider that the nature of the procedure under s 13 of the Mutual Assistance Act to be different in nature from the process considered by the High Court in Johns v Australian Securities Commission (supra). Under that procedure the Magistrate had no discretion in relation to the acceptance or rejection of the evidence. 57 It follows that I do not accept the submission that the applicant was entitled to be given notice of the application to the Magistrate or that he was entitled to be heard in relation to it. 58 I turn to the applicant's submission that the s 13 Mutual Assistance Act procedure undertaken was not lawful or in accordance with the provisions of the Mutual Assistance Act. It is important to note that a proceeding under s 13 of the Mutual Assistance Act in relation to a criminal matter that concerns an offence against the laws of a foreign country that made the request resulting in a proceeding that is punishable by imprisonment for life or for a period or maximum period of at least three years is an "exempt proceeding": s 5B(1)(h) of the TIA Act . Section 74(1) of the TIA Act provides that a person may give lawfully intercepted information (other than foreign intelligence information) "in evidence" in an exempt proceeding. 59 The applicant submitted that s 74(1) related to evidence given in the course of the proceeding but not to evidence which was the object of the proceeding in the sense that it was the evidence to be transmitted to a foreign country. The applicant submitted that under s 13 lawfully intercepted material might be disclosed only for the purpose of conducting the proceeding. The applicant submitted that if s 74(1) was construed otherwise it would undermine the whole structure of the TIA Act which was directed to prohibiting the communication of lawfully intercepted information other than through a narrow band of exceptions. 60 I do not consider that s 74(1) should be so construed. Section 13 of the Mutual Assistance Act enables the Attorney-General to authorise "the taking of the evidence" requested by the foreign country. The reference in s 74 giving lawfully intercepted information "in evidence" in an exempt proceeding includes, in my view, the evidence to be taken referred to in s 13(1) of the Mutual Assistance Act. 61 I do not consider that s 74(1) is ambiguous or unclear in this respect. However, if there be any doubt, the construction which I have placed on s 74(1) is confirmed by the Second Reading Speech for the Law and Justice Legislation Amendment Act 1989 (Cth) which inserted paragraph (h) in s 5B(1) of the TIA Act . Under that provision, the Attorney-General may authorise the taking of evidence or production of documents before a magistrate in Australia for the purposes of a proceeding relating to a criminal matter in a foreign country. Such proceedings are not ones in which information lawfully obtained by interception may currently be given in evidence. The amendment will allow Australia to give an assurance of reciprocity to other countries from which Australia may wish to seek intercepted information relating to prosecutions for Australian offences. He submitted that the s 13 procedure was designed to enable compulsory process to be used to obtain material not in the possession of the Commonwealth. He further submitted that it would make a farce of the legislative scheme if the Commonwealth could authorise a magistrate to take evidence and compel the production of material from the Commonwealth only then to certify its obtaining and to give it back to the Commonwealth. However, there is no limitation in s 13 which precludes the procedure which was followed in this case. Further, if the applicant be correct, then it is not easy to see what operation there is for ss 74 and 5B (1)(h) of the TIA Act . 63 I turn to the provision of Mr Creighton's statement to Greece on 19 June 2007. The applicant submitted that the provision of this material contravened s 63 of the TIA Act . Mr Creighton's statement falls within the window of communication provided by s 67(1) of the TIA Act . The permitted purpose relating to Mr Creighton's statement is found in subpar (a)(i) in the definition of "permitted purpose" in s 5 of the TIA Act as it was communicated to the Greek Ministry of Justice in connection with the investigation by the AFP of prescribed offences under Australian law. 64 It is apparent from Mr Livanis' evidence and from the letters from the AFP to the Greek Ministry of Justice that the AFP had been conducting an investigation into the applicant and Mr Skouras in relation to a number of alleged offences including money laundering and drug-related offences since 2005, which investigation was continuing. That investigation was being carried out under two operational names. Mr Creighton gave his evidence to the Magistrate on 31 May 2007 which included a reference to the investigation carried out under those operational names. The proceeding in the Athens Court related to offences of drug trafficking, money laundering and unlawful possession of firearms. 65 I consider that Mr Creighton and the AFP were entitled, and empowered, to communicate the contents of his statement made on 19 June 2007 (which related to the investigation carried out by the AFP under one of the operational names) to the Greek Ministry of Justice, insofar as that statement contained lawfully intercepted information, pursuant to s 67(1) of the TIA Act . That information was communicated for a "permitted purpose", namely a purpose "connected with" the AFP's investigation of prescribed offences alleged to have been committed by the applicant and others against Australian law. The purpose of the communication of the lawfully intercepted information contained in Mr Creighton's statement was to assist the Greek authorities in relation to offences with which the applicant had been charged in Greece which were similar to the offences alleged against the applicant in relation to contraventions of Australian law. The purpose of communicating Mr Creighton's statement had a direct relationship with the Australian investigation of the applicant because the proceeding in Greece related to the same type of offences which the AFP were investigating in Australia. 66 The applicant's amended application will be dismissed with costs. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | lawfulness of provision of information by australian federal police to greece under s 13(1) and s 13a(1) of mutual assistance in criminal matters act 1987 (cth) exercise of discretion by magistrate under s 13(3) of mutual assistance in criminal matters act 1987 (cth) provision of warrant interception information by australian federal police to greece whether provision of information for a permitted purpose whether proceeding before magistrate an exempt proceeding provision of information under telecommunications (interception and access) act 1979 (cth) natural justice no right to be heard under s 13 of mutual assistance in criminal matters act 1987 (cth). connected with administrative law words and phrases |
In consequence he made orders having the effect of admitting the evidence of Professors Garnaut and Walker at the trial of the action. The applicant (the Commissioner, who is the respondent in the action) now brings a motion in reliance on O 52 r 10(2) of the Federal Court Rules (FCR) seeking leave to appeal from the judgment of French J. 2 In its terms the motion admits of the application for leave to appeal being referred to the Full Court for hearing concurrently with the appeal which is sought. However, at the commencement of the hearing on the motion it was accepted by both parties that, following the insertion of O 52 r 2AA into the FCR effective from 9 August 2005 and as amended effectively from 1 August 2006, the usual course is that an application for leave to appeal pursuant to s 25(2) of the Federal Court of Australia Act 1976 (Cth) is to be determined by a single judge. The exceptions to that position are not applicable here. The hearing proceeded on the basis that in the event that I formed the view reasons existed warranting a recommendation to the Chief Justice that the application be heard by a Full Court, that course was open to me under FCR O 52 r 2AA in the resolution of this motion. In my opinion no such reasons exist. Therefore it falls to me to determine the issue of the grant of leave arising under the motion. 3 The Commissioner relies upon the affidavit of Ms Humphries sworn on 11 October 2006. Woodside relies on the affidavit of Ms Walker sworn on 16 October 2006. 4 The reasons of French J have been published and are available to all persons reading these reasons. I therefore do not propose to set out the content of those reasons other than is necessary for the purposes of these reasons. They should be read with these reasons as explicative of the legislative and factual background against which the present motion arises. 5 The legal issue at the core of the action before French J is whether hedging losses may be deducted by the respondent (Woodside) from its receipts as expenses incurred 'in relation to' the sale of petroleum within the meaning of s 24 of the Petroleum Resource Rent Tax Assessment Act 1987 (Cth) (the PRRTA Act). The action which arose before French J and which formed the subject of his reasons was an application by Woodside to have admitted into evidence the report of an expert economist (Professor Garnaut) and an expert accountant (Professor Walker) going to 'the proper treatment of hedging losses'. Following the decision to admit that evidence it would, if leave is not granted, be utilised at the hearing of the appeal from the disallowance of the claimed deductions as expenses, which is set down for December 2006. 6 It is common ground that the tests to be applied in determining whether leave to appeal from an interlocutory decision should be granted are broadly two-fold. First, the Court must be satisfied whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court. The second is whether substantial injustice would result if leave were refused, supposing the decision to be wrong. These tests, however, are not isolated from each other and they may bear upon each other and involve a fine balancing of considerations: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 ( Décor ) at 398-399 and the authorities there cited. They are not to be regarded as rigid rules that operate so as to destroy a court's discretion. In Décor the Full Court (Sheppard, Burchett and Heerey JJ) also recognised that Full Courts have granted leave on the footing that a matter of importance was raised which was appropriate to be determined by a Full Court and that there will continue to be cases raising 'special considerations'. As expressed by their Honours at 399-400 in Décor , the legislature has evinced a policy against the bringing of interlocutory appeals except where the Court, acting judicially, finds reason to grant leave. The Commissioner places particular reliance on these latter considerations in contentions in support of the motion. 7 The statutory context in which the issues in the action arise is set out in [14]-[17] of the reasons of French J. It may be summarised as follows. Liability to taxation is addressed in Pt V of the PRRTA Act. It provides that subject to the Act, tax imposed in respect of the taxable profit of a person of a year of tax in relation to a petroleum project is payable by the person. Taxable profit is defined (relevantly) so as to exist, where, in relation to a petroleum project and a year of tax, the assessable receipts derived by a person exceed the sum of '(a) the deductible expenditure incurred by the person; ...'. The term 'assessable receipts' is defined by s 23 as a reference to the total receipts in five different categories, one of which is 'assessable petroleum receipts'. Section 38 defines 'general project expenditure' and includes non-excluded production licences or fees liable to be paid 'in relation to' the carrying on or providing of any operations, facilities or other things referred to in the section. Rather, it is said that he was required to rule on two critical issues described as follows. The first issue is the assessing provisions of the PRRTA Act. It is submitted that his Honour has decided in effect that the provisions of that Act could not solely be construed by reference to the ordinary meaning of the words used and by the relevant legitimate extrinsic material. By 'legitimate extrinsic material' the Commissioner means material falling within the provisions of s 15AB(1) and (2) of the Acts Interpretation Act 1901 (Cth) ( Acts Interpretation Act ). It is contended that the affidavits of Professors Garnaut and Walker are not in that category and that when his Honour is determining the meaning of the statutory words he could be influenced and perhaps determine the issue by reference to the opinions of experts. 10 The second issue is said to concern broader issues of statutory construction. The contention is that his Honour decided, contrary to established authorities, that the opinion of a third party is admissible as an aid to the construction of the ordinary meaning of the words used in an Act of Parliament. Further, it is said that his Honour has decided, again contrary to authority, that the meaning of words used in an Act of Parliament could be ascertained by reference to speeches and other material never put before Parliament. 11 With reference to the first issue, the Commissioner says that it is common ground the PRRTA Act in taxing 'taxable profit' in relation to 'a petroleum project' is, in the relevant statutory provisions as outlined above, employing ordinary words to define a taxpayers measure of liability. That is, the sections do not use or in any way depend upon economic or accounting terms. It is on that basis that the Commissioner has administered and applied the PRRTA Act. 12 The Commissioner contends that so far as French J had regard to the extrinsic material constituted by the affidavits of Professors Garnaut and Walker, it was regard to extrinsic material which was not legitimate extrinsic material and hence is squarely contrary to the decision of the Full Court of this Court in Commissioner of Taxation v Murray (1990) 21 FCR 436 ( Murray's case). The issue raised in that appeal was whether certain articles (described as bowls, platters and near-spherical shapes) were 'works of art produced in Australia' and therefore within the exemption from sales tax prescribed by Item 68(2) in Div X of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935 (Cth). Sheppard and Neaves JJ agreed with the orders proposed by Hill J, whose reasons are relied upon by the Commissioner in support of the present motion in the following respect. At 447-449, Hill J referred to a submission from the Commissioner before the Full Court seeking to tender (presumably under s 15AB of the Acts Interpretation Act ) material said to have come from the files of the Commissioner and said to relate to the Bill which became the Financial Relief Act 1933 (Cth) which introduced Item 68(2). He said that it was obvious that the classes of extrinsic material enumerated under s 15AB(2) of the Acts Interpretation Act did not comprehend the classes of material sought to be made available to the Full Court in Murray's case. He added 'it is also clear that what is enumerated in subs (2) does not limit the classes of material to which regard may be had under subs (1)'. He pointed out that the limiting factor in determining the material to which regard may be had under subs (1) is that it may be 'capable of assisting in the ascertainment of the meaning of the provision'. He said that the use to which material of that kind may be put is limited to the two purposes specified in pars (a) and (b). Paragraph (a) refers to the meaning of the provision as the ordinary meaning conveyed by the text taking into account its context and the purpose or object underlying the Act. Paragraph (b) refers to determining the meaning of the provision when that is ambiguous or obscure or the ordinary meaning leads to a result that is manifestly absurd or is unreasonable. As Hill J stated at 449, the ascertainment of the legislative intention is to be derived by reference to the words used in their context and by construing the statute as a whole aided by extrinsic material such as s 15AB makes evident. He did not consider that the material for which admission was sought in Murray's case would aid the ascertainment of the legislative intention. 13 Likewise here, the Commissioner submits that the expert opinions of Professors Garnaut and Walker cannot explain the ordinary meaning of the words used in the PRRTA Act. It is said the only sound approach to such construction are the words that the Act uses. Reliance is placed on what was said by McHugh J in Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58 ; (2005) 221 ALR 448 ( Stevens case) at 476, at [126]. There his Honour said that to attempt to construe the meaning of particular provisions of legislation representing a compromise of interests not solely by reference to its text but by reference to some purported purpose of the legislation invites error. At [124] his Honour accepted that 'context' includes the state of the law when the statute was enacted, its known or supposed defects at that time and the history of the relevant branch of the law, including the legislative history of the statute itself. He said that: 'It also includes in appropriate cases 'extrinsic materials' such as reports of statutory bodies or commissions and Parliamentary speeches - indeed any material that may throw light on the meaning that the enacting legislature intended to give to the provision'. 14 In support of the second issue (the broader issues of statutory construction), the Commissioner submits that in not applying Murray's case and Stevens case, French J has adopted an approach to statutory construction which is fundamentally different from that established by authority. It is said this is because his Honour has used material not before Parliament and has admitted into evidence the opinions of third parties concerning the meaning of words used in the material to construe words that are not employed in the PRRTA Act where the words that are used in that Act (about which neither witness gives any evidence) were intended to be given their ordinary meaning. 15 The Commissioner accepts that the position might have been different if Parliament had employed technical terms, the meaning of which could be better understood through expert evidence. Here it is said that the cases relied upon by his Honour Visa International Service Association v Reserve Bank [2003] FCA 977 ; (2003) 131 FCR 300 ( Visa case) and Re Michael; Ex parte Epic Energy (WA) Nominees Pty Limited (2002) 25 WAR 511 ( Re Michael ) are examples of this approach. It is accepted that in his reasons his Honour appeared to recognise this distinction at [52]. 16 Therefore the Commissioner contends that the decision of French J should be seen as 'plainly wrong'. That, of course, is setting the standard too high for the purpose of the test previously referred to which makes it sufficient for the applicant to establish that the decision 'is attended with sufficient doubt' to warrant its reconsideration. 17 Turning to the second test, whether substantial injustice would result if the decision, assumed to be wrong, was allowed to stand. The Commissioner submits his office brings to him a statutory responsibility for the administration of the PRRTA Act as well as other Acts such as the Income Tax Assessment Act 1936 (Cth) and the A New Tax System (Goods and Services Tax) Act 1999 (Cth). Therefore, he says he is placed in a special position. He has hitherto approached the administration of these Acts on the basis of relying on the words of the enactments. He contends that if French J's decision is allowed to stand, he will need to reconsider his approach to the PRRTA Act and the other legislation which he administers and would have to do so immediately. This is because he is presently in the process of assessing, auditing and disputing matters under the PRRTA Act. Even if French J's decision was subsequently overturned on appeal, it would stand until then as an authority affecting his administration of the enactments for which he is responsible. This is because it admits of the non-limitation of extrinsic materials to matters falling outside s 15AB of the Acts Interpretation Act . 18 In support of this, the Commissioner relies on what was said by Burchett J in Registrar of Trade Marks v Woolworths Limited (1998) 45 IPR 445 at 446 ( Woolworths ). Burchett J was considering an application brought by the Registrar of Trade Marks for leave to appeal against a decision of a judge from a decision of a delegate to reject an application by Woolworths Limited to register a certain trade mark. Burchett J pointed to the fact that the Registrar has a statutory responsibility in relation to the implementation of the Act with respect to the register. His Honour said that supposing the decision to be wrong, the fact that it would require the performance of the Registrar's duties inappropriately and so as to affect adversely the rights of registered proprietors of marks, rights which the Registrar should protect, was a sufficient basis to allow a reasonably arguable appeal to proceed. 19 It is in respect of these circumstances that the Commissioner places particular reliance on what was said in Décor at [399] as to the existence of cases raising 'special considerations' such as to move the Court's discretion to grant leave. My reasons for reaching those conclusions are as follows. That is, I am not satisfied that he admitted the evidence for the purposes which the Commissioner considers to be unacceptable. 22 True it is that in summarising the effect of his decision in [3], his Honour said 'I am satisfied that the evidence is admissible as arguably informing the application of certain general terms in the Act by reference to its purpose and accounting and commercial practice'. That statement, summative in nature, must be read in the context of the balance of the reasons. 23 In [36] of his reasons, his Honour stated that Woodside sought the admission of the affidavits because it wished to show, by reference to these extrinsic materials, that the policy underlying the PRRTA Act involves an intention to replace excises and royalties levied on volume or value of production with a regime that would seek to capture a greater share of economic rent than would have accrued under pre-existing arrangements while being more economically efficient by not deterring the development of marginal fields. It wishes to argue that the words 'in relation to' and 'in carrying on or providing the operation facilities and other things comprising the project' should be construed having regard to the policy and objects of the legislation. It was submitted to his Honour by Woodside that the term 'in relation to' requires a consideration of economic and commercial factors as well as physical and temporal factors. 24 His Honour's reasons at [43] record that it was specifically submitted by Woodside that Professor Garnaut's evidence was relevant to understanding the mischief which the PRRTA Act was intended to remedy. It was said to his Honour that Professor Garnaut's evidence demonstrated the economic and commercial reality of treating the hedge expenses as being 'in relation to' the sale of petroleum or in carrying on the relevant operations. At [44] he stated that the accounting treatment which Woodside adopted and Professor Walker's evidence was said to provide useful assistance in confirming the existence of the necessary connection between the sale of petroleum and the payment of hedge expenses, although of course the accounting treatment would not be determinative of the issue. These latter references seem to me to demonstrate the possible relevance of the evidence of Professors Garnaut and Walker to the application of the PRRTA Act after the scope of the words 'in relation to' have been determined in the context of that Act and with regard to its purpose. That is, they appear to me to demonstrate that the utility of the admission of the evidence goes beyond any issue of statutory construction and into the issues of applicability of the statute. The term 'economic rent' appears nowhere in the Act, nor does the term 'resources rent tax' save for the title to the Act. In particular, the Act does not contain any explicitly economic terms whose application to a particular case would be assisted by economic evidence. By explicitly economic terms, I mean words such as 'market' and 'competition' which appear in Pt IV of the Trade Practices Act 1974 (Cth). In proceedings under Pt IV of that Act the evidence of economists may be relied upon to aid in the identification of the relevant 'market' and judgments about the effects, historic or predictive, of particular conduct on competition in a market. The company relies upon various extrinsic materials antedating the passage of the Act as indicative of that purpose. Assuming that purpose is made out, then Professor Garnaut offers what amounts to the inference that the overall objective of the Act is to generate revenue 'without distorting business decisions on the amount or composition of investment or production'. This identified purpose is relied upon to assist the Court to decide in the first place, whether the contentious hedging losses were 'expenses payable by [Woodside Energy] in relation to the sale' of petroleum within the meaning of s 24(a) of the PRRTA Act. Assuming that the hedging losses are properly to be called 'expenses' the question reduces to whether they are expenses 'in relation to' the sale. Such evidence may not be material directly concerned with interpretation of provisions of the Act as is extrinsic material received pursuant to s 15AB of the Acts Interpretation Act . Nor can it justify any application of the Act beyond the bounds set by its language . But it may help to identify the purpose of the statute and thus inform the application of ambulatory terms in it such as 'in relation to' in s 24(a). That will require a closer consideration of the terms of the Act and the extrinsic materials relevant to its interpretation. It is better done in the context of all the evidence, including the extrinsic materials relied upon. I am not prepared to rule Professor Garnaut's evidence inadmissible. I take it as evidence rather than as submission in that it purports to demonstrate that the economic mechanism to which the PRRTA Act is said to give effect would treat hedging losses as expenses in the way for which Woodside Energy contends. If some of his evidence trespasses into argument, I will simply treat it as such. I do not regard him as offering evidence on the ultimate issue even if that were a difficulty. It may be that in the light of further evidence and argument his evidence will be shown to be based upon a false assumption. If that is so, then it may be that it will be rejected as irrelevant . I am not prepared to find, on the materials presently before me, that the assumption upon which he advances his evidence has been falsified. It seems to me to be at least arguably relevant and so will be admitted . That is not to say that such evidence can displace the words of the statute. Nor does it involve the expert witness in interpreting the statute . But where, as in this case, there are terms used of indefinite import such as 'in relation to', 'incurred ... in relation to' and 'made ... in carrying on ... operations', then such evidence may properly inform their application having regard to the purpose of the statute and the context in which the provision appears . His Honour has not in any final sense, save the admission of the affidavits, in any way determined for what purpose they will be utilised. They are evidence before him open to future argument. They are in a sense only 'provisionally' admitted. The quality of provisionality derives not from the admission but from the possible uses to which the evidence might be put after future argument and submission. Murray's case was a particular application in the circumstances of that case of s 15AB of the Acts Interpretation Act . What was said in Stevens case by McHugh J at [126] and [124] is an elucidation of the mode of interpreting legislation and expressive of the applicable rules. 34 In any event, I do not consider for the reasons given above that his Honour has taken any step which has yet involved him in the applicability of the affidavits of Professors Garnaut and Walker in any impermissible way. The relevant portion of his reasons appears in [53]. In addition, the potential relevance of some concepts and provisions in the Act and Code can be more readily understood. It would have to be the subject of detailed submission in relation to particular issues. It is clear, however, that his Honour by the admission of the evidence of Professors Garnaut and Walker sought to place the Court in the position where Woodside could argue particular instances where the evidence could be properly relied upon to inform the Court as to the nature of the context in which the PRRTA Act is to operate. It is equally clear that his Honour was cognisant on the limitations on the use of that evidence. It cannot be inferred therefore that he will on some future occasion use the evidence in an inappropriate way. As has been seen earlier, this was expressly recognised by Hill J in Murray's case at 449. There may, therefore, be argument before his Honour on the future use of the admitted affidavits as extrinsic material. His Honour has taken no step to accept any such argument, nor has it yet been appropriately and finally formulated before him. The admission of the affidavits is to be viewed only in the way in which his Honour said, namely, that they may prove to be false or of no assistance to him. The fact of their admission does not place the Commissioner, in my view, in any position of experiencing substantial injustice because no principle of law has yet been put in issue by the application of the affidavits in a prohibited manner. The time has not been reached where the rationale in Woolworths has a factual basis on which to be applicable. Nor do I consider that the Commissioner has established that substantial injustice would result if leave were refused supposing the decision of his Honour to be wrong. | application for leave to appeal admission of affidavits of economic and accounting experts whether admitted for purpose of statutory construction and contrary to applicable principles whether decision attended with sufficient doubt to warrant grant of leave whether substantial injustice would result from such admission procedure |
Mr Whitsed was a former director of the Dairy. The principal of Wholefoods, Scott Kinnear, on 23 November 2004 wrote a letter to Consumer Affairs Victoria asking it to investigate the truthfulness of the labelling of organic milk and cream produced under the Dairy's brand. He based this, in part, upon what he said were records of telephone conversations he had had with Mr Whitsed who had raised concerns about the source of the Dairy's 'organic milk' which was currently on the market. 2 The Dairy had ceased an association with Mr Whitsed who had supplied certified organic milk prior to this conversation. Apparently the Dairy had also ceased its arrangements with the National Association of Sustainable Agriculture of Australia (NASAA) which was a certifier of organic products. 3 Wholefoods seeks to have these proceedings transferred to the Supreme Court of Victoria pursuant to s 5(4) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth). Alternatively, it has sought to have the proceedings remitted to the Federal Magistrates Court in its Victoria District Registry pursuant to O 82.5 of the Federal Court Rules and s 48 of the Federal Court of Australia Act 1976 (Cth). As another alternative, Wholefoods has sought an order under s 48 of the Federal Court of Australia Act 1976 (Cth) that the proceedings be conducted in the Victorian Registry of the Court. The first was in respect of the broadcast of a story on the 'Country Hour' programme by the Australian Broadcasting Corporation on 1 August 2005. The Dairy joined the two reporters and Mr Kinnear, who gave an interview on the broadcast. The interview referred to Mr Kinnear as a director of another company, Biological Farmers Australia. He expressed concern during the interview that the Dairy was selling organic dairy products which he said were uncertified organic products and that his organization represented certified organic products across Australia. Apparently, one of the issues in the Supreme Court proceedings is that produce which is to be exported from Australia must be certified, as organic, by a recognized certification organization whereas produce sold domestically does not. Thus, it is possible, as I understand the allegations thus far, for genuinely organic produce to be sold domestically without ever having been certified as such. On the other hand, it is possible that produce can be claimed to be organic when produced and sold for domestic consumption, but there is no requirement for certification that it is in fact so. The subject matter of the interview that was broadcast canvassed this question. 5 The second group of defendants in the Supreme Court proceedings were the Herald & Weekly Times Pty Ltd and one of its journalists who published an article in the Weekly Times of about 24 August 2005 under a headline 'Dairy fears over organics'. That article did not name Mr Kinnear or Wholefoods, but did refer to the fact that an investigation by Consumer Affairs Victoria had been conducted into the Dairy. It noted that despite the company's title, its suppliers did not have to be certified as that organic producers. A number of persons was reported to have made comments to the effect that consumers could be misled because of the failure to have a regulatory regime in place for domestic sales of organic produce. 6 On 12 April 2006, Bongiorno J dismissed complaints by the various defendants in the Supreme Court proceedings that they had all been inappropriately joined in the one proceedings notwithstanding that there were two separate and quite distinct publications in respect of which there were distinct issues ( Snowy Mountains Organic Dairy Products Pty Ltd v Australian Broadcasting Corporation [2006] VSC 138). He held that any defendant could apply again at or before the trial for appropriate relief to separate the issues as to the two publications. Bongiorno J said that he was satisfied that taking all the relevant circumstances into account it was convenient not only to the parties, but from the Court's own perspective, to permit the matter to proceed in its present form. He concluded that at that stage of the preparation of the matter there was no undue risk of unfairness to any party by permitting the issues arising from two publications to remain joined and that it could lead to considerable savings of time and cost of doing so. 7 After Bongiorno J gave judgment, the defendants in the Supreme Court filed defences, each of which raised pleas of justification, although the issues that were to be justified were distinct as I shall explain. I raised during the course of argument that the last representation, as framed, was quite unclear in respect of what it claimed was misleading, deceptive or false and that it would be impossible for a judge trying the issue to know precisely what it was in the 'account of events alleged' which was in issue. Counsel for the Dairy has indicated that consideration will be given to an amendment to clarify the matters sought to be raised by that allegation. In doing that he noted that the word 'questionable' in the last of those imputations was not so ambiguous as to render the pleading embarrassing even though it could mean both 'open to question, arguable' or alternatively 'dishonest, dubious, shady' ([2006] VSC 138 at [37]-[38]). No doubt, the precise sense in which that expression will be used when the matter comes to trial will require a degree of clarification: see Singleton v Ffrench (1986) 5 NSWLR 425 at 435E-F per McHugh JA. However, for present purposes, it suffices that on the current state of the pleadings in the Supreme Court, the truth or falsity of the Dairy's claim to have organic milk is squarely in issue. The particulars of justification set out in his defence asserted much of what is in the letter of 23 November 2004 to Consumer Affairs Victoria and annexures which are the subject matter of these proceedings. The Australian Broadcasting Corporation and its journalists pleaded a defence of justification, but the particulars which they gave were that Mr Kinnear had sent the letter of 23 November 2004 to Consumer Affairs Victoria and it had commenced an investigation as a result. The Weekly Times and its journalists pleaded that the final imputation pleaded against them was true, in that, the Dairy was the subject of investigation following receipt by Consumer Affairs Victoria of the letter 23 November 2004. There were differences of a substantial kind between the two matters complained of in the Supreme Court proceedings and the three defences filed (those of Mr Kinnear, the ABC and its journalists and the Herald & Weekly Times and its journalists). 14 It is apparent that both of the matters complained of in the Supreme Court raised a connection with the original complaint to Consumer Affairs Victoria made by Wholefoods through Mr Kinnear, the subject of the proceedings in this Court. To those questions the Dairy simply responded 'Yes'. As I pointed out during the course of argument, in commercial litigation of this character and, as indeed in other litigation in today's society, that approach is unacceptable for the reasons given by Allsop J in White v Overland [2001] FCA 1333 at [4] which were applied by Heydon JA with the endorsement of Mason P and Young CJ in Eq in Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346 ; (2001) 53 NSWLR 116 at 128-129 [28] - [32] and by a Full Court of this Court in Maniotis v JH Lever & Co Pty Ltd [2006] FCAFC 7 at [72] per Finn, Emmett and Bennett JJ. Quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue is a practice that must be firmly discouraged. Where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, common sense will, as a general rule, mandate that a party ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. No one's interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false. The only consequence of keeping issues hidden or not clearly identifying them is to disrupt the business of the court leading to the waste of valuable public resources and to lead to the incurring of unnecessary costs by the parties, costs which ultimately have to be borne by someone: see White v Overland [2001] FCA 1333 at [4] . 17 Counsel for the Dairy recognized that particulars were required, and I made an order at the conclusion of the hearing that they be given within three weeks. In this respect it is submitted that the claim almost certainly would or should satisfy [VSC] Rule 9.02(2)(i). There also seem likely to be common witnesses, [Mr] Kinnear at least. It said that either way, the call upon the resources of the Court would be greater than the present combined action. It also said that the evidence of the Dairy's witnesses '... and witnesses such as [Mr] Kinnear, will inevitably take longer in the second of the two trials as there would be cross-examination about the evidence in the first trial'. 20 Wholefoods submitted on the present motion that there will be common issues of fact with those raised in the Victorian proceedings. In essence, Wholefoods argued that the Dairy's claim in this Court is a contrivance and is a further claim in defamation, dressed up as a trade practices claim. Wholefoods also relied upon the failure of the Dairy to give proper particulars of the way in which it put its loss. 21 At the hearing it was not known what the attitude of the other parties to the Supreme Court proceedings, other than Mr Kinnear, would be to the question as to, if the matter were cross vested to the Supreme Court, whether it could be heard together with or consolidated into the current Supreme Court proceedings. I directed that the parties make enquiries for the purposes of ascertaining that. Having regard to the fact that Bongiorno J appears, at this stage, to have considered that it was appropriate that the two separate claims for defamation proceed concurrently, and remain joined in the one action, it seemed to me that, given the materiality of Mr Kinnear as a witness and the centrality of his complaint to Consumer Affairs Victoria, which was written on Wholefoods' letterhead, it would be in the interests of the parties to these proceedings, and the Dairy and Mr Kinnear as parties to the Supreme Court proceedings, to have the issues raised here also considered together with the issues in the Supreme Court action. Most significantly I raised the risk of inconsistent findings as to the truth of the relevant imputations or representations, all of which arise out of, in substance, the question whether it was appropriate for the Dairy to represent its milk as organic. I raised with the parties that there was a clear risk of inconsistent findings of fact. That risk applied also to issues as to the credibility of Mr Kinnear and the Dairy's witnesses. 23 In late August 2006, the media defendants in the Supreme Court proceedings brought an application for third party discovery against the Director of Consumer Affairs Victoria. The Dairy supported this application. Its solicitor, Mr Ball, in an affidavit sworn on 6 September 2006, exhibited notices issued by the Director pursuant to s 106A of the Fair Trading Act 1999 (Vic) which had been served on the directors of the Dairy. These notices required them to substantiate a number of claims made in relation to the Dairy's products. Additionally, on 8 September 2006, the Dairy made submissions in support asserting that it was not an issue that the investigation by Consumer Affairs Victoria was initiated by the complaint made to it by Mr Kinnear. None of this was before me during the course of the hearing on 7 September 2006. 24 On 26 September 2006 the Dairy commenced further proceedings for defamation in the Supreme Court of Victoria against the Director of Consumer Affairs, Victoria. This claim was based on assertions that the Director had confirmed to each of the media defendants in the Victorian proceedings that he was investigating Mr Kinnear's letter. A solicitor for the Dairy, in an affidavit asserted that each of the media defendants in their particulars of reasonableness for the plea of qualified privilege was relying upon the fact of the investigation by Consumer Affairs Victoria. Mr Kinnear's attitude was that he neither consented nor objected. The Dairy argued that if the matter were cross-vested to the Supreme Court of Victoria the result would still be that the two sets of proceedings would continue separately. It suggested that any motion for joinder would be resisted by the five media parties. 27 However, on 5 October 2006 after being apprised of the transcript of the hearing before me and further matters, the solicitors for the Herald and Weekly Times now do not object to a common mediation on 17 November 2006 but they were not in a position to consent or oppose to any application for consolidation or joinder of these proceedings if they were cross vested. Mr Whitsed's solicitors said they were not aware of the mediation that had been proposed or of the other parties' attitude to his being involved. However, they noted that they saw no disadvantage to their client doing so were he invited. They said that they had now reviewed matters including a transcript of the hearing before me, and in principle now supported the application for cross-vesting. The principles of res judicata ( Jackson v Goldsmith [1950] HCA 22 ; (1950) 81 CLR 446), issue estoppel ( Blair v Curran [1939] HCA 23 ; (1939) 62 CLR 464), and what has come to be known as Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45 ; (1981) 147 CLR 589), all find their roots in that policy. ...Effect can be given to that policy by the application of well-established principles preventing vexation by separate suits ... . The only common party in each set of proceedings is the Dairy itself. 31 On the other hand, if all proceedings brought by the Dairy based on Mr Kinnear's letter of 23 November 2004 were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings. That is an indication that there is a single matter or controversy between the parties: Re Wakim; Ex parte McNally [1999] HCA 27 ; (1999) 198 CLR 511 at 586 [141] per Gummow and Hayne JJ. Here, at the present time, Bongiorno J has held that there is, in substance, a single controversy between the parties to the first Supreme Court proceedings notwithstanding that there are two separate matters complained of published by apparently separate individuals with no common connexion other than the fact that the Dairy is the plaintiff against all those defendants. And the Dairy asserts that the second Supreme Court proceedings are also part of that one controversy. 32 One, perfectly legitimate reason why the Dairy considered that it should not sue in New South Wales was that under the Defamation Act 1974 (NSW), s 8A would have prevented a corporation of the size of the Dairy, according to Mr Lester, its managing director from bringing the proceedings because it was a corporation which that section precluded from having a cause of action. Similar legislation now exists in the Uniform Defamation Acts 2005 and 2006 of all the States and Territories. However, the fact that the law of New South Wales prevented recovery of damages for a defamatory publication in New South Wales would not mean that it was not at least, for present purposes, arguable that s 118 of the Constitution would require the Courts of New South Wales to recognize the right of the Dairy to bring proceedings for defamation which occurred in the other States and Territories in 2005 while the laws of those jurisdictions permitted recovery for a corporation in the position of the Dairy on such causes of actions: John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36 ; (2000) 203 CLR 503. 33 Mr Kinnear gave evidence that he was the sole director and secretary of Wholefoods and he asserted he would suffer extreme financial hardship if the Federal Court proceedings continued to be heard in Sydney. He said that he resided in Victoria and ran his business exclusively in and from that State. 34 There can be no doubt that the concurrent maintenance of proceedings in two different jurisdictions involving the same parties can be seen as vexatious and oppressive within the meaning of the test on which the exercise of the power of a superior court of record to stay proceedings exists. Bringing multiple proceedings with respect to the same subject matter in different courts in Australia was discussed by Dawson, Gaudron, McHugh and Gummow JJ in Henry v Henry [1995] HCA 64 ; (1996) 185 CLR 571 at 590-591. From the parties' point of view, there is no less -- perhaps, considerably more -- inconvenience and embarrassment if the same issue is to be fought in the courts of different countries according to different regimes, very likely permitting of entirely different outcomes. 36 And, in Re Wakim; Ex parte McNally (1999) 198 CLR at 587 [145] Gummow and Hayne JJ noted that the bringing of separate proceedings and the joining of different parties would often be important facts in deciding whether there was a single justiciable controversy for the purposes of Ch III of the Australian Constitution . 37 In my opinion there is a single controversy arising out of the assertions made in the letter signed by Mr Kinnear on the letterhead of Wholefoods that the Dairy ought be investigated by Consumer Affairs Victoria, in respect of whether or not it is accurate to say its milk was labelled as organic. The way in which the Supreme Court has treated the first two matters complained of in the defamation proceedings emphasises that it so regards that question. And the Dairy regards its proceedings against the Director in the same light. 38 In Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 ; (2006) 227 ALR 425 at 427-431 [4] - [16] Gleeson CJ, Gummow, Hayne and Crennan JJ discussed the concept of abuse of court process. They noted that what amounts to abuse of court process is insusceptible of a formulation comprising closed categories and that development continues (227 ALR at 428 [9]). 39 Here, I am of opinion that it would be unduly vexatious and oppressive upon Wholefoods to require it to litigate these proceedings in this Court. Mr Kinnear, although in law a separate individual, in a practical sense is closely connected to Wholefoods. He will be required to litigate in the Supreme Court proceedings, issues which, even the Dairy, in the joinder motion before Bongiorno J recognized were closely connected. 40 The Courts must have regard to the realities of the capacity of individuals, including corporations, to deal with litigation. Litigation is invariably expensive. It is stressful on individuals concerned with it, be they personal parties to the litigation or, where there are small, and sometimes large, corporations involved, on the individual director or shareholder or employee concerned. Courts must be mindful that there are both matters of public and private interest in ensuring that litigation does not become overwhelming for one or other of the parties concerned because it is conducted on more than one front in different courts or different jurisdictions. 41 Of course, the principles relating to a stay on the ground of oppression or vexation are not directly applicable to the application currently before me. Rather, I am concerned with the test in s 5(4)(d) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth) as to whether it is otherwise in the interests of justice that these proceedings be determined by the Supreme Court of Victoria in which case I must transfer the proceedings to that court. As Callinan J noted in BHP Billiton Ltd v Schultz [2004] HCA 61 ; (2004) 221 CLR 400 at 492 [258] , one person's legitimate advantage is another person's disadvantage and there should be no presumption in litigation in favour of any party. His Honour continued: 'Courts are required to do equal justice. After all, the Dairy has initiated defamation proceedings in that forum and has joined Mr Kinnear there. The other respondent to this application, Mr Whitsed, now consents to the application to cross vest the proceedings, and he is a resident of Victoria. 43 This Court is clearly able to hear and determine the claims in defamation. They are in federal jurisdiction because the Australian Broadcasting Corporation, among other things, pleaded a defence of qualified privilege which relied upon the principle in Lange v Australian Broadcasting Corporation [1997] HCA 25 ; (1997) 189 CLR 520. It said the broadcast concerned government or political matters that affected the people of Australia and that it was published within the implied constitutional freedom of communication on government and political matter. This Court has jurisdiction to hear and determine that matter under s 39B(1A)(b) of the Judiciary Act 1903 (Cth) as a matter arising under the Constitution or involving its interpretation. However, no party has applied to the Supreme Court of Victoria to cross vest the matter here. 44 I have not overlooked one possibility which may be available that, until matters clarify in the Supreme Court proceedings, this matter could be transferred to the Victorian Registry of the Court where, if need be, it could be later cross vested under the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth). 45 It is important that this Court retain the flexibility as to venue which was established by the decision in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 at 165 per Bowen CJ, Woodward and Lockhart JJ. They said that the Court's powers under s 48 of the Federal Court of Australia 1976 (Cth) and under the Court's Rules exist within the context of a national court. Earlier they said that the power under s 48 should be exercised flexibly having regard to the circumstances of a particular case. The Court or judge is in a position to mould orders under the section to take account of the many and varied circumstances that arise in particular cases (19 FCR at 162). However, in light of the evidence this is not the appropriate course to take here. 46 The new material confirms that there is a single controversy arising out of the assertions made in the letter signed by Mr Kinnear. I am satisfied that these proceedings should be transferred to the Supreme Court of Victoria in the interests of justice. The more recent developments make it even more compelling that the whole controversy be decided in the one forum. The Dairy has chosen to litigate on a considerable scale there. Given that the Dairy asserts that all its Victorian claims for defamation should be heard together because of the commonality of facts, I am of opinion that these proceedings are so closely connected to them that they should be cross-vested. 47 I will hear the parties on whether I should make an order for these proceedings to be referred to mediation on 17 November 2006 before the same mediator as is dealing with the media claims. If that mediator needs to conduct mediations separately with those parties or in a different way I am provisionally of the view that the mediator will be able to devise an effective means of doing so, even if the ABC and its journalists who are defendants do not consent to that course. However, the parties should have an opportunity to consider the position and to approach the mediator to see whether what I have in mind is feasible. If all parties were to approach the mediation in good faith with a view to resolving disputes, there would be considerable advantages in a common mediation. 48 Since the Dairy has failed in its opposition, it must pay the costs of the application. The other costs of the proceedings in this Court should be in the discretion of the Supreme Court of Victoria. 49 In order that the parties can formulate appropriate orders and resolve any outstanding issues in relation to the issue of an order under s 53A of the Federal Court of Australia Act 1976 (Cth) for mediation, I will direct that the first respondent prepare short minutes of order and relist the matter on 27 October 2006. | cross-vesting applicant commenced defamation proceedings in a supreme court applicant commenced proceedings for breach of trade practices act in federal court of australia defamation claims and trade practices claims against various parties arising from single act of publication by corporate respondent in this court and its defendant director in supreme court objective effect of continuation of proceedings in federal court in one state when other proceedings are pending in the supreme court in another state disproportionate hardship to be endured by respondents if separate proceedings maintained interests of justice courts and judicial system |
2 The earlier reasons left outstanding the question of all orders to be made, including orders as to costs. 3 On 9 July 2008, by consent as to form, I made orders disposing of one of the four proceedings, NSD 1870 of 2005 (the TGA (Protected Information) Proceeding). These are my reasons for the making of those orders. 6 I will use the abbreviations that were used in the earlier reasons and will take those reasons as read. 7 Two main issues have been debated: (1) whether there should be a stay of the order for rectification of the Register by removal of particulars of the extension of term of the Patent; and (2) costs. 8 As referred to below, other issues were also in contest. ; and (2) does the Court have power to reinstate the entry of the particulars of the extension of term in the event that Lundbeck's appeal is successful? 10 Alphapharm and Arrow accept that, upon the appropriate undertakings being given by Lundbeck, there should be a stay in relation to revocation of claim 5 of the Patent since there is some doubt as to the Court's power to order re-instatement: see Atlantis Corporation Pty Ltd v Schindler , unreported, Emmett J, 27 May 1997; Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2002) 54 IPR 495 at [4]; Imperial Chemical Industries plc v E I Dupont De Nemours & Co (2002) 58 IPR 227 at [11]. I agree that there should be a stay in relation to claim 5. I note that in Doric v Lockwood above, Hely J observed (at [4]) that it is usual for an order for revocation of a patent to be stayed pending an appeal against the order. 11 However, both Alphapharm and Arrow contend that there should be no stay in relation to removal of the particulars of the extension of the term of the Patent, and that no such doubt exists in relation to the Court's power to order re-instatement of those particulars. 12 The extension granted was from and including 14 June 2009 to 13 June 2014. If Lundbeck's appeal succeeds in relation to the extension, it will be held that it was entitled to retain that extension. 13 Immediate removal of the particulars will tell the world now that the term of the Patent will not extend beyond 13 June 2009, and other pharmaceutical and generic companies may make plans and expenditures on the faith of the removal. I was informed that if there is a stay, nonetheless the attention of those searching the Register will be drawn to the fact of the making of the Court's orders, the pending appeal and the stay of the orders in the light of the appeal. 14 If the particulars of the extension are removed, and the Court lacks power to order their reinstatement, Lundbeck would suffer a gross injustice if it succeeds in its appeal, whether or that success occurs before or after 13 June 2009. Obviously it would be a very serious matter for Lundbeck to be denied the benefit of such success merely because the Court lacked power to order reinstatement of the registration of the extension. On the other hand, if the particulars of the extension remain registered and Lundbeck loses the appeal after 13 June 2009, Lundbeck will have the benefit of a de facto extension for a short while beyond that date. 15 From Alphapharm's viewpoint, Alphapharm would not enjoy the benefit of the removal of the particulars of the extension until after 13 June 2009. However, if Lundbeck's appeal is dismissed at some time later than 13 June 2009, the effect of the stay will be to deprive Alphapharm of the fruits of its victory at first instance in relation to the period from that date to the dismissal of the appeal. 16 I accept that there is at least some doubt as to whether the result of the appeal will be known by 13 June 2009. It probably will but it may not. I should note in passing that the delay between the publication of the earlier reasons on 24 April 2008 and the making of the orders on 19 June 2008 was attributable to the desire of the parties to make oral submissions on the present issues and the difficulty in obtaining dates for that purpose suitable to all counsel who appeared at the trial. In the result, the appeal has missed out on the August 2008 Full Court sittings and will not be able to be heard until the November 2008 Full Court sittings. It seems reasonable to think that the Full Court's decision will be given by 13 June 2009 but the possibility of a later date cannot be excluded, in particular if there are post-hearing written submissions. 17 On the question of the Court's power to order reinstatement, in contending that the Full Court would have that power, Alphapharm relies on Woolworths Ltd v BP plc [2006] FCAFC 52 ; (2006) 150 FCR 134 ( Woolworths ) at [30]---[48] per Sundberg and Bennett JJ. Lundbeck contends that Woolworths is distinguishable. That case concerned s 68(1)(b) of the Trade Marks Act 1995 (Cth) (TM Act), in circumstances in which a trade mark had been registered pursuant to the order of the primary Judge and the issue was whether the Court, in its appellate jurisdiction, had power to order removal of the mark. There are some differences between s 192 of the Act and s 68(1)(b) of the TM Act. 18 Lundbeck points out that there has been no judicial determination of the Court's power to order reinstatement of an entry in the Register where the Court has ordered removal of particulars of an extension of term and the order for rectification of the Register has been implemented. 19 I will not explore the present question. It suffices to say that while I suspect that it would be within the implied power of the Court to order reinstatement, there is some doubt which is not clearly removed by Woolworths . 20 There should be a stay in relation to removal of the extension of the term. The potential hardship to Lundbeck if there is no stay, it succeeds in its appeal, and the Court is found to lack power to order reinstatement, far exceeds the hardship to Alphapharm if there is a stay, it successfully resists Lundbeck's appeal, and the appeal is not determined until after 13 June 2009. 21 As a condition of getting the stay, the Lundbeck parties must give to the Court the usual undertaking as to damages, an undertaking to prosecute their appeal expeditiously, and related undertakings. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order: Ritter v. Godfrey (1920) 2 K.B. 47. 2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed: Forster v. Farquhar (1893) 1 Q.B. 564. 3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law: Cretazzo v. Lombardi (1975) 13 S.A.S.R. 4 at 12. The notion of costs following the event is not straightforward in the present case. 24 Generally speaking, in the Revocation Proceeding, Lundbeck succeeded in defending the Patent against the attack by Alphapharm. Claim 5 was held invalid, but overall this did not assume great importance. Lundbeck succeeded on its cross-claim for infringement but only to a minor extent, and otherwise Alphapharm succeeded on that cross-claim. 25 Through the Arrow Proceeding, Arrow joined cause with Alphapharm in the attack on the Patent. There was no claim that Arrow had infringed the Patent. 26 In the Revocation Proceeding, the Arrow Proceeding and the Lundbeck Appeal (Extension of Term) Proceeding, Alphapharm and Arrow, as the case may be, succeeded in having the extension of term removed from the Register. 27 Alphapharm submits that the "event" is to be seen as Lundbeck's having been deprived of the monopoly granted by the Patent for the period after the expiry of its original term on 13 June 2009 down to 13 June 2014. Alphapharm submits that Lundbeck has retained its monopoly for only approximately one-sixth of the period from now to 13 June 2014. Alphapharm submits that like itself, Arrow is a generic company, and that the benefit of Alphapharm's labours (the removal of the extension of the term of the Patent) will enure to its benefit too. 30 The Lundbeck parties emphasise that Alphapharm and Arrow challenged the validity of its Patent, and that it succeeded on that issue except in a relatively minor respect (claim 5). Lundbeck points out that much of the evidence related to the issue of obviousness, on which it succeeded. Lundbeck submits that to the extent that the order for costs should reflect the fact that Alphapharm and Arrow succeeded in relation to the extension of term, there should be a reduction of no more than 20%, that is to say, that Alphapharm and Arrow should be ordered to pay 80% of the Lundbeck parties' costs. 31 The Lundbeck parties point out that there was a finding of infringement on claims 1, 3 and 6 of the Patent between at least November 2002 and 27 May 2004, on which date Alphapharm's defence pursuant to s 78(2) of the Act (and from 25 October 2006, s 119A of the Act) arose. They point out further that there was no evidence led by Alphapharm (and therefore little cost incurred) on its defence pursuant to the statutory provisions mentioned, in respect of its conduct occurring after 27 May 2004. 32 Like Alphapharm, Arrow submits that there should be no order as to costs. Like Alphapharm, it relies on what it describes as the reduction of the remainder of Lundbeck's monopoly from approximately six years to approximately one year. 33 Arrow submits that on the basis of the issues decided, the significance of, and time spent on, particular issues leads to a conclusion that the relative successes and failures of the Lundbeck parties on the one hand and Alphapharm and Arrow on the other hand, are approximately equal. 34 Finally, Arrow submits that if a costs order is made, the following matters are relevant to determining the proportion of those costs that Arrow should bear as compared with Alphapharm: there was no cross-claim for infringement against it; its proceeding was commenced well after that brought by Alphapharm; and its involvement in adducing evidence and making submissions was relatively minor by comparison with that of Alphapharm. 35 In the result, Arrow submits that there should be no order for costs against it, but that if the Court decides otherwise there should be an order against it for only a very small part of Lundbeck's costs. 36 I have considered carefully the parties' submissions, including their submissions relating to the time spent on various issues. A considerable amount of the hearing was occupied with the attack on the validity of the Patent on the ground of obviousness. Lengthy and dense evidence both in chief and in cross-examination from Professors Banwell and Davies occupied much time and gave rise to lengthy submissions. Their evidence related largely, but not exclusively, to the issue of obviousness. So did that of Lundbeck employees, Dr Bogeso and Mr Gundertofte. Lundbeck succeeded on that issue. 37 However, the position is complicated by the fact that some of the evidence relating to obviousness also related to other issues. For example, some of the evidence given by Professors Banwell and Davies laid out the groundwork for my understanding of chemistry that underlay the entire case, including, to some extent, the issue relating to the extension of term. 38 Even though it is true that Lundbeck lost its monopoly for most of the term of the monopoly that remained from the hearing to 13 June 2014, I think that a patentee is entitled to defend an attack on its intellectual property, even in so far as it relates to the monopoly that it has enjoyed in the past. The Patent was granted as long ago as 1989. 39 On the other hand, it is not to be ignored that in commercial terms, Alphapharm and Arrow have succeeded to the extent of approximately five-sixths of the extended term of the monopoly remaining. Moreover, there is some force in the submissions made by Alphapharm noted at [27] above, and by Arrow noted at [32] above. 40 Having regard to all of the considerations referred to, I think the appropriate order is that Lundbeck parties recover 40% of their costs, and that Alphapharm pay 30% and Arrow 10% of those costs in order to make up the 40%. (The Lundbeck parties did not press a submission they originally made that Alphapharm and Lundbeck should be jointly and severally liable, irrespective of their rights inter se . The Lundbeck parties indicated that they would be content with several liabilities simpliciter. There was an issue as to whether Alphapharm should be required to give discovery in relation to damages for infringement (in favour of which Lundbeck has elected). It should, but if Alphapharm promptly appeals, there should be a stay on the orders for payment of damages and for the associated obligation to give discovery. 42 There was an issue as to whether a permanent injunction should be ordered against Alphapharm. Alphapharm submitted that Lundbeck should be satisfied, as it had been in the past, with Alphapharm's undertaking. However, the fact that Lundbeck was willing to accept an undertaking pending trial should not deprive it of the right to seek a permanent injunction in the absence of agreement on an undertaking. There should be a permanent injunction restraining Alphapharm from exploiting the Patent save as allowed by s 78 (or now s 119A) of the Act. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | four proceedings heard together meaning of "costs following the event" costs order made on a broad issues basis, but "event" in each proceeding taken into account. order for removal of particulars of extension of term from register of patents whether court would have power to order reinstatement of particulars if patentee's appeal should succeed. costs patents |
The Tribunal's decision was made on 7 September 2006 and handed down on 19 September 2006, and affirmed a decision of a delegate of the first respondent to refuse to grant protection visas to the appellants. An earlier decision made by a differently constituted Tribunal handed down on 2 March 2004, had been set aside in May 2006. The father alleges that he first arrived in Australia in 1990, and then returned to China in 1993. He came back to Australia on 12 December 1995. The boy and his mother arrived in Australia on 8 May 1997. The family applied, through the boy, for protection visas on 3 March 2003. In his application for a protection visa, prepared by a migration agent, the son claimed to fear persecution in China because he had spent his formative years in the "West". The son stated that he would not have access to state education in China, that he would not be recognised as a "normal" Chinese student and that his own attitudes to the Communist government would endanger him. The father and mother offered no claims of their own and instead relied upon their membership of the son's family unit. On 29 May 2003, the delegate refused to grant the visas. This application, completed by the appellants' new migration agent, stated that each of the appellants had his or her own claim, and that separate statements in support of the claims would be submitted. The statements were received by the Tribunal on 8 January 2004 --- the day before the date of the hearing. 4 The appellants claimed that each of them had individual claims for refugee status. The appellants claimed that due to the fault of their previous migration agent they mistakenly did not put in claims on their own behalf. 5 The father claimed that on his return to China from Australia in 1993 he was regarded as a dissident and was interviewed by the Public Security Bureau (the PSB) about subversive communications he had engaged in with a particular foreign journalist. He claimed to have departed China in December 1995 because he had to escape scrutiny from the PSB. It was further claimed that the wife and son faced persecution in China on account of the husband's political profile. It was said that the mother was required to attend a labour camp and the son was denied access to school. The father claimed that his wife and their son obtained their passports eventually, by paying bribes, and came to Australia. 6 A hearing of the Tribunal was held in January 2004. The hearing was transcribed. Only the adult appellants attended the hearing. Their migration agent, Ms Grace X Chen, was present at the hearing. Each of the father and the mother gave evidence. On 2 March 2004, the Tribunal handed down its decision. In its reasons for decision, the Tribunal recorded the evidence which had been given by the husband and the wife. The Tribunal affirmed the delegate's decision. 7 The appellants applied for judicial review of the Tribunal's decision. 8 Pursuant to a consent order dated 29 May 2006, a Federal Magistrate quashed the decision of the Tribunal and remitted the matter to the Tribunal to be considered in accordance with law. 9 On 6 July 2006, the Tribunal wrote to the appellants. You are invited to provide any documents or written arguments you wish the Tribunal to consider which you have not already provided to the Tribunal. Any documents should be provided as soon as possible. Any documents not in English should be translated by a qualified translator. You should send both the documents and the translations. In the meantime, your case will be allocated to a Member of the Tribunal who has not previously made a decision in relation to your case. The letter outlined various inconsistencies between the original protection visa application, submissions made by the father in 2004 and 2005, and the evidence previously given to the Tribunal, and sought the appellants' comment. He may decide, having done so, and having considered your response to this letter and the other evidence currently before the Tribunal, that he is able to make a decision, which may be either favourable or unfavourable. It is therefore in your interest to submit with your response to this letter, all further evidence or submissions you wish the Tribunal to consider. 12 The Tribunal did not invite the appellants to a further hearing. In its reasons for decision dated 7 September 2006, the Tribunal explained that, having listened to the tape of the hearing, it was satisfied that the summary recorded in the first review decision was a fair summary of the evidence given by the parents. The Tribunal affirmed the decision of the delegate to refuse to grant the appellants protection visas. The Tribunal did not accept that the son would face "serious harm" by reason of having been educated abroad. Further, the Tribunal did not accept that the father was in fact a dissident and, therefore, rejected the mother's and son's claims that they would each suffer harm by reason of their association with the father. The essence of the appellants' complaint was that the reconstituted Tribunal had made the decision on 7 September 2006, without inviting the appellants to a hearing at which the appellants could give oral evidence. This omission, said the appellants, meant that the Tribunal failed to comply with its obligations under s 425 of the Act and under s 422B of the Act --- which they referred to as the "natural justice hearing rule". 14 The Federal Magistrate appointed the father as litigation guardian of the son for the purpose of the proceedings. The Federal Magistrate asked the father to expand on the alleged denial of natural justice under s 422B. The father relied on the failure by the Tribunal to invite the appellants to attend a hearing to give oral evidence. The Tribunal had held a hearing. The Tribunal was entitled to take into account information of claims that had been made to the earlier Tribunal at the hearing. An invalid decision by the Tribunal is no decision at all but it does not follow that all steps and procedures taken in arriving at that invalid decision are themselves invalid. The Tribunal still has before it the materials that were obtained when the decision that had been set aside was made. Even though, the RRT sent a s 424A letter to the applicant on 27 July 2006, and the applicant replied the letter in the due time. But the opportunity given by s 424A letter is different to the hearing opportunity as in the hearing, the applicant can fully provide its new information and arguments in relation to the decision under review. However, the Federal Magistrate noted that the father had been unable to say what those things were. 20 At the hearing of the appeal before me the father said that his complaint was that he had been denied his "opportunity to go to a hearing". The Tribunal had, he said, thereby failed to comply with its obligation under s 425 of the Act. 21 It is convenient to consider grounds 1 and 3 of the appeal together because they raise, in my view, two separate but related issues. 22 The first issue is, whether as a matter of right an applicant is entitled to a second hearing when a decision of the Tribunal is set aside on review and the matter is referred back to the Tribunal to be decided in accordance with law. 23 The case of Liu v Minister for Immigration and Multicultural Affairs [2001] FCA 1362 ; (2001) 113 FCR 541 ( Liu ) establishes that there is no absolute right to a hearing before the Tribunal member who decides the review. 24 In Liu , the Full Court said that s 428 of the Act made specific provision for a hearing to be conducted by a person other than the Tribunal member deciding the review. In that case, the hearing had been before one member of the Tribunal, but the decision was made by a different member of the Tribunal, who had invited the applicants to a hearing. The Full Court held that there was no jurisdictional error committed by the Tribunal in acting in that manner. 25 The second but related issue is whether in the circumstances of this case, a second hearing was required. It does not follow that because there is no absolute right to a second hearing when a matter is remitted to the Tribunal for hearing according to the law, that there will never be circumstances when the Tribunal will be required to invite an applicant to a second hearing, in order to comply with s 425(1). Section 425(1) requires the Tribunal to invite an applicant to appear before a Tribunal to give evidence and present arguments relating to "the issues arising in relation to the decision under review". 26 Whether such requirement arises will depend upon what the "issues arising in relation to the decision under review" are, at the time the Tribunal makes the second decision. In the case of Minister for Immigration and Multicultural Affairs v Wang [2003] HCA 11 ; (2003) 215 CLR 518 ( Wang ), the High Court considered the validity of a direction made by the Full Federal Court on appeal remitting a matter to the Tribunal as previously constituted, with the object of preserving the findings of fact that had been made by the Tribunal that were favourable to the applicant. So much follows from the fact that the Tribunal exercises afresh the powers of the original decision-maker. Seeking to "preserve" some findings of fact made at an earlier review assumes that no circumstance relevant to those facts has changed in the intervening time. It assumes, for example, that conditions in the country of origin have not changed and, in a case like the present, that the beliefs and intentions of the person who has sought protection have not changed in any material way. There was no evidence before the Full Court which would enable it to conclude that there had been no material change in circumstances. (Original emphasis. Footnote omitted. It is for the applicant to advance whatever evidence or argument she wishes to advance in support of her contention that she has a well-founded fear of persecution for a Convention reason. The Tribunal must then decide whether that claim is made out. It does not follow, of course, that each and every aspect of the claim made by an applicant will necessarily become an issue relating to the decision under review (see SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 231 ALR 592 at 601, at [40]). 30 In this case, the ambit of the potential issues before the Tribunal as originally constituted was defined by claims made by the appellants, as contained in the materials which were provided to the Tribunal immediately prior to the first hearing, and the evidence given at the first hearing. As previously mentioned, in July 2006, after the first decision was set aside and the matter was remitted to the Tribunal, the Tribunal wrote to the appellants inviting the appellants to comment upon nine items of information. These items arose from the content of the claims which had been before the Tribunal when it made its first decision. The letter also invited the appellants to submit any further evidence or submissions they wished the Tribunal to consider. 31 The appellants responded through their migration agent by commenting upon the items raised in the Tribunal's letter, but they offered no further evidence or submissions. In particular, there is no reference in the letter to any "new information" about China's human rights violations and persecutions in the appellants' home town which were referred to in the particulars to the notice of appeal at [18] above. 32 In my view, therefore, there was no information provided to the reconstituted Tribunal which amplified the appellants' claims. There was, therefore, no material change in circumstance which had the potential to expand the scope of the relevant issues beyond those the subject of the first hearing and the first decision. As the appellants had already had the opportunity to provide evidence and make oral submissions as to those issues at the first hearing, the appellants were not, in the circumstances of this case, deprived of their rights under s 425. Nor were they denied natural justice by reason of a lack of opportunity to make oral submissions at a hearing in respect of the issues relating to the decision under review --- that opportunity having been afforded them at the first hearing. Section 422B provides that Pt 7 Div 4 of the Act (which includes s 425) is an exhaustive statement of the natural justice hearing rule. Grounds 1 and 3 are dismissed. 33 As to ground 2, the complaint appears to be that the method adopted by the second member in listening to the tape of the evidence and not hearing the evidence directly, carried with it a real and substantial risk that the Tribunal would be unable to make a proper assessment of the evidence and, accordingly, the Tribunal fell into jurisdictional error. 34 First, as already mentioned and as recognised in Liu , s 428 of the Act provides that evidence may be taken by a person other than the Tribunal member who makes the final decision. Thus, the Act contemplates a Tribunal may make a decision based upon a record of evidence taken before another Tribunal member, or a different person. It follows that the adoption of this procedure by the Tribunal cannot, without more, give rise to a jurisdictional error. 35 Secondly, the transcript of the hearing was not in evidence before the Federal Magistrate or this Court, nor did the appellants identify any defects in the record of evidence set out in the first decision, to support their contention that there was a "real and substantial risk" that the Tribunal did not, in fact, make a proper assessment of the evidence. Accordingly, in my view, this ground of appeal adds nothing to grounds 1 and 3 of the appellants' appeal, and should be dismissed. 36 As to ground 4 of the appeal, the facts in this case are, indeed, distinguishable from those in SZEPZ . However, the Federal Magistrate relied upon SZEPZ for the proposition that where a Tribunal decision is set aside and the matter is remitted to the Tribunal, it is the decision that is set aside, and that it does not follow that the whole process in arriving at that invalid decision is also invalid. The Federal Magistrate did not err in so doing. Ground 4 of the appeal is dismissed. 37 The appeal is dismissed with costs. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | application for a protection visa tribunal's decision set aside matter remitted to tribunal no second hearing whether tribunal was obliged to conduct a second hearing whether issues in relation to the decision under review had changed migration |
2 For the reasons that follow, I would grant Mr Stewart retrospective approval to enter into the Agreements. In October 1993, Atco Controls Pty Ltd ("Atco") acquired 51% of the issued shares in Newtronics. In April 1998, Atco acquired the remaining issued shares. In September 1998, Atco (and therefore Newtronics) became a wholly owned subsidiary of an Austrian Group, the Zumtobel Group. 4 On 12 February 1998, Seeley commenced proceedings in the Federal Court against Newtronics seeking damages arising from the supply of faulty products by Newtronics to Seeley. On 21 December 2001, the Honourable Justice O'Loughlin ordered Newtronics to pay Seeley $8.9 million together with interest and costs: Seeley International Pty Ltd v Newtronics Pty Ltd [2001] FCA 1862. Interest was later fixed at $5 million. 5 On 8 January 2002, Atco served a demand upon Newtronics pursuant to a mortgage debenture and appointed receivers to Newtronics. On 26 February 2002, Mr Stewart was appointed the liquidator of Newtronics by an order of this Court on the application of Seeley. At the time of his appointment, Newtronics had no tangible assets and its creditors included Atco (in the sum of approximately $20 million but which was apparently secured), Seeley (in the sum of $19 to $20 million and which was unsecured) and other unsecured creditors (for approximately $60,000). Newtronics' assets position and principal creditors have not changed. Seeley is Newtronics' judgement creditor and remains Newtronics' largest unsecured creditor. 6 From the time of his appointment, Mr Stewart retained legal advisers to act on his behalf in relation to the liquidation of Newtronics. Initially, Mr Stewart retained Mr Rydon of Thomson Playford. That retainer was terminated on or about 22 October 2002. On the same day, Mr Stewart retained Mr Jonathon Kramersh, then a partner of Holding Redlich and from 1 February 2003, a partner of Corrs Chambers Westgarth. 7 After Mr Stewart's appointment as liquidator of Newtronics, Mr Stewart was approached by Seeley and it was agreed that Seeley would provide him with funding to carry out certain investigations. In Mr Stewart's first report to creditors dated 17 February 2003, Mr Stewart advised the creditors that he had obtained an indemnity from Seeley in relation to his investigations to date. The report went on to state that " in the absence of funding from Seeley or other creditors, [Mr Stewart had] no other means of funding the cost of any investigation into Newtronics' affairs. " Three other creditors agreed to offer Mr Stewart an indemnity to the extent of $6,600 although there was real doubt about the availability of those indemnities except to the extent of $1,000. 8 On 22 March 2002, an Agreement to Indemnify was executed by Mr Stewart and Frank Seeley on behalf of Seeley by which Seeley agreed to indemnify Mr Stewart " to investigate, and if [Mr Stewart] considers appropriate, recover assets and property of Newtronics or damages owed to Newtronics by exercising powers available to [Mr Stewart] under the Corporations Act 2001 and otherwise available pursuant to statute, at common law or in equity" (Recital C) ("the Agreement to Indemnify"). Examinations of 16 persons were conducted by Mr Stewart in August and September 2003. On 15 June 2004, Mr Stewart made a further application to the Federal Court to examine 9 persons pursuant to ss 596A and 596B of the Act . Examinations of those 9 persons were conducted by Mr Stewart in July, August and September 2004. The costs of these examinations were funded pursuant to the Agreement to Indemnify. 11 From about September 2004 and following the investigations, a draft statement of claim was prepared and Mr Stewart's then legal adviser (Mr Kramersh of Corrs Chambers Westgarth) commenced discussions with Seeley seeking an indemnity to pursue various causes of action. On 11 May 2005, Mr Stewart engaged Ms Penelope Pengilley, a partner of Holding Redlich and the legal file was transferred to her. 12 On 1 December 2005 and in the absence of an indemnity to issue proceedings, Mr Stewart commenced proceedings in the Supreme Court of Victoria by way of Writ and General Indorsement (Proceeding No 9670 of 2005) against Giorgio Gjergja and Gary Tescher to preserve certain causes of action in case of limitation issues ("the Directors' Action"). The general indorsement alleged that Mr Gjergja and Mr Tescher were both directors of Newtronics during specified periods and that each of them had, during those specified periods, breached his duties as a director of Newtronics. 13 On 27 March 2006, Seeley and Mr Stewart executed a Deed of Indemnity ("the Deed of Indemnity"). By that Deed, Seeley agreed to provide Mr Stewart with a further indemnity to commence proceedings on behalf of Newtronics against Atco seeking to enforce an agreement between Newtronics and Atco allegedly recorded, inter alia , in a letter of support dated 21 July 2001 from Atco to Newtronics ("the Promise of Support Action"). On 3 April 2006, Mr Stewart commenced the Promise of Support Action against Atco in the Supreme Court of Victoria, Proceeding No 2015 of 2006, Folio 5947. Atco was served on the same day. 14 On 13 April 2006, administrators were appointed to Atco and the Promise of Support Action was stayed in accordance with s 440D of the Act . 15 On 10 July 2006, Seeley and Mr Stewart entered into a deed to vary the terms of the Deed of Indemnity ("the First Variation Deed"). On 28 June 2007, orders were made for the provision of security for the benefit of one of the directors, Mr Gjergja. 17 On 1 December 2006, Mr Stewart filed an application in the Promise of Support Action seeking leave to proceed against Atco (a company then in liquidation) and seeking leave to add Newtronics' receivers as defendants to the proceeding. On 8 December 2006, Hargrave J granted Mr Stewart leave to proceed against Atco and added Newtronics' receivers as second defendants to the proceeding. The Promise of Support Action was served on the Newtronics' receivers on 14 December 2006. 18 On 13 December 2006, Seeley and Mr Stewart entered into a further deed ("the Second Variation Deed"). By the Third Variation Deed, Mr Stewart and Seeley agreed to vary the Deed of Indemnity (as varied by the First and Second Variation Deeds) to provide that Seeley would provide certain bank guarantees by way of security for costs in favour of the defendants in the Promise of Support Action. The bank guarantees were provided on 22 and 23 March 2007. 20 On 6 June 2007, Seeley and Mr Stewart entered into a further deed ("the Fourth Variation Deed"). By the Fourth Variation Deed, Mr Stewart and Seeley agreed to vary the Deed of Indemnity (as varied by the First, Second and Third Variation Deeds) to provide that Seeley would provide a further indemnity to Mr Stewart to pursue on behalf of Newtronics a further action for damages against Mr Gjergja, Russell Kenery, David Brice and Russell Kennedy in the Supreme Court of Victoria, Proceeding No 6897 of 2006 issued by way of Writ and General Indorsement on 9 June 2006 ("the Conduct of Litigation Action"). The defendants have all been served. A request for security for costs by one of the defendants is currently being considered. 22 In 2002, Mr Stewart sought advice about whether the Indemnity Agreement fell under s 477(2B) of the Act . On 27 May 2002, his solictor advised him that it did not. Subsequently, in July 2007, Mr Stewart raised again whether s 477(2B) of the Act applied to each of the Agreements. Coincidently, his legal adviser independently turned her mind to the same issue, concluding that it did apply and an application for retrospective approval was therefore necessary. 23 Subsequently, Mr Stewart instructed his legal adviser to make immediate application to the Court seeking approval, retrospectively, pursuant to s 477(2B) of the Act in respect of each of the Agreements. It is that application which is now before the Court. Section 477(2B) is commonly described as the "long-term agreements" provision. In certain circumstances, retrospective approval may be given by the court: Re HIH Insurance Group Ltd [2000] NSWCA 374 ; (2001) 19 ACLC 1,102 and Empire (Aust) Nominees at 741, [10] and the authorities cited. The same restraint must apply when the question is whether the liquidator should be authorised to enter into a particular transaction the benefits and burdens of which require assessment on a commercial basis. Of course, the compromise of claims will involve assessment on a legal basis, and a liquidator will be expected (as was made plain in Re Chase Corporation (Australia) Equities Ltd ) to obtain advice and, as a prudent person would in the conduct of his own affairs, advice from practitioners appropriate to the nature and value of the claims. But in all but the simplest case, and demonstrably in the present case, commercial considerations play a significant part in whether a compromise will be for the benefit of creditors. For that reason, I do not intend to outline the details of each of them. Rather, it has simply been agreed that I will approach the Court pursuant to section 564 of the .... Act to seek orders that the Court afford Seeley priority. Accordingly, the effect of the indemnity arrangements on the other creditors of the company is neutral at worst, even with the priority contemplated for Seeley. In entering the funding arrangements with Seeley, I also noted that in the event that Newtronics did have good claims against any party and a recovery or recoveries took place, it would have the effect of ensuring that a judgment of this Honourable Court would be satisfied either in whole or in part. Moreover, I was of the view that the arrangement with Seeley, which enabled the various actions to be brought, had commercial merit in the context of a beneficial and expeditious winding up of the affairs of Newtronics. Having reviewed the terms of each of the Agreements in light of the principles referred to at [26] above and the affidavit material summarising the merits of the various pieces of litigation being funded by the Agreements, I consider that it is appropriate that the liquidator be granted approval, retrospectively, to enter into each of them. 29 Section 1322(4)(a) of the Act empowers the Court to make an order declaring that any act, matter or thing purporting to have been done under the Act or in relation to a corporation is not invalid by reason of any contravention of a provision of the Act . Moreover, s 1322(4)(d) of the Act empowers the Court to order an extension of the period for doing any act, matter or thing under the Act , including an order extending a period where the period concerned ended before the application for the order was made. In those circumstances, the Court may make such consequential or ancillary orders as its thinks fit. 30 For those reasons, this is an appropriate matter for the Court to exercise its powers under ss 1322(4)(a) and (d) and 477 (2B) of the Act . 2. Pursuant to s 477(2B) of the Act , approval is given to the plaintiff to enter into each of the Agreements. 3. Pursuant to s 1322(4) of the Act , none of the Agreements is invalid by reason of having been entered into by the plaintiff prior to obtaining the approval of the Court. 4. Exhibits PAP-1, PAP-3, PAP-5, PAP-6, PAP-7 and PAP-8 to the affidavit of Penelope Alice Pengilley sworn on 3 August 2007 and filed herein and the affidavit of Penelope Alice Pengilley sworn on 23 August 2007 and filed herein be sealed up and not be available for inspection by any person unless the Court otherwise orders. 5. The costs of this application be costs in the winding up of Newtronics Pty Ltd (receivers and managers appointed) (in liquidation). | application by liquidator for retrospective approval of agreements under s 477(2b) of the corporations act 2001 (cth) considerations relevant to exercise of court's discretion corporations |
The system allowed consumers to pay various accounts and bills and to purchase products and services such as mobile phone credit at participating newsagents and merchants. The Bill Express Payment System was provided by Bill Express Limited (ACN 090 059 564) (in liquidation) ("BXP") to participating newsagents and merchants. To obtain the Bill Express Payment System, participating merchants entered into two contracts, usually for a term of 60 months: one with BXP to obtain the Bill Express Payment System on line ("the Merchant Contract") and the second with the Second Respondent, Technology Business International Pty Ltd (ACN 092 574 804) (in liquidation) ("TBI"), for rental of the computer and other equipment required to deliver the Bill Express Payment System ("the Rental Contract") (collectively the "Bill Express Contracts"). The Bill Express Payment System operated from 2003 until about July 2008. During that period, between 3,500 and 4,500 merchants entered into the Bill Express Contracts. The Applicant, the Australian Competition and Consumer Commission ("the ACCC"), contends that the circumstances surrounding the entry into, and further or alternatively the fact of entry into, the Bill Express Contracts by merchants in the period from mid 2003 until the demise of BXP in July 2008 amounted to: exclusive dealing, and in particular third line forcing as defined in s 47(6) of the Trade Practices Act 1974 (Cth) ("the TPA"), in contravention of s 47(1) of the TPA; misleading and deceptive conduct in contravention of s 52 of the TPA; false or misleading conduct in contravention of s 53(g) of the TPA. Each Respondent had notice of the hearing and nature of the orders sought by the ACCC. BXP, TBI and the Fourth Respondent, Mobius Financial Services Pty Ltd (ACN 099 088 365) ("Mobius"), informed the Court that they did not intend to appear. The Third Respondent, BNY Trust Company of Australia Ltd (ACN 050 294 052) ("BNY"), settled with the ACCC and executed terms of settlement. Those terms of settlement, in part, are dependent on the outcome of this hearing. The form and content of these declarations and orders require further explanation. Until 2 September 2004, BXP was called Dial Time Pty Ltd. It became a public company on 3 September 2004. Its ultimate holding company was On Q Group Limited (ABN 57 009 104 330). On 8 July 2008, Craig David Crosbie ("Crosbie") and Ian Menzies Carson ("Carson") were appointed joint administrators of BXP. On 12 December 2008, BXP was wound up and Crosbie and Carson were appointed joint liquidators. Since incorporation, BXP's directors have been and are: Name Appointment Date Cease Date Christiansen, Harold 21/10/1999 30/06/2008 Christiansen, Ian 31/07/2000 30/06/2008 Little, Julian 31/07/2000 Fischer, Tristan 09/07/2004 30/11/2006 McDougall, Dugal 09/07/2004 30/11/2006 McDougall, Peter 09/07/2004 28/02/2007 Jones, Philip 12/11/2004 23/11/2006 Daniel, Gregory 16/10/2006 02/04/2007 Doery, Michael 16/10/2006 30/06/2008 Brown, John 02/04/2007 30/06/2008 Murphy, Christopher 02/04/2007 Slattery, Sean 30/06/2008 From 14 June 2002, its principal place of business was at 677 The Boulevard, Eaglemont, Victoria. Prior to 10 April 2003, it was called On Q International Pty Ltd. It had a sole shareholder --- Technology Business Holdings Pty Ltd ("TBH"). On 30 June 2008, TBI was wound up and Geoffrey Niels Handberg ("Handberg") was appointed liquidator. Since incorporation, TBI's directors have been and are: Name Appointment Date Cease Date Ludescher, Christian 26/04/2000 26/04/2000 Christiansen, Harold 26/04/2000 14/03/2003 Di Donato, Sandro 14/03/2003 McKenzie, Ian 27/07/2003 01/06/2008 From 14 June 2002, its principal place of business was also 677 The Boulevard, Eaglemont, Victoria. Prior to 10 April 2003, it was called On Q Holdings Pty Ltd. It is majority owned by Equip Rentals Pty Ltd. Since incorporation, TBH's directors have been and are: Name Appointment Date Cease Date Ludescher, Christian 11/04/2000 06/06/2000 Christiansen, Harold 06/06/2000 14/03/2003 Christiansen, Ian 06/06/2000 14/03/2003 Little, Julian 06/06/2000 14/03/2003 Huntley, Anthony 28/07/2000 23/11/2001 McKenzie, Ian 23/11/2001 14/03/2003 Popovski, Chris 23/11/2001 14/03/2003 Di Donato, Sandro 14/03/2003 From 10 July 2002, its principal place of business has been and remains 677 The Boulevard, Eaglemont, Victoria. During the relevant period, one was not the holding company or subsidiary of the other and BXP and TBI were not subsidiaries of the same holding company. Mobius is the trust manager of the Mobius ERT-W04, ERT-W05 and ELR-01 Trusts ("the Trusts"). Mobius performed various managerial functions for the Trusts. BNY is the trustee of the Trusts. Those admissions were contained in letters sent by BXP's solicitors to the ACCC responding to complaints made to the ACCC about the Bill Express Payment System. The first letter from BXP's solicitors dated 4 June 2008 described the Bill Express Payment System and its operation. Although the letter stated that it did not purport to provide a comprehensive overview of all of the matters in issue, I accept that it provides a useful summary of the structure, implementation and operation of the Bill Express Payment System at that time. Except where noted, the following summary is extracted from that 4 June 2008 letter. The relevant events start in early 2003. On 1 March 2003, BXP and TBI entered into a Heads of Agreement. The Heads of Agreement was not referred to in the 4 June 2008 letter but in a subsequent letter from BXP's solicitors dated 16 June 2008. The recitals to that Agreement explained the business of BXP and TBI and their roles in the following terms: [BXP] is in the business of providing pre-paid and bill payment transaction management facilities to Merchants in return for transaction fees. [BXP] wishes to Introduce Merchants to TBI in return for an Upfront Fee and the right to the ongoing "prepaid and bill payment" transaction fees, from Introduced Merchants. Under the Heads of Agreement, TBI were to pay BXP fees for the introduction of merchants to TBI. Subject to the availability of acceptable finance, equipment and service agents, TBI undertook to use its "best endeavours" to provide satisfactory point of sale terminal equipment to merchants: Annexure A to the Heads of Agreement. Interestingly, BXP made no promise and provided no undertaking that its services would continue to be supplied to merchants. As the Heads of Agreement recorded, BXP had operated "DialTime", a distribution network of pre-paid telephony products. "DialTime" apparently ceased in mid 2003 (noting that the company did not change its name until September 2004, see [9] above) when it was rebranded as "Bill Express". As noted earlier (see [2]), to obtain the Bill Express Payment System, participating merchants entered into two contracts, usually for a term of 60 months: the Merchant Contract and the Rental Contract. Schedule B defined the "Agreement" or the "Merchant Contract" (cl 1) to mean the Merchant Contract and the Rental Contract. I will deal with the Rental Contract shortly. Merchants participate in the Service by signing the Merchant [Contract] or the ... Rental [Contract] and by agreeing to these Terms and Conditions. These Terms and Conditions are subject to change by [BXP] from time to time by notice in writing to the Merchant, the Merchant's continued use of the Service acknowledging the binding effect of such notice. The Merchant may, subject to this Agreement, use the Terminal for the Services. The Merchant must not load, change, or modify the software or any other visual, physical or functional aspect of the Terminal(s) nor use the Terminal(s) to process transactions of any nature except as contemplated by this Agreement, without the prior written approval of [BXP]. [BXP] will not be liable to the Merchant with respect to any transaction conducted on the Terminal except in the manner set out in the documents relating to the Service. The Merchant acknowledges that the Terminal may not operate with full functionality at all times. In relation to any loss suffered by the Merchant or any other person as a result of the performance or non-performance of the Terminal(s) or any repairs or remedial work required, the liability of On Q [BXP] is limited to the general indemnity provided in Clause 28 of this Agreement or to replacing the Terminal(s). As noted earlier (see [24]), "Agreement" was defined to mean the Merchant Contract and the Rental Contract. The Rental Contract was between TBI and the Merchant. The Rent Start Date is the Acceptance date with rental payments due on the monthly anniversary of this date and payable on the 26 th day of each month or the next Business Day. It is agreed by the parties that the Terminals Rental Fee will continue to be payable in all events in the manner and at the times agreed. In the event that there arises any defect in the Terminals or Services or any other breach of this agreement by [TBI] the Merchant shall not be entitled to terminate this Agreement and the Merchant's sole remedy under this Agreement shall be to make a claim for damages against [TBI]. The presentation explained how the Bill Express Payment System was structured and operated. Various versions of the presentation were provided by BXP's solicitors as attachments to the 4 June 2008 letter. Although the content of the presentations varied over time, they contained common elements. The first presentation is dated 1 and 2 May 2003. At that time, BXP was still known as "DialTime". The presentation was entitled "DialTime Bill Express Newsagent Business Opportunity 'Expanding through Electronic Retailing'". The presentation explained, amongst other things, that DialTime was an expandable multi-application device on one flexible technology platform which generated revenue to the merchant from "bill payment, pre-paid, Eftpos savings, telephony, email and internet". At that time, "three packages" were on offer. Each package was said to have different costs, hardware and revenues. All packages include physical installation costs paid by DialTime. Under "Packages 2 and 3", prospective merchants would "enjoy first 3 month 25% rental rebate off $385 & $495 while cards & advertising systems [were] installed, account card details loaded etc". The presentation reviewed the financial business case for each package. The presentation concluded with the heading "Next Steps --- Snap Shot". The relevant aspects of the presentation were substantially unaltered. Three packages were again on offer. However, the business case had been amended. During the course of 2003, all of the right, title and interest of TBI to the rental income payable under the Rental Contracts (then in existence) were assigned by TBI to BNY. By June 2004, the presentation had been amended but again not in any material way in respect of the business case or the "next steps": see [42] and [43] below. By mid 2005, the position was quite different. The substance of the presentation had been amended. BXP was listed on the Australian Securities Exchange. Merchant Contracts entered into during 2003 and 2004 required BXP to pay rebates to merchants of $295 per month. From 2005, the Merchant Contract also required BXP to pay a marketing subsidy of $200 if the merchant carried out the certain marketing obligations (see [57] below). The subsidy payable by BXP then totalled $495, the same amount as the equipment rental fee under the Rental Contract. The presentation was important because, from February 2005, Sales Representatives were required to obtain an acknowledgement from merchants that the presentation was viewed and the rebate structure understood by requiring them to sign the "Agreement Checklist". The incentive is equivalent to making up the shortfall of up to 200 bill payment transactions and is in recognition of your efforts in meeting the criteria outlined below and will effectively ensure that you are at a break even or better position. Each merchant was required to complete the "next steps" (see [37] above). First, complete an application form. The form directed merchants to use the checklist to assist them in completing the documents successfully. The "documents" were the Merchant Contract (Schedule A & B), the Rental Contract (Documents 1-4) and "Package Options & Rebates" (Schedule D & E). Problems were allegedly identified by BXP. The merchants dispute these claims. As a result, in March or April 2008, BXP decided to rationalise the existing rebate model (see [41] and [45]) and adopted a different model: to no longer pay the marketing subsidy to merchants as they did not meet the marketing subsidy obligations; to remove the advertising rebate as a variation to the Merchant Contract; and to remove the $85 rebate also as a variation to the Merchant Contract. In consideration of those variations BXP agreed to waive its rights to seek repayment of the marketing subsidy which had historically been paid to merchants who were not performing the marketing tasks. However, BXP reserved its right to reclaim overpaid marketing subsidies should the remodelled rebate structure be unwound. BXP alleged it was entitled to claw back those payments pursuant to the non-waiver provisions in the Merchant Contract. BXP also increased the overall transaction fees payable to the merchants. Under the previous model, fees were only payable after 200 bill payments. On 8 July 2008, BXP advised merchants to suspend selling all prepaid products and processing all bill payment transactions until further notice. BXP appointed administrators on that day. The Bill Express Payment System effectively ceased on 8 July 2008. The shareholders of TBI appointed a liquidator on 30 June 2008. On about 17 July 2008, Mobius sent letters to the merchants informing them that their obligations under the Rental Contract remained unaffected by TBI's liquidation. The letters went on to state that all amounts payable by the merchants under the Rental Contract would continue to fall due each month pursuant to cll 3.1-3.3 of the Rental Contract. Unsurprisingly, after July 2008 a number of merchants complained to the ACCC --- they were receiving no services or rebates from BXP but were still required to continue to pay TBI the rental fees due under the Rental Contract. As noted earlier (see [32]), cl 3.3 of the Rental Contract required the merchants to continue to make the rental payments even if the BXP services were not provided. Section 47(6) deals with a form of exclusive dealing known as third line forcing. Section 47(6) was amended in 2007: Sch 7, Pt 2 , cl 30, Trade Practices Legislation Amendment Act (No 1) 2006 (Cth). That amended form of s 47(6) applies to conduct engaged in after the commencement of the Part: Sch 7, Pt 2 , cl 33, Trade Practices Legislation Amendment Act (No 1) 2006 (Cth). The Part commenced on 1 January 2007. Contrary to the submissions of the ACCC, these proceedings concern s 47(6) in both its original and amended form. Even though for present purposes the amendment does not alter the operation of the section in this proceeding, the fact that s 47(6) has been amended cannot be ignored. Before turning to the legal analysis, something should be said about the amendments to ss 47(6) and (7). The amendments incorporated only some of the recommendations arising from the Review of the Competition Provisions of the Trade Practices Act ("the Dawson Review"). The only substantive amendment adopted was to ensure that related companies were treated as a single entity for the purposes of s 47(6): Explanatory Memorandum, Trade Practices Legislation Amendment Bill (No 1) 2005 (Cth), Sch 7, Item 30, para 67. The Dawson Review "considered that third line forcing is often beneficial and pro-competitive, and recommended that third line forcing should instead be subject to a substantial lessening of competition test, consistent with other forms of exclusive dealing:" Explanatory Memorandum, Trade Practices Legislation Amendment Bill (No 1) 2005 Cth), Sch 7, Pt 1, para 2. Initially, the amendments proposed by the draft bill and the accompanying explanatory memorandum implemented that recommendation to bring the treatment of third line forcing into line with other forms of exclusive dealing by requiring that third line forcing be subject to a competition test: Explanatory Memorandum, Trade Practices Legislation Amendment Bill (No 1) 2005 (Cth), Sch 7, Pt 1, para 3. However, the draft bill was substantially amended in the Senate and the status quo was restored --- a per se prohibition on third line forcing conduct: Supplementary Explanatory Memorandum, Trade Practices Legislation Amendment Bill (No 1) 2005 (Cth), Outline, para 6.1 (sic) and Notes on Amendments, paras 1.140 --- 1.147; Australia, Senate, Debates (2006) Vol S 244, p 127 --- 128. No doubt the decision to restore the status quo was, in large part, driven by pragmatic considerations. Any corporation concerned about its supply arrangements could, and can still, seek authorisation from the ACCC and the ACCC apparently opposes very few of the hundreds of third line forcing notifications: Explanatory Memorandum, Trade Practices Legislation Amendment Bill (No 1) 2005 (Cth), Sch 7, Pt 1, para 2 and Committee of Inquiry into the Competition Provisions of the Trade Practices Act 1974 (Cth), Review of the Competition Provisions of the Trade Practices Act , (Commonwealth of Australia, Canberra, 2003), p 129, http://tpareview.treasury.gov.au/content/report.asp. However, the fact remains that the per se prohibition on third line forcing conduct precludes any examination of the competitive nature of the conduct by a Court with the result that unless authorisation was sought or the conduct notified to the ACCC, the third line forcing conduct contravenes the provision regardless of its effect on competition. That is unsatisfactory. The applicable principles may be summarised as follows: third line forcing has been the subject of per se prohibition since its enactment. There is no requirement that the conduct complained of be done for the purpose or effect or likely effect of substantially lessening competition: IMB Group [2002] FCA 402 at [56] ; third line forcing requires two discrete products or services with the supply of the first being conditional on the purchaser acquiring another product or service directly or indirectly from a third person: IMB Group [2002] FCA 402 at [72] ; however, where two products or services manufactured or supplied by different entities, are bundled and supplied as a bundled package by the lead supplier, exclusive dealing is not made out because the purchaser could have made separate arrangements for the acquisition of the different components of the package: IMB Group [2002] FCA 402 at [72] . As the second principle provides, the supply of the first must be conditional on the purchaser acquiring another product or service directly or indirectly from a third person. Section 47(6) uses the phrase "on the condition". What that phrase in the context of s 47(6) actually means has not been fully explored. That is unsurprising. Some early decisions of the Full Court of the Federal Court considered whether it was necessary to prove an element of "compulsion" in s 47(6): Re Ku-ring-gai Co-operative Building Society (No. 12) Ltd [1978] FCA 50 ; (1978) 36 FLR 134 and S.W.B. Family Credit Union Ltd v Parramatta Tourist Services Pty Ltd [1980] FCA 125 ; (1980) 48 FLR 445. In the first, Re Ku-ring-gai [1978] FCA 50 ; 36 FLR 134 , Brennan J concurred with Deane J. Bowen CJ dissented. It involves supply upon a condition. The condition may well have been suggested by the recipient of supply. It may have been imposed by some third party. It may arise, by implication, from all the circumstances in which the goods or services were supplied. Even if the relevant condition upon which a loan was made was that contained in the rules of the applicants, a loan by an applicant to one of its members would, if that condition were applicable to it, be, for the purposes of s. 47 of the TPA, a supply of services upon that condition. The section does not look to the origin of the condition upon which there is a supply of services. The section looks to the supply of services upon that condition. [1980] FCA 125 ; 48 FLR 445 , a Full Court comprised of Smithers, Northrop and Sheppard JJ revisited s 47(6). Smithers J quoted and applied Deane J's test in Ku-ring-gai [1978] FCA 50 ; 36 FLR 134: see S.W.B. [1980] FCA 125 ; 48 FLR 445 at 453. This can be expressed in the form "If we do this, you will (must) do that". A condition in the nature of an obligation must be imposed upon the person dealing with the corporation. The condition to be complied with by that person must result from something done or to be done by the corporation imposing the condition. This is illustrated by Re Ku-ring-gai Co-operative Building Society (No. 12) Ltd . [1978] FCA 50 ; (1978) 36 F.L.R. 134 and Trade Practices Commission v. Legion Cabs (Trading) Co-operative Society Ltd. [1978] FCA 47 ; (1978) 35 FLR 372. In the former case the building society required members to whom it lent moneys on the security of an interest in real estate to insure that interest with a person nominated or approved by the society. In the second case, the co-operative society required members who received the benefit of radio services provided by it to purchase petrol and oil from designated service stations. In each case the requirement by the societies imposed an obligation upon the persons to whom they supplied a service to acquire goods or services from other persons designated or approved by the society and to the exclusion of persons carrying on similar businesses to those designated or approved by the society. In each case the arrangement was in the form "If the society does this (supplies the service or offers to supply the service) then you will (must) do that (acquire services from a nominated insurer or acquire goods from nominated service stations)". In each case the requirement can be said to be a condition which has attributes of compulsion and futurity. In each case persons competing with the nominated insurer or the nominated service station were affected adversely since the person upon whom the obligation was imposed was not free to acquire services or goods from them. Persons competing with Alliance are not affected adversely in the requisite sense. A member of the credit union desirous of acquiring travel services is free to deal with any person engaging in the travel agency business. He is not required to perform a series of acts over an extended period. He is not required by a condition or obligation to acquire the services of Alliance and Alliance only. If he does acquire the services of Alliance he need not disclose his membership of the credit union. If he does acquire the services of Alliance and discloses that he is a member of the credit union, then upon him paying the full costs of the travel services, and upon him entering on his travels, Alliance is required under its arrangement with the credit union to make a commission rebate to the credit union and the credit union then supplies its services to the member. This arrangement is in the form: "If you do that we will (must) do this. " No condition in the nature of an obligation is imposed upon the person dealing with the corporation. At no time is that person under any obligation to perform or observe the alleged condition. Any obligation that may arise is imposed upon the corporation. This conduct does not come within the conduct described by s. 47(6) of the [TPA]. It is not to be analysed in the same form as in the society cases. Instead, the ACCC submitted the requirement was no more than that the condition must be one which imposed on the consumer the practical requirement (even if not legally enforceable) to contract with a third line forcing beneficiary. The question raised by the present application in the context of s 47(6) may be briefly stated. Has Newspower Victoria supplied promotional services to advertising members on the condition that those newsagents will purchase goods of a particular kind or description from VNS? The applicant identifies the goods as "promotional goods" or alternatively "general newsagent supplies". The two essential elements of the conduct struck at by s 47(6) are indicated by the phrases "on the condition that" and "will acquire goods or services". In SWB Family Credit Union Ltd v Parramatta Tourist Services Pty Ltd [1980] FCA 125 ; (1980) 48 FLR 445 the meaning of the words "will acquire" were considered by a Full Court of this Court. This can be expressed in the form: "If we do this, you will [must] do that. " A condition in the nature of an obligation must be imposed upon the person dealing with the corporation. The condition to be complied with by that person must result from something done or to be done by the corporation imposing the condition. It is not, in my view, necessary that the supplying corporation impose the condition. The condition may be attached to the supply at the instigation of either party or, indeed, a third party; the essential requirement is the obligation on the recipient of the goods or services to acquire goods or services of a particular kind or description from another : see Re Ku-ring-gai Co-operative Building Society (No.12) Ltd [1978] FCA 50 ; (1978) 36 FLR 134 at 167 per Deane J. The applicant must, in my view, establish an element of compulsion, not necessarily one that is legally enforceable, but one which goes beyond creating a mere hope or expectation in the person for whose benefit the condition has been attached. I reject that contention. In my view, it not only ignores the words of s 47 (including ss 47(6) and (13)) but assumes (incorrectly) that all commercial arrangements must somehow fit into or match those which have gone before. They do not. The starting point must be the words of the statute. . As the emphasised words make clear, there is an essential element --- supply of goods or services to a purchaser "on the condition" that the purchaser will acquire goods or services of a particular kind or description from another. Making the contract with that condition constituted engaging in the practice of exclusive dealing. It was the inclusion of the condition obliging AFS USA to direct its work in that way that brought the lender's supply of services within s 47(6). It is therefore unsurprising that Courts have rejected the contention that infringement of s 47(6) of the TPA was determined by whether or not the supplier offered to enter into a single packaged contract with the purchaser or whether the arrangements involved the purchaser entering into separate contracts with the tying supplier and the tied supplier: IMB Group [2002] FCA 402 at [79] , [84] and [95]; Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd [1986] HCA 72 ; (1986) 162 CLR 395 at 403; The Paul Dainty Corporation Pty Ltd v The National Tennis Centre Trust [1990] FCA 163 ; (1990) 22 FCR 495 at 515. Whether in the present case the "the entire factual matrix" establishes the supply of goods or services to a purchaser "on the condition" that the purchaser acquire goods from another is an issue to which I shall now turn. The "condition" being that in order to acquire the Bill Express Payment System from BXP, merchants had to simultaneously acquire equipment in the form of "computer hardware (etc)" from TBI. I agree. The reverse was also true. It was a condition of the offer by TBI to lease the equipment necessary to conduct the Bill Express Payment System and / or the actual lease of the equipment necessary to conduct the Bill Express Payment System to the merchants that the merchants acquire goods and services from BXP --- namely, the electronic products and services that formed part of the Bill Express Payment System. What then was the evidence of the "condition"? The ACCC relied upon a number of documents to support the existence of the "condition" and the application of s 47(6) of the TPA. I have not included each fact and matter relied upon by the ACCC. In my view, the contents of the following documents are sufficient to support such a finding. First, cl 14 (either para (i) or (j)) of every Merchant Contract made it a condition of that agreement (which by definition included the Rental Contract) that the merchant observe each obligation specified in both of the Bill Express Contracts: see [28] above. Secondly, the cover page of the Merchant Contract and the Rental Contract was entitled "Express Shop Application Form" which stated "Please use this check list to assist in completing the attached documents successfully": see [44] above. Both the Bill Express Contracts were listed as attached and were in fact attached. Thirdly, cl 2 of the Merchant Contract contained the "Introduction" identified earlier: see [25]. Four versions of the Merchant Contract were tendered in evidence. At some point over the life of the Bill Express Payment System, the wording of the sentence "Merchants participate in the Service by signing the Merchant [Contract] or the ... Rental [Contract] and by agreeing to these Terms and Conditions" also read "Merchants participate in the Service by signing the Merchant [Contract] and the ... Rental [Contract] and by agreeing to these Terms and Conditions". I accept the ACCC's submission that the change in the wording does not materially alter the application of s 47(6) of the TPA because a merchant could only enter both Bill Express Contracts and by reason of cl 14(i) or (j) and the definition of "Agreement" in the Merchant Contract, each merchant was still bound by both Bill Express Contracts. Finally, not only were the Bill Express Contracts contractually linked they were also commercially linked. For those reasons, each of BXP and TBI contravened s 47(6) of the TPA. It is necessary to identify the conduct complained of and then identify the proper approach to the conduct which is sought to be impugned: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180 ; (1984) 2 FCR 82 at 87-90. As set out in Australian Competition and Consumer Commission v Dukemaster Pty Ltd (ACN 050 275 226) [2009] FCA 682 at [10] , the principles may be summarised as follows: A contravention of s 52(1) of the TPA is established by "conduct" which is misleading or deceptive or likely to mislead or deceive: Global Sportsman Pty Ltd 2 FCR 82, 87. The "conduct", in the circumstances, must lead, or be capable of leading, a person into error ( Hannaford (trading as Torrens Valley Orchards) v Australian Farmlink Pty Ltd [2008] FCA 1591 at [252] citing Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136 ; (1982) 42 ALR 177 at 200; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 198) and the error or misconception must result from "conduct" of the corporation and not from other circumstances for which the corporation is not responsible: Global Sportsman Pty Ltd [1984] FCA 180 ; 2 FCR 82 , 91. "Conduct" is likely to mislead or deceive if there is a "real or not remote chance or possibility regardless of whether it is less or more than fifty per cent": Global Sportsman Pty Ltd 2 FCR 82, 87. Section 52(1) is concerned with the effect or likely effect of "conduct" upon the minds of that person or those persons in relation to whom the question of whether the "conduct" is or is likely to be misleading or deceptive falls to be tested. The test is objective and the Court must determine the question for itself: Global Sportsman Pty Ltd 2 FCR 82, 87. Section 52 is not designed for the benefit of persons who fail, in the circumstances of the case, to take reasonable care of their own interests: Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332 ; (1987) 78 ALR 193 at 241. Moreover, it would be wrong to select particular words or acts which although misleading in isolation do not have that character when viewed in context: Elders Trustee [1987] FCA 332 ; 78 ALR 193 at 241 citing Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 199. "Conduct" can, of course, include making a statement which is misleading or deceptive or likely to mislead or deceive: Global Sportsman Pty Ltd [1984] FCA 180 ; 2 FCR 82 , 88. By making a statement of past or present fact, a corporation's state of mind is irrelevant unless the statement involved the state of the corporation's mind: Global Sportsman Pty Ltd [1984] FCA 180 ; 2 FCR 82 , 88. Contravention of s 52(1) does not depend upon the corporation's intention or its belief concerning the accuracy of the statement of fact but upon whether the statement conveys a meaning which is false. A false meaning will be conveyed if what is stated concerning the past or present fact is inaccurate but also if, although literally true, the statement conveys a meaning which is false. The nature of the case and the evidence adduced by the ACCC is not of the kind where, in the absence of an agreement as to the facts or adequate testing of the oral assertions, it is appropriate to make findings in relation to the alleged oral statements. The evidence disclosed that merchants to whom the Bill Express Payment System was promoted were given documents that expressly stated that the system would, in effect, be "fully subsidised". Those documents included: a printed slide kit with the BXP corporate logo entitled "Why should you bother with bill payment? You will not be out of pocket to install and [sic] will save on Eftpos rental and fees. I accept the ACCC's submission that each of those statements represented to the merchants to whom they were made that the Bill Express Contracts they would enter to acquire the Bill Express Payment System ensured that they would be fully subsidised. The merchants would at least break even financially. As the factual analysis showed, that representation was misleading. The Bill Express Contracts did not ensure that the merchants would at least break even financially because: the Merchant Contract contained a term that permitted BXP to unilaterally vary the Merchant Contract (see [25] above) which BXP in fact did in 2008 by withdrawing some of the rebates previously paid to merchants: see [46] --- [47] above; although the Bill Express Contracts were contractually linked, they were separate contracts which exposed the merchants to a risk of financial loss if BXP ceased to pay any rebates and / or supply the Bill Express Payment System because TBI (or its assignee) could and did continue to enforce the obligation of the merchant to pay rent to TBI under the Rental Contract: see [32] and [49] above; and the Bill Express Contracts purported to bind each of the merchants to an undertaking that "it waive[d] all rights of set-off against [TBI]". Put simply, the arrangements promoted by BXP and TBI: did not ensure that each of the merchants was in a breakeven or better position; did not ensure that the "net cost" of the Bill Express Payment System to the merchants was "$0". Consistent with the principles earlier identified (see [76] above), the conduct, in the circumstances, lead or was at least capable of leading, a merchant into error. As the ACCC submitted, these misleading representations were with respect to future matters. There was nothing to suggest that BXP and TBI had reasonable grounds for suggesting a risk free future for merchants. Accordingly, I accept that the conduct also contravened s 51A of the TPA although I note that no relief was sought in relation to a contravention of that section. First, it purported to impose on the merchants an "absolute and unconditional" obligation to pay monthly rental amounts in all events notwithstanding: "any defect" in the equipment the subject of the Rental Contract; "the condition, operation or fitness for use" of the equipment. Clause 3.3 imposed on the merchants an "absolute and unconditional" obligation to pay monthly rental amounts "in all events" notwithstanding "any defect" in the equipment provided under the Rental Contract, and notwithstanding "the condition, operation or fitness for use" of the equipment. Those terms are void pursuant to s 68(1) of the TPA. Secondly, cl 3.3 purported to limit the merchant's remedy under the Rental Contract for defects in the equipment or any other breach of the Rental Contract to a claim for damages. That statement was false. If the equipment was defective or not fit for a stated purpose, the merchant would be entitled to either rescind the contract and recover the price paid as a debt due from the supplier (s 75A of the TPA) or obtain relief under the TPA including possibly orders avoiding the merchant's obligation to pay monthly rental fees. As Counsel for the ACCC submitted, cl 3.3 of the Rental Contract was equivalent to a retailer asserting in store displays that the business has a "no refunds, exchange only" policy. Such statements have been held to be false and in contravention of s 53(g) of the TPA because the remedies available under the TPA are not restricted to exchanges but include the right to rescind and be refunded the purchase price: see e.g. Miller v Fiona's Clothes Horse of Centrepoint Pty Ltd (1989) ATPR 40-693 and Trade Practices Commission v Radio World Pty Ltd [1989] HCA 7 ; (1989) 16 IPR 407. As noted earlier, cl 3.3 was included in the Rental Contract. The Rental Contract formed part of the Merchant Contract (see [24] above). The Bill Express Contracts were provided to merchants. The Bill Express Contracts contained a false and misleading representation concerning: the existence, exclusion or effect of a condition implied into the Rental Contract by s 71 of the TPA; and the existence of other remedies available to the merchants including the right to rescind under s 75A of the TPA. Those contraventions having been found, the question is whether the Court should make the binding declarations substantially in the form sought by the ACCC. There was much discussion and debate during the course of the hearing about the form of the declarations. I accept that the Court has power to make binding declarations (s 21 of the Federal Court of Australia Act 1976 (Cth)). In the circumstances of the present case, there are important reasons for granting the declarations sought. First, the fact that the proceedings were in reality undefended, there is some benefit to the public, the Respondents and the merchants that the contravening conduct be clearly identified. Secondly, BNY has agreed to give an undertaking that if the Court finds that BXP and TBI engaged in the practice of exclusive dealing within the meaning of s 47(6) of the TPA, BNY will not take steps to recover any further money from merchants under the Rental Contracts and will use reasonable endeavours to repay to merchants the rental fees which BNY has collected but not yet paid over. The ACCC submitted that the Rental Contracts were unlawful at common law because of the breach of s 47 of the TPA and thus void. I would not grant such a declaration. The ACCC could not and did not submit in evidence each of the thousands of Rental Contracts executed by TBI and the merchants. There are other reasons for refusing to grant a declaration of the kind sought by the ACCC. First, I am not persuaded that contravention of s 47(6) necessarily gives rise to a finding that the contracts are infected by illegality and thus are void at common law: Master Education Services Pty Ltd v Ketchell [2008] HCA 38 ; (2008) 236 CLR 101. However, even if I was persuaded that there was illegality, what is illegal? In the context of s 47(6) , the ACCC submitted (properly in my view), that the third line forcing operated in respect of both the Rental Contract and the Merchant Contract. In those circumstances, I do not consider that the form of declaration sought by the ACCC is appropriate. I can see no basis for choosing one contract over the other --- they are contractually and commercially linked. In fact, the form of the first declaration proceeds on that basis. Thirdly, BXP and TBI are in liquidation and BNY has given an undertaking in the terms earlier identified (see [90] above). In those circumstances, it is by no means clear why such a declaration is necessary. For the same reasons, I refuse to grant the order sought by the ACCC that the following Rental Contracts which were adduced in evidence were void, namely: the Rental Contract executed by HDF Nominees Pty Ltd (ACN 007 007 132) on 8 November 2005 and by TBI on 17 November 2005; and the Rental Contract executed by Neil Brennan on 13 November 2006 and by TBI on 15 November 2006. If there is some compelling legal or other reason why such a declaration (or order in relation to the two Rental Contracts identified in [94]) is necessary, the ACCC may seek to have the matter relisted and I will consider the issue upon the receipt of further submissions. Again, if the ACCC seeks costs, it should file a submission (of not more than two A4 pages) by no later than 18 September 2009 directed at the question of costs. In the absence of such a submission, there will be no order as to costs as between the ACCC and each of BXP, TBI and Mobius. I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | third line forcing meaning of "on the condition" misleading and deceptive conduct false and misleading representations trade practices |
It was granted the patent in 1992. Another international pharmaceutical company, Apotex International Inc, is on the verge of supplying drugs for importation into Australia which contain that compound. The generic drugs will be imported through GenRx Pty Ltd, a company ultimately owned by Apotex. Arrangements are well advanced for the sale of the imported drugs in the Australian market which will commence after 1 December 2006. The drugs have been registered on the Australian Register of Therapeutic Goods and some are being included in the Pharmaceutical Benefits Scheme. Arrangements to import the drugs have been underway since at least November 2004. There is little room to doubt that the importation of the drugs will involve an infringement of Merck's patent. Merck has commenced infringement proceedings and seeks an interlocutory injunction to restrain the importation of the drugs until a final hearing. GenRx resists the injunction and says, amongst other things, that there can be no infringement because the patent is not valid. That is because the invention was not novel. 2 The importation of the drugs is scheduled for 31 October 2006. The interlocutory application was heard on 26 and 27 October 2006 and, at the request of the parties, this judgment is being given before the scheduled date of importation. Given the limited time to prepare these reasons, they are intended convey the substance of my reasons for granting interlocutory injunctive relief but do not discuss some matters of detail. 3 The first applicant, Merck, is the registered owner of Australian Patent No 625704, entitled "Process for preparing 4-amino-1-hydroxybutylidene-1, 1-bisphosphonic acids or salts thereof". The shortened name of the compound 4-amino-1-hydroxybutylidene-1, 1-bisphosphonic acid is alendronic acid. The patent period is from 8 June 1990 to 8 June 2010. A claimed salt of alendronic acid in Merck's patent (claim 23) is 4-amino-1-hydroxybutylidene-1, 1-bisphosphonic acid monosodium salt trihydrate ("AMT"). AMT is an active ingredient in Merck products carrying the FOSAMAX label, prescribed for the treatment of various bone disorders such as osteoporosis. The second applicant, Merck Sharp & Dohme (Australia) Pty Ltd carries on in Australia the business of formulation, sale and distribution of pharmaceutical products. It is a subsidiary of the first applicant. On 7 February 2001, MSDA obtained registration of "FOSAMAX Once Weekly" and "FOSAMAX Plus" on the Australian Register of Therapeutic Goods. The applicants commenced these proceedings on 25 September 2006 shortly after receiving correspondence suggesting one or number of the generic drugs to be imported by GenRx had been included in the Pharmaceutical Benefits Scheme. They applied to this Court under s 120 of the Patents Act 1990 (Cth) that the respondent be restrained from infringing claims 16 to 27 of the patent. 4 As interlocutory relief, the applicants seek orders that the respondent be restrained from infringing claims 16 to 27 of the patent by supplying, ordering to supply, importing or keeping for the purpose of doing any of those things the products branded Apo-Alendronate, GenRx Alendronate, Chemmart Alendronate, Terry White Chemists Alendronate and Aledronate-DP. This includes preventing the respondent from continuing to list or apply to list any one or more of those products for supply under the Pharmaceutical Benefits Scheme. It will. The drugs which GenRx proposes to import into Australia for sale contain AMT. By s 13 of the Act, Merck has the exclusive rights to exploit the invention which includes an exclusive right to import and sell product which it covers. The conduct of GenRx will derogate from that right. One of the inventors was Sergio Rosini. The Rosini patent was published in the Australian Patent Office on 18 December 1986. Merck has since acquired this patent. It contains one claim. It is "for a method of treatment of urolithiasis and inhibiting bone reabsorption which consists of administering to a patient in need thereof and effective amount of 4-amino-1-hydroxybutane-1, 1-bisphosphonic acid". Before considering what the patent discloses, it is convenient to discuss the principles concerning novelty of an invention. Lack of novelty is the only ground advanced by GenRx in the interlocutory hearing in support of the contention that the Merck's patent is invalid. 7 The principles to be applied in determining whether an invention was novel are comparatively settled. Courts both in Australia and the United Kingdom continue to view the principles as rooted in the decision of Lord Westbury in Hill v Evans (1862) 31 LJ Ch (NS) 457, 1A IPR 1. That decision has recently been described by Lord Hoffman as a judgment of unquestionable authority: Smithkline Beecham plc's (paroxetine methanesulfonate) patent [2006] RPC 10. Hill v Evans concerned disclosure and a patent for the purification of gas. Lord Westbury described the disclosure required in an earlier publication necessary to destroy a later patent for want of novelty, as involving a statement such that a person of ordinary knowledge of the subject would at once perceive, understand and be able practically to apply the discovery without the necessity of making further experiments and gaining further information before the invention could be made useful. His Lordship continued by saying that if something remained to be ascertained which was necessary for the useful application of the discovery, that provided sufficient room for another valid patent. 8 The other English authority described by Lord Hoffman in Smithkline Beecham plc's (paroxetine methanesulfonate) patent as of unquestionable authority was the judgment of the Court of Appeal in General Tyre and Rubber Co v Firestone Tyre and Rubber Co [1972] RPC 457, 1A IPR 121. In that case the prior publications and patent concerned processes (or aspects of processes) for making a compound suitable for tyre treads by mixing synthetic rubber with oil and carbon black. The Court of Appeal indicated that if the prior inventor's publication contained a clear description of, or clear instructions to do or make, something that would infringe the patentee's claim if carried out after the grant of the patentee's patent, the patentee's claim would have been shown to lack the necessary novelty. The prior inventor may have had a different starting point, but if the prior inventor's instructions were carried out and inevitably result in something being made or done which would constitute infringement of the patentee's claim, the patentee's claim would have been anticipated. 9 The case considered by the House of Lords in Smithkline Beecham plc's (paroxetine methanesulfonate) patent concerned a patent for a compound, a crystalline salt. Somewhat simply described, the earlier publication concerned the same compound (though with different characteristics) and contained examples which, if skilfully manipulated in a way not described in the earlier publication, created the compound with the characteristics described in the patent in suit. The trial judge concluded the patent was not valid. This judgment was reversed by the Court of Appeal but reinstated by the House of Lords. Lord Hoffman gave the leading judgment. As noted in the headnote, the following emerges from his Lordship's judgment. The infringement had to be not merely a possible or even likely consequence of performing the invention disclosed by the prior disclosure. It had to be necessarily entailed. Anticipation necessary to defeat a patent for want of novelty required disclosure of subject-matter which, when performed, must necessarily infringe the patented invention. It was the requirement that the performance of an invention disclosed in the prior art must necessarily infringe the patent which distinguished novelty from obviousness. The performance of an invention disclosed by the prior art would not infringe the patent but the prior art would make it obvious to a skilled person how he might make adaptations which resulted in an infringing invention, then the patent might be invalid for lack of inventive step but not for lack of novelty. 10 Australian authorities referred to by the parties, and judgments of Full Courts of this Court in particular, do not, in substance, suggest some other approach. Senior counsel for GenRx referred to passages in the joint judgment of Black CJ and Lehane J in Bristol-Myers Squibb Co v F H Faulding and Co Ltd [2000] FCA 316 ; (2000) 97 FCR 524 in which their Honours spoke of it being sufficient that the prior publication gave a direction or made a recommendation or suggestion which could be followed by a skilled reader and that the direction, recommendation or suggestion might be implicit. However, those observations were made in the context of quoting with approval the often cited and evocative observations of the Court of Appeal in General Tyre and Rubber Co v Firestone Tyre and Rubber Co that the prior publication must contain clear and unmistakable directions to what the patentee claims to have invented. A signpost, however clear, upon the road to the patentee's invention was not sufficient. The prior inventor must be clearly shown to have planted his flag at the precise destination before the patentee. The joint judgment of Black CJ and Lehane J has since been described in another recent Full Court judgment as deciding that the prior publication must contain "clear and unmistakable directions": Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd (2005) 67 IPR 230 at [140]. To similar effect is the joint judgment of French and Lindgren JJ in another recent Full Court judgment Pfizer Overseas Pharmaceuticals v Eli Lilly and Co (2005) 225 ALR 416 at [311]-[317]. 11 In the present case, GenRx relies, in substance, on two aspects of the prior publication embodied in the Rosini patent. The first is that Rosini clearly directs the skilled reader to 4-amino (alendronic) acid and not 5-amino acid (I use the shorthand description used in GenRx's submissions which somewhat simplify what the patent says). In a table, Table 6, the reader is referred to some typical pharmaceutical formulations containing amino-butan-bisphosphonic acid which included capsules containing 4-amino acid, sodium salt. That is, a monosodium salt version of the acid. One experiment in Rosini, experiment 5, instructs the reader to undertake an experiment commencing with a quality of 5-amino acid to which is added a solution of sodium hydroxide. That is then decolourized, filtered and concentrated and kept in the cold for a period of three days under gentle stirring. This produces a crystalline solid which is washed with a small amount of cold water and then methanol. After this is dried at 100deg.C, a quantity of the monosodium salt of 5-amino acid is produced. 12 GenRx led evidence that experiment 5 provided an illustration of how a monosodium salt of 4-amino acid might be produced. It also led evidence that if experiment 5 was followed but commencing with 4-amino acid rather than 5-amino acid as instructed, then AMT would be produced. That would come about and the trihydrate (AMT being a trihydrated monosodium salt of alendronic acid) would be created if a drying process as contemplated in experiment 5 was carried out though, as Merck points out, at a different temperature in different conditions. Merck also responded by pointing out that experiment 5 commences with 5-amino-1-hydroxy pentan-1, 1-bisphosphonic acid which is not alendronic acid as that compound has an extra carbon atom. 13 The evidence of GenRx, at its highest, was the opinion of Dr McClelland, Professor Emeritus at the University of Toronto, that a person skilled in the art would follow the Rosini patent and be led directly and without difficulty to AMT. In addition, as GenRx points out, Merck successfully prosecuted infringement proceedings in the United States in 2002 against a generic drug manufacturer which sought to sell and distribute a generic version of FOSOMAX containing, it appears, AMT. Merck did so relying on the Rosini patent. Judge Farnam of the United States District Court of Delaware concluded (a conclusion upheld on appeal in the Court of Appeals in 2003) that the claim in the Rosini patent for 4-amino-1-hydroxybutane-1, 1-bisphosphonic acid included both its free acid and sodium salt forms. His Honour's ultimate conclusion did not appear to depend on AMT being a monosodium trihydrate which, on evidence of the inventor of AMT (filed in a change of inventorship application in Australia in 1992), is of significance therapeutically. 14 Having regard to the criticisms made by Merck of GenRx's evidence, I doubt that GenRx is, in relation to the contention advanced in this interlocutory hearing that the invention in the patent in suit is not novel, in the territory marked out by the authorities referred to at [7]-[10] above. That is, GenRx's case of invalidity based on lack of novelty does not have strong prospects of success. Indeed it has, in my opinion, limited prospects of success. However, I doubt that it is open to me to proceed on the basis that there is not a serious question to be tried on the alleged invalidity of the patent particularly having regard to the findings of the Federal District Court in the litigation in the United States. I accept there is a serious question to be tried. It appeared to be accepted, and probably necessarily so, that Merck would lose sales, possibly lose market share and other generics may quickly enter the market to compete with the FOSOMAX line of products. The clear picture of Merck's present significant market share (though already adversely affected by one generic in the market, Alendro) is likely to be quickly and substantially muddied by the entry of not only the generics to be imported by GenRx, but other generics which might be encouraged to follow GenRx's example. It also appeared to not be seriously contested that Merck will lose the commercial advantages of being in the market with the patented products when the patent expires. Changes may be made to the Pharmaceutical Benefits Scheme in the near future and how they might impact on any loss suffered by Merck would be difficult to gauge. Undertakings are offered by GenRx and Symbion that neither will request a reduction of the Pharmaceutical Benefits Scheme benchmark price until final judgment is given in these proceedings. The original submissions of the parties, as filed, appeared to accept that those principles were as discussed by Stone J in Hexal Australia Pty Ltd v Roche Therapeutics Inc (2005) 66 IPR 325, applied by Sundberg J in Pharmacia Italia SpA v Interpharma Pty Ltd (2005) 67 IPR 387. That is, on the one hand, first the applicants must establish that there is a serious question to be tried on the alleged infringement, secondly unless the injunction sought is granted, they will suffer irreparable harm for which damages cannot adequately compensate and thirdly the balance of convenience favours the granting of the injunction sought, and on the other hand, the respondent must establish a serious question to be tried on the alleged invalidity of the patent. I accept these are the applicable principles. 17 During the course of the argument, counsel for GenRx referred to the decision of the High Court in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 119 CLR 618, the judgment of Stephen J in Firth Industries Ltd v Polyglas Engineering Pty Ltd [1975] HCA 25 ; (1975) 132 CLR 489 and observations in the fourth edition (2002) of Meagher, Gummow and Lehane's: Equity: Doctrines and Remedies at 782 (but, compare the commentary at 787) that "the old rule still obtains that only in the rarest of cases can a plaintiff obtain an interlocutory injunction against the infringement of the patent if the validity of the patent is put in issue". However I think it is clear, particularly having regard to the analysis of Gummow J in Martin Engineering Co v Trison Holdings Pty Ltd (1988) 81 ALR 543, that Courts are now considerably less reticent about granting interlocutory injunctive relief in infringement proceedings, than may have been the case historically. The balance of convenience favours it. Since at least November 2004, when the solicitors acting for GenRx in these proceedings sought in writing (by reference to the same file number that the firm is using for this matter) details of Merck's patent from IP Australia, GenRx has known of Merck's rights under the patent in relation to AMT. A clear inference is available than since then, GenRx has set about making the commercial arrangements to import into Australia for sale and distribution drugs containing an active ingredient protected by Merck's patent in Australia. It has done so for the admitted purpose of gaining the commercial advantage of putting the second generic drug into the market. Those arrangements have included sponsoring the registration of the drugs on the Australian Register of Therapeutic Goods and sponsoring the inclusion of one of them in the Pharmaceutical Benefits Scheme. The other branded drugs to be imported have been or are likely to be listed in that scheme on the application of other sponsors. 19 There can be little doubt that GenRx has engaged in this conduct deliberately and with the knowledge that Merck's patent would be infringed unless it was able successfully to impeach its validity. It could have done so by revocation proceedings. It has not and now calls in aid the consequences of not being able to give effect to the arrangements now in place. That includes commercial loss to it and others and potentially, loss of reputation. For my part I give little weight to these complaints or concerns. As just discussed, GenRx has placed itself in this position quite deliberately and knowingly. To use the language of some of the authorities, its "eyes were wide open". 20 While, if the infringement suit is successful, Merck's losses are ultimately only financial losses for which damages can be awarded, I accept that it will be difficult to assess with any real precision what those losses are so as compensate Merck for its actual loss. This is a relevant consideration. Issues were raised by Merck about whether it would be able to recover damages from GenRx given that it is a company with only two issued dollar shares. I do not view this as a matter supporting the grant of interlocutory relief. If I had concluded that interlocutory relief should not be granted having regard to the matters already discussed, a regime could have been put in place to ensure that any order for damages ultimately made could be made efficacious and met by Apotex. 21 The Act and the authorities to which I have referred create a statutory regime intended to afford patent owners a measure of protection subject, of course, to the rights of others to remove that protection. For the reasons I have given, I consider that in the circumstances discussed, the protection the Act affords Merck should continue until this application has been heard and determined on a final basis. I proposed to grant interlocutory injunctive relief broadly in the term sought by Merck. GenRx should pay the applicants' costs of this interlocutory application. | interlocutory injunction application to restrain respondent from importing and supplying pharmaceutical products containing applicant's patented compound claim that patent invalid for lack of novelty considerations relevant to grant of injunction where respondent challenges validity of patent whether serious question to be tried on validity of patent patents |
The motion is based upon various objections as to admissibility of the evidence which it is proposed to adduce from the witnesses in question. 2 The respondents and cross-claimants have prepared a convenient schedule of their objections, which also summarises the applicants' response to the objections. In dealing with the objections I will briefly state my conclusions. There is a large number of objections. Par 68 Objection upheld as to all words after 'Eurest'. Objection upheld on second sentence after 'I was not happy'. Par 23 Objection upheld --- this is a statement about 'the purpose' of the contract. It does not purport to go to reliance. Par 24 Objection upheld as to all words after 'prepared a report'. May give evidence of things said which support the conclusionary statement. Par 43 Objection upheld --- this is a statement about 'the intention' of an agreement. Par 53 Objection overruled --- compendious reference to statements at meeting but requires elaboration to be given any weight. Par 56 Objection overruled but statement requires elaboration to be given any weight. Par 33 Objection overruled --- this is explanatory of the witness's views as a director of OTML and secretary for the Department of Mining. Par 35 Objection overruled --- statement of existence of documents which has been identified by reference to their content. Par 37 Objection upheld --- as to statement of OTML's approach. Statement re future role of business owners is admissible. Par 38 Objection upheld as to last sentence. Par 39 Objection upheld --- assumes admissibility of intention of MRSM and is otherwise argumentative. Par 41 Objection upheld --- the position of the OTML Board is not a matter of inference for a witness, it is a matter of evidence either by way of resolution or some other indicator in evidence from which the Court may draw an inference. His evidence may, subject to compliance with the requirements of s 67 of the Evidence Act 1995 (Cth) (the Act), be received under an exception to the hearsay rule. I would therefore not uphold the objection to the statement on the basis simply that its maker is deceased. The question whether the evidence should otherwise be excluded pursuant to the discretion conferred on the Court by s 135 of the Act is left open at this stage as it has not been the subject of any submissions. I also leave open for further submissions the weight which should be given to any part of this statement which is not corroborated by other evidence. Par 40 Admissible as to state of mind of witness but not otherwise. Par 52 Admissible only as to recommendation of Ronald Kolalio. The balance is inadmissible second order hearsay. Par 53 Inadmissible. Apparently second order hearsay. Par 81 First and last sentences are inadmissible as conclusionary. Par 83 Evidence inadmissible as conclusionary. The third sentence is admissible as evidence of Mr Uglinga's state of mind linking to subsequent action. Pars 18 and 19 Admissible as evidence of historical background to subsequent events. Pars 32 and 33 Inadmissible --- no apparent relevance. Par 45 Admissible as relevant to subsequent action taken by witness as OTML Executive Manager. Par 49 Admissible --- goes to state of mind of witness --- no prejudice. Par 53 Last sentence --- inadmissible comment. Par 54 Admissible as explaining subsequent action and not as proof of truth of comments. Par 58 Inadmissible as conclusionary. Par 60 Admissible --- evidence of instruction to Terupo Apoki. Admissible only to show instruction given. Par 61 First sentence admissible as to state of mind of witness. Second sentence admissible as to commercial reality perceived by witness. Par 68 Admissible on basis of witness's experience as to OTML Executive Manager. Par 72 Admissible as evidence of the state of mind of the OTML Executive Officer. Par 74 Admissible as evidence of the state of mind of the OTML Executive Officer. Par 36 Statement of belief admissible to prove state of mind of witness. Par 39 Inadmissible comment. Par 40 The words 'and the Board' inadmissible as hearsay and otherwise opinion of the state of mind of other members of the Board. Par 41 Admissible only as to witness's state of mind. Par 70 Admissible, albeit would require elaboration to be given any weight. Par 75 Inadmissible as expression of opinion only. Par 76 The words 'on the part of the Board of MRSM' are inadmissible as opinion and/or hearsay. Par 82 The statement of a breakdown in the relationship of trust and confidence is admissible as reflecting the state of mind of the witness. The words 'there has remained a lack of transparency and ...' are inadmissible. Par 83 Inadmissible comment. Par 86 Last sentence inadmissible comment. Par 52 Inadmissible as hearsay. Par 84 Inadmissible in form. Par 85 Admissible subject to production of document. Par 49 Inadmissible. Requires statement of content rather than characterisation thereof. Par 91 Last three lines inadmissible. Par 92 Second sentence inadmissible. Par 94 Second sentence only inadmissible. Par 99 Relevant to explain action taken by witness (see par 100) but otherwise not evidence of the existence of problems. Par 101 Admissible on the same basis. Par 102 Inadmissible comment. Par 36 The words 'because of the problems' are inadmissible. Par 39 Second sentence inadmissible hearsay. Par 40 Admissible if letter produced. Second sentence comment inadmissible. Par 20 Inadmissible as to form. Par 12 Inadmissible --- no relevant representation- apparent statement of opinion by witness. Par 13 Inadmissible hearsay. Par 16 Inadmissible in the form in which it is put. 16 Statement of William Fenwick made on 1 September 2005. Par 43 Admissible if document is produced. Par 57 Admissible as linked to par 56 and reflecting state of mind of witness. Par 77 Inadmissible after the words 'Michael Baitia'. Par 113 Inadmissible unless document produced. Otherwise admissible to explain next action of witness. Par 128 Inadmissible to the extent that it refers to the concerns of another. Admissible in first person singular. Par 45 Inadmissible up to the word 'Poon's'. Par 46 Admissible --- no apparent dispute. Par 67 Admissible if document produced. Par 68 Admissible if document produced. Par 84 Inadmissible --- no factual foundation has been laid for this evidence. The fact that the witness had some relevant experience between 1980 and 2000 does not expose the factual grounding for the estimates offered. The applicants' response to the objections raised against it do not address the issue of relevance. The statement will not be admitted in its present form unless relevance is first demonstrated. Par 28 Admissible. Par 35 Admissible subject to production of documents. Par 41 Admissible. Par 50 Inadmissible comment and/or hearsay. Par 60 Admissible subject to production of document. Par 75 Admissible as to fact of discussion. Par 84 Admissible as to fact of discussion. Par 85 Inadmissible as statement of opinion. Pars 86 to 92 Admissible as to facts of discussions. Par 98 Sentence in parentheses inadmissible as comment --- conceded. Par 104 Inadmissible hearsay unless relevance demonstrated. Par 121 The words in parentheses are inadmissible as comment --- conceded. Par 122 Admissible. Par 126 The words in brackets are inadmissible as comment --- conceded. Par 10 Admissible subject to relevance. Par 11 Admissible subject to relevance. Par 12 Admissible as to state of mind of witness. Par 14 Admissible going to state of mind of witness and subject to relevance. Par 7 Inadmissible as argument and comment. Par 8 Admissible subject to relevance. Par 7 Admissible subject to relevance. 27 Further witness statement of John Atemeyok dated 30 November 2005(3025 PRF006). Par 7 Admissible. Par 6 Inadmissible comment. The respondents seek a 'strike out' of the various elements of the witness statements. That is not appropriate. It is sufficient to say that if tendered those parts of the witness statements will not be received in evidence. An order to that effect will be made. The question of the costs of the motion will be reserved. | witness statements objections as to admissibility motion to strike out parts of statements rulings as to admissibility in advance of trial strike out order inappropriate practice and procedure |
This proceeding concerns a decision made on 4 February 2009 by the second respondent, the Migration Review Tribunal ( the Tribunal ), affirming a decision by a delegate of the first respondent, the Minister for Immigration and Citizenship ( the Migration Minister ), to cancel the applicant's visa. The Tribunal's decision was based on a determination made on 14 July 2008 by the third respondent, the Minster for Foreign Affairs ( the Foreign Minister ), that the presence of the applicant in Australia was, or would be, contrary to Australia's foreign policy interests. The applicant seeks judicial review of the Tribunal's decision on the ground that the determination made by the Foreign Minister was invalid. On 3 March 2009, the applicant commenced a proceeding in the Federal Magistrates Court seeking judicial review of the Tribunal's decision. On 9 June 2009, the proceeding was transferred to the Federal Court by the Federal Magistrates Court. A further amended application was filed in the Federal Court on 29 June 2009, claiming judicial review in respect of the determination made by the Foreign Minister on 14 July 2008 and of the decision of the Tribunal made on 4 February 2009. The Tribunal has filed a submitting appearance. The Migration Minister and Foreign Minister (together the Ministers ), who have been represented by the same legal team, contend that, in so far as direct relief is claimed in respect of the determination of the Foreign Minister of 14 July 2008, the proceeding is incompetent. They say that a determination by the Foreign Minister in the terms contemplated by reg 2.43(1)(a) is a migration decision and any application for a judicial review in respect of that decision is out of time. The Ministers also say that a determination under reg 2.43 is not justiciable and that, accordingly, the proceeding is incompetent in so far as it seeks collateral relief in respect of that determination as a basis for impugning the Tribunal's decision of 4 February 2009. Such permission is known as a visa. Section 116(1)(g) of the Act authorises the Migration Minster to cancel a visa if satisfied that a prescribed ground for cancelling the visa applies to the holder. Section 116(3) provides that, if the Minister may cancel a visa under s 116(1) , the Minister must do so if there exist prescribed circumstances in which a visa must be cancelled. The Migration Regulations 1994 (Cth) ( the Regulations ) were made pursuant to s 504 of the Act. Regulation 2.43(1) prescribes grounds for the purposes of s 116(1)(g). One of those grounds, contained in reg 2.43(1)(a)(i), is that the Foreign Minister has personally determined that the holder of the visa is a person whose presence in Australia is, or would be, contrary to Australia's foreign policy interests. The circumstances comprising that ground are, by reg 2.43(2)(a), prescribed circumstances for the purposes of s 116(3). This proceeding is concerned with at least one migration decision, being the Tribunal's decision of 4 February 2009. On one view, dealt with below, a determination by the Foreign Minister in the terms contemplated by reg 2.43(1)(a) is also a migration decision. That would have consequences for the competence of this proceeding. Under s 5(1) of the Act, a migration decision includes a privative clause decision and a purported privative clause decision. Under s 474(2), a privative clause decision is a decision of an administrative character made, proposed to be made, or required to be made, as the case may be, under the Act or under a regulation made under the Act. Under s 5E(1), a purported privative clause decision is a decision purportedly made, proposed to be made, or required to be made, under the Act, or under a regulation made under the Act that would be a privative clause decision if there were not a failure to exercise jurisdiction or an excess of jurisdiction in the making of the decision. Under s 476(1) of the Act, the Federal Magistrates Court has the same original jurisdiction in relation to migration decisions as the High Court has under s 75(v) of the Constitution . Under s 476A(1), the Federal Court has original jurisdiction in relation to a migration decision, relevantly, if, and only if, the Federal Magistrates Court transfers to the Federal Court a proceeding pending in the Federal Magistrates Court in relation to the migration decision. Under s 476A(2), where the Federal Court has such jurisdiction in relation to a migration decision pursuant to such a transfer, that jurisdiction is the same as the jurisdiction of the High Court under s 75(v) of the Constitution . Under s 477(1) of the Act, as in force on the day the applicant commenced this proceeding, an application to the Federal Magistrates Court for a remedy to be granted in the exercise of that Court's original jurisdiction under s 476 in relation to a migration decision must be made to the Court within 28 days of the actual notification of the decision. Under s 477(2), the Federal Magistrates Court may extend that 28 day period by up to 56 days if an application for that order is made within 84 days of the actual notification of the decision and the Federal Magistrates Court is satisfied that it is in the interests of the administration of justice to do so. Under s 477(3), the Federal Magistrates Court must not make an order allowing, or which has the effect of allowing, an applicant to make an application for a remedy in relation to a migration decision outside that 28 day period. Under s 477A, that time limit also applies to an application that has been transferred to the Federal Court. Financial sanctions have been imposed against 418 individuals, including members of the State Peace and Development Council, Cabinet Ministers and senior military figures. Australia's bilateral financial measures have the effect of prohibiting transactions involving the transfer of funds or payments to, by the order of, or on behalf of specified Burmese regime figures and supporters without the specific approval of the Reserve Bank of Australia... Details of the sanctioned individuals are available at the Reserve Bank of Australia and Department of Foreign Affairs and Trade websites. Nor is there any further direct evidence as to the detail of the financial sanctions described in the media release. However, it appears that, since the introduction of those financial sanctions and the inclusion of 418 Burmese individuals, including the applicant's parents, on the Movement Alert List, a Burmese visa application is required to be referred to an appropriate officer of the Foreign Minister's department where supporting documentation shows an applicant or an applicant's family member as military. In May 2008, it came to the attention of officers of the Foreign Minister's department that the applicant is the daughter of a high ranking Burmese military officer who, together with his wife, are listed on Australia's Financial Sanctions List relating to Burma. An officer within the Foreign Minister's Department therefore enquired whether the applicant had declared her father in her student visa application, which was processed in Rangoon without reference to the Foreign Minister's Department. The response was that the applicant was not listed on Australia's travel restrictions list. Following that exchange, a submission was made to the Foreign Minister on 23 May 2008 by officers of the Foreign Minister's department. The submission stated that it had come to the attention of the Foreign Minister's department that the daughter of a senior Burmese military officer was currently studying in Australia and that the visa holder's father was on Australia's travel restrictions list. The submission recommended to the Foreign Minister that he exercise his discretion to determine that the applicant's presence in Australia is contrary to Australia's foreign policy interests. The submission contained a note to the effect that the Foreign Minister's department was reviewing the operation and effectiveness of the Burma Sanctions List and would shortly provide advice to the Minister on that question. The Minister declined to make the recommended determination at that stage and said that he would consider the question of a determination at the same time as he received advice concerning the operation and effectiveness of the Burma Sanctions List. He requested that advice urgently. The submission was supported by a memorandum relevantly saying as follows: Australia's travel restrictions are targeted against senior members of the Burmese regime and their associates, including close family members. Now that we are aware of [the applicant's] presence in Australia, it would appear inconsistent with our sanctions policy to allow her to stay... Your determination [to the effect that the applicant's presence is contrary to Australia's foreign policy interests] would mandate the cancellation of [the applicant's] visa by the [Migration Minister's Department]. On 13 June 2008, a further submission concerning the sanctions regime applicable to Burma was made to the Minister by an officer of his department. The submission stated that, since 1988, previous Australian governments have maintained pressure on Burma through travel restrictions on regime figures and that, in response to the regime's violent crackdown on peaceful protesters in September 2007, Australia had introduced financial sanctions against Burma on 24 October 2007. The submission stated that the introduction of the financial sanctions led to an expansion of those targeted by travel restrictions against the Burmese regime. The submission stated that the intent of those measures was to place pressure on the Burmese regime, and its associates and supporters, without causing additional hardship for the Burmese people. The submission stated that on 24 October 2007, the Financial Sanctions List of 418 individuals was introduced including, amongst others, senior military officers, regime business associates and immediate family members (spouses and children) of those people. The 418 individuals included the applicant's parents. The submission referred to particular difficulties in compiling such a list in Burma because the Burmese regime and its military establishment are secretive, and publicly available bio-data is severely limited. Because of those difficulties, individuals on the Financial Sanctions List, particularly senior military officers, have spouses and children of whom the department was not aware and who were therefore not listed. The submission recommended that the Foreign Minister agree to a review of the Financial Sanctions List by the end of October 2008. The submission then referred to the implementation of travel restrictions. It stated that the Movement Alert List is an alert system only and it does not automatically ban travel by those listed. The decision to prevent travel remains a policy decision that is made on a case by case basis once the Government is alerted that a visa application has been made by a listed individual. Once it is established that a listed individual has applied for a visa, the Foreign Minister's department is notified. The submission referred to the fact that the Foreign Minister has the authority, under the Regulations, to make a determination that a person's presence in Australia is, or would be, contrary to Australia's foreign policy interests. The submission said that the system gives the Foreign Minister the flexibility to consider potentially controversial visa applications on a case by case basis. The submission then referred to the Foreign Minister's request for advice on any comprehensive checking of existing Burmese visas against the Movement Alert List following its updating in October 2007. A check against the 418 Burmese names that had been added to the Movement Alert List produced a report of more than 800 possible matches. The submission said that those checks would not have brought the applicant to the department's attention, because the department was not aware of her existence until May 2008. The submission stated that, in compiling the Financial Sanctions List in October 2007, the intention was to include spouses and adult children of senior regime figures and military officers within the scope of the sanctions. Where the department was aware of those family members, they had been listed. However, given the lack of information available on the Burmese leadership, it is possible that many of the listed individuals, particularly senior military figures, have spouses and children not known to the department. The submission then referred to the Foreign Minister's question about whether consideration should be given to the fact that, from the applicant's point of view, there has been no material change in the facts since October 2007. The submission stated that, while, from the applicant's point of view, her personal circumstances may not have changed, the sanctions policy has been expanded, from October 2007, to include children of regime figures. However, the submission acknowledged that the applicant's case raises difficult issues of retrospectivity. On 14 July 2008, in response to the submission of 23 May 2008, the Foreign Minister agreed, despite the retrospective aspects, to make the determination that had been recommended. On 1 August 2008, officers of the Migration Minister's department sent to the applicant a notice of intention to consider cancelling her visa. The notice referred to, and annexed a copy of, the Foreign Minister's determination of 14 July 2008. The notice stated that it had come to the attention of the Migration Minister's Department that there may be grounds for cancellation of the applicant's visa under s 116 of the Act, because of the Foreign Minister's determination of 14 July 2008. The notice went on to say that the Australian Government maintains sanctions targeted against members of the Burmese regime and their associates and supporters. It stated that individuals subject to sanctions include senior military officers and their associates, including close family members, and that, as an immediate family member of listed individuals, the applicant was captured by the same sanctions as those individuals. The applicant was unaware of the determination before receipt of the notice of 1 August 2008. On 22 August 2008, the applicant's adviser wrote to the Migration Minister advancing arguments as to why the determination should not have been made by the Foreign Minister. That letter was passed to the Foreign Minister. In the letter, the applicant's adviser questioned the legality of the proposed cancellation and its unfairly punitive effect on the applicant. The letter stated that the applicant had been encouraged to come to Australia by an Australian permanent resident who is a friend of her mother's, whom the applicant had known for 14 years. Although the friend is not related to the applicant, he has come to regard her as his niece and the applicant has always turned to him for advice and guidance. The letter of 22 August 2008 also stated that the applicant had developed serious differences with her parents, especially her father, both because of his association with the Burmese junta and because of a lack of warmth in her personal relations with him. The letter stated that the applicant had not been dependent on her parents for any kind of financial support since at latest November 2004. At the time of lodgement of her student visa application in 2007 the applicant did not regard herself as a member of her father's family unit. The letter pointed out that, in her visa application, the applicant had failed to complete details of members of her family unit. The letter of 22 August 2008 was the subject of a further submission to the Foreign Minister on 18 September 2008 by officers of his department. The submission referred to the Minister's decision to make the determination of 14 July 2008 and recommended that, on the basis of all available information, including the further information supplied by the applicant, the Foreign Minister should affirm his original decision. The submission said that the decision was an objective one based on the fact that, as the child of sanctioned individuals, the sanctions apply to the applicant and that fact had not changed. The submission pointed out that claims of estrangement, differing political views and financial independence from family are likely to be made by individuals seeking reconsideration of sanctions related to visa cancellations and that it is extremely difficult to verify those types of claims. The Minister agreed on 19 September 2008 that the objective basis for his original decision had not changed and that, on the basis of all available information, the determination of 14 July 2008 be affirmed. On 3 October 2008, the Migration Minister's department was informed that the Foreign Minister had agreed that the determination made on 14 July 2008 remained in place. Accordingly, on that day, a delegate of the Migration Minister decided to cancel the applicant's visa on the basis that the Foreign Minister's determination made cancellation mandatory. On 10 October 2008 the applicant applied to the Tribunal for review of the delegate's decision. On 14 November 2008, the applicant's advisers made a written submission to the Tribunal raising contentions as to the construction of the Regulations. The submission also contended that the Foreign Minister's determination of 14 July 2008 involved a breach of procedural fairness and was therefore ultra vires , with the consequence that any cancellation of the visa based on the determination was vitiated. However, on 11 December 2008, the applicant, through new advisers, also wrote to the Foreign Minister seeking revocation of the determination of 14 July 2008. The request was supported by submissions. On the same day, the applicant's advisers wrote to the Tribunal asking the Tribunal to delay its decision on the review of the delegate's decision until the outcome of the applicant's approach to the Foreign Minister was known. The Tribunal indicated that it would wait until 2 February 2009 before making a decision on the review application. Another submission was made to the Foreign Minister on 22 January 2009 by officers of his department. The submission referred to the determination of 14 July 2008 and to the review by the Tribunal of the decision to cancel the applicant's visa. The submission referred to the letter from the applicant's advisers of 11 December 2008, a copy of which was attached to the submission. The submission stated that the letter claimed that the applicant is opposed to the Burmese regime and should not be punished for the position of her father. The submission pointed out that the applicant remained a listed individual subject to sanctions and proposed a response to the letter of 11 December 2008. The Foreign Minister accepted the recommendation and approved the response on 27 January 2008. Accordingly, on 29 January 2009, an officer of the Foreign Minister's department wrote to the applicant's advisers saying that the Foreign Minister had decided not to revoke the determination of 14 July 2008. The list of individuals subject to these sanctions includes senior military officers and their immediate family members. [The applicant's] father is a brigadier general in the Myanmar air force. Accordingly, [the applicant] falls within the scope of Australian sanctions in relation to Burma. On 4 February 2009, the Tribunal made the decision that is the subject of the present proceeding. The Tribunal found that the Foreign Minister had personally determined that the applicant is a person whose presence in Australia is, or would be, contrary to Australia's foreign policy interests. The Tribunal therefore found that the circumstances comprising the grounds set out in reg 2.43(1)(a)(i) exist. The Tribunal concluded that, in those circumstances, s 116(3) and reg 2.43(2)(a)(i) required that the applicant's visa must be cancelled. Accordingly, the Tribunal affirmed the delegate's decision to cancel the applicant's visa. (2) The Foreign Minister made jurisdictional error in making the determination of 14 July 2008. (3) The Foreign Minister made errors of law constituting grounds of review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ( the Judicial Review Act ) when making the determination of 14 July 2008. The applicants' ground for impugning the decision of the Tribunal is that the Tribunal committed jurisdictional error in basing its decision of 4 February 2009 on the determination of the Foreign Minister of 14 July 2008 because, on the grounds outlined above, that determination was a nullity and must be treated as never having existed in law. The particulars of the three grounds upon which the Foreign Minister's determination is impugned are essentially the same. (b) The Foreign Minister took into account an irrelevant consideration, namely, that the applicant is the daughter of someone subject to sanctions. (c) The Foreign Minister failed to take into account a relevant consideration, namely, the fact that he did not have anything adverse whatsoever against the applicant herself. (d) The Foreign Minister asked the wrong question in that he asked whether the applicant was the child of a senior member of the Burmese regime when he should have asked whether the applicant, being a child of a senior member of the Burmese regime, associated herself with her father in support of the regime by any of her actions or in any other way supported the Burmese regime. (e) The Foreign Minister exercised a discretionary power in accordance with a policy without regard to the merits of the particular case. (f) The Foreign Minister misinterpreted the words "associate" and "supporter" to mean a child of a senior member of the Burmese regime whereas, contextually, the true meaning of the words is someone respectively associated with or supporting whatever activities of the Burmese regime that had brought about the sanctions. The particulars in relation to the third ground are the same save for particular (d). The applicant relies on the fact that the only matter considered by the Foreign Minister before making his determination was that the applicant was the daughter of a very senior Burmese military officer. She says that such an exercise can be impugned on the basis that it involved a denial of procedural fairness or involved an error of law. Since a determination such as that made on 14 July 2008 is given legal significance by reg 2.43(1)(a) and reg 2.43(2)(a), those provisions impliedly conferred power on the Foreign Minister to make such a determination (see Attorney-General v Oates (1999) 198 CLR 172 at [16]). Since the determination was given force by those provisions, it is either a privative clause decision within s 474(2) of the Act or a purported privative clause decision under s 5E(1) of the Act. Accordingly, the determination is a migration decision within the meaning of s 5(1) of the Act. Since the determination was a migration decision, it is not a decision to which the Judicial Review Act applies (see s 3 of the Judicial Review Act and Items (da) and (db) of Schedule 1 of the Judicial Review Act). Accordingly, the application is incompetent to the extent that it relies upon the Judicial Review Act. Further, since the determination was a migration decision, it is affected by s 477 of the Act. However, the Ministers accept that, in so far as the proceeding seeks orders quashing the decision of the Tribunal, it was commenced within time. The Ministers also accept that that aspect of the proceeding is not precluded by the time limit in s 477, even though the grounds relied upon constitute a collateral attack on the Foreign Minister's determination. While s 477 would preclude the Court from making an order quashing or setting aside the determination of the Foreign Minister or making a declaration that the determination was invalid, s 477 would not preclude the Court from examining the validity of the Foreign Minister's determination for the purposes of the challenge to the Tribunal's decision. Thus, if the Court were to conclude that the Foreign Minister's determination was invalid, such that the prerequisite for the exercise of power to revoke the applicant's visa under s 116 did not exist, it would be open to the Court to set aside the Tribunal's decision. However, the Ministers contend that the question of the validity of the Foreign Minister's determination is not justiciable. That contention is advanced whether or not the making of the determination by the Foreign Minister was the exercise of an implied statutory power, by reason of the Regulations, or was an exercise of prerogative or executive power under s 61 of the Constitution . The Ministers say that the determination is immune from judicial review, such that the legal validity of the decision is not justiciable in the Court, because it is a decision as to the exercise of power in connection with international relations (see Minister for Arts v Peko-Wallsend Limited (1987) 15 FCR 274 at 298). The Ministers contend that the consequence of non-justiciability is that the applicant's attempt to impugn the Foreign Minister's determination does not give rise to or form part of a matter capable of attracting federal jurisdiction. The impugning of the Foreign Minister's determination is the sole basis for impugning the decision of the Tribunal. The want of justiciability of the subject matter of the Foreign Minister's determination therefore renders the proceeding incompetent. Both the applicant and the Ministers have given notice under s 78B of the Judiciary Act 1903 (Cth) that the proceeding involves a matter arising under the Constitution or involving its interpretation. The Ministers say that proceeding raises the question of whether the applicant's claim that, in deciding to make a determination, the Foreign Minister made a jurisdictional error, is justiciable, so as to give rise to a matter within the jurisdiction of the Federal Court under s 77(i) of the Constitution . The applicant says that the proceeding raises the issue of justiciability in relation to the character, extent and nature of the exercise of executive power under s 61 of the Constitution and whether that power is exceeded when its purported exercise results in a denial of procedural fairness or error of law. I am satisfied that all attorneys-general have had the opportunity of making submissions if they wish. None has done so. The first question is whether there is matter within ss 75 and 76 of the Constitution . The Courts will abide the Executive's views on questions such as the accession of foreign territory, the recognition of a foreign sovereign or the recognition of foreign states' ambassadors. Generally speaking, the issues that arise between nation states are unlikely to generate matters within the meaning of ss 75 and 76 of the Constitution for the rights and obligations do not form part of domestic law. Further, such questions are usually unable to bring forth an applicant who has standing. Complaints about the conduct of Australian international relations are likely to take a court into an area that involves the consideration of undertakings or obligations depending entirely on political sanctions. Where that occurs, there is no matter in the requisite sense (see Habib v The Commonwealth (2009) 175 FCR 350 at [52]). The second question, the applicability of the rules of natural justice, depends upon the effects of the subject decision. It is not enough that the subject decision might create a climate conducive to a subsequent decision adverse to the interests or expectations of some person. It is easier to import a duty of fairness when a decision relates essentially to the personal circumstances of an individual because, first, the decision is less likely to be dictated by broad considerations of public interest which may require the submerging of individual disadvantage and secondly because the affected persons are likely to be readily ascertainable and few in number (see Peko-Wallsend at 306-7). To qualify as a subject for judicial review, the decision must have consequences that affect some person or body of persons other than the decision maker, although it may affect the decision maker as well. It must affect such other person either by altering the rights or obligations of that person which are enforceable by or against that person in private law or by depriving the person of some benefit or advantage that the person had in the past been permitted by the decision maker to enjoy or has received assurances from the decision maker will not be withdrawn without being given the opportunity of being heard (see Peko-Wallsend at 303). If an applicant asserts that the Commonwealth acted in excess of the executive power with respect to foreign relations, within the meaning of s 61 of the Constitution , and the applicant has standing in respect of the matter, there is a justiciable matter. However, in so far as an applicant asserts some deficiency or failing on the part of the Commonwealth in the conduct of its relations with a foreign country, but no lack of Constitutional power, the question becomes, first, does that give rise to a matter and, second, if so, does the applicant have standing with respect to it (see Re Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347 at 372). Even if an applicant has standing in respect of a complaint sought to be agitated before a court exercising federal jurisdiction, there will nevertheless be no matter if the applicant seeks an extension of the Court's true function into a domain that does not belong to it, namely, the consideration of undertakings and obligations depending entirely on political sanctions. Such non-justiciable issues include agreements and understandings between governments within the federation and between the Australian and foreign governments. Such issues do not give rise to matters in the sense necessary for the exercise of Federal jurisdiction (see Re Ditfort at 370). The applicant contends that the concept of justiciability is redundant. Because the merits of any administrative action are entrusted to the Executive, any question of justiciability that arises by reason of the political nature of the matter is taken care of: if the matter is political, the merits of the matter are conceded to administrators whereas judicial review is based on legality and not merits. The issue is whether a decision is justiciable, in the sense of being reviewable upon one or other available grounds of review. One need simply ask whether one or more grounds of review can be made out. Judicial focus upon the particular ground of review advanced by an applicant avoids the imprecise strategy of denying the justiciability of a particular class of decision in toto . The applicant says that the difficultly with review of political decisions lies, not in non-justiciability per se , but in the difficulty in actually making out one or more grounds of review. The purported justiciability or otherwise of a particular administrative decision by the Executive may be nothing more than a function of the ground of review argued. That being so, the approach should be to focus explicitly on whether or not a ground of review can be made out. I consider that the subject matter of the Foreign Minister's determination can fairly be characterised as involving Australia's foreign policy interests and that, accordingly, it is within a field of decision making that is the exclusive province of the Executive. Where Australia's foreign policy interests lie and whether the applicant's presence in Australia is inimical to those interests are political issues that are not justiciable by a court, and no ground of judicial review is available. That consequence flows even though the basis for the legal effect of the determination under domestic law lies in statute rather than in the executive power of the Commonwealth. The lack of justiciability is the result of the subject matter of the power exercised and the issues that the Foreign Minister must consider in deciding whether to make a determination such as is contemplated by reg 2.43. The source of the power and the possible effect of its exercise do not detract from that position. I would be disposed to accept that there may be circumstances where a purported exercise of executive power or an implied statutory power may be challenged. Clearly enough, if the decision maker misinterpreted the statute giving implied power or a question arose as to the meaning of s 61 of the Constitution , there may be a justiciable issue. Further, it may be that an exercise of power could be impugned if it were based on facts that did not exist. For example, if it were demonstrated that the applicant is not in fact the daughter of a high ranking Burmese military office, that may give rise to a ground of review. I express no opinion as to those matters, because neither is raised in this proceeding. There is no suggestion that the basis upon which the Foreign Minister made a determination in the terms of reg 2.43 involved some misapprehension as to the meaning of reg 2.43 or s 61 of the Constitution , or some misapprehension of critical facts. It is clear that the Foreign Minister has personally determined, for reasons that are based upon the policy announced in October 1997, that the applicant is a person such as is contemplated by reg 2.43. The policy, rightly or wrongly, clearly extends to children of high ranking Burmese military officers. In circumstances where the applicant is the child of a high ranking Burmese military officer whose name and whose wife's name appear in the list of 418 Burmese individuals against whom financial sanctions have been imposed, the question of whether the applicant's presence in Australia is contrary to Australian foreign policy interests is not a matter into which the Court can enquire. Putting it another way, the applicant has no standing to complain about that aspect of the determination, whether or not she may have standing to challenge a misapprehension as to the meaning of s 61 of the Constitution or reg 2.43(1) or to challenge the correctness of an underlying assumption made by the Foreign Minister that she is the daughter of a high ranking Burmese military official whose name appears in Australia's Financial Sanctions List. In those circumstances, the applicant has no standing to complain of any failure on the part of the Foreign Minister to invite her to make submissions as to whether, in those circumstances, he should make a determination in terms of reg 2.43. It would follow that the challenge to the validity of the tribunal's decision must fail. Ground 1 appears to depend upon the Foreign Minister's decision being an exercise of non-statutory power. Ground 2 is an alternative to Ground 1, on the basis that the Foreign Minister's decision was an exercise of statutory power. The result will be the same, whichever Ground is relied upon. The three substantive grounds rely on identical particulars, to the extent indicated above. It is convenient, therefore, to deal only with the particulars. The answer to the applicant's complaint that the Tribunal's decision was based upon an invalid determination on 14 July 2008 by the Foreign Minister, because of a denial of procedural fairness, is that the Tribunal's decision was based simply on the conclusion that the Foreign Minister had personally made the relevant determination. The Tribunal deferred making a decision until the Foreign Minister had considered the applicant's request to the Foreign Minister to revoke the determination that he had made on 14 July 2008 and had affirmed on 19 September 2008. I consider that, even if the Foreign Minister's determination of 4 July 2008 lacked legal effect, because it involved a denial of procedural fairness, that deficiency had been remedied by the time of the Tribunal's decision. That is to say, in so far as the Tribunal acted on the determination of 14 July 2008, it did so on the basis that, on 19 September 2008, the Foreign Minister had decided to affirm the determination and, on 27 January 2009, had decided not to revoke the determination. The applicant had been given an opportunity to be heard in relation to both of those decisions. Thus, by 27 January 2009, before the Tribunal made its decision of 4 February 2009, the Foreign Minister had determined, after receiving submissions from the applicant, that the applicant is a person whose presence in Australia is, or would be, contrary to Australia's foreign policy interest. No formalities are prescribed for the making of a determination under reg 2.43(1)(a). As a result of the decision of 27 January 2009, if not the decision of 19 September 2008, the Foreign Minister had made a valid determination that satisfies reg 2.43(1)(a), being a determination that involved no denial of procedural fairness. Even if the determination of 14 July 2008 was not a determination pursuant to reg 2.43(1)(a), because of a denial of procedural fairness, as the applicant contends, by the time the Tribunal made its decision, a determination that was not affected by denial of procedural fairness had been made by the Foreign Minister. Regulation 2.43(1) refers only to a requirement that the Foreign Minister has personally determined that the holder of the visa is a person whose presence in Australia is or would be contrary to Australia's foreign policy interests. No particular form is required for the determination. The decision of the Foreign Minister made on 27 January 2009 not to revoke his determination satisfies the requirement of reg 2.43(1). That is to say, it is clear that, by that time, the Foreign Minister had personally determined that the applicant is a person whose presence in Australia is, or would be, contrary to Australia's foreign policy interests. That determination was made prior to the Tribunal's decision and after the applicant had been afforded the opportunity of making submissions, which the Foreign Minister took into account. In the circumstances, there is no basis for impugning the decision of the Tribunal on the basis that the Foreign Minister's determination was infected by jurisdictional error by reason of a failure to afford the applicant procedural fairness. The applicant had been afforded procedural fairness by that time. Even if there had been a defect in the Foreign Minister's determination of 4 July 2008, there was no defect in the Foreign Minister's decision of 27 January 2009. Accordingly, whether or not the Foreign Minister's determination that the applicant is a person whose presence in Australia is, or would be, contrary to Australia's foreign policy interests is a matter that is capable of judicial review, the ground of denial of procedural fairness in relation to the making of the determination is not made out. The policy that has been applied by the Foreign Minister involves sanctions against Burmese military officers and their immediate families. That policy is not capable of review by the Court. It is not to the point to say that the policy should not extend to the families of members of the Burmese regime. That entails an examination of the correctness or goodness of the policy. That is not a matter into which the Court can enquire. The question of what Australia's foreign policy interests are, where those interests lie and what issues are relevant to their identification are questions for the Executive. They are not questions that can be resolved by a court. It may be that some considerations could have no possible rational connection with Australia's foreign policy interests, such that having regard to such considerations might be evidence of bad faith or improper purpose. That has not been suggested in this proceeding. The fact that the applicant is the daughter of a senior military officer in the Burmese regime and is subject to financial sanctions could not be said to be completely irrelevant to Australia's foreign policy interests. The weight to be given to such a consideration must be a matter for the Foreign minister. The assertion that the Foreign Minister did not have anything adverse against the applicant herself is misconceived. The relationship of the applicant to a senior Burmese military officer, against whom Australia had in place financial sanctions, was the reason for the Foreign Minister's determination. That relationship is what the Foreign Minister had before him that was adverse to the applicant. The inadequacy of such a matter is not a matter for the court. The Foreign Minister did not misinterpret the policy. It is clear, from the material set out above, that the policy extended to children of members of the military regime in Burma. The contention is no more than an invitation to the Court to say that the policy applied by the Foreign Minister was wrong or bad and to substitute a different policy. However, it is a matter for the Foreign Minister personally as to whether to apply the policy in a particular case or not. The applicant, in essence, invites the Court to substitute different criteria from those applied by the Foreign Minister. The power was not discretionary in the relevant sense. The Foreign Minister was empowered to reach and state an opinion about a matter within his sphere of expertise and political responsibility. He was entitled to take a view about the sanctions that should be put in place against the regime in Burma and the effectiveness of those sanctions, irrespective of whether the applicant agreed with the stance adopted by her father as a high level military officer in the regime. In any event, the Foreign Minister had specific regard to the retrospective nature of the determination in relation to that applicant and, notwithstanding that operation, decided to make the determination. The Foreign Minister clearly had regard to the merits of the applicant's case in deciding to affirm the determination and not to revoke it. The applicant chose, with legal advice, to attempt to change the Foreign Minister's mind rather than to take up whatever rights she had to have his determination quashed or set aside. She made that decision with knowledge that the determination was at least arguably vitiated by the denial of procedural fairness. Her previous adviser had put precisely that argument to the Tribunal. The Ministers say principles of waiver or election are applicable. Seeking revocation by the decision maker, and being given a hearing in that context, instead of seeking judicial review forthwith, is no different, in principle, say the Ministers, from the case where a party decides not to object to a defect in procedure, thereby waiving the right to insist on that aspect of the hearing rule. Having taken that step, and having been heard, the applicant cannot now complain that she was not given a hearing prior to the making of the determination of 14 July 2008. The Foreign Minister had heard the submissions of the applicant as to why the determination should not be made or should be revoked, but has affirmed the determination. In those circumstances, the Court should decline to intervene. Having regard to the conclusion that I have reached concerning the substantive grounds of review, namely, that no ground of review is made out, irrespective of the justiciability of the Foreign Minister's determination, it is unnecessary to determine whether relief would be refused, as a matter of discretion. However, if my analysis of the Foreign Minister's determination upon which the Tribunal relied in making its decision is wrong, it is difficult to see why there should be a conclusion that there was jurisdictional error on the part of the Tribunal. There was, so far as the Tribunal was concerned, a determination by the Foreign Minister in terms of reg 2.43(1)(a). The Foreign Minister, having been invited to do so and after considering the applicant's submissions, reconsidered the determination of 14 July 2008 and decided to affirm it. Further, the Foreign Minister, having been invited by the applicant to revoke his determination and having considered the applicant's submissions as to why he should do so, decided not to revoke the determination of 14 July 2008. In those circumstances, I would be disposed to conclude that any relief that might be available should be declined. The proceeding should therefore be dismissed as incompetent in so far as it seeks such direct relief. In so far as the applicant seeks to agitate the validity of any determination by the Foreign Minister under reg 2.43, the question is not justiciable and the applicant has no standing to impugn the validity of the determination on the grounds upon which she relies. The proceeding should therefore be dismissed as incompetent in so far as it seeks relief in respect of the decision of the Tribunal of 4 February 2009 by reason of invalidity of the Foreign Minister's determination. In so far as there was a determination of the Foreign Minister within reg 2.43 made on 27 January 2009, there is no basis for impugning that determination on any of the grounds raised by the applicant. I consider therefore that there has been no jurisdictional error on the part of the Tribunal. Accordingly, the proceeding should be dismissed in so far as it seeks direct relief in relation to the Tribunal's decision of 4 February 2009. In the circumstances, the proceeding should be dismissed and the applicant should pay the costs of the Ministers. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | visa cancelled by immigration minister following determination by foreign minister that applicant's presence in australia is, or would be, contrary to australia's foreign policy interests whether determination by foreign minister is a justiciable issue whether foreign minister denied the applicant procedural fairness whether foreign minister took account of irrelevant considerations or failed to take account of relevant considerations migration |
2 Ms Obieta's claim arises in consequence of the handling of a complaint made by her to the Commission in relation to numerous incidents of alleged unlawful discrimination under the RDA and SDA whilst she was a student at TAFE Sydney Institute, Ultimo ('TAFE'): see Lina Obieta v NSW Department of Education and Training and Ors [2006] FCA 1693 ('TAFE proceedings'). It is necessary to refer to the facts in detail to comprehend Ms Obieta's claims. By letter dated 25 May 2005 Ms Obieta provided further details of numerous incidents of alleged unlawful discrimination, harassment and victimisation. 4 By letter dated 11 July 2005 Ms Obieta, having had no contact with an officer of the Commission, wrote to inquire of the progress of her complaint. On 13 July 2005 Mr Dominic Viricillo, an officer of the Commission sent an email to Ms Obieta concerning her matter and requesting details of her claim. On the same day an attempt was made to contact Ms Obieta by telephone. This attempt was unsuccessful and a message was left on her answering machine requesting her to call the Commission. 5 Ms Obieta did not respond by telephone. However, by letter dated 20 July 2005 Ms Obieta provided precise details of the complaint against fellow students, namely Ms Alexie Davis and Ms Ryissa Fogarty and also against her teachers, namely Mr David Norman and Mrs Susan Elfert. On 16 August 2005 Mr Viricillo made a minute that he had left a telephone message on Ms Obieta's answering machine informing her that the Commission was commencing the inquiry that day. 6 An internal memorandum prepared on 16 August 2005 by Ms Merrilyn Aylett, an officer of the Commission addressed to Ms Rocky Clifford, a delegate of the President of the Commission, recorded the detail of Ms Obieta's complaint and noted that Ms Obieta wished to pursue a complaint under the RDA against Ms Ryissa Fogarty. Ms Fogarty was not nominated as a person who was the subject of the complaint in Ms Obieta's original Complaint Form. The letter also advised Ms Obieta that the complaint against Ms Fogarty did not suggest intimidation on the ground of race. I am, however, prepared to consider any submissions you may wish to make as to how Ms Fogarty discriminated against you on the ground of race. 10 By email dated 17 October 2005 Ms Obieta requested Ms Aylett to advise her ' regarding my complaint against VETAB, TAFE, David Norman, Alexis Davies [sic] and Iryssa Fogarty [sic]. ' She also advised of a new postal mailing address. TAFE and Mr Norman were both given extensions to respond to the letters. both [sic] responses were received by the Commission on 13 October 2005. We will review the material on the file before the letters are forwarded to you, but I anticipate that this will happen in the next week. Ms Aylett left no message. 13 On 4 November 2005 Ms Aylett wrote to Ms Obieta enclosing responses provided by Mr Norman and TAFE. TAFE states that a number of students who were dissatisfied with their results arranged to have revision lessons and undertake a supplementary exam. TAFE notes that you did not request a supplementary exam but you could still make such a request if you wanted to. No message left. 17 No response was received by Ms Obieta to her email of 10 November 2005, nor to her letter dated 15 November 2005. Accordingly, on 22 November 2005 she forwarded by express mail detailed replies to the responses received by the Commission from David Norman and TAFE. Her letter also requested information in respect of the status of her complaints relating to Ms Fogarty made on 1 September 2005. 18 By letter dated 21 December 2005 Ms Aylett wrote to Ms Obieta stating that the Commission was waiting to hear from Ms Davis and that when her response arrived it would be forwarded to Ms Obieta. Ms Rocky Clifford referred to this in her letter to you of 16 August 2005. She expressed her belief that all the respondents had been granted an extension but that her request for an extension had been denied. However, I did not receive a letter signed by Ms Rocky Clifford that my submission was not accepted and an explanation why my submission was rejected against Ms Fogarty in relation to my submission dated 1 September 2005 that I provided to her in regards to my complaint against Ms Iryssa [sic] Fogarty for discrimination. 21 An internal memorandum from Ms Aylett to Ms Toohey dated 16 January 2006 details the steps taken by the Commission. It records that the submission had been received from Ms Obieta on approximately 1 September 2005. On 28 October 2004 Ms Fogarty challenged her in class about the number of questions she was putting to the teacher. In her submission dated 20 July 2005 Ms Obeita repeated this allegation. On 1 September 2005 Ms Obeita claimed that Ms Fogarty's alleged actions were based on race and that she had sought to limit Ms Obeita's participation in the class because of her ethnic background. Ms Obeita claims that Ms Fogarty did not seek to limit the participation of any of the Australian students, only Ms Obeita and another student of Chinese origin. The letter referred to Ms Obieta's letter of 5 January 2006 and noted her disappointment that she was not given an extension of time by Ms Aylett. I am advised that Ms Aylett received your email on Friday 11 November 2005 and that she tried unsuccessfully to contact you by telephone the same day. She was prepared to offer an extension of time but she also wished to discuss the process generally and the material that the respondents had provided. I confirm that it is standard practice to offer a short extension of time to complainants and respondents if they are having difficulty meeting a deadline, although less often to complainants as they are less likely to be required to respond to a list of questions or to have to gather information from a range of sources. Ms Aylett acknowledges that it would have been best practise [sic] to respond to your email when she was unable to contact you by telephone. I confirm that I have reviewed your submissions of 22 November 2005, together with the references to Ms Fogarty in your original complaint and your submission of 20 July 2005, and I am of the view that the claim against Ms Fogarty does not allege an unlawful act. In forming this view I took into consideration that you think Ms Fogarty sought to prevent you from participating in class because of your ethnic background, but your feelings about this do not appear to be based on evidence. According to your own account, Ms Fogarty raised issues regarding the number of questions you put to the lecturer and the amount of time you utilised. It appears that there was a dispute between you and Ms Fogarty over how the class time should best be used for the benefit of all the students, but there appears to be no connection between Ms Fogarty's actions and your race. I note, also, that Ms Fogarty was not in charge of the class and ultimately the lecturer decides how class time is utilised, not the students. In the interim, should you wish to discuss this matter please ring her on 9284 9816. According to the evidence of Ms Aylett, the phone call was made by her to inform Ms Obieta that her complaint was being passed over to Karen McCabe, who had had significant experience in assessing sexual harassment cases. Because Ms Obieta could not be contacted by telephone, an email was sent to her on that day advising her of this fact and providing the telephone number for Ms McCabe. 24 By letter dated 30 January 2006 Ms McCabe wrote to Ms Obieta raising issues concerning her complaints against Mr Norman, Ms Davis and the alleged vicarious liability of TAFE and VETAB. The letter contained details of the legal requirements to establish a claim of sexual harassment under the SDA and pointed out that in view of the disputed facts surrounding her claims against Mr Norman and Ms Davis, no determination was being made at that stage. The letter invited Ms Obieta's further comment within 14 days. The letter then commented upon other claims of mismanagement and occupational health and safety issues which had been raised by Ms Obieta. The letter informed her that the Commission had no power to deal with such complaints. 26 By letter dated 27 January 2006 Ms Obieta wrote to Ms Karen Toohey, Acting Director Complaint Handling concerning the conduct of Ms Aylett. Ms Obieta stated that she did not receive any phone messages claimed by Ms Aylett to have been left on her answering machine on 11 November 2005 or on any subsequent day. She also stated that an extension of time in which to provide the submissions had been requested, both by email and by letter, but that no response had been received. Ms Obieta stated that she believed that she had been treated unfairly and less favourably than the other respondents in the complaint handling procedures. Such letter also complained of inconsistencies in the treatment accorded to her and alleged that her submission dated 1 September 2005 which itemised Ms Fogarty's alleged unlawful behaviour had not been considered by the Commission. 27 According to the date stamp contained on Ms Obieta's letter of 27 January 2006, it was received by the Commission on 31 January 2006, namely the day after Ms McCabe had written to Ms Obieta. 28 By letter dated 8 February 2006 Ms Obieta wrote to Ms McCabe responding to her letter of 30 January 2006. Ms Obieta's letter contained the allegations of sexual harassment and racial hatred by Mr Norman and by Ms Davis, and alleged vicarious liability of TAFE and VETAB. The letter made no reference to Ms Fogarty. 29 On 16 February 2006 Ms Diana Temby, Executive Director of the Commission, responded to Ms Obieta's letter of 27 January 2006. The letter acknowledged that Ms Aylett did not respond in writing to Ms Obieta's written request for an extension of time. However the letter advised that Ms Aylett had attempted to telephone Ms Obieta on 11 November 2005 and that Ms Aylett did not leave a message on Ms Obieta's Telstra home message service because she was concerned to maintain Ms Obieta's confidentiality. It further stated that if Ms Aylett had been able to get in contact with Ms Obieta she would have informed Ms Obieta that there was no objection to her request for an extension of time. 30 The letter of 16 February 2006 also explained that Ms Aylett intended to telephone Ms Obieta again but she did not do so as Ms Obieta's submissions arrived by the due date. This was not the case. Ms Davis was not notified of the complaint on 16 August 2005 as the Commission was not aware of her contact details. Ms Davis was notified of the complaint on 27 October 2005 and a response was requested within 21 days. Ms Davis spoke to Ms Aylett on 1 November 2005 and was given an extension until 30 November 2005 as she advised that she was commencing exams. No further extension was requested or granted, but the response was not received until 5 January 2006. I understand that it was forwarded to you on 30 January 2006. Files are referred to the director at key points in the investigation process; they are not discussed with the director on a day to day basis. Your submission was not referred to Ms Clifford at the time, but was reviewed by Ms Toohey when she assumed the role of Acting Director. This was a matter of convenience, not an attempt to exclude Ms Clifford from the process. There is no reason to think that Ms Clifford would have assessed the complaint differently to Ms Toohey, since both officers are applying the same legislation and complaint handling procedure. However she acknowledged that a greater effort should have been made to contact Ms Obieta when an extension of time was requested and apologised for any distress so caused. 32 By letter dated 1 March 2006 Ms Obieta responded to Ms Temby disputing the conclusion that her complaint had been handled correctly. Ms Obieta also claimed that her submission of 1 September 2005 had been excluded from the investigation process by Ms Toohey. 33 By letter dated 3 March 2006 the President of the Commission, Mr John von Doussa QC wrote to Ms Obieta advising her that each of her complaints under the SDA and the RDA against TAFE, VETAB and their employees and students were found to be without substance and that he had decided to terminate her complaint pursuant to s 46PH(1)(c) of the HREOC Act. The letter contains details of the reasons for such determination. A Notice of Termination, issued pursuant to s 46PH(2) of the HREOC Act accompanied the letter. In respect of each issue, Ms Obieta has identified the sections of the relevant Acts which she claims were breached. She also claims that various Articles of the International Conventions set out in Schedules to each of the relevant statutes were breached. 35 An infringement of an Article in an International Convention referred to in Schedules to the RDA, SDA and HREOC Act does not give rise to a breach of the Act: see Minister of State for Immigration and Ethnic Affairs v Ah Hin Teoh [1995] HCA 20 ; (1995) 183 CLR 273. Accordingly the Court will not refer to the Articles of the International Conventions which were allegedly breached since no enforceable rights are created by them. Similarly, no cause of action arises in respect of alleged breaches of sections which are purely definitional or explanatory relied upon by Ms Obieta. Accordingly the Court will not refer to such sections. As such Ms Obieta claims that Ms Aylett and Ms Toohey denied her 'natural justice' in handling her complaint, violated her human right to be heard on an equal footing with other parties or Australian respondents, and that she was treated unfairly. She alleges a breach of s 9 and s 10 of the RDA. 37 Ms Obieta submits that the letter of the Commission to her dated 17 January 2006, which addresses her concerns relating to Ms Fogarty, refers to the original complaint relating to Ms Fogarty and submission of 20 July 2005 but does not refer to her letter of 1 September 2005. She submits this further demonstrates that the Commission failed to take into account such letter. 39 Ms Obieta claims that Ms Aylett acted unfairly and in bad faith, and treated Ms Obieta unfairly and less favourably than the Australian respondents in handling the complaint. Ms Obieta claims that Ms Aylett did not apply the complaint handling procedures to her complaint on an equal footing and impaired the exercise of Ms Obieta's right to enjoy on an equal footing with other parties or Australian respondents, rights in the field of public life. She claims that Ms Aylett discriminated against her on the ground of race and alleges a breach of s 9 and s 10 of the RDA. Issue 3: 'Covering up' by Commission. Ms Obieta claims that such conduct constituted procedural unfairness and that she had been treated unfairly and less favourably than the Australian respondents and as such this constituted discrimination. She alleges a breach of s 9 and s 10 of the RDA. She claims there are discrepancies in the Notice of Termination issued by the President. Further, Ms Obieta claims that the reasons provided by the President were to ' cover up for the conduct of all the respondents' and had the effect of 'condoning the unlawful behaviour '. As such Ms Obieta claims a breach of s 9 and s 10 of the RDA. She claims that the Commission did not attempt to conciliate her complaint and discontinued the inquiry and terminated all her complaints against all of the respondents by reason of them ' lacking in substance '. She claims that the Commission breached s 26 of the HREOC Act and s 9 of the RDA. She claims the President made a decision and acted unfairly, in bad faith and with malice and permitted the unlawful conduct alleged against the parties to the complaints. As such Ms Obieta claims that the President committed an unlawful act and breached her human rights. She claims a breach of s 26 of the HREOC Act and of s 9 of the RDA and s 94 of the SDA. 45 The first of these grounds, which I shall refer to as the jurisdictional ground, relies upon the basis that this Court has no jurisdiction to hear the issues pursuant to s 46PO of the HREOC Act. 46 The second ground relied upon for dismissing the claim, which I shall refer to as the immunity ground, is that s 48(1) of the HREOC Act and the equivalent sections in the RDA (s 45(1)) and the SDA (s 111(1)) provide an immunity from liability of the Commission and its officers in the circumstances of the current proceedings. 47 The Commission further submits that even if the Court is not satisfied that either of these grounds is sufficient to dismiss the application, Ms Obieta's claim should nevertheless be dismissed on the basis that each ground relied upon by Ms Obieta cannot be sustained. Such complaints must be in respect of conduct which contravenes the RDA and/or the SDA. Under this function, all correspondence received by the Commission is assessed to determine whether it constitutes a complaint under s 46P of the HREOC Act. Once this is established, the complaints of unlawful discrimination are referred to the President (s 46PD) who must inquire into the complaint and attempt to conciliate it (s 46PF). The President may then terminate the complaint for a reason set out in section 46PH(1) of the HREOC Act. 49 Section 46PO(1) permits a complaint to be brought to the Federal Court if the complaint has been terminated by the President under s 46PE or s 46PH of the HREOC Act and the President has given a notice to the complainant under s 46PH(2) in relation to the termination. The Commission considered that no further action was warranted in relation to the matters referred to in Ms Obieta's letters, and the Executive Director advised Ms Obieta of this fact in a letter dated 18 April 2006. As such her letters did not constitute a complaint which properly came under the Commission's complaints handling function as set out in Part IIB of the HREOC Act. 51 The issues raised in these proceedings were not the same as the complaints that had been made by Ms Obieta in the Complaint Form dated 23 May 2005 and terminated on 3 March 2006. Nor were they the subject of any other complaint properly accepted as such under s 46P of the HREOC Act and subsequently terminated. Accordingly, the Court finds that the application to this Court in relation to the issues ostensibly pursuant to s 46PO of the HREOC Act is incompetent. The Commission and the President rely upon such section in relation to the allegation of sexual discrimination against them. It submits that the onus of establishing bad faith rests upon Ms Obieta, as the party asserting bad faith. 56 The Commission refers to the decision of Kenny J in Spalla v St George Motor Finance Ltd (No 7) [2006] FCA 1177 at [166] which recently considered the general principles for determining whether an action may be done other than in good faith. Kenny J emphasised that an allegation of bad faith is a ' serious allegation involving the imputation of moral turpitude '. The Court is not simply evaluating the wisdom of an impugned decision... "mere error or irrationality does not of itself demonstrate lack of good faith...[b]ad faith is not to be found simply because of poor decision-making": SBBS at 756 [45] . Rather the circumstances must show dishonesty (or capriciousness) on the part of the decision-maker... Something is done in "good faith" when done honestly. Something is done in "bad faith" when done dishonestly. 58 In cross-examination Ms Obieta said that she relied on the terms of the letter dated 3 March 2006 from the President of the Commission advising her that the complaints had been terminated, as evidence of bad faith. 59 The Court is unable to find anything in the terms of this letter which would establish the requisite dishonestly or capriciousness on the part of the President or Commission necessary to establish bad faith. 60 In the absence of evidence to support a finding of bad faith, and as all the other requisite elements of these sections have been satisfied, the Court finds that the immunity provisions contained in s 48 of the HREOC Act, s 45(1) of the RDA and s 111(1) of the SDA apply to answer the whole of Ms Obieta's case against the Commission in these proceedings. Secondly it is necessary to identify a 'distinction, exclusion, restriction or preference' and thirdly to establish that such distinction, exclusion, restriction or preference was 'based upon' race. Findings to the same effect have been made in other courts: see Baird and Others v Queensland (No 1) (2005) 224 ALR 541; Commonwealth v McEvoy and Another [1999] FCA 105 ; (1999) 94 FCR 341. This memorandum, upon which the letter of 17 January 2006 from the Commission to Ms Obieta is based, records that the 1 September 2005 letter from Ms Obieta was part of the correspondence upon which the Commission relied in making its findings. 66 Further, the Court observes that even if there had been any irregularity in the handling of the complaint against Ms Fogarty by the Commission, there is no evidence that such conduct was based on Ms Obieta's race: see Macedonian Teachers' Association 91 FCR 8. 67 The Commission submits, and the Court accepts, that the allegation that the Commission mishandled Ms Obieta's complaint against Ms Fogarty because of Ms Obieta's race, was not put to Ms Aylett in cross-examination and Ms Obieta's correspondence to the Commission makes no claim that the conduct of any of the Commission's staff was based on race. This allegation was not explicitly raised in Ms Obieta's complaint of discrimination by the Commission dated 1 March 2006 addressed to Ms Temby, and the Commissions records do not refer to race as a factor in relation to the complaint. The first time that Ms Obieta directly raised such an allegation was in her affidavit sworn 28 March 2006 in the TAFE proceedings. 68 Accordingly the Court dismisses this issue. Ms Obieta acknowledges that in making her request for an extension of time she provided no reasons for such request. Ms Obieta acknowledged that she never told any officer of the Commission that she would have difficulty in meeting the deadline for the provision of submissions. Nor did she telephone Ms Aylett at any time from the date of the lodgement of her complaint concerning any issue. 70 The contemporaneous file note made by Ms Aylett on 11 November 2005, and her oral evidence satisfies the Court that Ms Aylett did attempt to telephone Ms Obieta, but that no message was left by Ms Aylett for the sole reason of protecting Ms Obieta's confidentiality. Ms Aylett testified that she was not aware of the residential circumstances of Ms Obieta, and was concerned that other persons might have access to the answering machine. 71 Further, although I am of the opinion that the letter written by Ms Obieta requesting the extension of time dated 15 November 2005 should, as a matter of courtesy, have been responded to, I am satisfied that the failure to respond was as a result of an oversight, and not the result of any intentionally discriminatory conduct directed towards Ms Obieta based upon her race. 72 In cross examination Ms Obieta acknowledged that her concern arose from the fact that she was not provided an extension of time whereas the respondents were granted an extension. She acknowledged also however that all of the material that she wished to place before the Commission had been provided to it in her letter dated 22 November 2005 and that there was nothing additional which she wished to put in answer to the request for information by the Commission. Although complying with the requested date for the receipt of submissions caused Ms Obieta inconvenience, no substantive detriment resulted. 73 Accordingly, this ground must fail. However, the letter of 1 March 2006 makes no connection between her race and the alleged failure by the Commission to take the letter of 1 September 2005 into consideration. 75 In oral evidence Ms Obieta claims that she was discriminated against on the ground of her Asian race and was excluded from equal treatment based upon the letter from Ms Toohey. Ms Obieta claims she was treated less favourably than Ms Fogarty. However, the correspondence of the Commission shows that there was no communication between the Commission and Ms Fogarty until 13 March 2006. On that day the Commission informed Ms Fogarty that a complaint had been received from Ms Obieta alleging unlawful discrimination by Ms Fogarty but that the Commission had terminated the complaint as lacking in substance. 76 Ms Obieta acknowledged in cross examination that the complaint of the 'cover up' made to Ms Temby did not arise out of alleged racial discrimination. Accordingly this ground of complaint must be dismissed. Whilst Ms Obieta challenges the date of receipt of the letter, the Court is prepared to infer that the stamped date was the date when it was received by the Commission. Accordingly, the President's letter terminating Ms Obieta's complaint dated 3 March 2006 was written before Ms Obieta's letter of 1 March 2006 had been received. 78 Irrespective of the date of receipt of Ms Obieta's letter dated 1 March 2006, Ms Obieta acknowledged in her oral evidence that she did not allege that the President terminated her complaint as lacking in substance because of her race. Accordingly this ground of complaint must be dismissed. By this date the Notice of Termination had already been issued. Accordingly, the content of her letter dated 1 March 2006 had no role in the issue of the Notice of Termination. Further, as Ms Obieta has acknowledged, her complaint against the President and the Commission was not based on any racial ground. Accordingly there is no utility in considering this issue further. Ms Obieta only made complaints concerning the conduct of the President of the Commission for the first time in the affidavit sworn on 28 March 2006 filed in support of the TAFE proceedings. Additionally, no complaint has been accepted by the Commission concerning the President's conduct. 82 It follows that this Court has no jurisdiction under Part IIB of the HREOC Act and accordingly the Court upholds the submission that the complaint of race discrimination cannot be substantiated and must be dismissed. 84 The Commission submits that Ms Obieta has adduced no evidence to establish that the President's exercise of discretion conferred by s 46PH of the HREOC Act to terminate the complaints as lacking in substance, resulted from the fact that Ms Obieta had made a complaint concerning the Commission staff. 85 The Commission also submits that there is no detriment to Ms Obieta arising from the President's termination of her complaint. In consequence of the termination of the TAFE and VETAB complaint, Ms Obieta was entitled to, and did in fact, commence proceedings in this Court under s 46PO(1) of the HREOC Act against TAFE and VETAB (see: TAFE proceedings). As such she has suffered no detriment and the complaint of victimisation against the President pursuant to s 94 of the SDA should be dismissed. 86 As to the 'aiding and abetting' alleged, the Commission submits that Ms Obieta's claim misconceives s 105 of the SDA. It submits that the President's discretion to make a decision under s 46PH of the HREOC Act does not involve the making of any binding determination concerning the merits of the complaint. Further, the process undertaken by the President does not involve sanctioning or permitting the alleged conduct. 87 Moore J in Elliott v Nanda and Another [2001] FCA 418 ; (2001) 111 FCR 240 at [163] explained the operation of s 105 as pertaining to the situation where a person who is in a position to prevent allegedly unlawful conduct fails to do so. A person can prevent unlawful conduct by not creating a situation where it will or may take place or altering a situation so it will not continue. Further, the President is not a party to the present proceedings and was not named as a respondent to Ms Obieta's complaint terminated on 3 March 2006. As such a claim made by Ms Obieta against the President cannot be maintained in these proceedings. 89 For the above reasons the Court will order that the proceedings be dismissed and that Ms Obieta pay the costs of the Commission. I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. | racial discrimination sex discrimination alleged unlawful discrimination by human rights and equal opportunity commission in handling complaint immunity of commission in administration of human rights and equal opportunity act 1986 (cth) jurisdiction of court after complaint terminated by president of commission. discrimination |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration & Citizenship to refuse to grant a protection visa to the appellant. In her application for a protection visa, the appellant included, as an annexure, a typed document which stated the grounds upon which she claimed a protection visa. The grounds were that the appellant was a member of an underground Christian group called the 'Shouters' in China, whose members had been arrested and 'tormented cruelly' by the Chinese authorities. The appellant became concerned about her safety and left China in March 2004. The appellant then travelled to Indonesia where she suffered discrimination because of her Chinese ethnicity. The appellant arrived in Australia on 24 April 2004 on an Indonesian passport. The appellant applied for a protection visa on 20 May 2004 which was refused on 17 June 2004. On 20 July 2004, the appellant applied to the Tribunal for a review of that decision. Before the Tribunal the appellant stated that she was not an Indonesian national and that, in effect, no reliance could be placed on the information contained in her Indonesian passport, which she presented on arrival in Australia, because the passport had been obtained falsely in Indonesia by a people smuggler, based on a bogus marriage. She said that she remained a Chinese citizen. 4 On 9 November 2004, the Tribunal notified the appellant that it had made its decision and invited the appellant to the handing down on 1 December 2004. On 15 November 2004, after the Tribunal decision was signed but before it was handed down, the Tribunal received a statutory declaration made by the appellant. The whole trip was arranged by person smugglers. The smuggler told me that it was the only way I could do, otherwise, I would have to return to China where I would have to face the cruel persecution from the Chinese Communist Party. On 8 th March 2004, I passed Hong Kong custom. I took a plan [sic] to arrive in Jakarta in the evening. I saw the smuggler at the custom; he took my passport and took me out of the custom. He then took me to his home. On 9 th March 2004, I became to know that I had to take photo with an Indonesian man whom I had not seen before nor talked. After taking photo, he left. The Smuggler took me home. About one week later, the Smuggler took me to sign my name. I saw that Indonesian man; he signed his name together with me and left. I returned to the Smuggler's home. On 26 th March 2004, the Smuggler took an Indonesian passport and air ticket to me and asked me to follow a lady to Singapore and Malaysia for sightseeing. At night on 28 th March 2004, we returned to Jakarta, the Smuggler picked us up and took away my passport. In the evening of 22 nd April 2004, the Smuggler told me that the next day afternoon; I would take plan [sic] to Australia. I saw that Indonesian man outside the airport. The Smuggler told me that the man would go to Australia with me, and then he would return to Indonesia. In coming to that view, the Tribunal relied upon information recorded in that passport that the appellant had married an Indonesian citizen on 11 March 2004, that she divested herself of her Chinese citizenship and gained Indonesian citizenship on 18 March 2004. After carrying out an extensive review of country information, the Tribunal found that as an Indonesian national of Chinese descent, the appellant did not have a well-founded fear of persecution. 7 The Tribunal recognised in its reasons, that the appellant claimed that she was not an Indonesian national and that the Indonesian passport contained false information. The Tribunal accepts that the applicant has no relationship to Indonesia, has no friends or acquaintances there, and does not speak the language. Any consideration of her circumstances on humanitarian grounds is a matter solely within the Minister's discretion. 9 Before the Federal Magistrate, the appellant submitted, in effect, that the Tribunal had erred because it had assessed her claim on the basis that she was an Indonesian national and not on the basis that she was a Chinese national. The appellant said that the Indonesian passport had been falsely obtained, she was not an Indonesian national and she remained a Chinese national. 10 The Federal Magistrate noted that the Tribunal had considered the information in the appellant's statutory declaration of 15 November 2004, because the Court Book recorded a note saying that the Tribunal had not recalled its decision because 'the details provided were already made known to me at the hearing'. The Federal Magistrate found that on the material, it was open to the Tribunal to reach the opinion that Indonesia was the appellant's country of nationality within the meaning of that reference in Article 1A(2) of the Convention definition. The Federal Magistrate said he was unable to identify jurisdictional error. She required, and was given, the assistance of an interpreter. 14 There was one ground of appeal in the appellant's notice of appeal. This was that the Federal Magistrate erred in failing to find the Tribunal made a jurisdictional error by not complying with s 424A(1) of the Migration Act 1958 (Cth) ('the Act'), because the Tribunal relied on inconsistencies between the appellant's statutory declaration and protection visa application, without first seeking the appellant's comment in writing. However, during the course of the hearing it became apparent that the appellant exhibited no understanding of the ground of appeal in the notice of appeal and did not advance any argument in support of it. Rather, the appellant advanced the same argument that she had made before the Tribunal and the Federal Magistrate, which was, in effect, that the issuance to her of the Indonesian passport did not provide a sufficient basis to conclude that her nationality was Indonesian, because the Indonesian passport was issued on the basis that she had entered a genuine marriage, when, in fact, the marriage was bogus, and would not have resulted in her becoming entitled to Indonesian nationality, nor losing her Chinese nationality. In some cases, however, it will have been necessary for the refugee to secure false documentation in order to successfully exit her country or in order to circumvent the visa controls imposed by some asylum states on the nationals of refugee-producing countries. In these cases of conflict between the claimant's assertion and the corroborative evidence of nationality, primary regard should be had to the characterization of the claimant's status by the country whose travel document the individual holds, or which was her immediate point of departure for the asylum state. Because international law allows each state to determine for itself those persons who are its nationals, a nationality cannot be attributed to a refugee claimant where the authorities of that state take a contrary position. If the country that issued the documentation cannot confirm the status of the claimant as its national, the need for protection should be determined with reference to the state which the claimant asserts to be her country of origin. It also followed, according to the appellant, that statements in the Indonesian passport, to the effect, that she had lost her Chinese nationality and acquired Indonesian nationality, did not conclusively establish those facts because they were founded on the assumption that the marriage was a genuine marriage. In other words, the appellant claimed that, in her circumstances, the existence of a passport which on its face was validly issued did not, in fact, establish that she was an Indonesian national, and that Indonesia would, on the true facts being revealed, accept her as an Indonesian national and accord her the protection accorded its nationals. 17 In my view, the Tribunal acknowledged the claim by the appellant that her Indonesian passport did not evidence her true nationality because it had been obtained falsely. However, the Tribunal did not consider the claim. The Tribunal acted on the evidence of the passport at face value, and concluded that it was 'validly' issued and, therefore, that it established conclusively that the appellant was an Indonesian national, and implicitly, a person to whom Indonesia would offer the protection that it would offer its nationals. It did not deal with the appellant's claim, in effect, that because she had entered a bogus marriage she would not have acquired Indonesian nationality, nor lost Chinese nationality; and that because the passport was issued on the assumption that the marriage was genuine, the passport contained inaccurate information insofar as it stated that the appellant was an Indonesian national and had lost her Chinese nationality. To make a decision without having considered all the claims is to fail to complete the exercise of jurisdiction embarked on. The claim or claims and its or their component integers are considerations made mandatorily relevant by the Act for consideration. There was, as the Tribunal acknowledged, cogent evidence to support the claim. In my view, the failure to deal with the claim amounted to a constructive failure by the Tribunal to carry out the review function and there was jurisdictional error on the part of the Tribunal ( Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184). 20 The failure of the Tribunal to address the appellant's contention meant that the Tribunal did not consider whether this was an occasion when it should exercise its powers of inquiry under s 427(1)(d) of the Act to ascertain from the Indonesian authorities whether in the appellant's circumstances, the appellant would be entitled to Indonesian nationality, and whether she would qualify for protection by the Indonesian state ( Applicant M164/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 16). 21 The Federal Magistrate erred in not concluding that the Tribunal had fallen into jurisdictional error. 22 The appeal should be allowed and the matter remitted to the Tribunal to be determined according to law. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | protection visa nationality of visa applicant tribunal determined nationality on the basis that visa applicant held an indonesian passport claim that bogus marriage in indonesia did not result in the acquisition of indonesian nationality and the loss of chinese nationality claim that indonesian passport was obtained under false pretences whether tribunal considered all the visa applicant's claims migration |
2 Mr Jakab has been represented in relation to the application by a firm of solicitors. On the hearing of the appeal, a preliminary application was made by those solicitors for leave to withdraw and leave was granted. Mr Jakab supported that application and wished to make submissions on his own behalf in support of the appeal. Mr Jakab in that sense is self-represented although some written submissions have been made by Mr Jakab's former solicitors. In addition to those submissions, Mr Jakab made oral submissions raising a question of whether the AAT had regard to s 119(1)(h) of the Veterans' Entitlements Act 1986 (Cth) ('the V E Act ') in reaching its decision. That section provides that in considering, hearing or determining and in making a relevant decision account shall be taken of any difficulties that for any reason lie in the way of ascertaining the existence of any fact, matter or circumstance including any reason attributable to the effects of the passage of time and the absence of or deficiency in any relevant official record relating to that fact, matter or circumstance. Mr Jakab asserts that over a long period of time complaints were made to medical officers within the Defence Force of symptoms entirely consistent with the contraction of Meniere's Disease and that in evaluating the facts and reaching its finding, the AAT ought to have had regard to the difficulty confronting the applicant in establishing the relevant factual matters due to the passage of time. 3 In the Notice of Appeal, Mr Jakab raises two questions of law to be determined. First, whether the Tribunal erred by failing to take into account relevant matters and secondly, whether the Tribunal erred by taking into account irrelevant matters. Of course, neither of those contentions properly formulate a question of law for determination in the appeal. The obligation cast upon an applicant pursuant to s 44(1) is to identify the question of law arising out of the decision of the AAT to be resolved by the Federal Court of Australia which is said to reflect an error of law. Formulating the question of law as a contention in terms of high level of abstraction such as a failure to take into account relevant matters and taking into account irrelevant matters does not crystallise a proper question of law for resolution. 4 In the written submissions prepared by Messrs Smith & Associates Solicitors, the applicant contends that the AAT applied an incorrect test in determining whether there was a causal link between Mr Jakab's disease and his defence service; that the AAT did not have proper regard to the correct meaning of the term 'aggravation'; that in the context of the causal link, the AAT did not properly consider the difficulties confronting Mr Jakab in obtaining appropriate clinical management of the disease; and that on the face of the material before the AAT, the AAT ought to have been satisfied that Mr Jakab suffered from the effects of the disease during a period of defence service and that it was worsened or aggravated by an inability to obtain appropriate clinical management during the period of service. The written submissions also contend that the applicant's service medical records demonstrate that the disease was present during the period of his service and that the AAT 'inappropriately preferred the evidence of Professor Gibson and Dr Anning in reaching the decision that the applicant did not have the constellation of symptoms of Meniere's Disease during his service' . 5 Plainly enough, it is not the role of the Court in determining an appeal from a decision of the AAT to conduct a de novo review of the factual findings of the AAT and form its own view of the weight of the evidence on the matters to be resolved. I propose to deal with the application under s 44(1) of the AAT Act by addressing these questions of law. First , did the AAT properly identify and apply the correct test for the determination of the questions before it? Secondly , did the AAT properly have regard to s 119(1)(h) in reaching its decision? 6 In addressing these questions and in formulating these reasons, I have had close regard to the 'T documents' and in particular the reports of the doctors not for the purpose of conducting a review of the facts but in order to consider fully and comprehensively all of the matters put to the Court by Mr Jakab in the context of the questions to be resolved. In formulating these reasons although they are, of course, directed to the parties, I particularly have in mind Mr Jakab as a self-represented litigant in the conduct of the appeal and in addressing the questions of law and factual matters relevant to the questions as formulated and in explaining the proper role of the Court in such an application. Section 70(5) provides that a disease contracted by a member of the Defence Force shall be taken to be a defence-caused disease if the disease arose out of or was attributable to any defence service of the member (s 70(5)(a)) or if the disease resulting in incapacity of the member was suffered or contracted during any defence service but did not arise out of that service (s 70(5)(d)(i)) or the disease was suffered or contracted before the commencement of the period of defence service or the last period of defence service and the disease was contributed to in a material degree by, or was aggravated by, any defence service rendered by the member being service rendered after the member suffered or contracted the disease (s 70(5)(d)(ii)). 8 Mr Jakab served as a member of the Australian Army in the period 23 September 1963 to 22 September 1969. Mr Jakab provided service as a member of the Royal Australian Air Force between 30 November 1971 and 10 January 1986. Accordingly, Mr Jakab, subject to satisfying the requirements of the V E Act , has provided defence service as a member of the Royal Australian Air Force which would give rise to eligibility for a pension from the Commonwealth. Meniere's Disease is a recognised disease for the purposes of s 5D of the V E Act . A reference to 'incapacity from a defence-caused disease' is a reference to the effects of that disease and not a reference to the disease itself (s 5D(2)). 9 Section 120(4) of the V E Act provides that in making any determination or decision in respect of a matter arising under the Act (including a claim for a pension based upon incapacity from a defence-caused disease under Part IV of the V E Act ), the statutory standard to be applied by the decision-maker is a standard of 'reasonable satisfaction' which adopts all civil standard ( Repatriation Commission v Smith (1987) 15 FCR 327). That section is to be understood having regard to s 120B of the V E Act which identifies the use to be made of a Statement of Principles in determining whether the decision-maker might be reasonably satisfied that a person has become incapacitated from a defence-caused disease for the purposes of the V E Act . 10 Section 120B applies to a claim made on or after 1 June 1994 under Part IV (s 120B(1)) which therefore relates to the claim made by Mr Jakab. The Repatriation Medical Authority has established a Statement of Principles pursuant to s 196B(3) in respect of Meniere's Disease. That Statement of Principles (No. 78 of 2001, replacing Instrument 28 of 1997) seeks to do a number of things. First , it recognises that Meniere's Disease is a clinical condition characterised by recurrent attacks of episodic vertigo, fluctuating sensorineural hearing loss and tinnitus often associated with nausea and vomiting and a sense of fullness in the involved ear. The condition includes conditions known as endolymphatic hydrops, delayed endolymphatic hydrops, Meniere's syndrome and Lermoyez's syndrome. The term 'vertigo' derives from the Latin term vertere , 'to turn' and is understood as 'a sensation of whirling and loss of balance, associated particularly with looking down from a great height, or caused by disease affecting the inner ear or the vestibular nerve; giddiness' (The New Oxford Dictionary of English, 2001). 11 Secondly , the Statement of Principles seeks to distil conclusions based upon an analysis by the Repatriation Medical Authority of the available 'sound medical-scientific evidence' as to those factors that can be demonstrated to be related to the cause of or material contribution to or aggravation of Meniere's Disease and which can thus be related to service as a member of the Defence Force. Thirdly , having conducted that evaluation, the Repatriation Medical Authority seeks to determine the factors that must exist before it can be said, on the balance of probabilities, that a person's relevant service caused or materially contributed to or aggravated Meniere's Disease. 12 Section 120B(3) relevantly provides that the decision-maker in applying s 120(4) (as to reasonable satisfaction), is to be reasonably satisfied that a disease contracted by a person was defence-caused only if the material before the decision-maker raises the connection between the disease and some particular service rendered by the person; and there is in force a Statement of Principles determined under s 196B(3) that upholds the contention that the disease is, on the balance of probabilities, connected with that service. Accordingly, the material before the decision-maker must raise a connection between the disease and Mr Jakab's service and the contention as to that connection must be one capable of being upheld by the Statement of Principles determined by the Repatriation Medical Authority under s 196B(3). 13 The determination made by the Repatriation Medical Authority by Instrument No. 78 of 2001 is that there is only one factor, based upon sound medical scientific evidence, that can be related to the cause of or a material contribution to or aggravation of Meniere's Disease and which can be related to service as a member of the Defence Force and that factor 'is inability to obtain appropriate clinical management for Meniere's Disease' (cl 4, Statement of Principles). In this context, a reference to Meniere's Disease must be understood as a reference to the effects of the disease and not a reference to the disease itself (s 5D(2)(b)). 14 Section 196B(3) addresses whether a disease can be related to defence service and the factor or factors determined by means of a Statement of Principles that must exist before it can be said, on the balance of probabilities, that a disease is connected with defence service. Section 196B(14) provides that a factor causing, or contributing to, a disease is related to defence service if it was contributed to (to a material degree) by that service or was aggravated by that service (s 196B(14)(d)); alternatively, in the case of a factor causing, or contributing to a disease, it would not have occurred but for the person rendering that service (s 196B(14)(f)(i)); or it would not have occurred but for changes in the person's environment consequent upon that person having rendered that service (s 196B(14)(f)(ii)). Section 196B(14) makes it clear that a factor causing or contributing to a disease is related to service and s 196B(3) enables the Repatriation Medical Authority to determine those factors that must exist and which must be related to service before a disease is, on the balance of probabilities, connected with the circumstances of service. The Outpatient Clinical Record confirms a complaint of vomiting, diarrhoea and dizziness. On 11 August 1979, Mr Jakab presented to the Medical Officer as confirmed in the Outpatient Clinical Record complaining of acute allergy reaction to a viral infection. On 2 October 1979, Mr Jakab presented to the Medical Officer and complained of headaches and dizziness as confirmed in the Outpatient Clinical Record. On 21 August 1980, Mr Jakab was admitted as an inpatient suffering from viral pericarditis suffering severe pain with dull ache. Mr Jakab says that from this time he started to suffer, on and off, from vertigo albeit that it was initially only slight dizziness which later developed into more classical symptoms of vertigo; at the same time he started to suffer from tinnitus and fullness of the ear; the symptoms persisted and got worse and he started to also suffer from nausea which increased as time went on. 16 Mr Jakab says that he reported to the Air Force Medical Officer and complained of the symptoms but those symptoms were dismissed as being of no concern. However, Mr Jakab says the symptoms persisted until 1995 (approximately five years after Mr Jakab suffered a stroke in 1990) when he suffered a severe attack with symptoms that were of such intensity medical attention was required. Medical investigation then led to the diagnosis of Meniere's Disease. Mr Jakab says that Meniere's Disease is affected by stress; as his stress levels have changed so has the intensity of the episodes of Meniere's Disease; and that since ceasing work, the intensity and number of episodes of Meniere's Disease has waned (see: Outpatients' Medical Records, Statement Stefan Jakab and Attachments, 23 June 2003; Statements Stefan Jakab, Veterans' Review Board, 25 June 2002; Statement of Facts and Contentions, Stefan Jakab (undated); Transcript of Evidence before AAT, 26 May 2005). 17 Mr Jakab contends that the onset of Meniere's Disease was contributed to by the viral infection of 11 August 1979 and viral pericarditis on 21 August 1980 whilst at Butterworth Air Base in Malaysia. Mr Jakab says that these viral infections contributed to the onset of the effects or symptoms of Meniere's Disease evidenced by complaints of transient episodes of dizziness, tinnitus and fullness of the ear, even though Meniere's Disease was not then diagnosed. Mr Jakab contends that the failure to diagnose the condition as Meniere's Disease evidenced by the effects of the condition on presentation to Air Force Medical Officers resulted in an inability on the part of Mr Jakab to obtain appropriate clinical management for the disease and thus the contention of a connection between the effects of the disease and Mr Jakab's Defence Force service is upheld by the Statement of Principles. As a result, Mr Jakab says he is entitled to a pension from the Commonwealth in respect of his incapacity (s 70(1) V E Act ). 18 In essence, Mr Jakab contends that the events surrounding the onset of viral infection and viral pericarditis brought about an undiagnosed onset of Meniere's Disease. 19 Accordingly, Mr Jakab says he contracted the disease during the period of defence service; by reason of the non-diagnosis of the disease he was unable to obtain appropriate clinical management of the effects of the disease; and the inability to secure proper clinical management contributed to the effects of the disease in a material way or aggravated the disease. 21 The AAT found that a constellation of symptoms, that is, manifest effects of Meniere's Disease, must be present before a conclusion can be reached that clinical onset of the disease has occurred. The AAT considered what it described as Mr Jakab's lengthy history of symptoms the subject of his evidence before the Tribunal and concluded that the failure on the part of the medical practitioners to record important aspects of the symptoms identified by Mr Jakab, in their reports, was not simply a function of those doctors failing to ask the relevant questions of Mr Jakab that would have revealed the detailed sequence of clinical effects symptomatic of Meniere's Disease but rather that Mr Jakab did not manifest all the necessary symptoms (the constellation of symptoms) that, manifest upon presentation now, would enable a diagnosis of Meniere's Disease to be made [36], [37]. 22 That finding was open to the Tribunal on the evidence. In reaching that conclusion, the Tribunal considered the background factual contentions; Mr Jakab's evidence; the report of Dr Robert J Hall, Neurologist dated 5 July 1995; the report of Dr P Baratosy dated 21 October 1998; the report of Dr M A Menzies, Ear, Nose and Throat Surgeon, dated 27 April 2000; the report of Dr S M Hamwood dated 31 May 2000. In each of these reports, the authors of the report record and give emphasis to symptoms emergent after the end of the period of Mr Jakab's service. For example, reference is made to the acute attack of Meniere's Disease in 1995 (Dr Hall); the consequences of the stroke; the period of pressure disturbance in the right ear reported to Dr Hall in the previous 12 month period prior to the report of 5 July 1995; a five year history of right-sided Meniere's Disease reported to Dr Menzies and Dr Hamwood's observation that Meniere's Disease emerged some two years after a stroke as a secondary consequence to cerebral ischaemia in 1990. 23 No particular emphasis was reported by Mr Jakab to these doctors concerning his symptoms in 1979 or 1980, in the discussions each of them had with Mr Jakab. 24 The AAT also had regard to the reports of Professor Gibson, a Professor of Otolaryngology. Professor Gibson concludes that the cause of Meniere's Disease is multi-factorial; is thought to be linked to viral infection; seems to have a demonstrated connection with a genetic disposition in sufferers to the disease; and although Mr Jakab contracted viral pericarditis during service, no connection exists in Professor Gibson's view between the viral pericarditis suffered by the applicant and the onset of Meniere's Disease, on the footing that Mr Jakab did not report symptoms which suggested a penetration of the virus to the inner ear so as to compromise the functioning of the ear and thus contribute to Meniere's Disease. Professor Gibson did not accept that any connection existed between any allergic reaction suffered by Mr Jakab in 1979 and the onset of the disease. 25 The AAT also had regard to the report and evidence of Dr F Anning (report dated 8 March 2005), Ear, Nose and Throat Specialist. Dr Anning observed that Meniere's Disease presents as an acute episode that is totally incapacitating just as the episode experienced by the applicant in 1995. Dr Anning gave evidence that the disease is very difficult to diagnose; is unpredictable; can return after a lengthy period when the individual has been symptom-free; the probable onset of the applicant's Meniere's Disease was in 1995; and could not have been diagnosed earlier nor treated earlier. The AAT considered Dr Anning's evidence in relation to an audiology report dated 10 February 1981 which showed that the applicant had no significant hearing loss. Dr Anning noted, however, that the test adopted produces variable subjective results. Dr Anning noted that hearing loss typical of Meniere's Disease is manifest in low tones whereas Mr Jakab's results in 1981 showed minor loss in the high tonic range. The Tribunal accepts the evidence of Professor Gibson and Dr Anning that there was no connection between Meniere's Disease and viral episodes or with an allergic reaction during service. The Tribunal also accepts Dr Anning's evidence that dizziness is a non-specific symptom that can be explained by a number of medical conditions, and in the applicant's case was better explained by the medical conditions identified at the time. The Tribunal accepts Dr Anning's evidence that the hearing loss recorded in 1981 was not related to the development of Meniere's Disease. In applying the evidence in regard to the applicant's circumstances to the test set out by Kenny J in Wedekind , and applied by the Tribunal in O'Brien , the Tribunal is reasonably satisfied that the applicant did not have the constellation of symptoms of Meniere's Disease during his service. Being so satisfied there is no need for the Tribunal to proceed to consider issues relating to clinical management of Meniere's Disease. For the claim to succeed, it is necessary for Meniere's Disease to be present before the end of service: O'Brien . For the reasons given above, the Tribunal is reasonably satisfied that the condition was not present during service. Therefore, the evidence, taken overall, does not point to factor 4 of the SoP for Meniere's Disease being met (or the equivalent factor 5 in the earlier SoP) and the claim must fail. Although some features associated with or consistent with Meniere's Disease were reported by Mr Jakab to the medical officers from time to time, during the period of Mr Jakab's service, the AAT has relied upon the body of medical evidence so as to find that the necessary collection of symptoms were not present; those symptoms which were consistent with Meniere's Disease were explained by the medical conditions at the time; and that no connection was demonstrated between Meniere's Disease and the viral episodes relied upon by Mr Jakab. Accordingly, Mr Jakab failed to establish that he suffered or contracted a disease during a period of defence service or prior to the last period of that service and that the disease was contributed to in a material degree or was aggravated by defence service. 28 In conducting an analysis of the factual matters, the AAT applied the correct statutory tests, addressed the correct questions and acted according to law. The factual findings made were open to the Tribunal. 29 Mr Jakab further contends that in conducting an analysis of the facts and applying the legal tests, the AAT failed to have proper regard to the discharge by Mr Jakab of the standard of proof and failed to properly apply the statutory considerations arising out of s 119(1)(h). 30 That provision is in these terms. The applicant now recalls symptoms during his service, however the Tribunal agrees with Dr Anning that memory can be unreliable when reporting symptoms that occurred a long time ago. No medical practitioner had taken a history from the applicant where he refers to the lengthy history of symptoms occurring during defence service as he now states was present. The Tribunal does not accept, as the applicant asks be accepted, that this was simply the result of doctors not asking him questions about his earlier experience of symptoms. The Tribunal does not accept that the applicant had all the necessary symptoms during his service that would allow a diagnosis now of Meniere's Disease during service. Mr Jakab says that he has a clear recollection of his symptoms during service; the symptoms were unpleasant and severe and thus made an enduring impression upon him and that his memory is not unreliable as to the symptoms even though they occurred a long time ago. Mr Jakab's contention based upon s 119(1)(h) seems to be that even if the AAT took the view that Mr Jakab's memory may have been unreliable as to any aspect of the symptoms, it could nevertheless have relied upon s 119(1)(h) as a basis for reaching a conclusion that Mr Jakab suffered symptoms emblematic of Meniere's Disease and thus discharged the onus of establishing the onset of Meniere's Disease during service. Accordingly, Mr Jakab says that the AAT ought not to have given weight and emphasis to the relatively short history of symptoms recorded by the medical practitioners in their reports. In addition, Mr Jakab says that if the AAT was undecided as to the role or accuracy of Mr Jakab's memory of the events, it failed to give weight to the 'effects of the passage of time' as required by s 119(1)(h) of the V E Act . 33 There are a number of things to say about this contention. 34 First, Mr Jakab had access to the outpatient medical records which contain a record of the complaints he made to the medical officers at the time evidencing the symptoms apparent to the medical officers at the time. 35 Secondly, as to other complaints of symptoms, Mr Jakab gave detailed evidence of his recollection of the symptoms, the severity of the symptoms and the combination of symptoms which he said demonstrated the onset of Meniere's Disease. Accordingly, this is not a case where Mr Jakab has poor recollection and was not able to obtain documents in support of his contentions. Accordingly, Mr Jakab was not presented with any identified 'difficulties' concerning any identified fact, matter or circumstance attributable to the effects of the passage of time. 36 Thirdly, s 119 of the V E Act instructs the Repatriation Commission (and in consequence the AAT in conducting a review) that the decision-maker is not bound to act in a formal manner and is not bound by formal rules of evidence. The decision-maker may inform himself or herself on any matter in such manner as the decision-maker thinks just (s 119(1)(f)). However, a provision such as s 119(1)(h) does not make out a case by enabling the decision-maker to reach a finding not supported by the evidence. In this case, the medical evidence did not support the proposition that the necessary conjunction of symptoms were present in order to lead the decision-maker to a proper conclusion that Mr Jakab had contracted the disease at the relevant time. 37 Fourthly, Mr Jakab was able to articulate to the medical practitioners and to the Tribunal his precise recollection of the collection of symptoms he says he suffered at the various dates. Mr Jakab was also able to place the history of those symptoms in a proper chronology by reference to the relevant documents. Mr Jakab was in a position to engage with the medical practitioners, both general practitioners and medical practitioners experienced in the disciplines relevant to the disease and discuss the extent of the symptoms and their onset. It is clear from the reasoning of the Tribunal, that the AAT had regard to the engagement between Mr Jakab and the medical practitioners, the chronology of the symptoms recounted by Mr Jakab to the medical practitioners and the weight and emphasis to be given to the chronology of clinical events in making findings as to the onset of the disease. It is clear therefore that the Tribunal had regard to and took account of the effects of the passage of time. 38 Fifthly, the fundamental criticism Mr Jakab makes of the AAT is that it preferred a view of the evidence which led it to find an onset of symptoms and thus the contraction of Meniere's Disease at a much later date than Mr Jakab contends for. The AAT reached that conclusion in part in reliance upon matters going to recollection. In other words, the AAT was simply not satisfied as to the contended primary facts that symptoms of Meniere's Disease were manifest during the period of service, on all the evidence. Mr Jakab did not fail to establish his contention because of the effects of the passage of time with the result that the AAT ought to have called in aid s 119(1)(h) of the V E Act . Mr Jakab failed in discharging the standard of proof because the weight of evidence, in the view of the AAT, was inconsistent with a conclusion that the necessary symptoms of Meniere's Disease were present during the period of service. That conclusion was open to the AAT. 39 Importantly, the section does not operate so as to strengthen the case or a contention of an applicant by lowering the threshold or standard of proof required by s 120 of the V E Act for establishing the clinical onset of the effects of Meniere's Disease especially in circumstances where the applicant contends for a demonstrated good recollection of each facet of the symptoms suffered over the period under examination. An appeal is not simply a process by which an alternative view of the evidence might be established. This is not a case where there is no evidence to support the conclusions of the AAT and no error of law is demonstrated. 40 The applicant has raised two further matters. 41 The first is a subset of the matters previously discussed, namely, that the reference to the term 'constellation of symptoms' is inappropriate as there is, in truth, a 'trilogy of symptoms' defining Meniere's Disease and the applicant contends that each of those symptoms were present during the period of his service. The AAT identified on the medical evidence before it the symptoms required to be present in order to accept the presence of Meniere's Disease during the period of service. The Tribunal reached the findings reflected in paragraphs [36], [37], [38] and [39] and those findings were open to it. 42 The third and final ground is that the Tribunal acted selectively in evaluating and relying upon the evidence and that the applicant ought to have been sent for further testing of his hearing loss. This contention does not raise any question of law for resolution nor does it identify any error of law. The role of the Tribunal was to consider the evidence before it in the context of the review of the primary application. The AAT properly conducted the review function. 43 Accordingly, the appeal by Mr Stefan Jakab by way of an application pursuant to s 44(1) of the AAT must be dismissed. 44 Since I have not heard Mr Jakab on the question of costs, I propose to reserve the resolution of the question of costs and make the following directions. Mr Jakab is to file and serve by 4.00pm, Tuesday, 19 June 2007 any comments by letter or submissions he wishes to make as to whether an order ought to be made that he pay the costs of the respondent of and incidental to the appeal. The respondent is to file and serve within seven days thereafter, any submissions in relation to the question of the costs of and incidental to Mr Jakab's application. 45 The Court will then determine the question of costs on the papers. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | appeal from a decision of the administrative appeals tribunal consideration of whether the applicant contracted a defence-caused disease, namely, meniere's disease reference to the statement of principles reference to the standard of proof discussion of s 119(1)(h) of the veterans' entitlements act 1986 (cth) veterans affairs |
I made these orders in the course of delivering judgment in this proceeding and at the time of publishing my reasons: Mathews v Health Insurance Commission [2006] FCA 195. 3 In the course of delivering judgment I declared the Committee's Final Report invalid. No vacation nor variation of that declaration is sought. Adjudicative Referral No. 223 be set aside. The matter be remitted to the Director with a direction that he establish a differently constituted Committee to determine the reference to Adjudicative Referral No. 223 according to law. The first, second and third respondents pay the applicant's costs. 223 that Dr Mathews had engaged in inappropriate practice be set aside. 223 by substituting for any references in that document to the third respondents, references to a differently constituted Committee, AND a direction that the Director of Professional Services Review establish a differently constituted Committee to determine Adjudicative Referral No. 223. 223 is that the effect of your Honour's order is, as we interpret it, to re-enliven the Director's responsibility to actually conduct an investigation, write a report and prepare an adjudicative referral. Since the matter was decided there has been a change in personnel at the [Professional Services Review] and the current Director of Professional Services Review is a gentleman called Dr Tony Webber. 223, without the necessity to conduct a fresh investigation and create a further investigation report. It's a very wordy sort of order ... . However, he did strongly reject any suggestion from me that, in consequence of the first order, the Director would have to undertake a fresh investigative referral. There was some confusion here, for which I may have been responsible, because as counsel for the respondents subsequently pointed out, it is the Health Insurance Commission ('HIC') that writes an investigative referral: section 86 ff of the Health Insurance Act 1973 (Cth) ('the Act'). What counsel for the respondents was referring to in the extract from her submissions at [8] supra was not the HIC's investigative referral but the investigation which the Director is required to undertake into the referred services pursuant to subs 89(1) of the Act. 11 The variation of the second order in the terms set out in [6] supra is essentially a consequential function of the terms of the first order, although counsel for the respondents agreed that, temporally, the setting up of the new committee should come before the terms of the remittal. 12 Counsel for Dr Mathews indicated his client's acceptance of order 2 as it stood. 13 So far as the variation sought to the order for costs is concerned, it is, in my view, ill conceived, too late and arguably, without foundation. It is ill conceived in the sense that the fact that Dr Mathews was unsuccessful on the vast majority of his grounds of challenge, does not mean that he was only partially successful; he was totally successful, even if only on one or more of his grounds of challenge. There was, and is, in my view, no basis for departing from the normal rule that the costs order should follow the event. It is too late in the sense that there was more than adequate time for the issue to be raised before the order was entered. And it is, arguably, without foundation. There is much in the contention of Dr Mathews' counsel that O 35 r 7(2) of the Federal Court Rules does not accommodate its agitation. 14 I do not propose to say anything more about the variation sought to order 3 (the costs order). 15 Returning to the first order I made, the intention of that order was to set aside the Director's referral to Professional Services Review Committee No. 223. The Director's referral to PSRC No. 223 of the reference known as Adjudicative Referral No. 223 be set aside. 223 according to law. The Director establish a differently constituted committee to consider the reference known as Adjudicative Referral No. 223 according to law. He has already done that. It will, however, require him to make an adjudicative referral to the new committee pursuant to subs 93(1) of the Act, to prepare a written report to the new committee and attach that report to the adjudicative referral to the new committee pursuant to subs 93(6) of the Act. 20 Moreover, having regard to my reasons, in particular at [62] and [69], the exploratory samples which the new committee examines must be randomly drawn from the preliminary random samples of 99 for Item 23, 96 for Item 24 and 93 for Item 193. They must not be 30 or more consecutively numbered services chosen from the preliminary random samples, whether by the Director, the Committee or someone else. 223 of the reference known as Adjudicative Referral No. 223 be set aside. 223 according to law. | health insurance professional services review statutory scheme for examination of conduct to ascertain whether inappropriate practice involved where committee failed to comply with sampling determination where committee's report invalid form of orders to remit matter to new committee for determination according to law effect of setting aside adjudicative referral whether director must conduct fresh investigation whether director must make new adjudicative referral and report. administrative law |
The answer affects the calculation of capital gains made by the applicant on the sale of issued shares in Murdoch Magazines Pty Ltd ("Magazines"). 2 The application is brought by way of an appeal under s 14ZZ of the Taxation Administration Act 1953 (Cth) ("the TAA"), against the decision of the respondent, the Commissioner of Taxation, to disallow in full an objection by Handbury Holdings Pty Ltd ("the taxpayer") to an assessment to income tax in respect of the year ended 30 June 2005. 3 The procedural background to the taxpayer's application to this Court is as follows. 4 By an application dated 26 April 2006, the taxpayer sought a private ruling from the Commissioner as to whether certain liabilities owed by Magazines to Handbury Nominees Pty Ltd (as trustee for the Handbury Family Trust) ("Nominees") and Matthew Handbury should be included in the step 4 amount under s 711- 45 of the 1997 Act . On 7 August 2006, the Commissioner ruled that they should be so included. 9 On 15 March 2007, the Commissioner disallowed the objection. This became an appealable objection decision. On 14 May 2007, the taxpayer appealed against the appealable objection decision, seeking to have the decision set aside by allowing the objection and reducing its assessable income by $26,140,360. 10 It is virtually impossible to explain the appealable objection decision without referring first to the relevant legislation. This legislation is complex. To follow it, it is regrettably necessary to mention numerous provisions and to set some down in full. Capital gains arise on the occurrence of what are called CGT events. Division 104 describes CGT events, including in s 104---10, a CGT event A1 and, in s 104-520, a CGT event L5. 12 Part 3 - 90 of the 1997 Act provides for the creation of consolidated groups for assessment purposes, and for the taxation of a head company and its wholly-owned subsidiaries as a consolidated group represented by the head company. An * in the 1997 Act indicates merely that the term is defined in the Dictionary to the 1997 Act , starting at s 995-1. Section 701 -5 states that "[f]or the head company core purposes in relation to the period after the entity becomes a subsidiary member of the group, everything that happened in relation to it before it became a subsidiary member is taken to have happened in relation to the head company". The 1997 Act refers to this 'rule' as the entry history rule. 16 Pursuant to s 701 -40, on ceasing to be a subsidiary member, a company takes with it an income tax history that recognises it is different from when it became a subsidiary member. The allocation of a tax cost of the underlying assets is done under Subdiv 705-A. It is unnecessary to refer to its provisions in any detail, save to note s 705- 10 , which sets out the objects of the subdivision. That amount consists of the cost of the group's membership interests in the joining entity, increased by the joining entity's liabilities and adjusted to take account of the joining entity's retained profits, distribution of profits, deductions and losses. Note: The head company's costs for membership interests in entities was aligned with the costs of their assets when the entities became subsidiary members of the group. Division 711 makes detailed provision for when a subsidiary leaves a group, including the manner of determining the interest's "tax cost setting amount": see s 711- 10 . Section 711- 5 provides some further guidance as to the object of Div 711 and the manner in which it is to be achieved. (Emphasis added. The first step taken under s 711- 15 is to work out the old group's allocable cost amount for the leaving entity in accordance with s 711- 20 . To ensure that the allocable costs amount includes the cost of the assets. 2 Add to the result of step 1 the step 2 amount worked out under section 711-35, which is about the value of deductions inherited by the leaving entity that are not reflected in the terminating value of the assets that the leaving entity takes with it. To ensure that the value of the deductions is reflected in the allocable cost amount. 3 Add to the result of step 2 the step 3 amount worked out under section 711-40, which is about liabilities owed by members of the old group to the leaving entity at the leaving time. To ensure that the liabilities, which are not recognised while the leaving entity is taken to be part of the head company by subsection 701-1(1), are reflected in the allocable cost amount. 4 Subtract from the result of step 3 the step 4 amount worked out under section 711- 45 , which is about: (a) the liabilities that the leaving entity takes with it when it ceases to be a subsidiary member; and (b) membership interests in the leaving entity that are not held by members of the old group. To ensure that the allocable cost amount is reduced to reflect the liabilities and the market value of the membership interests. 5 If the amount remaining after step 4 is positive, it is the old group's allocable cost amount for the leaving entity. Otherwise the old group's allocable cost amount is nil. Otherwise the old group's allocable cost amount is nil (s 711- 20 (1)). If there is a negative amount (i.e., if the liabilities that the leaving entity takes with it when it ceases to be a subsidiary member and the membership interests in the leaving entity that are not held by members of the old group exceed the ascertained value of its assets), a capital gain arises under CGT Event L5, as provided for in s 104-520. (3) For the head company core purposes mentioned in subsection 701-1(2), the head company makes a capital gain equal to the amount remaining. 27 Pursuant to Pt 3 - 90 of the 1997 Act , the taxpayer has been the head company of a consolidated group of companies since 1 July 2003. Magazines was a subsidiary member of the consolidated group from 1 July 2003 to 30 July 2004. There was a contest between the parties as to whether this date was 29 July 2004 or 30 July 2004. For the reasons stated below, I consider the later to be the correct date. 28 As at 9 July 2004, Magazines was indebted to Mr Handbury in the amount of $11,290,000. 29 On 12 July 2004, the taxpayer, Magazines, Nominees, Mr Handbury, Pacific Publications Pty Ltd, Seven Network Limited and Citicorp Leasing Inc entered into an Implementation Deed and a Share Purchase Agreement. Pursuant to cl 3 of the Deed, the implementation of what were called "the implementation steps" in cl 4 was dependent on the parties to the Share Purchase Agreement confirming that they were able to complete that agreement. 31 At 7.00 pm on 29 July 2004, the directors of Magazines declared an interim dividend of $14,850,360 to be paid (to the taxpayer) on 30 July 2004 by crediting the amount to "the appropriate loan account in the books of the company". 32 A little earlier, at 5:30 pm on 29 July 2004, the directors of the taxpayer purported to declare an interim dividend of $14,850,360 in favour of Nominees. This dividend was also payable on 30 July 2004, "by way of assignment of the loan amount of $14,850,360 owed" by Magazines to the taxpayer. The relevant loan did not arise until an hour and a half later, but nothing ultimately turns on this. 33 The taxpayer, Magazines and Nominees executed an Assignment Deed and Acknowledgement dated 29 July 2004 recording the taxpayer's agreement to assign to Nominees "all of its rights title and interest in the loan arrangement it has with [Magazines] pursuant to which [Magazines] owes [the taxpayer] the sum of $14,850,360". 34 Also at 7.00 pm on 29 July 2004, the directors of Magazines resolved to issue 244,491 fully paid shares to Nominees and 184,035 fully paid ordinary shares to Mr Handbury, "both issues being in full satisfaction of loans owed to them by [Magazines]". The directors further resolved that "the shares be issued on the basis of the Net Assets of [Magazines] just prior to converting the loans to equity". 35 On 30 July 2004, Nominees applied for an allotment of 244,491 shares in Magazines. On the same day, Mr Handbury applied for an allotment of 184,035 shares in Magazines. The Register recorded the allotments being made on 30 July 2004. Form 484 dated 26 August 2004 filed with the Australian Securities & Investments Commission indicated that these allotments occurred the day before (that is, 29 July 2004), but, in the circumstances just mentioned, I accept that this was probably because the form was completed by reference to the minutes and not the register. Consistently with the facts set out here, and Mr Bourne's evidence (see below), the register recorded the shares as being issued to Nominees and Mr Handbury on 30 July 2004: see also Corporations Act 2001 (Cth), s 176. 36 On 30 July 2004, Magazines issued 184,035 fully paid ordinary shares to Mr Handbury and 244,491 fully paid shares to Nominees. I return to the dispute between the parties about the dates of allotment and issue of the shares at the conclusion of these reasons for judgment. In this circumstance, Magazines ceased to be a member of the consolidated group on 30 July 2004. The Magazine's Completion Accounts did not disclose the liabilities that were purportedly discharged by the shares issue. 37 On 30 July 2004, the taxpayer, Nominees and Mr Handbury sold and transferred all of the issued shares in Magazines to Pacific Publications. 38 Further evidence concerning the transactions was given by Mr Bourne, a chartered accountant and adviser to Mr Handbury, the taxpayer and its related entities at the relevant time. Mr Bourne's tasks included ensuring that they carried out all the steps required to complete the relevant transactions. In his capacity as a director of the taxpayer and Nominees, he signed relevant documentation, including share transfer forms and share certificates. Mr Bourne's evidence was that he travelled to Sydney on 30 July 2004 "for the purpose of attending to preliminary steps required to complete the Transaction and to attend the settlement meeting", including the unexecuted share certificates and the share transfer forms. He said (and I accept) that he attended a number of board meetings in the morning of that day for various companies, including Magazines, at which the steps involved in the share sales were completed, including the issuing of the new shares in Magazines; the signing of the share certificates; and the execution of the share transfer forms. Mr Bourne said too (and I accept) that he later attended a meeting to settle the share sales, and that settlement occurred in the afternoon of 30 July 2004. 39 The Commissioner assessed the taxpayer to capital gains in the amount of $16,934,891 on the issue of shares to Nominees and Mr Handbury, as an Event L5 gain, and in the amount of $9,205,469 on the sale of shares to Pacific Publications, as an Event A1 gain (on disposal). By its objection to the assessment and in this application, the taxpayer contended that the net capital gain derived by it should be reduced by the amount of $26,140,360. The taxpayer characterized this amount as "the amount discharged at the time [Magazines] ceased to be a subsidiary member of the consolidated group". 40 Both the amounts of $16,934,891 and $9,205,469 were calculated after the liabilities of Magazines to Nominees and Mr Handbury, totalling $26,140,360, were included in step 4 of the calculation of allocable cost amount required by s 711 - 20 . Without including the liabilities of $26,140,360 in the calculation of allocable cost amount, these capital gains would not have arisen. The taxpayer submitted that, since the event causing the extinguishment of the liabilities was also the event constituting the "leaving time", the loans were not "liabilities that the leaving entity takes with it when it ceases to be a subsidiary member" of the consolidated group for the purpose of s 711-20 of the 1997 Act . 43 The taxpayer submitted that "[t]he recurring theme in the objects provisions of [Pt 3-90] is that the object is 'the alignment of the head company's costs for membership interests in each entity and its assets,' when the subsidiary joins the group by allocating to its assets ... the 'cost of the group's membership interests in the joining entity, increased by the joining entity's liabilities' ... and when it leaves by allocating to the membership interests 'an amount equal to the cost of the entity's assets at that time reduced by the amount of its liabilities' to 'preserve the alignment ... established when entities become subsidiary members'". The taxpayer further submitted that "[t]he object is achieved by 'setting the tax cost' by taking into account 'the terminating values of assets that the leaving entity takes with it when it ceases to be a subsidiary member' ... and 'liabilities that the leaving entity takes with it when it ceases to be a subsidiary member'". Thus, so the taxpayer said, the leaving time occurred when the taxpayer ceased to be the sole beneficial owner of the shares in the Magazines. This occurred, so the taxpayer said, when Nominees and Mr Handbury became the beneficial owners of the shares in Magazines instead of it. Further, so the taxpayer argued, Nominees and Mr Handbury could not become the owners of the shares in Magazines until the shares were issued to them. 45 The taxpayer submitted that the shares were issued when Nominees and Mr Handbury "were entitled as against the company to be registered", citing Federal Commissioner of Taxation v Patcorp Investments Ltd (1973) 140 CLR 247 at 303. The taxpayer said that "[t]hat point was the point at which the allotment consideration was provided and the contract was executed on their part, that is, the point at which the debts owing by the company to them were set off against the debt owing by them to the company for the allotment moneys". According to the taxpayer, the consideration was the setting off of the allocation moneys owed by Nominees and Mr Handbury against the debts owed by Magazines. In consequence, the "leaving time" for the purposes of Div 711 and s 104-520 coincided with the extinguishment of the liabilities to Nominees and Mr Handbury. 46 The taxpayer noted that step 4 in s 711-20 requires identification of "the liabilities that the leaving entity takes with it when it ceases to be a subsidiary member". The taxpayer submitted that, at the point when Magazines ceased to be a subsidiary member of the consolidated group, it also ceased to be indebted to Nominees and Mr Handbury and, therefore, those debts were not "a liability of the leaving entity at the leaving time that can or must be identified in the entity's statement of financial position". In consequence, the taxpayer submitted that Magazines did not "take with it" any relevant liabilities on ceasing to be a subsidiary member, and that liabilities to Nominees and Mr Handbury extinguished at the leaving time were excluded from the sum deducted under step 4 from the allocable cost amount for the leaving entity, as calculated under s 711-20. 47 By excluding the extinguished debts from the step 4 deduction, the taxpayer argued that its net capital gain was reduced by $26,140,360. This construction was, so the Commissioner argued, "inconsistent with the principle upon which the relevant legislation is based and the terms by which it is expressed, and should be rejected as discordant with the policy and objective of the legislation". The Commissioner argued that the word "at" was "sufficiently flexible" to mean "just before" the leaving time; and that this interpretation would be consistent with the statutory policy and intent. Thus, so the Commissioner said, "the liabilities (if any) of [Magazines] to each of Nominees and Mr Handbury were liabilities of [Magazines] at the time it left the consolidated group, and should be included in the calculation of the step 4 amount under s 711- 45 (1), and the calculation of the [taxpayer's] allocable cost amount for [Magazines] under s 711-20". 49 Further, the Commissioner noted that, in most cases, because the financial position of the leaving entity at the leaving time will not have changed, the tax cost setting amount worked out either "just before" or "just after" the leaving time would, in most cases, be the same. The Commissioner added that, where an entity ceases to be a member of the consolidated group because of a change in ownership linked to a change in the value of its liabilities by, for example, the conversion of debt to equity, the correct tax cost setting amount can be obtained only if the calculations are done "just before" the instant the leaving company ceases to be a member of the consolidated group. In the case of a debt/equity swap, the loan would be present in the leaving entity's balance sheet before the entity ceases to be a member. The Commissioner also relied on various contextual factors to support the contention that "at the leaving time" should refer to a time just before the shares are issued in order to preserve the alignment referred to in ss 701 -15(2) and 711-5(2). 50 Accordingly, the Commission submitted that a purposive construction of the legislation requires that liabilities that are extinguished by the issue of shares should be included under s 711- 45 (1), and consequently at step 4 in the table in s 711-20. 52 The taxpayer submitted that, "if an obligation recognisable as a liability arose, it was because of the declaration of the dividend pursuant to the course of conduct to which the parties had bound themselves by the implementation deed and share purchase agreement, to which each of [the taxpayer], [Magazines] and [Nominees] were party; discharge of any liability arising from the declaration of the dividend upon the issue of the shares was an outcome to which each of the parties agreed and by which each was bound". The taxpayer added that "if no obligation recognisable as a liability arose, there was no amount in respect of it to be deducted under s 711-20(1)". 54 Further, after reviewing the statutory scheme, the taxpayer submitted that "the phrase 'just before the leaving time' serves only to link sec 711-5 to sec 701 -15 for the purposes of sec 701 -55, by which the amount of the capital gain in issue in these proceedings is fixed". The taxpayer argued that the phrase "at the leaving time" in ss 711-20, 711- 25 and 711- 45 was a separate concept. As we have seen, the taxpayer argued that they did not, whilst the Commissioner argued that they did. There is a further question, to which I turn below, as to whether the assumptions on which this question is based are correct. 56 Under Pt 3 - 90 of the 1997 Act , the consolidated group is treated as a single taxpayer represented by the head company. The assets of a subsidiary member are treated as being held by the head company. As already noted, the head company inherits the tax history of the subsidiary member when it joins the group. Plainly enough, the regime established by Pt 3 - 90 is intended to reflect, within the tax framework, the commercial and economic realities of corporate group dealings: compare s 700-10. See generally Envestra Limited v Commissioner of Taxation [2008] FCA 249 at [6] - [9] per Mansfield J. As his Honour commented in Envestra at [6], "[t]hat process obviously required rules, including to set the cost for income tax purposes of the assets that a subsidiary member would bring into the group". Just as rules are needed for this purpose, so too rules are needed to govern the situation when a subsidiary member leaves the group. A subsidiary member leaves the group when it ceases to be a wholly-owned subsidiary of the head company. 57 As the earlier discussion shows, the drafting style used in Pt 3 - 90 is a distinctive one: it specifically directs attention to the objects of the scheme as a whole and in respect of aspects of the scheme, and to the particular principles that are instrumental in achieving these objects: see e.g., ss 700-10, 701 -15(2) & (3), 705 -10(2) & (3) and 711-5(2) & (3). The more detailed provisions, or 'rules', that are to be applied to give effect to these principles are to be construed in light of these principles and objects. 58 This appeal is concerned with what happens when a subsidiary leaves the group. The object of Division 711, which governs this situation, is set out in s 711-5, namely, "to preserve the alignment of the head company's costs for membership interests ... established when entities become subsidiary members": s 711-5(2). The means by which this is to be achieved is "by recognising the head company's cost for those interests, just before the leaving time , as an amount equal to the cost of the leaving entity's assets at the leaving time reduced by the amount of its liabilities": s 711-5(3). The legislation is directed to quantifying the head company's cost for membership interests "just before the leaving time", to be done in the manner indicated. This is the principle that is intended to achieve the object of preserving the relevant alignment. 59 As noted above, s 711-20 sets out the rules for calculating the allocable cost amount for the leaving member and involves five separate steps. Generally speaking, the statutory methodology gives a result that is tax neutral, irrespective of whether the group disposes of an asset directly or sells an entity that takes the asset with it: compare s 701 -15(3). 60 This tax appeal is specifically concerned with the working out of step 4, in s 711-20: see [22] above. Step 4 is worked out in accordance with s 711- 45 --- i.e., "by adding up the amounts of each thing ... that, in accordance with accounting standards ... is a liability of the leaving entity at the leaving time that can or must be identified in the entity's statement of financial position": see s 711- 45 (1), emphasis added. 61 When used in connection with time, for example in such phrases as "at the time of", the word "at" conveys no very precise meaning. As Casey J said, in Re Port Supermarket Ltd ( In liquidation ) [1978] NZLR 330 at 337, "[t]he ordinary meaning of 'at the time of' suggests some indefiniteness, 'at' having the meaning of 'near' for example, 'at Christmas time' doesn't mean on Christmas day --- a period a few days either side is also included", citing Re Columbian Fireproofing Co Ltd [1910] 1 Ch 758 at 765. See also Doe d Ellis v Owens (1843) 12 LJ Ex 53 at 56 per Lord Abinger and Sakhuja v Allen [1973] AC 152 at 175-76 per Viscount Dilhorne. What is intended by the word "at" in s 711- 45 (1) depends on the context in which it is used, including the subject matter and the legislative objects and principles. 62 The broad subject matter is the tax treatment of consolidated groups and leaving members. Section 711-5(3) expressly states that the object in s 711-5(2) --- preserving the relevant alignment of head company's costs for membership interests --- is to be "achieved by recognising the head company's cost for those interests, just before the leaving time" as equalling "the cost of the leaving entity's assets at the leaving time" reduced by its liabilities. In this context, the phrases "just before the leaving time" and "at the leaving time" are intended to refer to essentially the same time. Whilst it might be thought that the use of different words was intended to refer to different points in time ("just before" as opposed to "at"), this interpretation would not, so it seems to me, make much sense in this context. It is to be borne in mind that the calculation under s 711- 45 (1) is for the purpose of determining the tax liability of the consolidated group be reference to the assets in the subsidiary company that is about to leave the group. Absent any contrary indication, it seems most reasonable to make this calculation done just before the company leaves the group. It therefore makes much better sense if the expression "at the leaving time" (a somewhat elastic phrase) is understood as synonymous with the phrase "just before the leaving time". The phrase "at the leaving time" has a different connotation from the phrase "at midnight", which was discussed by Stone J in Tio v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 53 ; (2003) 126 FCR 185 at [41] . 63 If the phrase "at the leaving time" is properly to be understood as meaning "just before the leaving time" in s 711-5(3), then, in the absence of any contrary indication, the same phrase is to be understood in the same way elsewhere in Div 711 and Pt 3 - 90 and, in particular, in s 711- 45 (1). I reject the taxpayer's submission that the phrase "just before the leaving time" and "at the leaving time" refer to different and distinct concepts. 64 There are a number of considerations that provide further support for this approach. First, as the analyses accompanying the Commissioner's written submissions showed, the taxpayer's construction would mean that the gain made on the sale of the shares was not brought to tax under Pt-3-90. That is, the taxpayer's construction would leave out of account under this regime the deduction of liabilities of about $25 million, which were said to be due to Mr Handbury and Nominees, although, as the taxpayer pointed out, part at least might be taxed on some other basis. The result would appear to be inconsistent with the principles on which Pt 3 - 90 is said to be based, especially s 711-5(3), and with its stated objects. It is worth emphasizing that the overarching object is to align the cost of the membership interests in a leaving entity with the cost of the net assets of the entity when the head company held all the membership interests in the leaving entity: see ss 701 -15(2) and 711-5(2). It is scarcely necessary to refer to s 15AA of the Acts Interpretation Act 1901 (Cth) to affirm the principle that a construction that promotes the objects of the statutory regime in Pt 3 - 90 , as a whole and in specific aspects, is to be preferred to a construction that does not promote these objects. Whilst I accept that, in the taxation context, a consideration of this kind is not necessarily determinative, nonetheless it seems to me an important one. I reject the taxpayer's argument that I should not place much weight on this consideration. 65 A number of contextual factors also support the view that "at the leaving time" refers to a time just before the shares are issued in order to preserve the alignment referred to in ss 701- 15 (2) and 711- 5 (2). Since liabilities extinguished at the leaving time did not fall within the description of step 4 in s 711- 20 , they were, so the taxpayer said, to be left out of account. Two things may be said about this point. First, s 711-45, not s 711- 20 , provides the rule for calculating step 4: this is clear from the terms of ss 711- 20 and 711-45. Secondly, the statement referred to by the taxpayer ("s 711-45 ... is about the liabilities that the leaving entity takes with it ... and membership interests in the leaving entity that are not held by members of the old group") is essentially a descriptive, as opposed to, an operative statement. In keeping with the distinctive drafting style of Pt 3 - 90 , it is a descriptive statement that is, presumably, intended to guide the reader. It operates neither as a 'rule' nor as a direction. It does not modify or qualify the terms of s 711-45(1). Further, taken as a whole, the broad thrust of the statement is to the effect that the calculation under s 711-45 is about the liabilities and membership interests that were formerly, but are no longer, within the old group. 67 Accordingly, I would not regard the language used in connection with step 4 in s 711- 20 as determinative of the present question. Whilst the question before the Court does not admit of an easy answer, for the reasons stated, I consider the construction advanced by the Commissioner to be correct. 68 I accept, therefore, that on a proper construction of s 711-45(1), a liability of the leaving entity at the leaving time means a liability of the leaving entity just before it ceases to be a subsidiary member of the consolidated group. The liabilities of Magazines to each of Nominees and Handbury were liabilities of Magazines just before it left the consolidated group, and should be included in the calculation of the step 4 amount under s 711-45(1) and the calculation of the taxpayer's allocable cost amount for Magazines under s 711- 20 . 69 I turn briefly to another argument raised by the Commissioner, which was that, in the circumstances of the case, the "leaving time" for the purposes of Pt 3 - 90 was 29 July 2004, as opposed to 30 July 2004. If this were so, then the extinguishment of Magazines' liabilities to Nominees and Mr Handbury was not co-incident with Magazines leaving the consolidated group. The argument had essentially two stages. 70 First, the Commissioner argued that Magazines incurred a liability to the taxpayer on 29 July 2004. This may be accepted. It was common ground that the directors of Magazines declared a dividend of $14,850,360 on 29 July 2004. Magazines incurred a debt to the taxpayer when the dividend was declared (see Corporations Act , s 254V(2)) , which was payable on 30 July 2004 "by way of crediting ... the appropriate loan account". For present purposes, it may be accepted that, as the Commissioner submitted, this liability had to be taken into account in accordance with the accounting standard made by the Australian Accounting Standards Board, which was in evidence. The only argument the taxpayer made against this proposition depended on acceptance of its principal argument, which I have rejected. I also interpolate here, though little was made of the point, that Magazines had been indebted to Mr Handbury since 9 July 2004. Further, by virtue of the deed of assignment of 29 July 2004, Nominees assumed the benefit of Magazines' liability to the taxpayer. 71 Secondly, the Commissioner argued that the share allotment to Nominees and Mr Handbury was complete on 29 July 2004, referring to Mr Bourne's evidence in cross-examination that, after the meeting at 7 pm on 29 July 2004, there was nothing to do other than enter Nominee's and Mr Handbury's names on the register, issue the share certificates and notify the Australian Securities and Investments Commission. On this approach, so the Commissioner said, the "consideration was the promise that a liability in the future to Nominees ... be set off in the future ... the liability for the shares be set off against the amount of liability that was to become due to Nominees following the assignment coming into effect on the next day". Alternatively, the Commissioner argued that the nature of the contract pursuant to which Nominees and Mr Handbury became shareholders in Magazines had not been proven by the taxpayer. In this connection, counsel for the Commissioner drew attention to Mr Bourne's inability to identify the contractual consideration. On this approach, it might be said, presumably, that the taxpayer had failed to show that its assessment was excessive. I would reject both approaches. 72 Payment for shares may, by agreement, be effected by a set off in discharge of a debt owing by the company to the intending member: see Whim Creek Consolidated (NL) v Federal Commissioner of Taxation (1977) 17 ALR 421 at 429. This was what happened in this case. There was no execution of the contract in respect of the shares until the set-off was effected, which was on 30 July 2004. An entitlement to be registered did not arise before this date. There was therefore no "leaving time" before 30 July 2004. 73 There was some debate between the Commissioner and the taxpayer as to the significance of share allotment and issue. In the circumstances, it does not seem to me necessary to explore this issue in any detail. Speaking generally, there will be an allotment when there is a binding contract to issue and take shares and an appropriation of shares, usually by the directors, to the intending member: Commonwealth Homes and Investment Company Limited v Smith [1937] HCA 73 ; (1937) 59 CLR 443 at 461, Dixon J; Central Piggery Co Ltd v McNicoll and Hurst [1949] HCA 19 ; (1949) 78 CLR 594 at 599 per Dixon J, quoting Spitzel v Chinese Corporation (1899) 80 LT 347 at 351 per Stirling J; and Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd [1981] HCA 4 ; (1981) 146 CLR 336 at 371 per Mason J. Plainly enough, an allottee acquires rights against the company, depending in part on the nature of the contract between the intending member and the company. These rights do not, however, turn the allottee into a member holding the shares. This will happen only when the shares "issue", that is, when the shareholder is "put in control of the shares allotted": see Central Piggery 78 CLR at 599-600 per Dixon J. 74 Nominees and Mr Handbury did not become members of Magazines (that is, the holders of the shares in the company) until their names were entered in the share register of the company on 30 July 2004: see St Helens Farm 146 CLR at 427 per Aickin J; and Patcorp Investments 140 CLR at 293, 295-96 per Gibbs J and 303 per Jacobs J. See generally HAJ Ford, RP Austin and IM Ramsay, Ford's Principles of Corporations Law (Butterworths, Australia, 2000), vol 2, at [17.170]. When their names were entered in the register, the shares came into existence as separate items of property: see Pilmer v Duke Group Ltd (In Liq) [2001] HCA 31 ; (2001) 207 CLR 165 at [20] ; St Helens Farm 146 CLR at 427 per Aickin J; also Commonwealth Homes and Investment 59 CLR at 461 per Dixon J. It follows that Nominees and Mr Handbury did not acquire any beneficial interest in shares in Magazines until 30 July 2004, at which point Magazines ceased to be a member of the consolidated group. 75 On 30 July 2004, Nominees and Mr Handbury gave consideration for the shares allotment and executed their part of the contract (by which they were to become members of Magazines) when the debts that Magazines owed them (by assignment or directly) were set off against the debt that each owed Magazines for the allotment. This was the precondition for the entitlement, which then arose, for them to be registered as members. The liabilities to Nominees and Mr Handbury are thus properly characterized as liabilities "of the leaving entity just before it cease[d] to be a subsidiary member of the consolidated group". I reject the Commissioner's argument to the contrary. 76 For the reasons stated, I would dismiss the application, with costs. I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | appeal under taxation administration act 1953 (cth) that the commissioner's assessment of income tax to the taxpayer was excessive taxpayer was the head company under pt 3 90 of the income tax assessment act 1997 (cth), of which murdoch magazines pty ltd ("magazines") was its wholly-owned subsidiary magazines was indebted to mr handbury and handbury nominees pty ltd ("nominees"), which debts were discharged by the issue of shares to them taxpayer then sold shares in magazines to a third party whether liabilities of magazines to mr handbury and nominees were liabilities of magazines "at the leaving time" and should be included in the calculation of the step 4 amount under s 711- 45 (1) and the allocable cost amount for magazines under s 711-20 of the 1997 tax act construction that promotes the objects of pt 3-90 to be preferred liability of the leaving entity "at the leaving time" under s 711-45(1) means a liability just before it ceases to be a subsidiary member of consolidated group taxpayer failed to show assessment was excessive tax appeal dismissed when was magazines' "leaving time" of the consolidated group under pt 3-90 of the 1997 tax act when were shares issued by magazines to mr handbury and nominees payment of shares effected by set off in discharge of debt owing by company to intending member allottee of shares becomes member when put in control of shares shares were issued to mr handbury and nominees when their names were entered on magazines' share register taxation taxation |
The shares are presently held in the name of the first defendant, Green Frog Nominees Pty Ltd (in liquidation). Phisci asserts it is the beneficial owner of the shares. The second defendant, Opes Prime Stockbroking Pty Ltd (receiver and manager appointed) (in liquidation) (OPS), also claims to be the beneficial owner. On 15 December 2008 I granted Phisci leave to proceed with its action against OPS for purposes of determining the ownership of the shares and issues of liability: leave was required by reason of s 500(2) of the Corporations Act 2001 (Cth). I also ordered that if the receivers and managers of OPS retire or are removed from office, Phisci must not without further leave proceed with the action. What follows are my reasons for making those orders. The background to the dispute may be descried briefly. Phisci engaged Opes Prime Paradigm Pty Ltd (OPP), a company that is related to OPS, to act on its behalf in relation to the acquisition of the shares in RBNZ. Phisci's intention was to purchase the shares partly with its own funds and partly with borrowed money. It claims that OPS agreed to lend it the money it needed on the basis that the shares would be put up as security. For its part, OPS says that its agreement with Phisci contains terms to the effect that Phisci would have no interest in the shares. When Phisci commenced the action Green Frog was not in liquidation, but OPS had been placed into administration. Section 440D of the Corporations Act provides for a stay of proceedings against the property of a company in administration in the absence of the administrator's consent or leave of the court. The cases say the section applies to property claimed by a company in administration even if its title is in dispute and even if the property is held by a third party: see Cope v Home [2002] NSWSC 777. For that reason Phisci applied for (and was in due course granted) leave to continue the proceeding against Green Frog. Green Frog was subsequently placed into liquidation. On Phisci's application, it was granted leave to proceed with its action against Green Frog. The liquidators of Green Frog did not oppose that course. They indicated that they would take no part in the action but that nonetheless the claim would be defended by OPS through the receivers. It was, in any event, appropriate to grant leave because Green Frog is a necessary party to the action, it being the legal owner of the shares. Leave was granted on the usual condition that Phisci does not, without further leave, enforce any judgment for the payment of money. The second meeting of the creditors of OPS was held on 15 October 2008. The creditors resolved that OPS be wound up. One consequence of the winding up was the need to obtain leave to proceed with the claim. Phisci sought that leave on the basis that if the receivers retire or are removed from office Phisci would not proceed with the claim. The policy that lies behind s 500 is discussed in many cases, including O D Transport (Australia) Pty Ltd (In Liquidation) v O D Transport Pty Ltd (1997) 80 FCR 290 , 293-294. One purpose for the section is that "without the relevant restriction [i.e. the requirement to obtain leave], a company in liquidation would be subjected to a multiplicity of actions which would be both expensive and time-consuming, as well in some cases as unnecessary": Ogilvie-Grant v East (1983) 7 ACLR 669 , 672. The structure of the Corporations Act is that a money claimant should generally lodge a proof of debt with the liquidator unless he can demonstrate some good reason why a departure from that procedure is justified: Hewlett Packard Australia Pty Ltd v Siltek Holdings Pty Ltd [2005] NSWSC 672 at [6] . "The question whether a claimant should be permitted to proceed by action, or should be required to submit his proof of debt ... is therefore reduced largely to one of choosing between alternative forms of procedure": Ogilvie-Grant at 672. Different considerations arise when a party is seeking to recover his own property from a company that is in liquidation. In that event a court will readily grant the plaintiff leave to proceed. For example, where a mortgagee wishes to enforce his security by taking action to recover mortgaged property leave is normally granted: O D Transport at 294; see also Robins Haigh McNeill Pty Ltd v Nichols-Cumming Advertising Australia Pty Ltd (in liq) [2001] VSC 427 at [39] ; Hewlett Packard Australia at [7]. This exception to the general rule suggests that Phisci's claim to recover what it asserts are its shares should be allowed to proceed. An order to that effect was not opposed by the liquidators who did not contest there is a real dispute between the parties about the ownership of the shares. Although of only marginal relevance, I note that as the receivers will run the defence to Phisci claims: the order granting leave places no burden on the liquidators. It is necessary to explain why leave to proceed was confined to issues of liability. Phisci pleads several causes of action to found its claim for the RBNZ shares. Its primary claim is that it purchased the shares pursuant to a line of credit agreement, the terms of which were partly formed by representations made by OPS, OPP and Green Frog. OPS denies this assertion, claiming that Phisci entered into a securities lending agreement (SLA) under which beneficial ownership in the shares was transferred to OPS: for a discussion about SLAs see Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Limited (2008) 246 ALR 361. If it is found that the shares were transferred to OPS under the SLA, then Phisci contends that the terms of the SLA should be rectified to include the terms of the line of credit agreement. There is also an indirect proprietary claim. Phisci alleges that OPS, OPP and Green Frog made misleading representations in breach of s 52 of the Trade Practices Act 1974 (Cth) and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth). By way of remedy, Phisci seeks an order that the SLA be varied under s 87 of the Trade Practice Act or s 12GM of the ASIC Act to recognise its proprietary interest over the RBNZ shares. Then there is a non-proprietary claim by which Phisci seeks damages for the misleading conduct under s 82 of the Trade Practices Act or s 12GF of the ASIC Act. Last, there is a claim that Phisci was induced into entering the SLA in reliance upon the representations and that OPS and Green Frog are estopped from asserting that terms of their agreement differ from the line of credit agreement. The facts that Phisci will attempt to prove to establish each cause of action are substantially the same. It was therefore appropriate that all the facts (and the corresponding legal issues) be determined at one time. On the other hand, it was not appropriate to deal with issues of quantum. For one thing, those issues are of no interest to the receivers. It will fall upon the liquidators to deal with that part of the claim. This gives rise to a problem. OPS is not entitled to separate representation on separate issues without leave, and that leave is rarely granted. In any event, at present the liquidators have no funds and are not in a position to contest quantum. In that circumstance, it would be prejudicial to the interests of creditors to allow the quantum claim to go ahead untested. When and how damages (if any are proven) should be assessed can be resolved on another day. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | company in liquidation action by plaintiff to recover its property application for leave to proceed principles to be applied corporations |
The applicant had, as the owner of Australian Patent 774224 A barrier, alleged that the respondents had infringed that patent. The respondents alleged that there had been no infringement, and counter-claimed that the patent was invalid on a number of grounds. On 11 March 2008, in reasons for judgment published on that day, I declared that Australian Patent 774224 A barrier is, and has been at all material times, invalid, and I ordered that that patent, and each of the claims of the complete specification thereof, be revoked. On the question of costs, I then ordered that: Within 7 days of this Order, the Respondents are to file any submissions they wish to make on costs, including a draft of the Orders sought from the Court. Within a further 7 days, the Applicant is to file and serve any submissions it wishes to make on costs, including a draft of the orders sought from the Court. On 18 March 2008, the respondents filed an outline of submissions on costs. On 19 March 2008, the time for the application to file submissions was extended to 28 March 2008, and, on that date, the applicant filed its outline of submissions. By way of summary of the proceedings, the applicant sought relief in respect of what it claimed was infringement of claims 1, 2, and 4 of the patent. The respondents contested the infringement case by arguing that the steel beam in the guardliner system was not "mounted on" the barrier element, did not overlie the side walls, and was not on the side walls. The respondents also contested the liability of the second and third respondents in the principal proceedings. The respondents failed in their defence of the infringement allegation, and they failed on all of the grounds of invalidity pleaded and argued at trial, except for the ground lack of novelty. The grounds of lack of novelty and inventive step were highly pressed at the trial. While it is not relevant on the question of costs in the principal proceedings, it is to be noted that an appeal against the judgment pronounced on 11 March 2008 was dismissed with costs by a Full Court of the Federal Court (Sundberg, Emmett and Greenwood JJ) on 31 October 2008. The respondents seek an order that the applicant pay the respondents' costs of the proceeding to date, including the costs of the cross-claim. Their submission is based on their assertion that the applicant failed to establish an entitlement to the relief which it sought in the amended application. The applicant's submission is based on my finding that the respondents failed in the defence of the infringement allegation, and failed on all grounds of invalidity which they asserted, except for lack of novelty. In those circumstances, the applicant submits, the appropriate order is that the applicant be ordered to pay 40 per cent of the respondents' costs. Ritter v Godfrey (1920) 2 KB 47. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. Forster v Farquhar (1893) 1 QB 564. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, 'issue' does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. Cretazzo v Lombardi (1975) 13 SASR 4 at p 12. In Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 169 Burchett J had to consider the case of a successful defendant who had failed in respect of some issues. A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument: he is entitled to raise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably, he may suffer in costs. Ultimately, the question is one of discretion and judgment. Observations by McHugh J in Oshlack v Richmond River Council [1998] HCA 11 ; (1998) 193 CLR 72 at 96, [66] --- [70] are directly relevant: By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs. Prima facie, a successful party is entitled to his costs. To deprive him of his costs or to require him to pay a part of the costs of the other side is an exceptional measure. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party [ Latoudis [1990] HCA 59 ; (1990) 170 CLR 534 at 543, per Mason CJ; at 562-563, per Toohey J; at 566-567, per McHugh J; Cachia v Hanes [1994] HCA 14 ; (1994) 179 CLR 403 at 410; per Mason CJ, Brennan, Deane, Dawson and McHugh JJ]. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice. The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation [ Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842 ; Bostock [1900] 2 QB 616 at 622, 625, 627]; unnecessarily protracts the proceedings [ Forbes v Samuel [1913] 3 KB 706] ; succeeds on a point not argued before a lower court [ Armstrong v Boulton [1990] VR 215 at 223]; prosecutes the matter solely for the purpose of increasing the costs recoverable [ Hobbs v Marlowe [1978] AC 16] ; or obtains relief which the unsuccessful party had already offered in settlement of the dispute [ Jenkins v Hope [1896] 1 Ch 278]. Such examples were recognised by O 55 of the 1875 Rules which, after stating that costs shall be in the discretion of the Court, declared that "nothing herein contained shall deprive a trustee, mortgagee, or other person of any right to costs out of a particular estate or fund to which he would be entitled according to the rules hitherto acted upon in Courts of Equity"], there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. The fact that the respondents succeeded on one only of the many grounds of invalidity they asserted is not in my view, in the circumstances of this case, "misconduct" such as to require a departure from the ordinary rule. Nor is the respondents' unsuccessful claim of non-infringement. As a matter of fact, the respondents' challenge based on lack of novelty was at the forefront of its defence, and, in my assessment, was the central issue joined on the question of validity. Pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth), on the whole of the material in these proceedings, I order that the applicant pay the respondents costs of and incidental to the proceedings, to be taxed if not agreed. | whether the usual order as to costs should be made where only part of the cause of action was successful whether that should influence the apportionment of costs held that the fact that the respondent succeeded on only one ground does not require a departure from the ordinary rule as to costs usual order for costs made costs |
On that date that Court dismissed an application for review of a decision of the Refugee Review Tribunal. 2 The decision of the Tribunal was signed on 29 December 2005 and handed down on 17 January 2006. The Applicant, however, did not commence proceedings in the Federal Magistrates Court seeking to challenge the decision of the Tribunal until 13 September 2007. 3 The decision of the Federal Magistrates Court was that it had no jurisdiction because the application to that Court was not filed within the time prescribed by s 477 of the Migration Act 1958 (Cth). (3) Except as provided by subsection (2), the Federal Magistrates Court must not make an order allowing, or which has the effect of allowing, an applicant to make an application mentioned in subsection (1) outside that 28 day period. (4) The regulations may prescribe the way of notifying a person of a decision for the purposes of this section. 4 Section 477(1) requires " actual (as opposed to deemed) notification of the decision " of the Tribunal. And " actual notification " requires delivery by hand: Minister for Immigration & Citizenship v SZKKC [2007] FCAFC 105 at [37] , [2007] FCAFC 105 ; 159 FCR 565. See also SZKET v Minister for Immigration & Citizenship [2007] FCA 1705. 5 The Applicant had been in attendance when the decision of the Refugee Review Tribunal was handed down and received such notification. No Has the decision, etc been given to the applicant? There had thus been compliance with the requirement imposed by s 477(1): cf Minister for Immigration & Citizenship v SZKKC [2007] FCAFC 105 at [1] . 6 The Federal Magistrates Court in its 5 November 2007 decision concluded that proceedings had not been commenced within the time prescribed from the date of actual notification. [6] I am aware of the decision of the Full Court of the Federal Court in Minister for Immigration & Citizenship v SZKKC [2002] FCAFC 105. [7] In this case that is exactly what happened. I refer to an affidavit of Angela Margaret Nanson which was filed in Court on 8 th October 2007 to which is annexed a letter from the Tribunal to the applicant's then advisers advising that the decision would be handed down on 17 th January 2006. There is also annexed the Tribunal's check-list for handing down the decision on 17 th January 2006. [8] The document makes it clear that the applicant attended the handing down on that day and a copy of the decision was given to the applicant. In the circumstances there has been compliance in the requirement of the legislation for physical delivery to the applicant of the written statement of the decision prepared by the Tribunal within 14 days of it being handed down and indeed on the day it was handed down. And such the time limit in s 477 of Migration Act does apply. [9] The applicant did not commence proceedings until 13 th September 2007 which is well outside the time. Accordingly the Court has no jurisdiction to hear the application. The applicant told the Court that the reason for the delay was that he had made an application to the Minister, presumably under s 417 of the Migration Act . That may well be, but it does not affect the operation of s 477. Concurrence is expressed with these reasons as to the operation of s 477. 7 It was not until 3 December 2007 that the Applicant commenced proceedings in this Court seeking leave to appeal from the 5 November 2007 decision of the Federal Magistrates Court. That application also sought ( inter alia ) an order " that compliance with Order 52, subrule 5(2) be dispensed with . " Order 52, r 5 of the Federal Court Rules 1979 (Cth) applies where an appeal only lies to this Court with leave and prescribes a period of 21 days as the period within which such applications are to be made. Relevantly, leave is required from an interlocutory decision of the Federal Magistrates Court: Federal Court of Australia Act 1976 (Cth), s 24(1A). The Affidavit as filed in this Court on behalf of the Applicant annexes a statement addressing the grant of work visas -- but that is irrelevant to the Application now before this Court. The Affidavit further annexes a statement setting forth the orders sought. The Affidavit clearly does not satisfy the requirements of O 52 r (4)(2). 9 The decision of the Federal Magistrates Court dismissing the application is, it is considered, an interlocutory decision for the purposes of appeal rights: SZDGN v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 1543 at [6] per Lindgren J; Md Abdullah Al Mamun v Minister for Immigration and Citizenship [2007] FCA 541. Accordingly, leave to appeal is required. The Applicant by the form of his Application acknowledges as much. He also acknowledges that an extension of time is also required: cf Nguyen v Minister for Immigration & Citizenship [2007] FCAFC 38 at [18] . 10 It is considered that leave to appeal should be refused, as should an extension of time. It matters not for the purposes of the present application whether it is Rule 5 or Rule 15 of Order 52 of the Rules which applies -- both prescribe a 21 day period. 11 No prejudice is now relied upon by the Respondent Minister by reason of the failure to commence proceedings within 21 days. The Respondent Minister, however, is critical of the Affidavit as filed. That criticism is soundly based. The fact that an applicant for leave to appeal may be unrepresented is not in itself a licence to disregard those Rules of Court with which all other litigants must comply. The importance of the decision under review -- especially when protection visas are sought -- cannot be ignored. Difficulties confronting unrepresented litigants, especially in migration appeals, are very real. But applicants do not advance such prospects of success as they may have by failing, as in the present case, to set forth any explanation at all as to why it is contended that the decision of the Federal Magistrate may be erroneous and why they have not commenced proceedings within time. As has been recognised, " casual disregard of the requirements of the Rules is inappropriate ": Nguyen v Minister for Immigration & Citizenship [2007] FCAFC 38 at [23] . 12 The failure of the present Applicant to comply with the time limit imposed by s 477 of the Migration Act when commencing proceedings in the Federal Magistrates Court, and his failure to comply with the time limits imposed by this Court's Rules for the commencement of appeals, only supports an inference that no real attention has been given at any point to time limits which are imposed. Objection was taken by the Respondent Minister to this further material being considered, even for the purposes of either an application for leave or for the purposes of an application for an extension of time. No objection, however, was taken to the further material being considered and a ruling on its admissibility being deferred. That was the course pursued. The further material has, accordingly, been considered. That material does not satisfy the requirements of O 52 r 4(2) or r 15(3)(c); nor does it provide any information of relevance to the present Application . The objection to this further material, it is considered, should be upheld and its tender rejected. 14 The Respondent Minister, rather than opposing the grant of leave to appeal by reason of failure to comply with such time limits and resultant prejudice, places reliance upon an assessment as to prospects of success. That approach is endorsed. It is considered that the decision of the Federal Magistrates Court is correct and that an appeal from that decision has no prospects of success. For that reason the Application should be dismissed. 15 There has been simply no compliance with the time limits imposed by s 477. The time limits imposed by s 477 are " strict and effective " and are an " essential part of the grant of jurisdiction " to the Federal Magistrates Court: cf SZICV v Minister for Immigration & Citizenship [2007] FCAFC 39 at [67] per Buchanan J (Besanko J agreeing at [18]), [2007] FCAFC 39 ; 158 FCR 260 at 274. Time limits prescribed prior to the introduction of s 477 were similarly construed: WACB v Minister for Immigration & Multicultural & Indigenous Affairs [2004] HCA 50 , 210 ALR 190. It is not considered that the decision of the Federal Magistrates Court is attendant with sufficient doubt to warrant the grant of leave to appeal: Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397 at 398---9. The Application for Leave to Appeal and for an extension of time within which to file a Notice of Appeal is refused. 2. The Applicant to pay the costs of the First Respondent. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | application to federal magistrates court out of time dismissed as incompetent interlocutory decision appeal to federal court filed out of time leave to appeal refused migration |
The appellant is a citizen of Sri Lanka who lodged an application for a change in circumstance (residence) (class AG) sub-class 806 family (special need relative) visa on 31 July 1998. He has claimed that he is a 'special need relative' in relation to his brother ('the nominator'). 2 The appellant filed an amended application on 16 June 2004 seeking judicial review of a decision of the Migration Review Tribunal ('the Tribunal') made on 18 February 2004. The Tribunal in that decision affirmed a decision of the delegate of the Minister refusing to grant to the appellant a family visa. McInnis FM on 25 July 2005 affirmed the decision of the Tribunal. 3 The Tribunal was added as a respondent to the action by consent orders of Gray J on 2 September 2005. 4 The appellant has appealed to this Court from the decision of McInnis FM. Such other orders as the Court sees fit. He entered Australia in January 1996 as the holder of a short stay (visitor) (class TT) sub-classes 435 visa. This visa ceased on 12 February 1996. He has held a number of visas, including bridging visas, since then. 7 On 31 July 1998 the appellant applied for a change in circumstance (residence) (class AG) sub-class 806 family (special need relative) visa, his brother being the nominator under the legislation. As already noted, the delegate of the Minister refused to grant the visa on 10 September 2003, and the Tribunal on 18 February 2004 affirmed the decision of the delegate. 8 The relevant provisions of the Migration Act 1958 (Cth)('the Act'), including part 806 and the definition of 'special need relative' in reg 1.03, were repealed by statutory r 259 of 1999 reg 4 in Sch 2. However, the original visa application in the case before me pre-dates the repeal, and the legislation in force as at the date of the application continues to apply. This includes the definition of 'special need relative' as it stood before the repeal: McHugh J in Re Minister for Immigration and Multicultural Affairs; ex parte Cohen [2001] HCA 10 ; (2001) 177 ALR 473, cf for example Wahab v Minister for Immigration and Multicultural Affairs [2006] FCA 421. The applicant ceased employment on the same day as the nominator, in order to be at home with the nominator. For the purposes of the application and current appeal, the applicant also relied upon medical reports concerning the nominator's medical status from a general practitioner treating the nominator, Dr Kanapathipillai, and a consultant psychiatrist, Dr Nallaratnam. Further, his Honour was of the view that the Tribunal had applied the correct criteria in determining whether the applicant was a 'special need relative' of the nominator, and had embarked upon its fact-finding mission in a manner consistent with the law (decision of McInnis FM, par 25). The learned Magistrate, in reviewing the decision of the Tribunal, noted that the Tribunal had referred to the Full Court decision in Narayan v Minister for Immigration and Multicultural Affairs [2001] FCA 1745 , which authority was, in his Honour's view, applicable to this case. In his Honour's view, the applicant (now the appellant) had 'effectively sought to re-agitate the issues which were before the MRT and essentially...sought to argue that there should be a different finding of fact', a submission incompatible with judicial review of the Tribunal's decision. 'Privative clause decisions' means decisions of an administrative character made, proposed to be made, or required to be made, as the case may be, under the Act or under a regulation or other instrument made under the Act: s 474(2). Decisions of the Tribunal are 'privative clause decisions', and in the normal course appeals do not lie from Tribunal decisions: s 474(3)(i). 16 It follows that, in order for the appellant to seek to overturn the decision of the Tribunal, and the learned Federal Magistrate who affirmed that decision, it is necessary for the appellant to establish that the Tribunal's decision suffered from jurisdictional error as distinct from mistake of fact. If such an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it. The opening paragraph describes the kind of assistance which the visa applicant must be able to provide in response. Although the relationship between the two paragraphs is not stated expressly, it is not surprising that that assistance which the visa applicant is willing and able to provide is required to be "continuing", since the need referred to in par (a) is "permanent or long-term". Similarly, since the cause of the permanent or long-term need must be "serious" circumstances as described in par (a), it seems likely that often such need will be able to be met by nothing less than "substantial assistance". As explained by the Full Court in Xiang v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 64 at par 7, this issue raises the question whether the applicant is prepared to do what is necessary to provide the assistance. • the reference to 'able' calls for an objective inquiry. Again as explained in Xiang , this issue raises the question whether the applicant is a person who is suitable or fit to provide the assistance (par 7). • 'substantial' means 'of substance', 'significant' or 'real' ( Narayan , par 43). From Narayan it is clear that the assistance to be provided to the nominator must be substantial and continuing. At one end of the spectrum for example, assistance by the applicant which is of an optional and unimportant nature may properly be found by the decision maker to be not only not 'substantial', but may also signify that there is not truly a 'permanent or long-term need for assistance' within the contemplation of par (a) of the definition ( Narayan , par 43). However, whether assistance is 'substantial and continuing' is a question of fact. As the Full Court pointed out in Chow v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 88 , the performing of domestic chores and the giving of companionship could constitute substantial and continuing assistance in some circumstances (par 28). • Whether a visa applicant is able to satisfy the requirements of the definition of 'special need relative' depends to a significant degree on the assistance required by the nominator. That is, the circumstance is sufficiently serious that, in relation to a citizen, it would require assistance of the same sort that would be required if the citizen was suffering from a disability or prolonged illness. 26 This submission gave rise to an interesting threshold question --- namely if the Tribunal had not specifically directed their minds towards whether the nominator was suffering from a prolonged illness within the meaning of the reg 1.03, did it follow that the decision of the Tribunal in relation to the visa application was affected by jurisdictional error. 27 The respondents submitted that the decision would not have been so affected. The respondents submitted that, in order for the appellant to succeed, he must show that the findings of the Tribunal on each individual requirement of the definition of 'special need relative' were affected by jurisdictional error. Conversely, if it could be shown that any of the findings of the Tribunal stood as a finding of fact unaffected by any relevant material error, it would be sufficient to support the Tribunal's decision even if another one of its findings on a different limb of the definition might have been affected by error. So, for instance, if the Tribunal erred in relation to whether the nominator suffered a prolonged illness, it was irrelevant if the Tribunal was correct in relation to other findings which would mean that the applicant was not a special need relative, for example that the applicant had not provided substantial and continuing assistance, or that assistance to the nominator could be obtained from other sources (TS pp 27-29). 28 I do not accept this submission of the respondents. In reaching a decision under the Act as to whether the applicant was a special need relative, the Tribunal was required to apply the definition under the Act, and the criteria in that definition. If the Tribunal did not apply its mind properly to the definition, ignored relevant material, identified a wrong issue or asked itself a wrong question, it follows that the Tribunal may have made an error in its understanding of the applicable law, or failed to apply the law correctly to the facts it found (note comments by McHugh, Gummow and Hayne JJ in Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at 347, 348, 352). Accordingly, if the Tribunal did not direct its mind to the question whether the nominator suffered from a 'death, disability, prolonged illness or other serious circumstances affecting the citizen or resident personally' which resulted in 'permanent or long-term need for assistance', it is possible that the Tribunal would have misapplied the law to the facts before it in this case. 29 However in my view, the Tribunal in this case did direct its attention to whether the nominator was suffering from 'death, disability, prolonged illness or other serious circumstances affecting the citizen or resident personally'. The decision of the Tribunal contains considerable discussion of the medical conditions suffered by the nominator, including acknowledgment of medical reports (for example par 50 of the decision of the Tribunal). The Tribunal also considered whether the condition of the nominator constituted 'other serious circumstances' (par 52). The sponsor was able to work despite his health problems until recently. The Tribunal notes the medical evidence submitted on 10 February 2004, which shows deterioration in the condition of the sponsor, in that he now tends to become drowsy in the daytime, a condition known as narcolepsy, and that his shoulder has deteriorated and he has become more anxious. Mild narcolepsy is not an uncommon condition in middle aged men. While the letter of Dr Kanapathipillai of 3 February 2004 mentions that the sponsor needs 'long term assistance by someone who can provide him direct, substantial and continuing assistance', this is not detailed nor substantiated by other sources. As I noted earlier in this judgment, the Full Court in Wu v Minister for Immigration and Multicultural Affairs [2000] FCA 1817 ; (2000) 105 FCR 39 at 54 observed that the required conditions of the nominator --- ie death, disability, prolonged illness or other serious circumstances --- reinforce 'the nature of the assistance that is central to the definition, namely assistance which is substantial and continuing in relation to a need for assistance which is permanent or long-term'. In the case before me, it is clear that the Tribunal thoroughly considered the medical condition and general circumstances of the appellant in the context of the regulation. In my view it is not necessary for the Tribunal in reaching that conclusion to specifically make a finding of fact in relation to whether the nominator had suffered from 'prolonged illness' when the decision specifically states that the ailments and illnesses of the nominator were not in the Tribunal's view of a serious nature or did not constitute the serious circumstance envisaged by the regulations. Indeed, the finding of fact by the Tribunal in this regard is not an issue capable of challenge before this Court. 31 Accordingly, I reject the submission of the appellant in this respect. (ii) The Tribunal was erroneously preoccupied with the nominator's ability to work. The fact that both the nominator and the appellant were working at the time of the visa application was relevant to the nominator's need for assistance, and the appellant's ability to provide substantial and continuing assistance. The relevance of the fact that the nominator was working was noted in his judgment by the learned Federal Magistrate, who in turn noted the reference to the nominator working as an issue of relevance in Narayan (at pars 35-36). 33 Accordingly, I reject the submission of the appellant in this respect. (iii) The Tribunal posed itself the wrong question in relation to the medical conditions suffered by the nominator when it stated 'they are not of a serious nature or constitute the serious circumstance envisaged'. It is appropriate for the Tribunal to consider whether the condition suffered by the nominator is serious in the context of its broader consideration of whether there is a permanent or long-term need for substantial and continuing assistance ( Wu v Minister for Immigration and Multicultural Affairs [2000] FCA 1817 ; (2000) 105 FCR 39 at 41, Singh v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 298 at par 21). It is clear from its decision that the Tribunal gave extensive consideration to the medical conditions of the nominator. Any conclusions of seriousness or otherwise which the Tribunal drew from the evidence, including medical reports, are issues of fact, and beyond the scope of this appeal. 35 Accordingly, I reject the submission of the appellant in this respect. (iv) The Tribunal appeared to mischaracterise the test required by the Regulations which defines a special need relative as one which 'means a relative who is willing and able to provide substantial and continuing assistance to the citizen or resident'. 37 Earlier in this judgment I referred to the discussion of 'willing and able' in the Full Court decision Xiang v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 64. 38 To the extent that I understand this submission, in my view it is misconceived. It is, with respect, pointless to speak in the abstract of the willingness and ability of a visa applicant to provide substantial and continuing assistance to a citizen or resident. The willingness and ability can only meaningfully be considered in terms of the regulation, and in light of the nature of the assistance for which there is a permanent or long-term need by the nominator. 40 In identifying as an issue of fact the nominator's need for assistance, it is also relevant to consider the nature of the assistance which the appellant has been providing. 41 Accordingly I reject the submission of the appellant in this respect. (v) The Tribunal mischaracterised and misapplied the test in relation to the ability of the nominator's relatives to provide assistance . 42 Specifically, the appellant argued that to the extent that the Tribunal found that there appeared to be adequate forms of assistance available to the nominator and that the nominator's wife 'should' be able to assist him, the Tribunal was wrong: the appropriate question was whether the wife or others can reasonably be expected to provide such assistance. As such it would appear that the nominator has obtained medical services from an appropriately qualified medical practitioner in Australia. The spouse of the sponsor states that she has sought assistance from local bodies but has not indicated the response of the organisations or the actual organisations she approached. While she states 24 hour care is not available, the case for 24 hour assistance being needed has not been made out. 45 Accordingly I reject the submission of the appellant in this respect. However in my view the reference by the Tribunal to the report prepared by the nominator's consulting psychiatrist as being a report prepared by a 'medical practitioner' is unobjectionable, and not indicative in any way of a misapplication of law in respect of this application. 48 In relation to (ii), the view taken by the Tribunal of the appellant's narcolepsy was in my opinion a finding of fact, and not properly an issue before this court. 49 Accordingly I reject these submissions of the appellant. 50 As no errors have been shown in the decision of the Tribunal, I order that the appeal 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 Collier. | special need relative "willing and able" to provide assistance "substantial assistance" whether the tribunal had directed its mind to "prolonged illness" ability of the nominator to work description of consulting psychiatrist as "medical practitioner" migration |
2 The defendant seeks summary judgment in relation to paragraphs 3, 4, 6, 7, 8, 9, 10 and 11 of the prayer for relief in the originating process. 3 On 25 January 2007 the plaintiffs commenced a proceeding against the defendant seeking an order that Mr Timothy Owen Lebbon be appointed director of the defendant company and consequential orders relating to the constitution of the company. 4 The character of that proceeding changed during the course of interlocutory hearings to the point where the plaintiffs sought pre-trial discovery from the defendant. On 7 August 2007 Finn J made orders in favour of the plaintiffs giving the plaintiffs the right to inspect and copy a number of documents in the defendant's possession. 5 The orders were made on the plaintiffs' lawyers' undertaking to keep the documents confidential, even from their clients. A declaration that the conduct of the affairs of the company is contrary to the interests of the members of the company as a whole. 2. Further, or in the alternative to 1, a declaration that the conduct of the company's affairs is oppressive to, unfairly prejudicial to, or unfairly discriminatory against the plaintiffs. 3. In the alternative to 1 and 2, a declaration that the company's failure to demand repayment by Nadi Bay Beach Corporation Limited ("NBBC") is contrary to the interests of the members as a whole. 4. Further, or in the alternative to 1, 2 and 3, a declaration that the company's failure to demand repayment by NBBC is oppressive to, unfairly prejudicial to, or unfairly discriminatory against the plaintiffs. 5. An order for the appointment of a receiver over the company's interests pursuant to the mortgage granted by NBBC dated 30 November 1984 ("mortgage") pursuant to Section 233(1)(h) of the Act. 6. In the alternative to 5, an order requiring the company to require repayment pursuant to the mortgage pursuant to Section 233(1)(c) and (j) of the Act. 7. A declaration that NBBC is in breach of its obligations pursuant to clause 3 of the mortgage. 8. Upon the sale of the land the subject of the mortgage, an order determining the value of the plaintiffs' interest in the defendant. 9. An order pursuant to section 233(1)(d) of the Act requiring Boris Andrew Ganke and / or his nominee(s) to purchase the plaintiffs' shares in the capital of the defendant at the valuation determined pursuant to order 8. 10. In the alternative to order 9, an order pursuant to section 233(1)(e) of the Act requiring the defendant to acquire the shares held by the plaintiffs in the capital of the defendant at the valuation determined pursuant to order 8 and authorising and directing reductions accordingly in the defendant's capital. 11. In the alternative to orders 9 and 10 an order that the defendant be wound up pursuant to section 233(1)(a) and 461(1)(k) of the Act. 12. An order as to costs. Such further or other orders as this Honourable Court deems appropriate. In due course, I will make an order striking out that paragraph. 8 The originating process was accompanied by an affidavit of the plaintiffs' solicitor which exhibited the plaintiffs' proposed statement of claim. The plaintiffs adopted that procedure so as to ensure compliance with the orders made by Finn J to keep the contents of the documents confidential. Because of the undertakings given to the Court, the plaintiffs themselves and their director, Mr Lebbon, were unaware of the contents of the discovered documents at the time this proceeding was commenced. 9 After the proceeding was commenced and on the application of the plaintiffs, I made an order releasing the plaintiffs' lawyers from the undertaking they had given to the extent that they were permitted to provide Mr Lebbon (who is a director of the plaintiffs) with the documents which had been discovered by the defendant. 10 Subsequent to the hearing of this application I made an order allowing the plaintiffs to file the statement of claim, which is exhibited to Mr Clarke's affidavit sworn on 23 September 2008 but in a sealed envelope marked "Not to be opened other than by order of a judge of the Court". 11 The plaintiffs are shareholders in the defendant. They own in the order of 20% to 25% of the capital of the defendant. The defendant was incorporated in 1969 and is a publicly listed company being quoted on the official list of the Australian Securities Exchange Ltd (formerly Australian Stock Exchange Ltd) (ASX). Mr Boris Ganke has been a director of the defendant since 1976. Ms Goh has been a director since 1990. Mr Ganke is a substantial shareholder of the defendant. 12 Nadi Bay Beach Corporation (NBBC) is a company which was incorporated in Fiji in 1969, of which Mr Ganke and Ms Goh are directors. Mr Ganke and Ms Goh are shareholders of NBBC holding 145,001 shares of the 401,000 issued shares. 13 Acron Pacific Ltd (Acron Pacific) was incorporated in 1953 and has as its directors Mr Ganke and Ms Goh, who are also majority shareholders. 14 Northern Star Investment Pty Ltd (Northern Star) was incorporated in 1970 and is a wholly owned subsidiary of the defendant. Mr Ganke has been a director of Northern Star since 1976 and Ms Goh since 1991. 15 The defendant owns about 20% of the capital of NBBC. Northern Star also owns about 20% of the capital of NBBC. 16 As at 30 November 1984 NBBC was indebted to Aureole Investments Pty Ltd (Aureole Investments) in the sum of $2,577,605. At the same date, Acron Pacific was indebted to Offshore Oil NL (Offshore Oil) in the sum of $802,140. 17 The two debts were secured by a mortgage given by NBBC in favour of Aureole Investments and Offshore Oil as mortgagee over 39 pieces of land in Fiji owned by NBBC. 18 The plaintiffs assert that in August 1988 the mortgages were purchased by Mr Ganke who, in turn, transferred 50% of his interest as mortgagee to the defendant and Northern Star and consolidated the other 50% of the mortgage in a company controlled by Mr Ganke (Bonds and Securities (Trading) Pty Ltd) and another entity controlled by Mr Ganke (Mitre Securities Ltd) and Mr Ganke himself. The plaintiffs contend that since that date the defendant has been entitled to 50% of the principal outstanding on the mortgage and entitled to 50% of the interest payable on the mortgage. 19 The plaintiffs contend that it was a term of the mortgage that NBBC should sell and dispose of the land which was secured by the mortgage for the purpose of repaying the mortgage. The plaintiffs' case is that apart from two sales some time in March 2006 NBBC has not sold the land as required by the terms of the mortgage. They also contend that in 2007 the amount owed by NBBC to the defendant, including capitalised interest, amounted to $5,519,513. They contend that notwithstanding that the defendant has at all relevant times been entitled, the defendant has not required NBBC to repay the amount owing under the mortgage. 20 Essentially, therefore, the plaintiffs' case is that the defendant has failed to require NBBC to comply with two terms of its mortgage, namely to sell the land to repay the mortgage debt and to repay the mortgage. 21 The plaintiffs claim that the defendant's affairs have been conducted contrary to the interests of the members of the defendant as a whole and its conduct of the defendant's affairs is oppressive to, unfairly prejudicial to, or unfairly discriminates against the plaintiffs. I have identified the relief which the plaintiffs seek. 22 The proceeding is brought pursuant to s 232 of the Corporations Act 2001 (Cth) (the Corporations Act ), which provides that the Court can make an order under s 233 if the conduct of a company's affairs or an act or omission by or on behalf of a company is either contrary to the interests of the members as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member or members whether in that capacity or in any other capacity. 23 Section 233 identifies the relief that may be sought. As I have said, the plaintiffs have abandoned the relief sought in paragraph 7 of the originating application. 25 The plaintiffs oppose the application. For the reasons that follow, in my opinion, the application should be dismissed. 26 The defendant by limiting its application under s 31A to the prayers for relief mentioned above accepts for the purpose of the application that the plaintiffs' statement of claim identifies an arguable case under s 232. That is implicit in the revised application which does not seek judgment on the proceeding but only seeks "judgment" in relation to part of the relief sought. 27 For the plaintiffs to succeed in this proceeding they will need to establish that the defendant has acted oppressively, in the sense of unfairly, to the members or to the plaintiffs: Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459. It is for the court to decide whether in balancing the interests of the company as a whole against minority interests the directors have acted so as to unfairly prejudice the interests of the minority. The court decides this "according to ordinary standards of reasonableness and fair dealing". Whether the conduct is unfairly discriminatory will be judged on standards which reasonable directors with such skills as directors should have, acting bona fide, would think to be fair. 29 In Jenkins 6 ACSR 539 , the Court held that once the Court is satisfied that there has been oppression or unfairness within the meaning of s 232 "it is the obligation of the Court to grant whatever relief is best suited to deal with that conduct": p 561. The powers given to the court are extremely wide. They include the power to make orders regulating the conduct of the affairs of the company in the future. This necessarily involves the court making orders which may interfere with the internal administration of the company. There is nothing in the language of s 320 which suggests that the court should be reluctant to interfere where that is necessary or desirable to give effective relief. There is express power to order the appointment of a receiver and manager. 30 In my respectful opinion, the Court's comments are consistent with the wide powers given to the Court by s 233 and the scheme of s 233 which gives an unfettered discretion to the Court to fashion the appropriate remedy for the particular circumstances proved at trial. 31 The plaintiffs' case is that the defendant, by reason of the conflict which its directors have as shareholders and directors of NBBC, has acted oppressively or unfairly to the members. If the plaintiffs succeed, then they will be entitled to argue for any of the relief which is available under s 233. The relief which will be granted will be determined by reference to the circumstances of the case and will be fashioned so as to ensure that the defendant does not act in such a way as to be unfair to any of its members. 32 The defendant argued that none of the relief which is sought, except the declarations sought in paragraphs 1 and 2, would be granted. In particular, it contends that there is no possibility of the plaintiffs obtaining an order for the winding up of a publicly listed solvent company. The defendant's contention is, with respect, somewhat surprising. When analysed, it means that even if the plaintiffs prove that the defendant has by reason of its directors' conduct conducted its affairs unfairly to the interests of the members as a whole or in a way oppressive to or unfairly prejudicial to its members or some of its members, no relief could be given except by way of a declaration (paras 1 and 2) and the appointment of a receiver (para 5). In other words, even if the plaintiffs make out a case there is no reasonable prospect that under s 232 the Court could make an order which sought to stop or rectify the contravening conduct. 33 If the defendant is to succeed on this application the defendant must establish that there is no reasonable prospect of the plaintiffs successfully prosecuting those parts of the proceeding contained in the relief. In these reasons I need only deal with a defendant's or respondent's application for summary judgment under s 31A. 34 Section 31A is not an appropriate procedure for a defendant seeking to strike out the relief sought in an application or statement of claim. Section 31A is concerned with the substance of a proceeding and enables, relevantly, a defendant to apply for summary judgment in respect of the proceeding or part of the proceeding. The Court on such an application has to address the issue as to whether it is satisfied that the plaintiff has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding. An application under s 31A is not an appropriate procedure where a party is seeking to have part of an application or part of a pleading struck out. If the defendant's application were the appropriate procedure the Court would be called upon to give judgment in respect of the relief sought by the plaintiff. A court does not rule upon the relief sought and give judgment upon it. A court gives judgment in respect of the issues insofar as they amount to causes of action within the proceeding. The judgment that will be given in this proceeding in due course is upon the plaintiffs' claim of oppression under s 232. If the plaintiffs succeed the plaintiffs' judgment will be reflected in the relief which the Court fashions. If, on the other hand, the plaintiffs fail, the Court will not give judgment by dismissing the relief but will give judgment by dismissing the proceeding. That question is not to be answered by a finding that a party's statement of claim or defence fails to disclose a reasonable cause of action or defence. A pleading may be rectified by amendment so as to raise a reasonable cause of action or defence. It follows that a finding that a pleading should be struck out under O 20 does not mean there must be judgment against the party whose pleading it is. There may yet, by amendment, be a reasonable prospect of successfully prosecuting or defending that proceeding. In order to secure judgment under s 31A it must be shown that the party prosecuting or defending the proceeding has no reasonable prospect of success. This judgment can be made, by reference to pleadings, where there is a defect in the pleadings which cannot be cured. Alternatively, it may be a judgment made by reference to evidence put on in support of an application under s 31A which reasonably excludes the possibility that facts essential to the success of the claim or defence will be able to be established. ... Section 31A is not a vehicle for simply striking out parts of pleadings that are deficient. Section 31A allows for "judgment" or nothing. Alternative remedies with respect to deficient pleadings must be found in the rules of Court. That is not an application under s 31A because it would not give rise to a judgment for the whole or part of the proceeding. Section 31A(1) is comparable to O 20, r 1 in that they are both concerned with summary judgment for the party who is prosecuting the proceeding. Section 31A(2) is comparable to O 20, r 2 in that they are both concerned with dismissals of proceedings. The word "judgment" in s 31A(2) is defined in s 4 of the FCA Act to mean "a judgment, decree or order, whether final or interlocutory, or a sentence". It is convenient in the context of the present case to think of the judgment to which s 31A(2) refers as an order of dismissal of a proceeding. 38 It is wrong to attempt to use s 31A for something for which it was not designed. It was not designed for the purpose of striking out an application or pleading or any part of a pleading for some defect in the application or pleading. It was designed to enable the Court to give judgment in respect of a proceeding or part of a proceeding when that proceeding or that part of the proceeding has no reasonable prospect of success. It is designed to deal with issues whether it be by way of a cause of action or an issue within a cause of action. It is not designed to attack the adequacy or the sufficiency of a pleading. 39 If any of the prayers for relief were struck out as sought, the Court would not thereby be giving judgment in favour of the defendant for the proceeding or part of the proceeding. The Court could not on the defendant's application give judgment on any part of the proceeding. 40 If the defendant were able to show that the plaintiffs could not hope to obtain any part of the relief sought, that part may be struck out but that is not to give judgment for the defendant on that part of the relief. Indeed, if at trial the plaintiffs showed that they were in fact entitled to the relief which had been struck out, relief could still be ordered. Of course, that is another reason why this application is, with the greatest respect, misconceived. 41 For those reasons, I would dismiss the application insofar as it is brought pursuant to s 31A of the Federal Court Act. 42 However, the defendant could have applied under O 11 r 16 to have part of the application struck out on the ground that the prayers for relief have a tendency to cause prejudice, embarrassment or delay in the proceeding or are otherwise an abuse of process. 43 It would be difficult to sustain an argument that where a pleading raises an arguable statutory cause of action and seeks the relief given by the statute that it offends O 11 r 16. I think, however, that is how the defendant put its case, albeit under the guise of a s 31A summary judgment application. 44 If a party seeks relief which on any understanding must be plainly and obviously not available to that party, the Court would strike out the relief. The Court would need to be satisfied, however, that it was unarguable that the relief sought would not be granted. 45 If, on the other hand, the defendant was relying upon an abuse of process, the defendant would have the onus of showing that the proceeding was an abuse and was brought or maintained for a collateral or ulterior motive. The defendant did not assert an abuse of that kind. 46 Therefore, it seems to me, the statutory relief sought would only be struck out if the Court was convinced that the relief, even assuming the plaintiffs succeeded on their case of oppression, would never be granted. It would be a rare circumstance where a court would say, not having heard a word of evidence, that an arguable case of oppression could not entitle the plaintiffs to any part of the relief given by the statute except a declaration and the appointment of a receiver. 47 However, I shall address the relief sought. 48 The first four paragraphs of the originating application are for declarations. The defendant does not challenge paragraphs 1 and 2 but claims that it is unarguable that the Court would not make the declarations sought in paragraphs 3 and 4. 49 It simply cannot be said that the plaintiffs could never be entitled to the relief sought in paragraphs 3 and 4. The relief sought in paragraphs 3 and 4 are a more precise statement of the declarations sought in paragraphs 1 and 2. The declarations sought reflect the plaintiffs' pleaded case, which the defendant accepts for the argument is arguable. If the plaintiffs made out their claims I think there is a real chance that the declarations which are sought in paragraphs 3 and 4 would be made. 50 No quarrel is taken with paragraph 5. 51 The relief sought in paragraph 6 may be ordered by the Court if the Court is of the opinion, as the plaintiffs claim, that the defendant ought to have required repayment of the mortgage prior to the institution of this proceeding. It cannot be said there is no prospect of an order of that kind. The order reflects the plaintiffs' pleaded case. 52 The plaintiffs have abandoned the relief sought in paragraph 7. 53 The relief sought in paragraph 8 is a precursor to the relief which is sought in paragraphs 9 and 10. Ordinarily, one would have thought the value of the plaintiffs' interest in the defendant would be assessed by reference to the number of shares held by the plaintiffs and the market value of those shares at any particular time, especially when the defendant is a publicly listed company. The plaintiffs' holdings and the market value of their holding is, whilst the defendant remains listed, easily identified and calculated. One would have thought that this kind of order is more appropriate to a company with few shareholders and with shares of unknown value. However, it would not be appropriate to strike out paragraph 8 because it may be that the plaintiffs can successfully contend that the plaintiffs' interest in the defendant is to be valued by some other assessment other than the market value on the ASX. In any event, it could not be said that this prayer for relief had a tendency to cause prejudice, embarrassment or delay. 54 The relief sought in paragraph 10 is, as I say, consequential apparently upon an order made in paragraph 8. Paragraph 10 is an order that could be made. It may be the Court would decide that it is in the plaintiffs', the defendant's and the other members' of the defendant's interests that the plaintiffs' shareholding should be acquired by the defendant so that the plaintiffs could exit the defendant. Such an order would amount to a reduction in the defendant's capital. 55 In paragraph 9 the plaintiffs claim an order that Mr Ganke or his nominee purchased the plaintiffs' shares in capital of the defendant at the valuation determined pursuant to order 8. Mr Ganke is not a party to the proceeding. I raised with counsel for the plaintiffs, Mr S J Doyle, how the Court would order a non-party to purchase the plaintiffs' shares when the non-party had not been heard in relation to the claim of oppression by the defendant. He accepted that such an order would be unlikely unless Mr Ganke were joined as a party to the proceeding. Subsequent to the hearing of this matter, the plaintiffs' solicitors have advised that they do not intend to join Mr Ganke. 56 In those circumstances, I think the order sought in paragraph 9 ought to be dismissed because there is no prospect, in the absence of Mr Ganke being joined as a party, that he would be ordered to purchase the plaintiffs' shares. I would strike out paragraph 9, not pursuant to s 31A but pursuant to O 11 r 16, on the basis that the pleading has a tendency to embarrass or delay the proceeding. 57 That leaves for consideration the order sought in paragraph 11 which I think troubles the defendant most. The defendant claims that there is no prospect that a court could make an order for the winding up of the defendant in circumstances where the defendant is solvent and a publicly listed company. 58 The defendant submitted that the winding up of a publicly listed company in the absence of insolvency even for oppression is virtually unheard of, citing, so it was contended, the last reported case Re William Brooks & Co Ltd [1962] NSWLR 142 where a winding up order was set aside by consent in the High Court. 59 I think that contention is incorrect. In Re Weedmans Ltd (1974) Qd R 377 the company was listed on the Brisbane Stock Exchange: p 382. The trial judge (Lucas J) found that the directors of the company had acted in the affairs of the company in their own interests rather than in the interests of the members as a whole. He found that they had failed "to observe the requisite standard of commercial morality" and their conduct "reacted unfairly and unjustly against other members": p 398. He ordered the company to be wound up as "it seems to me that no other remedy is available to them": p 399. 60 The defendant relied upon a decision of the Court of Appeal in New Zealand in Latimer Holdings Ltd v SEA Holdings NZ Ltd [2005] 2 NZLR 328 in which the Court of Appeal upheld a decision of a trial judge to enter summary judgment against plaintiffs in an application for oppression. 61 However, I do not think that that case supports the defendant's contention. It was argued in that case that the equivalent to s 232 and s 233 of the Corporations Act , s 174 of the Companies Act (NZ) , did not apply to a publicly listed company. That test is an objective one. The provision may be prayed in aid even if the conduct accords with the company's constitution, because even then inappropriate prejudice may still arise. Relief can be given even if the conduct complained of does not involve a want of good faith or a lack of probity. The fact that all members are treated uniformly as members will not necessarily make conduct fair. The reasonable expectations of members are distinctly relevant --- though this factor is not in and of itself necessarily determinative --- and those expectations are not necessarily restricted to purely "internal", or "formal" expectations. There are no fixed categories of cases to which s 174 apply. The provision is one of general application. Relief may be sought even with respect to a listed company. 62 In the circumstances of that case, however, the Court agreed with the trial judge that it was appropriate for him to have entered summary judgment. 63 I do not think that s 233(1)(a) is not available as a remedy because the defendant is a publicly listed company. I agree, with respect, that there is nothing in s 233 or the Corporations Act which suggests that s 233(1)(a) has no application to a publicly listed company. 64 I would accept, however, that it would be a rare circumstance where an order of that kind would be made and even rarer where the company is shown to be solvent. In the absence of a strong case and a clear need for the relief, the Court would not take the extreme step of winding up a solvent company: Cumberland Holdings Ltd v Washington H Soul Pattinson & Company Ltd (1977) 2 ACLR 307. 65 Now is not the time to enquire into the financial health of the defendant or to determine whether it is solvent. It is not alleged by the plaintiffs that the defendant is insolvent. It is not in the plaintiffs' interests to make such a case. 66 The following matters can be noted. First, the defendant's financial statements have been prepared upon the basis that the defendant is a going concern. Secondly, the defendant's auditor's opinion is unqualified. Thirdly, the defendant, being a publicly listed company on the ASX, has reporting requirements which would include an obligation to advise the ASX of any changes in its financial circumstances. 67 However, that having been said, there are a number of matters that emerge from the defendant's financial statements which have been exhibited to witnesses' affidavits. As at 31 December 2007 there were 56,000,000 fully paid shares and 60,000,000 partly paid shares issued. As at 31 March 2008 there were two substantial shareholders; Mr Ganke with 26,450,372 shares and the plaintiffs and associates with 21,429,716 shares. The plaintiffs and Mr Ganke hold a significant part of the capital of the defendant. The plaintiffs and Mr Ganke are the dominant shareholders in the defendant and between them hold nearly 40% of the defendant's shares. 68 Up to and including the financial year ended 31 December 2004, the defendant's financial statements were qualified by the auditor because the auditor was unable to obtain sufficient audit evidence relating to the NBBC mortgage to form an opinion on whether other information should be included in the financial report. The accounts have not been subject to a qualified audit report since that date. 69 Revenue, which mainly comprised interest payments, more than halved in the financial year ended 31 December 2007. Revenue from interest reduced from $715,559 to $339,593. In the financial year 2007, the defendant made a loss of $83,750. Current assets decreased from $2,258,373 to $700,867 because the directors reclassified $1,734,266 of the mortgage investment as a non-current asset. Non-current assets increased from $3,764,883 to $5,805,192 by reason of that reclassification. 70 Included in assets designated "Available for Sale Financial Assets (Non-current)" were shares in unlisted corporations at cost - $612,627 which apparently includes the defendant's investment in NBBC. 71 The defendant's current liabilities amounted to $1,120,572 up from $568,940. 72 Whereas in the financial year ended 2006 the defendant's current assets exceeded its current liabilities of in the order of $1,700,000, by the end of the financial year in 2007 the defendant's current liabilities exceeded its current assets by around $420,000. The auditor makes no comment on this reversal in his audit opinion. However, as I have said, the accounts have been prepared on the basis that the company is a going concern and there is no qualification in the audit opinion. The auditor must have concluded, notwithstanding the excess of current liabilities over current assets, that the company can pay its debts as and when they fall due and payable: s 95A(1). 73 The mortgage given by NBBC was shown as a non-current asset. The mortgage investment shown under current receivables in 2006 was reclassified as non current. 74 The company's non-current assets included exploration and evaluation expenditure. Those expenses were included at cost $1,420,312 together with the director's valuation of $7,086,235. The directors revalued the company' s 5% interest in a uranium exploration in 2006 from $413,765 to $7,500,000. Energy Metals Ltd, the Operator, has released a JORC compliant resource report to the ASX which estimated resources of 14,000,000 pounds of uranium and 16,000,000 lbs of vanadium. The Directors revalued the company's interest based on the resources estimates and using a price per pound of $75 for uranium and $6 for vanadium, reducing these values to long term contract prices, and allowing for mining costs and further discounting for risks and future timing of cash flows. The ultimate recoupment of costs carried forward in respect of areas of interest still in the exploration or evaluation phases is dependent upon successful development and commercial exploitation, or alternatively, sale of the relevant assets. 75 The company's borrowings increased by $303,000 in 2007 which was used to meet its liabilities as and when they fell due. 76 The accounts show that the company's assets exceeded its liabilities by $15,174,657. 77 The defendant's most recent audited half yearly accounts to 30 June 2008 have been exhibited to one of Mr Ganke's affidavits. Again, the accounts have been prepared on the basis that the defendant is a going concern and, again, the audit opinion is unqualified. This project has been maturing slowly but surely. Political issues and bureaucratic procedures have been the major cause of delays. Southern Cross expects to receive full value for its investment and should in due course obtain extra benefits from its shareholding in the Fijian company. An independent valuation of the land holdings of about F$20,000,000 was obtained in 2006. This beachfront, freehold property has great potential for the development of holiday apartments and other tourist-oriented facilities, including an international hotel, all in close proximity to the Nadi International Airport. 79 The defendant's current assets are $678,705 (31 December 2007; $700,867). Its current liabilities are $1,719,072 (31 December 2007; $1,120,572). The defendant's current liabilities now exceed the defendant's current assets by $1,040,367. The defendant's liquidity has worsened by nearly $600,000. 80 The defendant's bank overdraft at 30 June 2008 was $998,202. It did not have an overdraft at the previous balance date, 31 December 2007. It would appear that the defendant's banker has supported the defendant over the last six months. The defendant's current liability for "Trade and other payables" was, at 31 December 2007, $484,012. That liability has decreased (i.e. improved) to $350,013. Of the $484,012, $165,278 was a liability to related parties. There are no notes to the 30 June 2008 half yearly accounts which would show whether the related parties' liability has been repaid or reduced. The defendant's liabilities in loans reduced from $636,560 to $370,857. 81 The defendant's consolidated cash flow shows that it made payments of $255,850 for exploration and paid $303,333 for investments during the half year. It incurred $314,703 in operating activities. It repaid $501,721 in borrowings. However, it borrowed $998,202 in an overdraft and borrowed a further $300,000. It made a loss of $46,142 for the six months. 82 The increase in the excess of current liabilities over current assets may indicate the defendant's need for support which may have been given by its bankers. 83 The defendant's fortunes will no doubt be examined at trial. Its directors will have the opportunity of explaining how the defendant is able to pay its debts as and when they fall due. It may be that the defendant has the support of its bankers. I have observed that the defendant's borrowings increased in 2007 by $303,000 and an overdraft liability of $998,202 was incurred. It may be that the defendant has the support of the shareholders associated with Mr Ganke, although this is less likely because there does not appear to be any increase in related party liabilities. 84 However, there is no need to speculate. If the defendant's solvency becomes an issue at trial, those matters can be addressed at that time. 85 It should not be understood that I am suggesting that the defendant is insolvent. I am merely explaining why it would not be appropriate to take away from, as it must be assumed, successful plaintiffs, one aspect of the discretionary relief given under s 233. 86 In the end, it will be a question at trial whether this defendant, if the plaintiffs make out their primary case, should be wound up. 87 I am not persuaded that paragraph 11 of the application should be struck out. Paragraphs 7 and 9 of the plaintiffs' originating application be struck out. 2. The defendant's application for summary judgment be dismissed. I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application pursuant to s 232 of the corporations act 2001 (cth) whether possible for plaintiffs to obtain an order winding up publicly listed solvent company if the court is satisfied of oppression or unfairness relief which is best suited winding up order would be rare but not impossible interlocutory application for summary judgment pursuant to s 31a of federal court of australia act 1976 (cth) whether proper use of the provision s 31a not designed for striking out a defective or partially defective pleading designed to give judgment where no reasonable prospect of success application dismissed whether relief sought in originating application relief sought would only be struck out if the court convinced that relief would never be granted two prayers for relief not pressed application dismissed corporations practice and procedure practice and procedure |
The terms of the 2004 certified agreement applied to the academic staff of the University. 2 By a letter dated 6 January 2006, the Vice Chancellor advised the applicant, a tenured professor at the University, that allegations of serious misconduct comprising breaches of the University's policy on sexual harassment had been made against him and that he was suspended without pay pending the investigation of the allegations. The letter invoked Sch D of the 2004 certified agreement, which dealt with the process to be adopted where allegations of misconduct including serious misconduct, were made against a member of the academic staff. It provides, inter alia, for the establishment of a Misconduct Investigation Committee. 3 In early February 2006, the University advised the applicant that it had established a Misconduct Investigation Committee ('the Committee') to investigate the allegations. In March 2006 the Committee held a number of hearings. The applicant complained that the University had failed to set out in sufficient detail the particulars of the allegations made against him and that, accordingly, the University acted in breach of Sch D of the 2004 certified agreement in establishing the Committee. The applicant also alleged there were breaches of the 2004 certified agreement arising from the way the hearings of the Committee were conducted. Notwithstanding these complaints by the applicant, the University did not provide the particulars of the allegations in the detail requested by the applicant, and the Committee continued with its hearings. 4 On 17 March 2006, the applicant commenced these proceedings whereby the applicant seeks declarations relating to the proper interpretation of Sch D of the 2004 certified agreement and, in support of his claim that a penalty be imposed upon the University pursuant to s 178 of the Act, declarations that the University breached certain provisions of Sch D of that certified agreement. The applicant also seeks a permanent injunction restraining the Committee from taking any further steps in relation to the allegations made against him by the University. On 21 March 2006, the applicant obtained an interim injunction precluding the Committee from continuing its hearings. 5 The University filed a defence and counterclaim. In its defence the University admitted that it breached the 2004 certified agreement in relation to its obligation to give proper particulars of the allegations made against the applicant, but did not admit all the allegations of breaches of the 2004 certified agreement made against it by the applicant. It also pleaded that it did not comply with other provisions of Sch D of the 2004 certified agreement in the course of the establishment of the Committee. Schedule D to the 2006 certified agreement provided for a disciplinary procedure which was different to that contained in Sch D of the 2004 certified agreement. 7 The University's position was that, whilst it intended, in effect to abandon the proceedings before the Committee, that was established in February 2006, it, nevertheless, intended to deal with the allegations of misconduct against the applicant under the 2006 certified agreement. Clause 6.6 of Sch D of the 2006 certified agreement contained transitional provisions identifying the circumstances when each of the 2004 and 2006 certified agreements was to apply to disciplinary proceedings. The University counterclaimed for a declaration that on the proper construction of the 2006 certified agreement, all allegations of misconduct against the applicant must be dealt with in accordance with the provisions of Sch D of the 2006 certified agreement. 8 The admissions made by the University narrowed the range of issues left in dispute. At the trial there were four main issues to be determined. The report shall provide information about the nature and details of the misconduct allegation(s), and what steps were taken to resolve the issue, if any. The Deputy Vice Chancellor is then to advise the employee in writing who is dealing with the matter. 11 Clause 4 of Sch D provides that if immediate investigation is not warranted the Academic Member of Executive may refer the matter of the alleged misconduct back to the employee's supervisor, or other appropriate person, to attempt to resolve the matter through guidance, counselling, conciliation or other appropriate means. The Academic Member of Executive has the power to counsel or censure the employee or withhold an increment for a period not exceeding twelve months. Where he/she is of the view that the misconduct is such that it warrants other disciplinary action as listed in the definition [which would include dismissal], the matter must be referred to the Vice-Chancellor. Each of the parties read affidavits. There was no cross-examination on the affidavits. I set out below an account of the essential facts. 21 The applicant is a professor in the Department of Economics at the University and he has an international reputation. 22 On 19 August 2005, the University established a preliminary inquiry into the working environment within the Department of Economics. Ms Beverley Hill, the Manager of Equity and Diversity, employed by the University, conducted the inquiry. In the course of conducting the inquiry, Ms Hill interviewed members of staff in the department. On 7 November 2005, Ms Hill published the report of her findings. 23 On 2 December 2006, the applicant received an email from the Deputy Vice Chancellor, Professor Margaret Seares, calling upon the applicant to meet with Professor Probert on 8 December 2005, to discuss matters which, it was said, the University had determined required further action consequent upon the publication of Ms Hill's report. 24 At their meeting on 8 December 2005, Professor Probert handed the applicant a letter setting out allegations of sexual harassment made against the applicant, and advising him that the University intended to commence proceedings against him for sexual harassment in accordance with the University's policy on sexual harassment. The letter went on to say that a Sexual Harassment Review Panel had been established to consider these matters. The allegations of sexual harassment contained in the letter were the same as, and expressed in the same form as, the allegations set out in the University's letter of 6 January 2006 referred to in [29] below. 25 By a letter dated 13 December 2005, the applicant's solicitors complained to the University about the absence of particularity of the allegations made against the applicant. 26 On 14 December 2005, two of the persons interviewed by Ms Hill, as part of her inquiry, made affidavits. Each of the deponents was a female member of the Department of Economics. The two affidavits comprise 17 pages and 6 pages respectively and contain accounts of conversations and events that occurred over the course of a number of years --- in the case of one deponent, commencing in 1991. These affidavits are not made in this proceeding but are annexed to the affidavit of the applicant dated 17 March 2006. I will from now on refer to the deponents to those affidavits as 'the deponents'. 27 The applicant's solicitors received a letter from Professor Probert dated 14 December 2005 enclosing the two affidavits, each dated 14 December 2005, referred to above. 28 In December 2005, the Sexual Harassment Review Panel considered the allegations against the applicant and upheld the allegations. The Review Panel also recommended that the University take further action in respect of its findings. By a letter dated 23 December 2005, the Vice Chancellor of the University advised the applicant of the Review Panel's findings and recommendation. 29 On 6 January 2006, the Vice Chancellor of the University wrote a letter to the applicant. Consistent with the provisions of Schedule D and the findings of the Sexual Harassment Review Panel the following allegations of serious misconduct are made against you. Clause 6.1.2 of Schedule D requires you to provide a response to the allegations within 10 working days. Accordingly your reply is required by close of business on 20 January 2006. 32 By a letter dated 18 January 2006 to the Vice Chancellor, the applicant stated that he disputed the allegations made against him, and complained that the statement of the allegations in the letter of 6 January 2006 was inadequate and did not comply with the provisions of cl 6.1.1 of Sch D of the 2004 certified agreement. 33 On 27 January 2006, Professor Probert wrote to the applicant advising that she was of the view that the allegations, if proven, would constitute serious misconduct and she was referring the matter to the Committee in accordance with Sch D of the 2004 certified agreement. The letter also advised that particulars of the allegations would be provided in due course. 34 By a letter dated 9 February 2006, Professor Probert advised the applicant of the names of the persons who were to comprise the Committee. They were Ms Robyn Carroll (Chair), Professor Mark Bush and Dr Bruce Stone. On 13 February 2006, the applicant's solicitors wrote to the University complaining about the absence of adequate particulars of the allegations. 35 On 16 February 2006, the Executive Secretary of the Committee wrote to the applicant's solicitors proposing a hearing for the purpose of assisting the Committee to determine, amongst other things, which persons should be interviewed as part of the hearing process, and whether there had been compliance with the procedures under cl 2.2 of Sch D of the 2004 certified agreement. By a letter dated 24 February 2006, the applicant's solicitors again complained about the absence of proper particulars in relation to the allegations being made against the applicant. 36 On 2 March 2006, the University sent the applicant and the Committee a further document. In that document the University linked each of the allegations set out opposite each of the dot points in the letter of 6 January 2006 referred to in [29] above, to certain numbered paragraphs in each of the deponent's affidavits of 14 December 2005. Dr Le has made it clear that she does not wish to be interviewed. 41 The first hearing of the Committee was held on 3 March 2006. At that hearing the Committee recommended that the decision of the Vice Chancellor to suspend the applicant without pay be varied to a suspension on pay. The Vice Chancellor accepted the recommendation. 42 The Committee subsequently held hearings on 6, 8, 9, 16 and 17 March 2006. The applicant was assisted at these hearings of the Committee by Professor Darryl Turkington, a professor in the same department as the applicant. 43 At the hearings of the Committee on 3, 6, 8 and 9 March 2006, it was submitted to the Committee, on the applicant's behalf, that the Committee should interview each of the deponents and that Professor Turkington be permitted to question the deponents so that their evidence could be tested. Mr Farrally, the advocate for the University informed the Committee that Dr Le, one of the deponents who was then in Australia, refused to give oral evidence. He later informed the Committee that he had contacted Dr Voola, the other deponent, who was then overseas, and she had said that she would refuse to give oral evidence on her return from overseas. Mr Farrally also said that both deponents would, however, be prepared to answer questions on affidavit, if these questions were put to them in advance in writing. The Committee said that it could not compel the deponents to give evidence and that it would receive their affidavits. During her evidence, Ms Hill referred to having made copious notes of the interviews that she had conducted with members of the Department of Economics. Professor Turkington asked Ms Hill to produce the notes but the advocate for the University objected on the grounds that the notes were confidential. The Chair of the Committee said that she could not compel Ms Hill or the University to make the notes available and the Committee proceeded to hear Ms Hill's oral testimony without the applicant obtaining access to any notes. 45 On 28 February 2006, the Executive Secretary of the Committee said that the Committee would keep a full record of the proceedings on audio tape which would be available to either party as required. However, on 10 March 2006 the applicant was informed by the Executive Secretary of the Committee that following testing of the audio recordings of the hearings on 3, 6, 8 and 9 March 2006, it had been discovered that 19 hours of the hearings had not been recorded. 46 During the hearings, Professor Turkington asked that the University specify the provisions of the various policy documents that it alleged the applicant had breached. This request was repeated in a letter from the applicant's solicitors dated 15 March 2006. By a letter dated 14 March 2006 but presented on 16 March 2006, the University provided copies of the University Sexual Harassment policy document and four other policy documents. An interim injunction was granted on 21 March 2006. 48 On 30 May 2006, the 2006 certified agreement became effective. The disciplinary procedure, expressed in Sch D of the 2006 certified agreement, is different to that expressed in the 2004 certified agreement. The disciplinary procedure set out in the 2006 certified agreement does not provide for a misconduct investigation committee. It also contains different provisions relating to the investigation of allegations of serious misconduct to those contained in the 2004 certified agreement. The lodgement date of the 2006 certified agreement was 26 May 2006. 50 The University has also pleaded that it did not comply with other provisions of the 2004 certified agreement in the course of establishing the Committee, which it said affected the validity of the appointment of the Committee. The University contended that when Professor Probert referred the matter of the allegations of sexual harassment to the Committee in February 2006, she had not been validly appointed and that, therefore, the appointment of the Committee was also invalid. This was because, in breach of cl 3 of Sch D, it was the Vice Chancellor, and not the Deputy Vice Chancellor, who had appointed Professor Probert as the Academic Member of Executive to deal with the matter. Secondly, it was said that, in breach of cl 2.2, there had not been a report, within the meaning of that clause, made to the Deputy Vice Chancellor, and no consideration by the Deputy Vice Chancellor of the matters set out in cl 3 of Sch D. Thirdly, it was said that, in breach of cl 4.1, Professor Probert did not properly consider whether to refer the matter back to the applicant's supervisor. 51 The declaration contended for by the University goes further than declaring that it breached the 2004 certified agreement, and seeks to incorporate into the declaration the notions of invalidity and nullity in respect of the establishment and subsequent proceedings of the Committee. 52 The applicant objects to the making of a declaration in the terms proposed in the defence of the University on the basis that the declaration seeks to pronounce upon the 'validity of the constitution of the Committee and its deliberations and determinations and have them declared to be void and of no effect'. The applicant contends that if a declaration was made in those terms, it would undermine the effectiveness of the recommendation made by the Committee, which was accepted by the University, that the suspension of the applicant should be on full pay rather than on no pay. 53 In his application, the applicant states that the application is brought under the Act, and also by reference to the accrued jurisdiction. Both parties appear to have conducted the trial on the basis that the provisions of the 2004 certified agreement are enforceable in the general law as an employment contract between the applicant and the University ( Construction, Forestry, Mining & Energy Union v Australian Industrial Relations Commission [2001] HCA 16 ; (2000) 203 CLR 645). No submission was made that the Court did not, in the circumstances of this case, have power to grant an injunction. Further, as this application was commenced prior to the coming into effect, on 27 March 2006, of the amendments to the Act made by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth), I will apply the provisions of the Act as they were on 17 March 2006, when this proceeding was commenced. 54 In my view, the declaration sought by the University should not be made. In granting relief under the Act in respect of breaches of a certified agreement, the Court is confined to granting the remedies provided for under the Act. The declaration sought by the University goes beyond a declaration of breach as an incident to imposing a penalty under the Act. The Act does not provide the Court with the power to make declarations of nullity or to set aside actions carried out in breach of a certified agreement. 55 Further, insofar as the position at common law is concerned, H.W.R. Wade & C.F. The same may apply to members of universities, including students. Such cases, strictly speaking, fall outside administrative law, since they are not concerned with governmental authorities, and the question at issue is not one of ultra vires but one of breach of contract. These remedies include a declaration and an injunction. The remedies are discretionary and are capable of being moulded to meet the exigencies of the situation. Even if, in the circumstances of this case, a declaration of invalidity was available as a remedy, I would in the exercise of my discretion decline to grant such a declaration on the application of the University. This is because in seeking a declaration in those terms, the University seeks to impugn its own actions and rely upon its own breaches of the 2004 certified agreement. The appropriate relief in this case is the grant of an injunction which precludes the University from taking any benefit from its breaches of the 2004 certified agreement and minimises the detriment caused to the applicant. 57 I will make a declaration that the University breached cl 6 of Sch D of the 2004 certified agreement by failing to provide adequate particulars of the allegations made against the applicant. I will also grant an injunction precluding the University from proceeding any further with the hearings or deliberations of the Committee. However, the applicant pressed his claim that the University committed breaches of the 2004 certified agreement in relation to the hearings of the Committee. 60 As to the breach alleged in par 5(a) of the applicant's prayer for relief, the University has admitted that, after the establishment of the Committee, it was asked on a number of occasions by the applicant to provide proper particulars, and it declined to do so. 61 In my view, the failure of the University to respond adequately to each request for proper particulars, did not comprise a separate breach by the University on each occasion that it failed to give proper particulars. Once the University failed, on the occasion of issuing its letter of 6 January 2006, to provide adequate particulars, it had committed a breach of cl 6.1.1 of Sch D of the 2004 certified agreement. The fact that it did not, thereafter, provide proper particulars in response to the applicant's requests, aggravated the position but did not comprise separate breaches. 62 Insofar as cl 11 and cl 13 of Sch D of the 2004 certified agreement impose obligations relating to the matters complained of in pars 5(b), 5(c) and 5(d) of the prayer for relief, these are obligations imposed upon the Committee and not upon the University. The clauses, cannot, therefore, afford the basis of any claim that a penalty be imposed on the University in respect of the breaches identified in pars 5(b), 5(c) and 5(d) of the prayer for relief, and cannot, therefore, support the making of the declarations as an incident of that claim under the Act. 63 The applicant also submitted, however, that alleged breaches referred to in pars 5(a), 5(b), 5(c) and 5(d), were breaches of obligations requiring the University to provide particulars, make the deponents available to give oral evidence, to require Ms Hill to produce her notes, and to ensure that the Committee kept a record of the hearings. These obligations, said the applicant, were implied obligations which were to be derived from the University's implied obligation under its contract of employment with the applicant to do nothing to undermine mutual trust or confidence between the parties to the contract, and to cooperate with the applicant in giving effect to the contract of employment. Clause 60 of the 2004 certified agreement states that the termination of the employment at the instance of the University is to be 'exhaustively governed' by Sch D of the 2004 certified agreement, and that all disciplinary decisions or decisions to terminate employment for misconduct must be carried out in compliance with Sch D. In my view, these provisions operate as an express exclusion of the implied terms contended for by the applicant. 64 I would add that the applicant does not make any claim for damages under the general law in relation to these alleged breaches of the implied terms contended for by applicant. Even if I was of the view that there was room for the operation of the implied terms in the manner alleged by the applicant, and that the University had breached the terms, I would in light of the acceptance by the University that proceedings before the Committee are, in effect, to be abandoned, have concluded that there was no utility in making the declarations sought. The failure by the University to provide the applicant with adequate particulars of the allegations was a serious breach. There are other facts which add to the gravity of the breach. The allegations made against the applicant were allegations of serious misconduct. The applicant holds a senior position in the academic staff at the University and has an international reputation in his field. The allegations are of such a nature they have the potential to damage the reputation of the applicant. The University did not after having initially failed to provide particulars in its letter of 6 January 2006, thereafter provide adequate particulars. 67 I accept that the University did not act with malice and did not intend to flout the law. It is apparent that the failure of the University to provide proper particulars, has its origin in the incorrect view which it held at the time, as to the ambit of its obligation. The University, no doubt acting on different legal advice, has now changed its view. I also take into account, in favour of the University, the fact that the University admitted in its defence that it had breached cl 6.1.1 of Sch D of the 2004 certified agreement and that it did not challenge the evidence at trial. However, the weight placed on these matters must be tempered by the fact that the admissions were contained in the University's defence and counterclaim which was first filed on 18 September 2006. It is, also, the fact that the University failed to furnish the applicant with particulars after 6 January 2006 and sought to defend its position at the hearing of the application for an interim injunction. I take into account, in favour of the University, that there is no evidence of any previous breach. I also accept that the University did not make any finding of misconduct against the applicant but I place little weight upon that factor because, in the circumstances of this case, the making of any such finding in the absence of a report from the Committee would have been a breach of Sch D of the 2004 certified agreement. I also place little weight on the submission that there are agreed procedures for the recovery by the applicant of lost money. Those procedures are existing procedures to be found in cl 5.3 of Sch D and have not been made in response to the breach of the 2004 certified agreement under consideration in this case. 68 I also take into account the fact that the University has attempted to maintain confidentiality in relation to the proceedings before the Committee. However, the weight to be given to that consideration is also limited by the fact that, by reason of the position adopted by the University, the applicant was required to commence this proceeding with the attendant surrender of confidentiality associated with the commencement of a proceeding in this Court. I also accept that the allegations made against the applicant are of such a nature that it was appropriate for the University to have taken steps by reference to Sch D of the 2004 certified agreement. However, again, limited weight is placed on that factor because, as previously mentioned, the allegations are of such a serious nature that it was particularly important that the applicant knew in detail the case which he had to meet. 69 In weighing the competing factors referred to above, I have come to the view that the serious nature of the breach and the aggravating factors referred to above, dictate that a penalty should be imposed upon the University. Another factor militating in favour of the imposition of a penalty is deterrence. The University employs a large number of academic staff. Reputation is particularly cherished in the academic world. The importance of the need for the University to act in accordance with the agreed disciplinary procedure, so as to minimise the risk of unwarranted damage to the reputation of its academic staff, should, in my view, be reflected by the imposition of, and, in the quantum of, a penalty. 70 It was submitted by the applicant, that the successive failure of the University to provide particulars of the allegations in response to the applicant's requests was a breach of the 2004 certified agreement which 'continued for more than a day' within the meaning of s 178(4)(iia) of the Act. The object of those provisions is to set the upper limit of the maximum penalty. Whilst it is arguable that the breach of cl 6.1.1 of Sch D of the 2004 certified agreement is one to which s 178(4)(iia) applies, it is not necessary to decide the point, because as I have held, the successive failure by the University to provide adequate particulars stems from, in my view, a single circumstance, namely, the University holding an incorrect view of the ambit of its obligation. In these circumstances, the exercise of my discretion as to the quantum of the penalty to be imposed is more appropriately informed by having regard to the maximum prescribed by a single breach of the 2004 certified agreement, than by seeking to establish a maximum in respect of a breach which is arguably still continuing, which, in the circumstances, is otiose. 71 I might add that, if my analysis of the nature of the breach of cl 6.1.1 set out in [61] is wrong, and each failure to provide particulars was a separate breach of cl 6.1.1, then s 178(2) of the Act would operate so that the separate breaches would fall to be regarded as a single breach for the purpose of the imposition of a penalty. 72 The maximum amount of penalty which can be imposed on a corporation in respect of a single breach is $33 000, being the amount representing 300 penalty points. As I have previously stated, I regard the breach as serious with aggravating circumstances and that it is necessary that the penalty reflect an element of deterrence. Balancing those considerations with the factors I have identified, which count in the University's favour, I have come to the view that the appropriate penalty to be imposed on the University is $20 000. The penalty is to be paid to the applicant. As already mentioned, the University has pleaded that it intends to deal with the allegations against the applicant under Sch D of the 2006 certified agreement. The University contended that, upon the proper construction of cl 6.6.1 of Sch D of the 2006 certified agreement, 'disciplinary proceedings' are commenced when a 'properly appointed' Academic Member of Executive under the 2004 certified agreement chooses to refer the matter to a Misconduct Investigation Committee in accordance with cl 9.2 of the 2004 certified agreement, and that any allegation of misconduct that has not been the subject of deliberations by a 'properly convened' Misconduct Investigation Committee prior to 26 May 2006, must be dealt with in accordance with the 2006 certified agreement. The University went on to submit, that by reason of the breaches of the 2004 certified agreement which it had committed, the Committee had not been properly convened and, therefore, 'disciplinary proceedings' had not been commenced before the Lodgement Date, within the meaning of cl 6.6.1 of the 2006 certified agreement. 75 In my view, the contention advanced by the University is not to be accepted. 76 The words 'disciplinary proceedings' in the clause must be given its ordinary meaning, namely, steps taken by the University for the purpose of taking disciplinary action. In this case, the University was of the view in January 2006, that the allegations against the applicant, if proved, warranted the termination of the applicant's employment. Schedule D of the 2004 certified agreement prescribed the process that was to be followed in that circumstance. By its letter of 6 January 2006, the University took steps to commence the process. Not only had the process commenced, but it had advanced to a considerable extent, before it was halted by the grant of the interim injunction. Further, the University, as part of the process, through the Vice Chancellor's letter of 6 January 2006, in fact, administered 'disciplinary action' by suspending the applicant without pay, in reliance upon the commencement of the process. 78 The essence of the University's contention is that, because the appointment of the Committee occurred by reason of the University acting in breach of the 2004 certified agreement, its actions, which would otherwise have been characterised as 'disciplinary proceedings' are, for the purpose of cl 6.6 of the 2006 certified agreement, not to bear that characterisation. 79 I do not accept the University's argument. 80 The term 'disciplinary proceedings' must be capable of being given a practical meaning, and the term is, therefore, in my view, to be construed as reference to the objective acts taken by the University as a prelude to the administering of disciplinary action, without regard to whether the objective acts are susceptible to legal challenge on the grounds of invalidity on the basis that provisions of Sch D of the 2004 certified agreement were breached. 81 Accordingly, in my view, the actions which occurred on and after 6 January 2006 in furtherance of the allegations in the University's letter of 6 January 2006, are 'disciplinary proceedings', within the meaning of cl 6.6.1 of the 2006 certified agreement. The disciplinary proceedings commenced on 6 January 2006; well prior to the lodgement date of the 2006 certified agreement of 26 May 2006. The consequence is that, any further pursuit by the University of the allegations, the subject of the 'disciplinary proceedings', is to be dealt with under Sch D of the 2004 certified agreement. 82 As to the ambit of the matters which were the subject of the disciplinary proceedings taken under the 2004 certified agreement, in my view, these are comprised by the allegations of misconduct which are referred to in the letter of the Vice Chancellor to the applicant on 6 January 2006. The evidence, derived from the University's letter of 2 March 2006, referred to at [39] above, is that the University's case is 'largely' based on the affidavits of the two deponents. I find, therefore, that the ambit of the disciplinary proceedings is comprised by the allegations contained in the letter of 6 January 2006, which include, but are not confined to, the facts and circumstances referred to in affidavits of the two deponents. 83 I will, therefore, not make the declaration sought by the University in its counterclaim. Instead, I will make a declaration that the allegations of serious misconduct made against the applicant as set out in the University's letter of 6 January 2006, are to be dealt with in accordance with the provisions of Sch D of the 2004 certified agreement. In my view, there is no need to grant an injunction sought by the applicant, precluding the University from dealing with the allegations of misconduct, the subject of the disciplinary proceedings, other than by reference to Sch D of the 2004 certified agreement, as there is no suggestion that the University would not give effect to the terms of the declaration made by the Court. 84 Other than in respect of cl 6.1.1 of the 2004 certified agreement, the applicant did not in his application make any claim for relief in respect of the breaches of the 2004 certified agreement which the University pleaded that it had committed. 85 I will hear the parties on costs. I certify that the preceding eighty-five (85) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | certified agreement breach of the provisions of disciplinary procedure failure to provide particulars of allegations of serious misconduct whether a penalty should be imposed industrial law |
In 2003 the appellant submitted an application for a Protection (Class XA) Visa ('protection visa'). The appellant claims to have a well-founded fear of persecution should he return to Malaysia because of his political opinion and activities, his race and his religion. 2 The appellant's protection visa application was refused by a delegate of the Minister ('the delegate's decision'). The Tribunal affirmed the delegate's decision in January 2004 ('the first Tribunal hearing'). The first Tribunal decision was quashed by order of the Federal Magistrates Court in March 2006 and the matter was remitted to the Tribunal for re-hearing ('the second Tribunal hearing'). The Tribunal again affirmed the delegate's decision ('the Tribunal decision'). Federal Magistrate Smith dismissed an application for review of the Tribunal decision ( SZCOS v Minister for Immigration & Anor [2007] FMCA 1471). The appellant appeals from Smith FM's decision. Those claims related to the appellant's support of the opposition party in Malaysia, the National Justice Party ('the NJP'). The appellant claimed that he had donated money to the NJP and demonstrated at the trial of Mr Anwar Ibrahim in 2001. As a consequence of those activities the appellant alleged that he had been attacked and detained by the police overnight and subsequently dismissed from his job in a Malaysian hotel. In 2002 the appellant left Malaysia and visited Australia. The appellant claimed that upon returning to Malaysia he was again detained by police, for a period of two months. The appellant contended that if he returned to Malaysia the police would continue to harass him and he would again be detained. 4 The appellant also asserted discrimination because of his religious beliefs and race, as a Christian of Malaysian ethnicity. Specifically the appellant pointed to the fact that he had experienced some discrimination in relation to housing, education and employment opportunities in Malaysia. The appellant contended that if he returned to Malaysia he would be persecuted as the Malaysian police ' are Muslims, anti-Christian, anti-minority and are fired up by Islamic fundamentalism... '. 5 In its reasons the Tribunal referred to the evidence given by the appellant at the first and second Tribunal hearings. The Tribunal did not accept the appellant's claims in relation to his alleged political persecution. He did not appear to be speaking from actual personal experience. The Tribunal then explained the reasons for this finding, including the fact that the appellant did not appear to be aware of what charges were laid against Mr Ibrahim when he demonstrated at his trial. It seemed the applicant had changed his evidence about whether he knew what the charges were when it appeared that not knowing what they were might undermine his claim. This indicates that the applicant was not being truthful. 6 Further, the Tribunal did not find the appellant's claim that he was dismissed from his job because of his political activities credible. The Tribunal noted the delay between his alleged attendance at the demonstration and his dismissal, a period of some nine months, and concluded that it was unlikely that the appellant would have been dismissed for attending one demonstration. 7 The Tribunal determined that the appellant was of no adverse interest to the police, the authorities or anyone in Malaysia for reasons of political opinion and that ' ... there is not a real chance that the applicant would be persecuted if he returned to Malaysia for reasons of political opinion '. 8 In relation to the appellant's claims concerning his race and religion, the Tribunal was prepared to accept that he was a "native" Malaysian and a Christian. While the Tribunal noted that Sunni Islam is the official religion of Malaysia, it found that any discrimination experienced by the appellant in the past was not serious enough to amount to persecution. It found that, on the basis of the evidence before it, it was not satisfied that there was a real chance the appellant would be persecuted for reasons of race or religion if he returned to Malaysia. 9 The Tribunal concluded that it was not satisfied that the appellant had a well-founded fear of persecution in Malaysia for reasons of political opinion, religion, race or any other Convention ground. Grounds one to three are identical to those relied upon before the Federal Magistrate while ground four was generally raised and addressed by his Honour. ... failed to hold that the Tribunal made jurisdictional error as it exceeded its power by acting arbitrarily and/or capriciously in making a credibility finding which resulted in the Tribunal reaching a lack of satisfaction that the Appellant is not a refugee. ... failed to hold that the Tribunal made jurisdictional error as it was not open on the evidence for the Tribunal to make a finding that " It seemed the applicant had changed his evidence about whether he knew what the charges were when it appeared that not knowing what they were might undermine his claim. This indicates that the applicant was not being truthful ". ... failed to hold that the Tribunal made jurisdictional error in that it made a credibility finding against the appellant without asking a question it should have asked. ... erred by not holding that the Tribunal made jurisdictional error as it did not deal with the appellant's case in a bona fide manner. The Magistrate also failed to hold that the Tribunal was biased as it prejudged the appellant's case and looked for reasons to reject his case. The appellant submits that the Tribunal failed to apply the correct test for a well-founded fear of persecution. The appellant submits that, the Tribunal should have applied the required "real chance" test, but instead applied a "probability" test and therefore based its decision on inadequate evidence. Specifically, the appellant submits that for each individual finding of fact, the Tribunal must decide whether that fact is true on the standard of "real chance". If there is a real chance that each fact giving rise to the appellant's individual claims is true, the appellant says that the Tribunal must find itself satisfied that there is a well-founded fear of persecution. The appellant says that there is no material in the transcript or in the written material given to the Tribunal to support this finding, that the Tribunal could not have formed this view based upon the demeanour of the appellant alone and that, if it did so, such a finding could not be justified. Accordingly, the appellant submits that the Tribunal acted arbitrarily or capriciously in making its credibility finding. 13 The appellant requested that Smith FM listen to the tapes of the hearing. His Honour declined to do so and noted at [29] that this exercise would not put him in an equal position with the Tribunal so as to allow him to find that its conclusions were not open to it as a matter of law. His Honour noted that, even if he listened to the tapes, he ' would still be left with the unknown area of the visual and atmospheric aspects of the hearing which must have formed a part in the Tribunal's own assessment '. From a reading of the transcript his Honour concluded that it may have been open to the Tribunal, from the language and responsiveness of the appellant to the Tribunal's questions, to form the impression that the appellant was speaking from a script rather than from his actual memory (at [30]). His Honour noted that the appellant had not pointed to any particular passage in the transcript to demonstrate the contrary. 14 The appellant contends that Smith FM erred in this finding and that the appellant's manner could have been ascertained by his Honour examining the transcript and listening to the tapes. The appellant points to several authorities that caution against findings made by reference to demeanour alone: State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In liq) (1999) 160 ALR 583 per Kirby J at [88]; WAEJ v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 188 ; (2003) 76 ALD 597 at [17] ---[18] referring to SAAK v Minister for Immigration & Multicultural Affairs [2002] FCA 367 ; (2002) 121 FCR 185 at [21] ---[31]. 15 At [25] Smith FM acknowledged the doubts expressed in Fox v Percy [2003] HCA 22 ; (2003) 214 CLR 118 at [31] about the ability to tell truth from falsehood on the basis of appearances of witnesses, without basing conclusions as far as possible on contemporary materials, objective facts and the logic of events. Tribunal in a case such as the present is that it must assess the applicant's evidence given in an interview, without "contemporary material" nor "objectively established facts" which can provide easy tests of the credibility of the applicant's account of persecution. This leaves an assessment of "the apparent logic of events" in a refugee applicant's history as an important part of a credibility finding, and the present Tribunal has performed that assessment ... in my opinion the present Tribunal made no jurisdictional error by also putting significant weight upon its impression of the applicant as a witness. 16 The appellant submits that the Tribunal made its first credibility finding based only on demeanour and not on ' the apparent logic of events '. He says that there were no inconsistencies or contradictions in the evidence presented to the Tribunal. As well as finding that the appellant's testimony appeared to be rehearsed, the Tribunal determined that the appellant had changed his evidence regarding his knowledge of the charges made against Mr Ibrahim in 2001. Further, the appellant's claim that he was dismissed from his job because of his political activities was found not to be credible because he failed to give a convincing explanation for the delay of nine months between the demonstration in which he participated and his dismissal. Moreover the Tribunal did not find it believable that the appellant would be dismissed from his job while another, more politically active, staff member ('Mr S') was only demoted. 18 The Tribunal was entitled to have regard to and base findings on the appellant's demeanour while giving evidence ( Re Refugee Review Tribunal; Ex parte H [2001] HCA 28 ; (2001) 179 ALR 425 at [34] ; W148/00A v Minister for Immigration & Multicultural Affairs [2001] FCA 679 ; (2001) 185 ALR 703 at [64] ). However, in assessing the appellant's credibility, the Tribunal's findings were not made on demeanour alone. The Tribunal assessed the appellant's claims and made findings on credibility that it explained; based on its observation of the appellant, the way he presented his claims, the lack of consistency that it discerned in the claims made and what it found to be implausible. Those were findings of fact for the Tribunal. 19 The appellant points out that the Tribunal did not specify which parts of his evidence appeared to it to be rehearsed. He argues that if evidence on different occasions is consistent, it can be said to be rehearsed; if inconsistent, the appellant's credibility is called into question. I have some sympathy with that position. However, fact finding and determination of credibility are matters for the Tribunal. The Tribunal explained the reasons for its conclusions and the conclusions were open to it on the evidence. It cannot be said that, as the appellant submits, the findings have been shown to be arbitrary and capricious or that they were not based on probative material or logical grounds. 20 The appellant also submits that the matters relied upon by the Tribunal were not matters of sufficient substance. That is a complaint of the fact finding by the Tribunal and the weight it attributed to the facts. It does not found jurisdictional error. 21 The Federal Magistrate had the transcripts of the Tribunal hearing. His Honour was not obliged to listen to the tapes of the hearing. As Smith FM noted at [29], even if he had listened to the tapes, this exercise would not put him in a position equal to the Tribunal in observing the manner in which the appellant presented his claims, so as to allow him to find that the Tribunal's conclusions were not open to it and were subject to jurisdictional error. 22 The appellant has not demonstrated error on the part of the Tribunal or the Federal Magistrate. This ground of appeal does not succeed. This indicates that the applicant was not being truthful. 24 Federal Magistrate Smith held at [40] that it was open to the Tribunal to conclude that the appellant had tailored his evidence in an attempt to meet the Tribunal's concern. 25 The appellant asserts that he never said to the Tribunal that he found out about the charges against Mr Ibrahim later and that the Tribunal used trivial matters and incomplete information to make a credibility finding against him. The appellant also asserts that actual charges against Mr Ibrahim were immaterial because the appellant was protesting the political persecution of Mr Ibrahim rather than the specific charges laid. Therefore, he submits, the Tribunal's decision was not based on findings of fact that were grounded upon probative material and logical grounds. If so, the Tribunal's decision may be subject to review ( Minister for Immigration & Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 at [145] per Gummow J). These responses are supported by the transcript. 27 Jurisdictional error is not established by simply identifying an incorrect finding of fact ( Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356 per Mason CJ). As to the contention that the matters were trivial, even if an inference appears to have been drawn as a result of illogical reasoning, provided there is some basis for the inference, there is no jurisdictional error or error of law to support jurisdictional review ( Bond at 356). As found by Smith FM, it was open to the Tribunal to conclude that the appellant had tailored his evidence in an attempt to meet its concerns as raised with the appellant at the hearing. 28 This ground of appeal does not succeed. The appellant contends that the Tribunal committed jurisdictional error by making a credibility finding against him without asking a question it should have asked, namely whether the hotel authorities took further action against Mr S after demoting him for his political involvement with the NJP. 30 Federal Magistrate Smith held that the Tribunal was not obliged to ask specific questions of the appellant before basing its reasoning on an apparent anomaly in the appellant's account of events (at [45]). His Honour referred to the transcript of the second Tribunal hearing and noted that it was clear that the appellant was asked to explain an apparent difference in treatment between him and Mr S. The Tribunal said that it seemed ' hard to believe ' that the two employees would be treated so differently (at [48]). His Honour noted that, in his response, the appellant did not seek to present additional information about what happened to Mr S. His Honour held that there was no obligation on the Tribunal to have inquired further into that topic. The appellant's solicitor was present at the second Tribunal hearing. At the conclusion of the hearing he was given the opportunity to raise with the Tribunal any matters that required clarification (at [49]). This issue was not raised. It is not for the Tribunal to make out the case for the appellant. The Tribunal did tell the appellant that it found the different treatment of the appellant and Mr S hard to believe and gave the appellant the opportunity to explain that apparent anomaly. The Tribunal put the appellant squarely on notice that it had difficulty believing the appellant's evidence on this topic. The Tribunal was not obliged to make further enquiries or to frame further questions for the appellant to answer. 32 This ground of appeal does not succeed. 34 The appellant points to the test in Ex parte H at [27] where the Court expressed the test for apprehended bias as ' whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question to be decided '. The appellant submits that the fair-minded observer of this case would conclude that since there was nothing the Tribunal could find against the appellant on any substantive matters, it ' picked on trivial matters to deny the application ' and accordingly demonstrated bias. 35 Federal Magistrate Smith found that the Tribunal's ultimate reasons for rejecting the credibility of the appellant carried no suggestion of bias, or of a closed mind before the Tribunal arrived at its findings (at [51]). His Honour said that he could find no evidence suggesting that the proceedings of the Tribunal might give rise to a reasonable apprehension that the Tribunal might have closed its mind to the merits of the matter (at [52]). Bad faith must be clearly alleged and proved ( SBBS at [43]). There is nothing on the face of the Tribunal's reasons that gives rise to a suggestion that the Tribunal was biased or to a reasonable apprehension of bias on the part of the Tribunal. The Tribunal gave detailed and considered reasons for its rejection of the appellant's claim. The mere making of findings adverse to the appellant does not indicate bias or apprehended bias. Even if the appellant could establish error or irrationality on the part of the Tribunal, mere error or irrationality does not demonstrate a lack of good faith ( SBBS at [45]). 37 I have rejected grounds one to three above on which the appellant relies to establish bias but, even considered cumulatively, they do not demonstrate actual or apprehended bias. The appellant submits that the Tribunal engaged in "nit picking". Questioning the appellant or expressing concern about facts and claims that may be said to be of minor overall importance does not demonstrate a closed mind and does not amount to apprehended bias. 38 This ground of appeal does not succeed. The test propounded by the appellant is ' whether each persecutory event claimed occurred must be ascertained based on real chance and not on probabilities '. The appellant says that if there is a real chance that each persecutory event as claimed is true, such as the appellant's dismissal from his employment, the Tribunal must find itself satisfied that there is a well-founded fear of persecution. 40 The appellant says that the Tribunal was obliged to assess each finding of past fact on this basis and not on the balance of probabilities and that instead of applying the "real chance" test, the Tribunal applied a "probability" test to whether the appellant's claims regarding the past persecutory events were true. Accordingly, the appellant submits that the Tribunal expected him to satisfy too high a standard in assessing his treatment in Malaysia and required him to demonstrate that it was probable that each claimed event did occur. 41 It follows, the appellant contends, that the Tribunal based its decision on inadequate evidence and a finding based on inadequate evidence points to a misconstruction by the Tribunal of the test to be applied ( SZDTZ v Minister for Immigration & Citizenship [2007] FCA 1824 at [32] per Greenwood J). In support of his argument that the Tribunal applied the wrong test (the probability test) to his evidence, the appellant points to the High Court decision in Minister for Immigration & Ethnic Affairs v Guo [1997] HCA 22 ; (1997) 191 CLR 559. In Guo , the High Court emphasised that the "real chance" test is not a substitute for the Convention term "well-founded fear" (at 572). A fear is "well-founded" when there is a real substantial basis for it. It is not well---founded if it is merely assumed or if it is mere speculation ( Guo at 572). 43 In Guo at 573, the High Court also affirmed what was said in Minister for Immigration & Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 281, that an opinion that one version of the facts is more probable than another is not necessarily inconsistent with the correct application of the Chan test. In many, if not most cases, determining what is likely to occur in the future will require findings as to what has occurred in the past because what has occurred in the past is likely to be the most reliable guide as to what will happen in the future. It is therefore ordinarily an integral part of the process of making a determination concerning the chance of something occurring in the future that conclusions are formed concerning past events. ... It is true that, in determining whether there is a real chance that an event will occur or will occur for a particular reason, the degree of probability that similar events have or have not occurred or have or have not occurred for particular reasons in the past is relevant in determining the chance that the event or the reason will occur in the future. If, for example, a Tribunal finds that it is only slightly more probable than not that an applicant has not been punished for a Convention reason, it must take into account the chance that the applicant was so punished when determining whether there is a well-founded fear of future persecution. It is the latter that requires an assessment of real chance. An assessment of the likelihood that the applicant will be persecuted for a Convention reason ordinarily involves making findings about whether all or part of the applicant's account of past events should be accepted ( Minister for Immigration & Multicultural Affairs v Rajalingam [1999] FCA 794 ; (1997) 93 FCR 220 per Sackville J at [34]). The past event either did or did not occur. 46 In Rajalingam Sackville J, with whom North J agreed, discussed the various observations concerning the obligation of the Tribunal to consider, in its assessment of well-founded fear as discussed by the High Court in Guo and Wu Shan Liang , whether there is "real doubt" that findings of fact as to past events were correct. At [60] Sackville J distilled those observations into the principle that there are circumstances in which the Tribunal must take into account the possibility that alleged past events occurred, even though it finds that those events probably did not occur. If the Tribunal makes an adverse finding in relation to a material claim of an appellant but is unable to make the claim with confidence, it must proceed to assess the claim on the basis that the claim may possibly be true. There are, however, limits to the application of this principle, known as the "what if I am wrong" test. This does not preclude the Tribunal making a finding with certainty. It is where the Tribunal is uncertain as to whether an alleged event occurred or finds that the event might have occurred that it should, in considering the ultimate question, take into account the possibility that it did take place (at [62]). 47 That is not to say that the Tribunal must express findings that make explicit its degree of conviction or confidence that the findings are correct ( Rajalingam at [64]). A 'fair reading' of the reasons incorporates the principle that the [Tribunal's] reasons should receive a 'beneficial construction' and should not be 'construed minutely and finely with an eye keenly attuned to the perception of error': Wu Shan Liang, at 271-272, quoting Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 322 ; (1993) 43 FCR 280 at 287. Only if a fair reading of the reasons allows the conclusion that the [Tribunal] had a real doubt that its findings on material questions of fact were correct, might error be revealed by the [Tribunal's] failure to take account of the possibility that the alleged events might have occurred (or the possibility that an event said not to have occurred did not in fact occur). If the fair reading allows of such a conclusion, the failure to consider the possibilities might demonstrate that the [Tribunal] had not undertaken the required speculation about the chances of future persecution. Where the Tribunal is unsure as to whether events occurred, as understood from its reasons, it is obliged to consider the possibility that its findings of fact might not have been correct. The Tribunal then considers the chance of an applicant's persecution in the future on a standard less than the balance of probabilities ( Kalala v Minister for Immigration & Multicultural Affairs [2001] FCA 1594 ; (2001) 114 FCR 212 at [25] per North and Madgwick JJ). In Kalala conclusions reached by the Tribunal as to whether certain events did or did not take place were attended by significant doubt. The same is true of imputing a relevant character to past events which themselves are either not in doubt or as to which it has been recognised that there is at least a real and substantial basis for concluding that they may have occurred. If there is, in the sense mentioned, an unacceptable risk that the events occurred or had such character, they are to be taken into account in assessing whether there is a real chance of Convention-related harm to the applicant. If there is a real chance that some event occurred or bore a certain character, that circumstance may powerfully affect the assessment of whether fear of future harm befalling an applicant, if returned to his or her country of nationality, is well-founded. 49 The appellant submits that the real chance test should be applied ' in reverse ': ' There can not be two standards of decision making dealing with real chance of the past and the future '. The appellant submits that the occurrence of past events should be ' tested on real chance ' and, further, that ' various factors going into each persecutory event could be given different weight based on probabilities '. The appellant offers a model of a mathematical evaluation of each factor. He says that the Tribunal should combine the mathematical evaluation of each factor to determine the percentage that then amounts to a real chance. He submits that if the Tribunal cannot rule out the alleged occurrence, it must assume that the claim is true. 50 The appellant then asserts that, the probability of each factual finding in the Tribunal decision being correct is small. Accordingly, he contends, the Tribunal applied a ' very high standard of proof ' and required satisfaction to ' a very high probability '. The appellant contends that, on a real chance test, the Tribunal should have found that the incidents described by the appellant did occur. 51 The appellant submits that it is evident from the Tribunal decision that the Tribunal was not confidently satisfied that the events did not take place. The appellant submits that the inadequacy of the evidence cited by the Tribunal to support its findings gives rise to the inference that it was not confidently satisfied that the past events did not take place as the appellant claimed ( Re Minister for Immigration & Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 ; (2003) 198 ALR 59 at [36] per McHugh and Gummow JJ). The appellant accepts that the attribution of greater weight to one piece of information as against another is not necessarily inconsistent with the correct application of Chan . He argues, however, that this is only appropriate when the question of whether each persecutory event of significance occurred is assessed on real chance and not on probability. 52 The appellant's submission that the Tribunal must apply the real chance test to each finding of fact in relation to past events claimed is misguided. So too is the appellant's attempt to overcome the High Court's reasoning in Guo by reliance on what was said to the contrary by Einfeld J at first instance ( Guo v Minister for Immigration & Ethnic Affairs (1996) 64 FCR 151). 53 An integral part of the process of determining whether there is a real chance of persecution is the formation of conclusions on past events ( Guo at 575). The Tribunal is not required to determine the veracity of past events as a mere possibility. Rather, the Tribunal is required to assess the material before it and to reach a conclusion on the occurrence of those events to see if they provide a basis, a foundation, for a fear of persecution. Where the Tribunal expresses no doubt as to its findings of fact, where the Tribunal simply does not accept that certain events took place, the Tribunal is not obliged to consider the chance of the fact being true or the event having occurred ( Rajalingam ; Yakubu v Minister for Immigration & Multicultural Affairs [2002] FCAFC 57 at [50] ). 54 In the present case, the Tribunal did not accept the appellant's claims and did not express or imply any doubts as to whether the events as claimed had not occurred. The Tribunal made an unequivocal finding that the appellant's evidence was rehearsed. The Tribunal did not find credible the appellant's claim that he was dismissed from his job because he donated to the NJP and attended a demonstration. It did not accept that the appellant was detained after returning to Malaysia. It made a finding that the appellant does not wish to engage, nor would he engage, in any political activity if he returned to Malaysia and that he is of no adverse interest to the police, the authorities or anyone else in Malaysia for reasons of political opinion. The Tribunal accepted country information on the freedom of Christians to practise their religion in Malaysia. It gave reasons for its conclusions which were not expressly or implicitly attended by doubt. The Tribunal was not required to consider whether each alleged persecutory event could possibly have occurred or could be established by applying a real chance test. 55 This ground of appeal does not succeed. Regardless, the Tribunal's rejection of the appellant's claims was based upon several strands of reasoning, only one of which included the appellant's demeanour whilst giving evidence. 57 The findings of fact made by the Tribunal were open to it on the evidence and no jurisdictional error on the part of the Tribunal has been shown. The Tribunal was not obliged to make further enquiries or to frame further questions for the appellant. There is no indication of bias or apprehended bias on the part of the Tribunal. 58 The Tribunal did not accept the appellant's claims and did not express any doubts about its conclusion that the past events as claimed had not occurred. The Tribunal is not required to assess those past claimed events of persecution on the basis of the real chance test. 59 The appeal should be dismissed. The appellant is to pay the respondent's costs. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | decision upholding refusal of protection (class xa) visa whether tribunal entitled to base finding only on demeanour tribunal entitled to have regard to demeanour tribunal's rejection of claims based on several strands of reasoning only one of which was demeanour whether tribunal obliged to ask questions tribunal not obliged to frame further questions findings adverse to appellant do not indicate bias or apprehended bias no jurisdictional error test for well-founded fear of persecution whether tribunal applied wrong test (probability test) whether real chance test in chan v minister for immigration & ethnic affairs (1989) 169 clr 379 should be applied to each past persecutory event claimed findings of past events not in same category as assessment of future events tribunal's reasons for findings on past events not attended by doubt tribunal not required to consider each past event by applying real chance test migration migration |
The Applicant seeks damages, interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth) (the 1984 Act) and costs. The Applicant is apparently the owner of a motor vehicle which is said to have been insured by the Respondent. The vehicle was damaged to the extent that it was " written off ", a claim was made on the insurance policy and that claim was refused. Neither the Application nor the Statement of Claim specify the amount claimed pursuant to the insurance policy nor the quantum of such loss or damage as is now claimed. It is considered that the proceeding should be transferred pursuant to s 32AB of the Federal Court of Australia Act 1976 (Cth) (the 1976 Act) to the Federal Magistrates Court. (4) In particular, the Rules of Court may set out factors that are to be taken into account by the Court in deciding whether to transfer a proceeding to the Federal Magistrates Court under subsection (1). (5) Before Rules of Court are made for the purposes of subsection (3) or (4), the Court must consult the Federal Magistrates Court. (8) An appeal does not lie from a decision of the Court in relation to the transfer of a proceeding under subsection (1). To avoid doubt, the court's jurisdiction under this subsection is not subject to limits set by another provision. (10) This section does not apply to proceedings of a kind specified in the regulations. It is thus a power which may be exercised even though an applicant may oppose such an order being made: e.g. Rahman v Dayeh [2006] FCA 1362. But where the parties consent to the making of such an order, Jacobson J has observed that such consent is " decisive ": Rixon v Business Parcel Express Pty Ltd [2006] FCA 969 at [3] . In addition to those matters set forth in s 32AB(6) to which the Court " must have regard ", O 82 r 7 of the Federal Court Rules 1979 (Cth) provides a further non-exhaustive list of those factors to be taken into account when exercising the discretion. In Garage Wholesalers Pty Ltd v Engineering Software Solutions Pty Ltd [2009] FCA 361 , McKerracher J transferred a proceeding alleging a contravention of s 52 of the Trade Practices Act 1974 (Cth). His Honour considered that the proceeding involved a claim for a moderate amount and that it was likely that it could be dealt with more expeditiously and less formally in the Federal Magistrates Court. See also Kurniadi v Loh [2002] FCA 1021 , 193 ALR 253. A further instance is provided by Ozluk v Australian Turkish & Kurdish Community Services Co-Operative Ltd [2008] FCA 352 where Graham J transferred an application brought pursuant to s 46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth). See also Beetham v Cortra Pty Ltd [2003] FCA 150. In Melville v Macquarie University [2006] FCA 1761 Madgwick J transferred an application brought under the Workplace Relations Act 1996 (Cth) for unlawful termination of employment. See also Sheikholeslami v University of New South Wales [2006] FCA 712 ; Rixon v Business Parcell Express Pty Ltd [2006] FCA 969. Applications arising under the Migration Act 1958 (Cth) have also been the subject of orders made pursuant to s 32AB: Nadu v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 571 ; Hong Bo Su v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1355. These are but instances of the circumstances in which the discretionary power may be exercised. That discretion, however, is relevantly confined by s 32AB(6) and O 82 r 7. Although r 7 identifies " factors that the Court or a Judge may take into account ", s 32AB(4) provides that " the Rules of Court may set out factors that are to be taken into account ...". But the discretion is otherwise unconfined, although it remains a discretionary power to be exercised judicially and by reference to the facts and circumstances of each individual case which comes before the Court. The prospect of transferring the proceeding to the Federal Magistrates Court was canvassed with the parties when the matter first came before the Court on 30 June 2009. The matter was stood over to this morning to permit the parties an opportunity to advance such further submissions as were considered appropriate. Yesterday, on 16 July 2009, the Applicant provided a detailed outline of written submissions addressing those issues canvassed on 30 June and, in particular, reasons opposing any transfer. The adjournment has also permitted the filing of a Defence to the Statement of Claim. The basis upon which this Court's jurisdiction was initially invoked was not self-evident, other than perhaps the reference in the Application as filed to the claim for interest pursuant to s 57 of the 1984 Act. Reference was also made in the Statement of Claim to an agreement to indemnify the Applicant, and to the Particulars that state that the insurance policy was " express and implied " and " to the extent that it was implied, its terms were implied by the Insurance Contracts Act 1984 (Cth) ". Why the claim was not commenced in some competent State Court was not the subject of submissions. But doubt as to whether this Court's jurisdiction has been properly invoked need not presently be resolved because the power to transfer a proceeding exists even where a question arises as to jurisdiction: cf Assad v Minister for Immigration and Citizenship [2008] FCA 1039. In my view, the expression "proceeding" in s 32AB of the Federal Court of Australia Act 1976 (Cth) is distinct from the expression "matter" (as used in s 39B(1) of the Judiciary Act 1903 (Cth)) and is sufficiently wide to encompass the present dispute between the parties. I therefore consider that the Court has power to, and should, transfer the proceeding notwithstanding any doubt which may exist as to its jurisdiction to hear and determine the application. What further orders or directions as that Court may hereafter make is a matter for that Court to determine. No submission was advanced that a referral of a proceeding pursuant to s 32AB to the Federal Magistrates Court can in any way constrain the manner in which that Court thereafter itself deals with the proceeding. Notwithstanding the fact that the Applicant does not wish for the proceeding to be transferred, it is considered that the case essentially involves a motor vehicle accident claim upon an insurance policy. That claim can be expeditiously resolved in the Federal Magistrates Court. It has been put that the Federal Magistrates Court is an inferior court and that, even if it has jurisdiction, it is best exercised by the Federal Court as a superior court. Federal Magistrates are Federal judicial officers governed by Ch III of the Constitution although, in a sense, judges of an inferior court. Both the qualifications for appointment and the characteristics of those individuals who have been appointed, fit them to undertake jurisdiction which might not previously have been thought appropriate. Even though I must pay regard to the opposition of the applicant, in one sense the applicant may be gaining another level of appeal to this Court. Such legal costs as will be incurred, it is to be expected, will be less --- or at least no more --- than those that would be incurred in this Court. The Respondent insurer this morning adopted a " neutral stance " as to whether the proceeding should be transferred. Notwithstanding the careful written submissions advanced by Counsel for the Applicant, it is not considered that the proceeding involves any point of general importance, let alone a point which should be resolved by a single judge of this Court --- at least initially. If attention is confined to the Application and the Statement of Claim, the only two " federal aspects " of the claim there advanced are: the claim for interest pursuant to s 57 of the 1984 Act; and the Particulars provided as to a possible implied term of the policy. Indeed, it is not understood that Counsel for the Applicant sought to contend otherwise. Whether or not any term is to be implied may possibly depend upon a resolution of disputed facts which, it is considered, are best resolved before a Federal Magistrate. Those points of general importance upon which Counsel for the Applicant sought to rely were to be found, so it was contended, not in the Statement of Claim but rather in the Defence --- a document not before the Court when the question of possible transfer to the Federal Magistrates Court was first raised. That Defence , so it was contended, raised a number of " complicated points ", including: the application of s 21(2)(c) of the 1984 Act and " the circumstances in which information contained in an insurer's files is ... a matter which is known to the insurer "; the circumstances in which a proposal form can be looked at in isolation; whether s 28(3) of the 1984 Act allows the Respondent to reduce its liability to " nothing ", as is alleged; the proper construction and scope of s 37 of the Road Transport (Safety and Traffic Management) Act 1999 (NSW); and the admissibility or discretionary exclusion of material. None of the " complicated points ", however, are such that they cannot be resolved by a Federal Magistrate. As was properly recognised by Counsel for the Applicant, assistance has been provided by other courts as to the manner in which at least some of the statutory provisions in question are to be applied: e.g. Commercial Union Assurance Co of Australia Ltd v Beard [1999] NSWCA 422 , 47 NSWLR 735. But there remain difficult issues of statutory construction which are yet to be resolved --- or so it was contended by the Applicant. There was said to be " contrary views " expressed by different superior courts. But the Federal Magistrates Court, it should be recognised, routinely confronts and has to interpret a myriad of complex statutory provisions and routinely has to resolve difficult questions of evidence and law. That quite frequently is the nature of the jurisdiction entrusted to that Court. Not surprisingly, Counsel for the Applicant did not refer in his outline of written submissions to the Defence pleading such further facts as: the non-disclosure of convictions for offences other than for " not wearing a seatbelt "; the non-disclosure of convictions for driving with more than the prescribed concentration of alcohol; and the driving of the vehicle the subject of the claim by a driver " under the influence of intoxicating liquor ". The insurer further contends that a significant aspect of its case will be the question as to whether liability can be denied simply upon the basis that the driver of the vehicle was intoxicated at the time of the accident. The insurer envisages that relevant to that part of its case there will be the need to call evidence from police officers, ambulance officers and possibly evidence from those in the emergency department of the hospital to which the driver was taken after the accident. If this be the manner in which the claim is ultimately resolved, the only " complicated point " that may have to be resolved may be confined to s 37 of the New South Wales Act. Even though it may be accepted that points of general importance may emerge from the most mundane or apparently simple of cases, it is considered that the present proceeding remains a claim made upon an insurance policy in respect to a motor vehicle accident. Even if the jurisdiction of this Court has been properly invoked, such claims only invite inquiry as to whether they should be transferred to the Federal Magistrates Court. The potential importance to the present parties of such provisions as ss 13 , 21 and 28 of the Insurance Contracts Act 1984 (Cth) may also be accepted. The application of such provisions, however, will in all likelihood largely depend upon the facts and circumstances to which they are to be applied. As was recognised by both the Applicant and the Respondent, and depending upon how the facts are ultimately to be resolved, one or other of the " complicated points " may not finally emerge for resolution. And such importance as may emerge from the application of those statutory provisions as may extend beyond the interests of the present parties (if any), it is considered, is no reason why it is not appropriate to transfer the proceeding to the Federal Magistrates Court. It was further submitted on behalf of the Applicant that " it would be a curious result that at the same time the Court is seeking to expand and encourage its general jurisdiction as a Commercial court that an interesting case involving some complexities within its original jurisdiction is transferred ". That is a submission without substance. This Court exercises such jurisdiction as is entrusted to it and may exercise in an appropriate case such powers as have been conferred, including the power conferred by s 32AB of the 1976 Act. This is an appropriate case in which to exercise that power. This Court should not " encourage " cases to be commenced in this Court simply because they may have some " commercial " aspect. It remains a matter for an applicant to commence such proceedings as may be advised and in such forums as are considered appropriate. The fate of any proceeding thereafter remains a matter for the parties --- and the Court --- to address. It was not understood that Counsel for the Applicant sought to contend that this Court should " encourage " cases to be brought before it which should be properly and appropriately resolved in some other forum --- be it the Federal Magistrates Court or some State court. The responsibility of this Court is to exercise such jurisdiction as is entrusted to it in accordance with law. What jurisdiction is entrusted to it, and the powers with which it is clothed, are matters for the legislature. But the manner in which it exercises that jurisdiction and those powers is a matter for the Court. It is further considered that the proceeding should be transferred now rather than later. A course urged on behalf of the Applicant was for this Court to retain the proceeding until the Reply is filed and until after its evidence has been filed and discovery provided. The question as to whether to make an order pursuant to s 32AB could then be addressed, so it was contended, upon a more complete understanding of the issues. That submission should not prevail. The content of the Reply was outlined, at least in part, during the course of oral submissions, and provides no basis for delaying the transfer. And, if the proceeding is to be transferred, it is better for questions as to evidence and discovery and the future conduct of the proceeding to be addressed by a Federal Magistrate from the outset. It will remain a matter for the Federal Magistrate to give such directions as are considered appropriate for the proper resolution of the claim being advanced. The informality of the procedures otherwise adopted by that Court in other proceedings is no reason to question the ability of that Court to formulate directions which properly recognise the commercial nature of the claim being pursued by the Applicant and the bases upon which it is sought to be resisted by the insurer. Although the questions as to the appropriate order to be made in respect to those costs as were incurred on 30 June 2009, and as to who should pay those costs, were raised on both 30 June 2009 and this morning, Counsel for the Applicant contended that such costs should be reserved. No submission was advanced by the insurer opposing that course. Any costs incurred to date in the proceeding in this Court be costs in the cause on their transfer to the Federal Magistrates Court of Australia. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | transfer of proceedings opposition of parties court acting on its own motion practice and procedure |
The application was supported by three affidavits. The warrant authorised the search for and seizure of property at the premises of TS&B Retail Systems Pty Ltd on the Princess Highway in Dandenong South. Having considered the information disclosed in the affidavits his Honour determined to issue the warrant. " I assume that the reference to "decisions" is an error and that the request relates to his Honour's decision to issue the warrant. His Honour responded by letter dated 15 October 2007. He confirmed that he had issued the warrant as an eligible Judge appointed pursuant to s 129A of the Bankruptcy Act . His Honour drew attention to the provisions of s 13(11)(b) of the ADJR Act and expressed the view that s 13 might not impose an obligation on him to provide reasons beyond those which he had annotated on the affidavit. Nonetheless he quoted, in the letter, the full terms of the notation which he had made and which are set out above at [2]. By application dated 26 November 2007 the applicant applied to the Court for a declaration pursuant to s 13(4A) of the ADJR Act, or alternatively, an order pursuant to s 13(7) of that Act that his Honour furnish the applicant with an expanded statement of reasons for his decision to issue the warrant. His Honour has submitted to the jurisdiction of the Court. The second respondent was joined as a party and has acted as a proper contradictor in relation to the application. Section 130 is one of a number of provisions in the Bankruptcy Act which are designed to assist a bankrupt's trustee to obtain control of property which, by virtue of the bankruptcy, has vested in the trustee: see s 58(1). If, as a result of the execution of a warrant under s 130 , undisclosed property of the bankrupt is discovered, the trustee may take possession of that property and, if need be, obtain an order of the Court to enforce possession: see s 129. Section 13 of the ADJR Act establishes a regime pursuant to which persons who have standing to make an application under that Act may seek reasons for the decision which they might seek to challenge. This was because it was not clear that his Honour had determined that the applicant was not entitled to make the request. The central elements of the applicant's case were: The second respondent disputed the applicant's claim to be a person with standing to seek an order under s 5 of the ADJR Act. He contended that the notation on the warrant, which was quoted in his Honour's response to the applicant's request for reasons, provided adequate particulars for the purposes of s 13(1) and s 13(11)(b) of the ADJR Act. He also submitted that, even if the applicant was otherwise entitled to an order under s 13(7), that order should be refused in the exercise of the Court's discretion. The second respondent accepted that, when acting as an eligible Judge under s 129A of the Bankruptcy Act and determining to issue a warrant under s 130 of that Act, a Judge is not acting in a judicial capacity or exercising judicial authority. This concession was properly made: see Morton v Robins (1996) 14 ACLC 1197. He also accepted that the decision of an eligible Judge under s 130 of the Bankruptcy Act was a decision of an administrative character made under an enactment which, if he had standing, was a decision which the applicant could challenge under the ADJR Act. This concession was also properly made: see Morton at 1198. The warrant was to be executed at the premises of TS&B Retail and was so executed. The warrant was, it was said, issued because of matters arising in relation to the applicant's bankrupt estate rather than the bankrupt himself. For these reasons it was submitted that the applicant did not have standing to apply for review under s 5 of the ADJR Act. Counsel for the applicant did not point to any evidence before the Court which went to the standing of the applicant. He did however state that, when the warrant was executed, the applicant claimed that some of the documents seized were subject to a claim, by him, of client legal privilege. As a result those documents were segregated and have not been examined by the second respondent. He submitted that his client's interest in preserving the confidentiality of the privileged material was a relevant interest which was affected by the decision to issue the warrant. Had the warrant not been issued the maintenance of that confidentiality would not have been compromised. A person has the necessary standing to bring an application under the ADJR Act if he or she is aggrieved by the decision which it is desired to challenge. By s 3(4) of the ADJR Act it is provided that a person will be taken to be aggrieved by a decision if that decision adversely affects the interests of the person. The term "person who is aggrieved", used in the ADJR Act, is not narrowly to be confined: see Alphapharm Pty Ltd v Smithkline Beecham (Australia) Pty Ltd [1994] FCA 996 ; (1994) 49 FCR 250 at 259. A person will have standing if his or her "interests", broadly defined, are affected by the particular decision. Proprietary and financial interests are relevant interests. They are, however, by no means the only interests comprehended by s 3(4). It will be necessary, in any particular case, for the Court to form a judgment as to whether the person's interests are affected to such a degree as to warrant the grant of standing: see Australian Foreman Stevedores Association v Crone (1989) 20 FCR 377 at 382. The Court's judgment will be influenced by the nature of the particular decision and the extent to which the interests of the applicant rise above those of an ordinary member of the public: see Australian Institute of Marine and Power Engineers v Secretary, Department of Transport [1986] FCA 443 ; (1986) 13 FCR 124 at 133 per Gummow J. See also Pharmacy Guild of Australia v Australian Community Pharmacy Authority (1996) 70 FCR 462 at 473; Mark v Australian Broadcasting Tribunal [1991] FCA 570 ; (1991) 32 FCR 476 at 477. Another relevant, but not decisive, consideration is whether the applicant had a right to be heard prior to the making of the decision in question: see Alphapharm at 260 - 261; Big Country Developments Pty Ltd v Australian Community Pharmacy Authority (1995) 60 FCR 85 at 95. If a person has a right, interest or legitimate expectation which entitles him or her to be heard prior to a particular decision being taken it is more likely that that person will be treated as having standing to challenge the decision once made than a person who lacked a sufficient interest to attract the requirements of procedural fairness. Section 130 of the Bankruptcy Act allows a trustee of a bankrupt's estate to make an ex parte application to a Judge for the issue of a search warrant. The warrant, if issued, authorises the persons named in it to search for and take possession of the property of a bankrupt, property that may be connected with, or related to, the bankrupt's examinable affairs or books relevant to any of the bankrupt's examinable affairs. Thus, although his Honour was under no obligation to hear the applicant prior to the issue of the warrant, the property to which the warrant was directed was, necessarily, the property of the applicant (albeit vested in his trustee) or property or books relating to his examinable affairs. The notations made by his Honour, in accordance with the requirements of s 130(4) of the Bankruptcy Act , record that he was satisfied, on the affidavit material before him, that there were reasonable grounds for believing that there were, on the premises of TS&B Retail, books that would disclose that the applicant played a role in the conduct of the business of TS&B Retail and that the books would disclose that role. Although the warrant was executed on the premises of TS&B Retail, it authorised, inter alia, the seizure of books of account which related to the applicant's examinable affairs. As it happened the material seized included documents in respect of which the applicant claimed client legal privilege. That to my mind is not a significant consideration. What is important is that the documents sought related to the applicant's financial affairs. If, as expected by the trustee, they provided evidence about his business activities, that information plainly had the potential to affect the applicant, particularly if he had failed to supply relevant information to his trustee. The seizure under the warrant, therefore, affected the applicant in a way which distinguished his interests from those of other members of the public. Accordingly, in my view, the applicant was a "person interested" for the purposes of the ADJR Act and was entitled to make an application under s 5 of that Act. It follows that he was entitled to make the request for reasons which was made under s 13(1) of that Act. There was also initial agreement that none of the exclusionary provisions of the ADJR Act which relieved decision-makers of an obligation to provide reasons for their decisions, had application to decisions to issue warrants under s 130 of the Bankruptcy Act . The central question argued on this application was whether the contents of the annotation provide a statement of his Honour's reasons for issuing the warrant which is sufficiently detailed to constitute a statement of reasons of the kind described in s 13 of the ADJR Act. The introduction of the requirement that administrative decision-makers provide reasons for their decisions (or do so on request from persons affected by those decisions) was a fundamental development in Australia's system of administrative law. In his 1989 Blackburn Lecture, the then Chief Justice of the High Court, Sir Anthony Mason, said that the creation of the obligation to provide a statement of reasons for decisions "was a dramatic advance in arming the individual with effective remedies in the overall scheme to ensure administrative justice" and that "reasoned and principled administrative decisions are an indispensable element in a modern democracy. " The provision of reasons serves a number of useful functions: see Osmond v Public Service Board of New South Wales [1984] 3 NSWLR 447 at 463 (per Kirby P); Comcare Australia v Lees (1997) 151 ALR 647 at 656 (per Finkelstein J). Relevantly, the provision of reasons enables the parties, and, particularly, unsuccessful parties, to understand why the decision was made and to make an informed judgment as to whether to seek redress or to accept the decision. To this end "[i]t is necessary that the statement be sufficiently explicit to enable the recipient to determine whether "the making of the decision was an improper exercise of the power conferred by the enactment", "the decision involved in error of law", the decision-maker took into account an irrelevant consideration or failed to take into account a relevant consideration and like matters referred to in ss 5 and 6 of the [ADJR] Act": Hatfield v Health Insurance Commission (1987) 15 FCR 487 at 490. I am now in a position to decide whether that decision has involved an unwarranted finding of fact, or an error of law, which is worth challenging. He should do so in clear and unambiguous language, not in vague generalities or the formal language of legislation. A statement will be treated as inadequate if it states conclusions without providing particulars of or explanations for those conclusions: Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No 1) [1987] FCA 301 ; (1987) 16 FCR 465 at 482-3 or if it does not record the decision-maker's findings on material questions of fact: Sullivan v Department of Transport (1978) 20 ALR 323 at 348-9. Section 13 does not, however, impose an onerous burden on decision-makers. As Lockhart J observed in Ansett Transport Industries (Operations) Ltd v Taylor (1987) 18 FCR 498 at 502 a decision on whether reasons are adequate or not must depend on the circumstances of a particular case. Nor is it necessary that the evidence or other material be set out in the statement; it is sufficient if it is referred to in it. Nor should the statement be interpreted by the courts narrowly or technically. This is hardly surprising. What s 130(4) of the Bankruptcy Act required him to do was to record, on an affidavit, which of the grounds specified in the affidavit he had relied on when issuing the warrant. In order to issue the warrant a Judge must be satisfied that there are reasonable grounds for doing so: see s 130(3)(c). That state of satisfaction will, in the usual case, result from a reading of the affidavit or affidavits filed by the trustee in support of an application for the issuing of a warrant. There is no reference at all in his Honour's notation to the evidence or other material contained in the affidavits which supported his stated conclusions. Nor are there any findings on material questions of fact other than the ultimate facts incorporated in the conclusions. It follows, in my opinion, that his Honour's letter of 15 October 2007, does not provide a statement of reasons of the kind contemplated by s 13(1) of the ADJR Act. The next question becomes whether the provisions of s 13(11)(b) of the ADJR Act relieved his Honour of the obligation to comply with the applicant's request. He would be so relieved if his original decision had been accompanied by a statement which satisfied the elements prescribed by s 13(1). I have framed the proposition in this way because, although there are some linguistic differences between s 13(1) and s 13(11)(b), like Stone J in Madera v Commissioner of Taxation [2004] FCA 1616 ; (2004) 214 ALR 327 at 333, I consider that the similarities in the language employed suggests no relevant difference in the nature of the statement which will satisfy these provisions. So understood s 13(11)(b) does not apply because, as I have already held, the notation did not constitute a statement of reasons within the meaning of s 13(1) of the ADJR Act. Schedule 2 contains a list of classes of decisions that are not decisions to which s 13 applies. Counsel for the second respondent drew the Court's attention to potentially relevant authorities but did not make a firm submission one way or the other as to whether paragraph (f) applied to decisions made under s 130. Both parties referred to decisions of Full Courts of this Court on the construction of paragraph (f). The first of those decisions was Ricegrowers Co-operative Mills Ltd v Bannerman [1981] FCA 211 ; (1981) 38 ALR 535. In that case the Trade Practices Commission had issued a notice under s 155 of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act ") requiring the appellant to furnish the Commission with certain information and to produce certain documents. Ricegrowers sought the provision of a statement of reasons for the decision to issue the notice under s 155. The Full Court held that paragraph (f) operated to render decisions, made under s 155 of the Trade Practices Act , to issue notices which required provision of information and the production of documents as decisions to which s 13 of the ADJR Act did not apply. Although all members of the Full Court were agreed as to the outcome of the appeal, they differed as to the construction of paragraph (f). The first and fourth sub-paragraphs are again of a broad and relevant nature. We read para (f)(iv) as excluding from s 13 decisions in connection with the investigation of persons for contravention of enactments and decisions under enactments requiring the production of documents and the giving of information. It would be difficult to find words which more clearly exclude from s 13 of the [ADJR] Act a decision to issue a notice under s 155 of the Trade Practices Act . His Honour was, however, persuaded that sub-paragraph (f)(iv) operated of its own force to exclude decisions made under s 155 of the Trade Practices Act even when civil proceedings had not been instituted and there existed no certainty or probability that such proceedings would be instituted (at 547-8). The second case was Murphy v KRM Holdings Pty Ltd [1985] FCA 495 ; (1985) 8 FCR 349 in which a Full Court held that paragraph (f) did not apply to a decision to seize imported goods under s 203(2) of the Customs Act 1901 (Cth) ("the Customs Act "). Fox J (at 351) held that the provisions of sub-paragraphs (i) to (iv) had to be read subject to the opening words of the paragraph and that a decision to seize goods was not a decision in connection with the institution or conduct of civil proceedings or a decision related to, or one which might result in, the bringing of civil proceedings for the recovery of penalties. Pincus J (at 354) adopted a similar approach to the construction of para (f). Counsel for the appellants submitted that decisions to seize "may result in" the bringing of proceedings for recovery of the penalties set out in s 234(2). The words "result in" connote causation. To come within the expressions relied on, it must appear that the decisions to seize may cause the bringing of the proceedings mentioned. While it has to be conceded that the decisions to seize may form part of a causal chain which leads on to the institution of proceedings for penalties, one would not speak of the decisions to seize as in themselves bringing about that consequence. No mention was made, in any of the judgments, of the earlier Ricegrowers decision. In Telstra Corporation Limited v Australian Competition and Consumer Commission (No 2) [2007] FCA 493 ; 240 ALR 135 Bennett J was called on to determine whether the Australian Competition and Consumer Commission ("the ACCC") was required, by s 13 of the ADJR Act, to provide reasons for its decision to issue a competition notice to Telstra under s 151AKA of the Trade Practices Act . The purpose of such a notice was to give the recipient a warning that it was engaging in proscribed anti-competitive conduct. If the recipient of the notice, despite the warning, continued to engage in the conduct certain consequences might follow. These included the institution of a proceeding by the ACCC for recovery of a pecuniary penalty, actions for damages by third parties who had suffered loss or damage by reason of the anti-competitive conduct and other compensatory orders. Further, third parties will not necessarily issue proceedings to recover damages pursuant to ... the Act. Certainty of legal proceedings, however, is not necessary for a decision to fall within the broad terms of para (f) of Sch 2. Decisions which "relate to, or may result" in the bringing of proceedings in a civil court for the recovery of pecuniary penalties expressly are included in para (f) of Sch 2 to the ADJR Act. The issue of a Part A competition notice is a prerequisite to the bringing of proceedings in this Court for the recovery of pecuniary penalties for a contravention of the competition rule ... . The scheme of the Act expressly contemplates that such proceedings may result from the decision by the [ACCC] to issue a Part A competition notice. Were it not for the fact that such proceedings may result, the desired incentive for the carrier to cease the allegedly anti-competitive conduct would diminish significantly. Indeed, Telstra relies upon that very consequence of the decision in its submissions as to the requirements of common law procedural fairness. It follows that the [ACCC] was not obliged by s 13(1) of the ADJR Act to furnish Telstra with a statement of reasons for its decision to issue that notice. Uninstructed by authority I would be disposed to hold, as Northrop J did in Ricegrowers , that the sub-paragraphs of paragraph (f) each provide for stand alone exemptions from the operation of s 13 of the ADJR Act. I am, however, bound by the majority decision in Ricegrowers and the decision in Murphy , to construe sub-paragraphs (iii) and (iv) within "the basic limits" imposed by the opening words of paragraph (f). This means that it is necessary to determine whether a decision to issue a warrant under s 130 of the Bankruptcy Act , which authorises the entry onto premises for the purpose of searching for and taking possession of property including documents, can be said to be a decision in connection with the institution or conduct of civil proceedings or a decision that relates to, or may result in, the bringing of civil proceedings for the recovery of pecuniary penalties for contravention of statutory provisions. A decision to issue a warrant permitting the search for and seizure of property (including books of a bankrupt) would not necessarily lead to the institution of civil proceedings against the bankrupt or anybody else. A decision as to whether or not such proceedings should be commenced would depend, in large part, on what was found when the seized property was examined. Nonetheless, Ricegrowers would support the conclusion that the decision to issue the warrant was covered by sub-paragraph (iii) and, possibly, sub-paragraph (iv). I say "possibly" because decisions in connection with the issue of search warrants are specifically dealt with in sub-paragraph (iii) and, although, in a loose sense, it may be said that search warrants can be used to require the production of documents, the language of sub-paragraph (iv) would, more naturally, apply to decisions to issue notices of the kind contemplated by s 155 of the Trade Practices Act and other equivalent provisions. Such notices do not authorise entry to premises for the purposes of searching for and seizing property. In Ricegrowers the majority held that paragraph (f) (iv), when read subject to the opening words of the paragraph, clearly excluded decisions to issue notices under s 155 of the Trade Practices Act from the reach of s 13 of the ADJR Act. This was so despite the fact that, at the time at which the decision to issue the notice was made, no decision had been taken as to whether civil proceedings should be instituted against the company to which the notice was directed or any other person. It is implicit in the majority judgment that it was sufficient that the notice was issued in the course of an investigation which might have led to the commencement of civil proceedings under the Trade Practices Act . The possibility was enough to bring the decision within the controlling words at the commencement of the paragraph. A decision to issue a notice which requires the production of documents and the provision of information is a step in an investigatory process which may or may not lead to the commencement of curial proceedings. The documents provided might provide evidence which might be deployed against a person in civil proceedings; on the other hand, they may prove to be of no relevance or even to be exculpatory in nature. Their significance, if any, will only be known once the notice has been executed and the documents have been examined by the authority which has issued the notice. An application under s 130 of the Bankruptcy Act can only be made if the trustee has reasonable grounds for suspecting that there exists (presumably undisclosed) property of the bankrupt, property that may be connected with or related to the bankrupt's examinable affairs or books which are relevant to those affairs. The grounds must be disclosed, on affidavit, to the Judge to whom application for the issuing of a warrant is made. They may nor may not prove to be well-founded. If property is seized, pursuant to a warrant, issued under s 130 , and it is alleged that the property is property of the bankrupt, the trustee will be entitled, under s 129 of the Bankruptcy Act , to assert an entitlement to possession of the property. If that claim is contested the trustee will be able to seek Court orders to enforce possession: see s 129(2). Paragraph (f) contemplates that decisions "in connection with the issue of search warrants" and decisions "requiring the production of documents" may be decisions in connection with the institution or conduct of proceedings in a civil court. The necessary nexus between the decision to authorise the seizure of property or documents and the institution of civil proceedings may exist where no antecedent decision has been made to commence such proceedings. No such decision may ever be made. Had the reasoning which was adopted by Pincus J (with whom Beaumont J agreed) in Murphy been applied in Ricegrowers it would have compelled a finding that a decision to issue a notice under s 155 of the Trade Practices Act was not a decision to which paragraph (f) applied. Pincus J held that, as a matter of construction, a decision to seize goods was not sufficiently connected with the institution or conduct of civil proceedings and could not, without more, result in the commencement of proceedings for a civil penalty. His Honour was influenced by the ordinary use of language. He did not consider that a decision to seize goods could be said to have occurred in connection with the institution or conduct of any proceedings. Furthermore, such decisions would not "in themselves" necessarily lead to the institution of proceedings for penalties. I do not consider that I am bound to apply Murphy . It appears that the Court in Murphy was not referred to Ricegrowers. In my view there is no relevant distinction to be drawn between a decision to issue a notice, under s 155 of the Trade Practices Act which requires the production of documents and a decision to issue a warrant under s 130 of the Bankruptcy Act which authorises the seizure of property (including documents). Both are decisions taken in order to facilitate an investigative process which has the potential to lead to the commencement of civil proceedings but which may not, necessarily, have that outcome. The same may be said of decisions to seize property, made under the Customs Act . Accordingly, in my opinion, the decision of Middleton J to issue the warrant was a decision to which paragraph (f) --- and, particularly, sub-paragraph (iii) applied. That being so the decision was not a decision to which s 13 of the ADJR Act applied. His Honour was not, therefore, obliged to provide reasons for his decision to issue the warrant upon receipt of the applicant's request. Because of the view which I have formed as to the operation of paragraph (f)(iii) of Sch 2 it is not necessary for me to express a concluded view as to whether or not sub-paragraph (iv) might also have rendered the decision one to which s 13 of the ADJR Act did not apply. Had I been of the view that s 13(11)(c) did not operate to exclude the operation of that section further issues would have arisen. One would have been whether the order sought should have been refused in the exercise of the Court's discretion: see s 13(7) of the ADJR Act and cf Soldatow v Australia Council [1991] FCA 160 ; (1991) 28 FCR 1 at 2. Moreover, it may have been necessary to make any order for the provision of reasons subject to the provisions of s 13A of the ADJR Act: cf Ansett Transport Industries (Operations) Pty Ltd v Wraith [1983] FCA 179 ; (1983) 48 ALR 500 at 509-10. I certify that the preceding forty one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | whether "decision" to issue a search warrant pursuant to s 130 of the bankruptcy act 1966 (cth) is a reviewable decision pursuant to the administrative decisions (judicial review) act 1977 (cth) ("the adjr act") whether decision-maker obliged to provide a statement of reasons pursuant to s 13 of the adjr act decision to issue warrant may result in the institution of civil proceedings (para (f) of sch 2 of the adjr act) no obligation to provide reasons administrative law |
The debt, which was the subject of the creditors' petition, arose from an order of the Supreme Court of New South Wales that the respondent pay the applicants' costs of proceedings in that Court, and from a further order for costs made by Gyles J in this Court in relation to different proceedings. 2 The applicants claimed that the respondent committed an act of bankruptcy on 6 June 2005 when he failed to comply with a bankruptcy notice that was deemed to have been served on 30 March 2005. The creditors' petition was filed on 21 October 2005. On 1 June 2006 the Attorney-General's Department of New South Wales, on behalf of the Supreme Court of New South Wales, filed a notice of appearance in this proceeding as a supporting creditor. The solicitors for the Supreme Court of New South Wales forwarded to the Court a Certificate as to Determination of Costs of Cost Assessor, dated 30 December 2003 in the sum of $2,983.75. On 1 September 2006, Mr Adrian Probert also filed a notice of appearance in this proceeding as a supporting creditor. Mr Probert claims to be owed $30,000 by the respondent, pursuant to a loan made to the respondent in 2005. It has no technical or special meaning for the purposes of the Act. Nor do the words "ordinarily resident" have any such technical or special meaning. They are ordinary English words. Whether a debtor is ordinarily resident in Australia is a question of fact and degree. The word "ordinarily" connotes a comparison, a measure of degree. A person may have more than one residence, but he is not necessarily ordinarily resident in each of them. The question must be determined for the purposes of s 43 of the Act at a particular time. One must ask the question whether at that time the person was ordinarily resident in Australia. The concept of "ordinary residence" for the purposes of the Act, in my opinion, connotes a place where in the ordinary course of a person's life he regularly or customarily lives. There must be some element of permanence, to be contrasted with a place where he stays only casually or intermittently. It is obviously not to be answered, in respect of any particular time, by asking where that person was then resident . Otherwise, the word, "ordinarily" would have no meaning. But even the unqualified concept of residence is not tied to the accidents of a day; for, as Viscount Sumner said in Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 245: "One thinks of a man's settled and usual place of abode as his residence. " At the same time his Lordship pointed out that "in many cases in ordinary speech one residence at a time is the underlying assumption and, though a man may be the occupier of two houses, he is thought of as only resident in the one he lives in at the time in question". In s 43 of the Bankruptcy Act , the phrase is not "resident in Australia" but "ordinarily resident in Australia", and it expresses an alternative to "personally present ... in Australia". In such a context it must convey the former of the meanings which I have quoted from Viscount Summer's speech rather than the latter. If a man's home is in Australia, a merely temporary absence will not prevent his being ''ordinarily resident in Australia". It is a question of fact and degree at what point a temporary absence might, if sufficiently prolonged, prevent its being proper to continue to regard him as ordinarily resident in Australia. He may regularly live in each. He cannot be physically present in both at the same time, but he may be resident (or ordinarily resident) in each at the same time. People may come and go from the place in which they are ordinarily resident in a large variety of circumstances and on various occasions. It is always a question of fact and degree. Plainly you cannot be physically present in more than one place at the same time. But the lifestyles of people vary greatly. Some people in the ordinary pursuit of their lives regularly or customarily live in more than one place, each of which has an element of permanence about it and is not merely a place of casual or intermittent resort. His Honour referred to tennis and golf professionals as examples of people who travel away from the place or places where they are ordinarily resident, in order to earn their incomes. Indeed, in Mathai , Graham J found that a tax consultant who had spent only two out of the preceding 20 or so years actually residing in Australian was, nonetheless, ordinarily resident here. 9 The extracts from Vassis and Taylor above both focus on the conduct and habits of the debtors in question however, in their respective judgments, both Burchett J and Lockhart J also referred to the debtors' statements or beliefs regarding their residency. In Taylor Lockhart J placed significant reliance on outgoing and incoming passenger cards, on which the debtor had recorded that he was an Australian resident, either leaving Australia temporarily or returning from a temporary absence. Although his Honour stated (at 200) that '[o]f course, statements by persons on migration forms are not definitive of their truth', in the context of the rest of the evidence his Honour found the passenger cards persuasive. In Vassis , Burchett J also referred to a departing passenger card in which the debtor indicated that he was an Australian resident, and to the debtor's evidence that he intended to come back to Australia to live permanently after his trip to Greece. Burchett J found that the debtor was ordinarily resident in Australia throughout the two year period that he spent living in Greece. The language used in a number of the cases focuses upon whether the person habitually and normally resides in the jurisdiction, and does so for a settled purpose. He had left Australia with his family, with the intention of spending a substantial period of time - as much as five years - overseas. He was not engaged in employment which by its very nature created a link between himself and Australia notwithstanding long physical absence - such as employment by the Australian Government or an Australian company. He had, for the time being at least, severed his ties with Australia and made arrangements for the winding down (if not winding up) of the company's business affairs. The applicants accept that they bear the onus of establishing that, as at 6 June 2005, the respondent was ordinarily resident in Australia within the meaning of s 43(1)(b)(i) of Bankruptcy Act . From 1998 to 2003 the respondent lived with his mother, Mrs Ailsa Lee, at Ethersey House, Sutton Forest in New South Wales. Ethersey House was purchased by Cape Vale Pty Limited, a company owned by the respondent's mother and Mr Rudi Fabian in June 1998. It was apparently sold in April 2006. In April 2004 the respondent left Australia for Scotland. The respondent purchased the lease of Dunfallandy House in Scotland in about 2004. He is no longer in possession of Dunfallandy House, apparently because the landlord claims that he has failed to pay the rent. Despite that, he persists in describing it as his 'principal residence' . The respondent presently lives in London with his partner who, he says, supports him. Mrs Lee gave evidence that he had returned on several occasions to visit her; that each visit had lasted only 3 or 4 days; and that the respondent did not have any clothes or personal belongings left in Australia. She further deposed that the respondent did not have a rental agreement with her or Cape Vale Pty Limited. 14 The respondent goes by the name of Andrew Charles Robert Edward Albert Battenberg, Lord Battenberg of Ellis Leitrim. His given name appears to have been Andrew Charles Robert Lee. It is not clear how he came by his present title however some newspaper articles before the Court indicated that he had bought a title from an Irish Lord. The respondent did not deny that he had purchased his title but also said in cross-examination that he had a hereditary right to call himself, Lord Battenberg, Lord Leitrim and Earl of Leitrim and that this had been confirmed by the Lord Lyon's Court in Scotland. He did not provide any evidence to support this statement. In any event he stated that he first commenced using this name/title in about 2000; this statement is confirmed by an Australian passport issued to the applicant in January 2001 in the name of Battenberg. The respondent's change of name (however he came by it) is in one sense a harmless vanity but the applicants submit, that in another sense it is relevant to the respondent's credibility; it shows that he lives in a fantasy world and that his evidence is tailored to bolster that fantasy and cannot be believed. 15 The applicants relied on two key documents and various surrounding circumstances to support their claim that the respondent was ordinarily resident in Australia in June 2005. The first of these two key documents is a letter dated 3 March 2005 from the respondent's solicitor, Mr Salvatore Russo, to the Scottish solicitors, Russel & Aitken. The applicants pointed to the present tense of the statement that the respondent 'lives' in Sutton Forest and that he has lived there continuously for a period of 'at last five (5) years'. They submit that the latter sentence clearly contains a typographical error and was either intended to read "at least five years" or "the last five years" and, on either construction, supports their claim. The applicants also highlighted the past continuing tense of the sentence which ends "his domicile has always been Australia" in support of this submission. 18 Both Mr Russo and the respondent gave evidence that, at the time, they knew or intended that the letter would be used to challenge the jurisdiction of the Scottish Employment Tribunal. In cross-examination, however, the respondent contended that the letter was not prepared in accordance with his instructions. Both Mr Russo and the respondent were closely cross-examined about their evidence concerning this letter. According to Mr Russo, the respondent telephoned him whilst he was driving to the city and asked Mr Russo to draft a letter saying that the respondent lived in Sutton Forest in 2003 when he negotiated Mr Chidgzey's contract. Mr Russo, while still driving, immediately dictated a letter to his secretary using his mobile phone. Mr Russo said that he did not review the letter and did not see it before it was sent. 20 Mr Russo did not keep a file note of the respondent's instructions. His recollection was that the letter he dictated was relevantly different from that ultimately sent to Russell & Aitken. Mr Russo said that he recalled dictating the words "from 1998 to 2003..." prior to the sentence beginning "Lord Andrew lives at Sutton Forest" and that, consistent with these additional words, the sentence was expressed in the past tense. 21 In cross-examination, Mr Russo said that he often dictated letters by telephone to his secretaries and that it was his practice that such letters would be signed by a secretary on his behalf and sent out without review by him unless he gave instructions to the contrary in his dictation. Given that Mr Russo admitted that the first drafts prepared by his secretaries were frequently different from what he dictated, his statement that letters are customarily sent out without review is an admission of a significant degree of carelessness. 22 Given his evidence that the letter was intended to indicate the respondent's address as at 2003, Mr Russo's inability to provide a satisfactory explanation as to why that year was not expressly referred to in the letter is puzzling to say the least. Similarly, Mr Russo could provide no explanation for the use of present tense in the letter, save that it had been dictated over the telephone and never corrected. Ultimately, he attributed the difference between the letter he recalled dictating, and the letter that was ultimately sent, to an error or series of errors, on the part of his secretary. Mr Russo said that he had not asked his secretary about the letter because at the time of the hearing she had been in Tasmania for 'about a week'. He gave no indication that he had tried to contact her or of any other attempt to resolve the question of the alleged errors in the letter. In all, Mr Russo exhibited a cavalier attitude to the issue and to establishing the truth of what had occurred. Mr Russo also admitted that he did not take any steps to contact either Russel & Aitken or the Scottish Employment Tribunal to inform them that the letter he had sent was inaccurate. 23 The applicants submitted that in truth this letter accurately represented the respondent's instructions to Mr Russo; that this explained why the letter was referred to by the respondent in his notice of appeal to the Scottish Employment Tribunal; and why Mr Russo took no steps to correct its alleged inaccuracies. As counsel for the applicants pointed out to Mr Russo during cross-examination, in the absence of a file note the letter is the only contemporaneous record of the respondent's instructions in March 2005. The respondent's notice of appeal that referred to this letter was filed in the Scottish Employment Appeal Tribunal on 7 June 2005, the day after the act of bankruptcy. In the applicants' submission, by referring to the letter on this date, the respondent effectively admitted or adopted its contents. 24 I find Mr Russo's explanation of this letter unconvincing. It is inconceivable that a solicitor who customarily exhibited the degree of carelessness Mr Russo professed would continue to have a viable practice. Moreover, even if he really is as careless as he claims and his secretary did not accurately transcribe his dictation I fail to see how the words he says he dictated would, even if misunderstood, have led to the particular 'errors' claimed. I find that, apart from the obvious typographical error in the third paragraph, the letter is in accordance with the instructions given to Mr Russo and that it says what Mr Russo intended it to say. The notice of appeal was signed by the respondent and dated 3 May 2005. Two stamps on the front of the document apparently confirm that the document was received by and subsequently filed in the Tribunal on 4 May 2005 and 7 June 2005. According to the respondent, he had retained solicitors to act for him at first instance in the Employment Tribunal, but had decided to represent himself on appeal. The respondent agreed that he was the author of the notice of appeal and that it was signed by him after only a cursory read. He said that it was typed by an unnamed assistant who was responsible for all of the errors in it. 26 The applicants submitted that there are several statements in the notice of appeal that support their claim that the respondent was ordinarily resident in Australia at that time. 2. the respondent "is not domiciled in Scotland. "the Tribunal erred in determining that it had jurisdiction to hear the matter the Appellant having Australian domicile at the time. (The letter of 3 March 2005 from Messrs Russo, the Appellant's Australian solicitors, to Russel & Aitken refers). " The letter referred to is Mr Russo's letter of 3 March 2005, discussed above. 4. the respondent's "London and Australian contact details had been supplied to the Tribunal". 28 He claimed that his instructions to the unidentified person who typed the document were that his address was Dunfallandy House, Scotland and that his Australian address should be given as a previous address. He claimed that his 'original draft' did in fact give his address as Dunfallandy House, Scotland and that it was the usual practice in the Tribunal to include previous addresses. No evidence was given to support the respondent's assertions as to the Tribunal's practice. To the contrary the applicants tendered several documents that had been filed in the Scottish Employment Tribunal, including the respondent's notice of appearance, in which previous addresses were not provided . The respondent could not account for his use of the present tense, save to say that he was not a solicitor and 'probably didn't put it in legal terms'. 30 The respondent initially claimed that he had referred to Mr Russo's letter of 3 March 2005 in the notice of appeal without having read it but that once he had read the letter, he chose not to submit it. During his cross-examination he said "It did not form part of the proceedings because it was wrong" and "when I did finally read the letter before submitting all my bundle of documents, I chose not to submit it because it was incorrect.". However, later in the cross-examination, the respondent revealed that he "was advised after the preparation of this document [the notice of appeal], that the jurisdiction issue was not going to be dealt with". The respondent's later evidence is inconsistent with his statement that he had decided not to rely upon the letter in the proceedings because he knew it to be inaccurate. 31 I find the respondent's explanations of the alleged errors in the notice of appeal unconvincing. There was no evidence as to who typed the document and how the particular errors came about. I do not accept that the respondent gave only cursory attention to a document so crucial to his interests, as he saw them at the time. Even if I did accept that he gave the document this level of inattention I do not accept that the instructions he says he gave for the typing of the notice of appeal, even if misunderstood, would have resulted in the particular errors that are now alleged. Given the dispute that the respondent was having with Mr Chidgzey I find it more likely than not that the notice of appeal says exactly what, at the time, he intended it to say. In September 2003 the respondent obtained a United Kingdom/European Union passport which was declared lost and replaced in September 2004. Records produced by the then Department of Immigration and Multicultural and Indigenous Affairs show that on 5 February 2005 the respondent entered Australia and left again on 11 February. Both leaving and entering Australia he travelled on his Australian passport which hardly seems consistent with his professed desire to leave Australia and make Scotland his permanent home. I've renounced citizenship, my obligation is to Great Britain ... and my loyalties are to Britain, not to Australia. ... I have no loyalty as far as anything [is] concerned to Australia. This was crossed out and "Australian" was written, although the respondent claimed that he did not make this change. In his affidavit evidence the respondent says that he has surrendered his passport to the Australian Government but does not say when he did this or provide any evidence of the alleged surrender. In any event the records show that he was using it as recently as 2005 at a time when he also held a British passport. 34 Further documents produced by the Department of Immigration reveal that in May and December 2005 the respondent made two other short trips to Australia but on both of these occasions travelled on his British passport. The movement records confirm that the respondent was not in Australia on the date of the act of bankruptcy. 35 The applicants also referred to a bundle of invoices sent by Mr Russo to the respondent, with dates ranging from 29 August 2004 to 18 February 2006. Each of these invoices was addressed to "Lord Andrew Battenberg P.O. Box 994 MOSS VALE NSW 2577". The respondent gave evidence that until a date in 2004, these invoices had been paid by his mother, Ailsa Lee, who accessed the post office box herself. Once his mother stopped paying the invoices, Mr Russo continued to send them to the post office box and Mrs Lee or Mr Fabian collected the invoices, bundled them up with any other mail addressed to the respondent and posted them to his address in London or Scotland. The respondent indicated that Mr Russo also faxed these invoices directly to him, either to his address in Scotland or to his partner's address in London. Mrs Lee gave evidence that the respondent received little mail other than the invoices and various pieces of junk mail. 36 The applicants also relied on documents filed in legal proceedings conducted in the Supreme Court of New South Wales. In an affidavit sworn on 23 March 2004, and filed on 22 April 2004 in those proceedings, the respondent gave his address as Ethersey House, Illawarra Highway, Moss Vale. In the NSW Supreme Court proceedings the respondent sought, amongst other things, an order that his membership of the Union Club (a club located in Sydney) be renewed; he also claimed damages for defamation. Counsel for the applicants cited these proceedings as evidence that the respondent was concerned to retain ties with Australia and was interested in protecting his reputation in Australia. The respondent's evidence was that he felt he was entitled to Union Club membership and that international damage was done to his reputation for which he was entitled to compensation. The respondent said that he had no interest in his reputation in Australia; he said, without proffering any evidence, that he has renounced his Australian citizenship and that his loyalty is now to Britain not Australia (see above at [32]). He conceded however that one of the reasons he commenced litigation against the Union Club was to regain membership of the club. The respondent also conceded that Mr Russo had paid the amount of $7320.59 to satisfy a costs order against him and to maintain his membership of the Union Club. He said that it was a loan and that he would repay it from the proceeds of litigation in Scotland. It is not clear when Mr Russo paid this amount but presumably it was after 14 April 2005 which is the date of a letter from the Union Club seeking payment. 37 The applicants also pointed to the circumstances surrounding the respondent's alleged residence in Scotland. Specifically, the respondent gave evidence that he had not lived in Dunfallandy House at all during 2006 and indeed for the preceding 18 months which included the date of the act of bankruptcy. The applicants tendered a document signed by the respondent which purported to transfer, in July 2004, "all furnishings and household contents" of Dunfallandy House to Mr and Mrs Bardsley, his housekeepers, in lieu of money owed for their wages. The respondent did not dispute that he had signed this document, but claimed that the circumstances in which it was signed were the subject of ongoing proceedings in a Scottish Court and that in any event the furnishings ought to have been returned to him on payment of the money owing. The applicants also tendered a letter from Russo and Partners to McCash & Hunter, Solicitors (the solicitors for the Bardsleys) dated 12 May 2005 which stated that various items in Dunfallandy House were owned by Mrs Ailsa Lee and Cape Vale Pty Limited. As stated at [2] above, Mr Probert has claimed as a supporting creditor in this application in respect of a loan of $30,000. His explanations about evidence that might be counter to his interests were not credible. He was evasive in cross-examination and not at all frank with the Court. I regard him as a completely unreliable witness and am not prepared to accept his evidence without independent corroboration. 40 I also have deep reservations about the evidence of, and concerning, Mr Russo. Some aspects of Mr Russo's evidence, for instance in relation to the letter of 3 March 2005, I frankly disbelieve; see [24] above. In other respects he has been less than candid with the Court. If the evidence I have heard is to be believed, Mr Russo has been acting for the respondent for a number of years without payment. More than that he has also paid, from his own pocket, some of the respondent's debts, for instance the costs awarded to the Union Club; see [36] above. In the absence of any explanation why Mr Russo might choose to act in this way I am inclined to think that the relationship between him and the respondent is more complex than either has admitted. While I understand that issues of confidentiality between solicitor and client may have led to a degree of reticence on Mr Russo's part, in my view his lack of candour has gone beyond this. 41 As previously discussed (see [24] above) I find that the letter of 3 March 2005 was in accordance with the instructions given by the respondent and that it said what Mr Russo intended it to say. There is nothing before me to suggest that either the respondent in his instructions or Mr Russo in authoring the letter intended to say anything other than the truth as they saw it at the time. Accordingly I accept the letter as evidence of the respondent's own belief about his place of residence. I am supported in this finding by my findings in relation to the notice of appeal (see [31] above) which I also find says what the respondent intended it to say and which, by reference, incorporates the letter of 3 March. It indicates that when it was signed and when it was filed the respondent believed that he was resident in Australia. 42 Mrs Lee's evidence was quite limited and I have no reason not to accept that she told the truth as she understood it. She was quite candid about her lack of knowledge (and indeed curiosity) about her son's affairs and it is quite possible that, particularly in financial matters, she does not have the full picture. Mrs Lee said that Mr Fabian managed financial matters and matters concerning Cape Vale Pty Limited and agreed that Mr Fabian had accompanied her to Court and could have given evidence if required. 43 I accept that the respondent was registered as a British citizen on 3 September 2003, that since 2003 he has held both British and Australian passports and that it is more likely than not that both are still valid. I also accept that as at 1 December 2003 the respondent's name was on the Register of Electors as indicated in the letter from the Electoral Registration Officer, Angus and Perth & Kinross. I accept that since early 2004 the respondent spent most of his time in Britain, initially in Scotland and for the last eighteen months at least, mainly in London. 44 I accept that since he moved to Britain the respondent has made a number of short trips to Australia and, while in Australia, stayed with Mrs Lee at Ethersey House. He used his Australian passport to enter Australia in February 2005 and his British passport for visits later that same year. I accept that on the immigration cards he filled in when entering Australia in 2005, the respondent described himself as resident in Britain and as temporarily visiting Australia. I do not accept the respondent's uncorroborated evidence that he surrendered his Australian passport, renounced his Australian citizenship or had his name removed from the Australian electoral roll. 45 I accept that five crates containing personal effects were sent to the respondent in Scotland but I am unable to determine whether these items belonged to the respondent or to Mrs Lee. In any event the transfer of all the furnishing and contents of Dunfallandy House to Mr and Mrs Bardsley (see [37] above) suggests that the respondent no longer has any personal possessions in that house. I accept that the respondent has not lived at Dunfallandy House for more than eighteen months because of a dispute with his landlord. Despite his insistence that he still regards that property as his home, I cannot see how he can be said to reside there. I am not in a position to make any finding on whether the respondent has any assets in this country. 46 It is clear from the evidence that, at least until 2004, the respondent was ordinarily resident in Australia. From late 2003 the respondent began the process of moving from Australia and taking up residence in Britain. It may be the case that by now the respondent has done so to the exclusion of any form of residence in Australia however, it is not unexpected that such a transition might take some time. In my view this is the most likely explanation of what happened here and that for a time it could truly be said of the respondent that he was ordinarily resident both in Australia and in Britain. 47 The evidence of the respondent himself, derived from the letter of 3 March 2005 and the notice of appeal, shows that in the first half of 2005 the respondent viewed himself as living in Australia. This is an important factor in assessing his ordinary residency. The notice of appeal was signed on 3 May 2005 and apparently filed on 4 May and 7 June. The date of the act of bankruptcy was 6 June 2005. I accept that the respondent was not in Australia on that date. The applicants' case, however, was not that the respondent still resided in Australia at that date but rather that he had retained sufficient ties with Australia to be considered ordinarily resident. The letter and the notice of appeal are strong evidence that, as at 6 June 2005, the respondent retained those ties. 48 Other aspects of the evidence support this conclusion although they would not be sufficient in themselves. The respondent does not appear to have found a settled home in Britain by the relevant date. He had lived for a short period in Dunfallandy House and, when dispossessed from that property took up residence in London with his partner who now supports him. On my calculation that occurred in about March 2005. It may be that by now he could be said to have established sole residence in Britain but in June 2005 it would not seem to be the case. 49 The fact that Mr Russo's accounts were sent to an address in Australia is relevant as is the fact that in February 2005 he was still travelling on his Australian passport. His ties with Australia are also indicated by the importance he apparently attached to his membership of the Union Club, the defamation proceedings he is prosecuting in the New South Wales Supreme Court and the financial dealing he still has here, for instance his borrowings from Mr Probert; see [38] above. 50 Taken collectively, the evidence adduced by the applicants does not demonstrate that when he first moved to Britain he immediately ceased his ordinary residence in Australia. In my view the transition from being ordinarily resident in Australia to being ordinarily resident in Britain, if it has occurred, took some time and that it was not completed on 6 June 2005. Until it was complete the respondent may well have been ordinarily resident in both countries. In any event, I find that the applicants have discharged the burden of proof imposed on them and that, as at 6 June 2005, the respondent was ordinarily resident in Australia. It is not necessary for me to decide if he was, at the same time, also ordinarily resident in Britain. 51 I accept that a bankruptcy notice was served or deemed to be served on the respondent on 30 March 2005, that the time for compliance with this notice, originally 21 days after that date, was extended on 20 April 2005, 3 May 2005 and then again on 23 May 2005 to 6 June 2005. I accept that the respondent did not comply with the notice. I am satisfied that the respondent committed the act of bankruptcy alleged in the creditors' petition and of the other matters stated in the creditors' petition, including that the respondent was ordinarily resident in Australia at the time the act of bankruptcy was committed. Accordingly, I order that the estate of the respondent be sequestrated and the applicants' costs be paid in accordance with the Bankruptcy Act . I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. | creditors' petition whether respondent was ordinarily resident in australia at the time of the act of bankruptcy person may be ordinarily resident in two places transition from being ordinarily resident in australia to being ordinarily resident in britain not immediate sequestration order made. bankruptcy |
The interlocutory proceedings for determination of the viability of the respondents' claim to public interest immunity advanced pursuant to the Attorney General's certificate bearing date 10 April 2005 be referred to the Full Court for hearing and determination pursuant to s 25(6) of the Federal Court of Australia Act 1976 . 2. Costs of the present proceedings to date be reserved. 3. The parties provide draft directions for consideration by the primary judge at least in the first instance as to the scope of the reference and as to the documentary material to be placed before the Full Court, and for the provision of submissions to the Full Court. That decision was made by Deputy President G D Walker, and his comprehensive reasons for decision extended over 56 pages. Both parties were represented by counsel on the present application. His wife and children presently reside in Hong Kong. On 22 August 1999, he entered Australia pursuant to a visitor's visa. Shortly after his arrival, he applied for and was granted a subclass 560 student visa, valid until 5 January 2001. His proposed course of study in Australia was to commence in the year 2000, and was to comprise a three year business management course. On 15 December 2000, he applied for renewal of that visa for the purpose of continuing his course of study during 2001. Virtually from the outset he retained his present solicitor for the purpose of lodging and pursuing his visa renewal application. 4 A decision on the applicant's visa application was made by the Minister adversely to the applicant on 22 January 2002. The applicant has claimed that the first time he became aware of that refusal was on the occasion of his arrest on 7 February 2002 by an officer of the Department of Immigration at his place of residence. Since then he has been continuously held in detention, all applications made for his release having been unsuccessful. 5 The applicant's original visa refusal decision was made by the Minister for Immigration and Multicultural and Indigenous Affairs pursuant to s 501(3) of the Migration Act 1958 (Cth). Subsequently on 13 February 2002 and on 4 March 2002, representations were made on his behalf by his solicitor to the Minister pursuant to s 503C of that legislation. On 28 May 2002, the Minister decided not to revoke the earlier refusal decision. Documentary information from authorities of the People's Republic of China concerning the applicant were apparently placed before the Minister at the times of her relevant decision-making. None of those documents are said by the applicant to have been provided to him, whether by way of photostat copies or otherwise for some considerable time, until on 8 April 2002 there occurred the partial release of documents, purportedly pursuant to the Freedom of Information Act 1982 (Cth). Exemption from disclosure and production of the remainder has been the subject of litigious claim on the respondents' part. I observe that in the reasons for decision of the AAT, it is said (at [19]) that 'a large volume of documents' was released to the applicant on 29 November 2004. 6 During the hearing before the AAT on 6 December 2004, in the course of cross examination of a witness, being Mr Craig Riviere, counsel for the first respondent was granted an adjournment to enable representations to be made to the Attorney General. Upon further hearing on 19 April 2005, a document described by the applicant's solicitor as consisting of 'a number of pages' was admitted into evidence, whereof the first page alone was said to have been provided to the applicant. That document comprised a certificate dated 10 April 2005 issued purportedly pursuant to ss 36 and 36A of the AAT Act. Privilege was claimed by officers of either or both of the respondents in relation to the remainder. The certificate, which is currently in contention, was to the effect that the disclosure of information specified in a confidential schedule to the certificate would be contrary to the public interest, in that it would prejudice the international relations of Australia within s 36(1)(a) of the AAT Act. I was also referred in that regard to s 36A(1) and (2) of the AAT Act. Upon the resumption of cross-examination of Mr Riviere, the Attorney-General objected to a number of questions which counsel for the applicant addressed to that officer, upon the footing that the abovementioned certificate excused the Attorney-General's witness from answering those and similar questions. The Attorney-General's objection was further upheld by the AAT, upon the basis of the certificate in relation to a large number of questions put in cross-examination to another witness called on behalf of the Attorney-General, being Mr Peter Coyne. It became readily apparent, in the course of oral submissions in particular, that sensitive issues may well be involved in relation to the controversy as to access to the documents or categories of documents sought by the applicant, being issues concerning at least Australia's international relationship with the People's Republic of China. For that reason it became further readily apparent that the outcome of any first instance proceedings in favour of either party would inevitably be challenged on appeal, having regard to the implications to both parties of production of what the respondents contend to be sensitive governmental documentation involving Australia's relationships with China. Moreover I was informed by counsel for the Minister that the s 36A notion of ' public interest' raises or involves 'a novel question without judicial precedent'. 9 In the result, I adjourned the proceedings in order to determine whether the issues of statutory construction arising should be resolved in the first instance by a Full Court, if at all possible in the course of the next Full Court sittings in 2006. In light of the debate that took place, I am of the opinion that such a course would be both appropriate and expedient. If that course should be affirmed in principle, it would be necessary for the parties to submit to the court the precise text of the questions to be raised, and for any further procedural matters to be resolved by me, at least in the first place. 10 In the circumstances, I grant liberty to either party to reapply on 3 clear days notice. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. | issue arising at first instance before aat as to access to government documents claims of privilege from production on grounds related to public interest sensitivity recommendation for reference to full court for authoritative determination administrative law |
The appellant applied for constitutional writs under s 39B of the Judiciary Act 1903 (Cth) (see also s 475A of the Migration Act 1958 (Cth) ("the Act ")) in relation to a decision of the Refugee Review Tribunal ("the Tribunal"). The Magistrate made an order dismissing the application. The appellant appeals against that order. He arrived in Australia on 12 December 2004. On 24 January 2005 he made an application for a protection (Class XA) visa ("protection visa"). On 7 February 2005, a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs ("the Minister") refused the appellant's application. On 9 March 2005 the appellant applied to the Tribunal for a review of that decision. The Tribunal affirmed the decision of the delegate not to grant a protection visa to the appellant. 3 The appellant's claims in his application for a protection visa can be summarised as follows. He was born in Fujian, China. He was a member of Fa Lun Dafa and he became a member in 1997. The parties were in agreement that Fa Lun Dafa is another name for Falun Gong. The appellant learnt the practices of Fa Lun Dafa from reading material and from other members of his group. It improved his health. In October 1997 he was selected as a tutor at the Shuangxi Chun tutoring group. In July 1999 the authorities in China started to "crack down" on Fa Lun Dafa. In October 2001, the appellant was arrested for political reasons, "such as 'blockage of public affairs' and 'promoting evil religion, etc'". He was released by reason of the fact that his offence was a first offence. The appellant's name was put on a control list and he was prohibited from organising Fa Lun Dafa tutoring as usual. His home was searched and his tutoring materials were confiscated by the authorities. After that happened he had to organise his tutoring activities secretly. The appellant was detained in August 2003 and mistreated whilst in detention. The mistreatment included physical abuse. He was released from detention on 31 August 2003, but after his release he was watched by the authorities. The appellant spent a large sum of money to get a business visa to travel to Australia and he joined Fa Lun Dafa in Australia as soon as he arrived in this country. 4 On 9 March 2005 the Tribunal wrote to the appellant advising him that it had received his application for review on that day. The Tribunal advised the appellant that it had asked the Department of Immigration and Multicultural and Indigenous Affairs ("the Department") to send it the Department's file so that the Tribunal could review the appellant's application for a protection visa. If we can consider it, a member of the Tribunal will look at the information you and DIMIA have given us and information about your country. He was invited to a hearing of the Tribunal to give oral evidence and present arguments in support of his claims. He was advised that if he wished to attend a hearing, then such hearing would take place on Friday 20 May 2005 at 1.00 pm. 6 The appellant did not attend the proposed hearing on 20 May 2005. 7 On that day, the Tribunal wrote to the appellant. At the Tribunal's request DIMIA has provided to it a copy of the delegate's decision refusing your application for protection but has informed the Tribunal that it has lost your file. The Tribunal therefore has no information before it about your claims other than information recorded in the delegate's decision record. I invite you to provide to the Tribunal, on or before 16 June 2005, a copy of your application for protection visa, a statement of your claims and any other documents or information in support of your claims that you wish the Tribunal to consider. 9 On 14 July 2005 the Tribunal handed down its decision. It decided to affirm the decision not to grant a protection visa to the appellant. The Tribunal said that on the basis of the information before it, it could not be satisfied that the appellant suffered persecution in China and fled that country for that reason. Nor could it be satisfied that the appellant could or would not return to China because he fears persecution there due to his Falun Gong activities. The Tribunal said that it could not be satisfied about these matters because the appellant's claims were mere assertions and there was a lack of detail about his claims. He referred to a note on the Tribunal's file that made it clear that approximately 12 days before its letter dated 27 April 2005, the Tribunal had been advised that the Department's file could not be located. The Magistrate said that the Tribunal had before it the record of the delegate's decision. 13 The Department's file was located between the date of the decision of the Tribunal and the date of the decision of the Magistrate. The Magistrate said that he was satisfied that the essence of a statement of the appellant which was contained in the Department's file was fairly reproduced within the delegate's decision. The Magistrate noted the reasons of the Tribunal and said that the ground for the Tribunal's decision was a lack of satisfaction based on the appellant's failure to attend the hearing and provide the Tribunal with the type of details it believed was necessary for it to come to the required state of satisfaction as referred to in s 65 of the Act . 14 The Magistrate rejected the grounds advanced by the appellant in support of his application. In view of the issues on the appeal, it is unnecessary to mention those grounds. The Magistrate considered another possible claim by the appellant which, in fairness to the appellant who was unrepresented, had been raised by the Minister. It was that the fact that the Secretary had not provided the file of the Department to the Tribunal was a breach of s 418(3) of the Act . 15 The Magistrate said that the obligation in s 418(3) was on the Secretary not the Tribunal and that, without more, a breach of s 418(3) by the Secretary did not give rise to jurisdictional error on the part of the Tribunal. The Magistrate considered whether the Tribunal provided the appellant with procedural fairness and held that it had because it notified him by letter that the documents had not been sent to it and offered him an opportunity to provide those documents to the Tribunal. The Magistrate said that he inferred from the Tribunal's letter dated 20 May 2005 that if the appellant had asked again for a hearing "he would in all probability have been granted one". Instead, the appellant chose to remain "mute". The Magistrate held that the Tribunal did not fall into jurisdictional error by considering the appellant's claims in the manner in which it did and in the absence of the documents. He said that "the claims that it considered are now borne out to have been the same claims as were considered by the delegate". DIMA failed to carry out its duty. My file was lost by DIMA (indicated at Page 62 at Court book). 2. The RRT failed to carry out its duty due to no information before the Tribunal. The Tribunal's decision was based on unwarranted assumptions. The appellant made no submissions in support of the complaint in the third ground of appeal and, despite a question from me, did not identify the "unwarranted assumptions" referred to in this ground. In those circumstances, the issues on the appeal all relate, in one way or another, to the fact that the Department's file was not available to the Tribunal at the time at which it made its decision. 18 Although there will be some repetition, it is convenient at this point to identify clearly the facts relevant to this issue. 1.3 Letters from the Department to the appellant. 1.4 Protection Visa Decision Record of nine pages and prepared, I assume, by the delegate ("the record of decision"). I will need to return to this matter. 2. The appellant's application for review was lodged with the Tribunal on 9 March 2005. On or around that date, the Tribunal asked the Department for its file. 3. On 9 March 2005 the Tribunal wrote to the appellant advising him that it had written to the Department asking it for its file so that it could review his application for a protection visa. 4. On 15 April 2005 the Tribunal was told by the Department that its file could not be located. The Tribunal did have a copy of the record of decision. 5. On 27 April 2005 the Tribunal wrote to the appellant advising him that it could not make a decision in his favour on the information before it. He was invited to a hearing proposed for 20 May 2005 at 1.00 pm. He was told that if he did not attend the hearing the Tribunal might make a decision without further notice to him. He was not told that the Tribunal did not have a copy of the Department's file. 6. The appellant did not attend the proposed hearing on 20 May 2005. 7. On 20 May 2005 the Tribunal wrote to the appellant in the terms set out in [7] above. 8. The appellant did not provide any information to the Tribunal or respond to the Tribunal's letter. 9. The Tribunal handed down its decision on 14 July 2005. It said in its reasons that the appellant had not appeared before it and had not responded to correspondence sent to him and that in the circumstances and "pursuant to s 426A of the Act the Tribunal has decided to make its decision on the review without taking any further action to enable the applicant to appear before it". The Tribunal's reasons contain quite a clear and detailed summary of the appellant's claim insofar as it is set out in the record of decision. 20 I have already referred to the argument addressed by the Magistrate to the effect that there was a breach of s 418(3) which infected the Tribunal's decision with jurisdictional error. In my opinion, the Magistrate was correct in rejecting this argument. (3) The Secretary must, as soon as is practicable after being notified of the application, 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. The Magistrate made no finding as to whether there had been a breach of the subsection. In Part B of the delegate's decision, the Department's file is referred to as evidence used in making the decision and I think that it is fair to assume that it would have been relevant to the review of the decision within the terms of subsection (3) of s 418. The circumstances under which the file was "lost" and then "found" appear not to have been the subject of evidence, and certainly the Magistrate did not make findings in relation to the issue. The Magistrate proceeded on the basis that even if the Secretary was in breach of s 418(3) that did not vitiate the Tribunal's decision and he referred to WAGP v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 103 at [48] - [67] (" WAGP "). 23 In WAGP , the Full Court of this Court discussed the decision of the High Court in Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 190 ALR 601 (" Muin "). It is not necessary for me to repeat the Court's analysis of that decision. At the time Muin was decided, the provisions of the Act (other than s 418) were in quite different terms from the provisions of the Act as they stand today. It is sufficient for me to say that a mere breach of s 418(3) of the Act by the Secretary will not vitiate the Tribunal's decision. That is not to say that a breach of the section may not in some other way result in the Tribunal committing jurisdictional error. In this case, the Tribunal gave the appellant the opportunity to remedy any deficiency (assuming for the moment that there was a deficiency) in the information before it, and it was within the appellant's power to do that. He did not take that opportunity. In any event, the important document in the Department's file which was not before the Tribunal was the appellant's statement, and the essence of the information in that statement was fairly reproduced in the record of decision which was before the Tribunal. That was the finding of the Magistrate and I see no reason to interfere with that finding. In the circumstances of this case, if there was a breach of s 418(3) of the Act , it did not lead to jurisdictional error on the part of the Tribunal. 24 The Magistrate also considered whether the appellant had been denied procedural fairness. He held that he had not been denied procedural fairness because he had been given the opportunity to provide to the Tribunal the documents the Department had not provided to the Tribunal and any other information in support of his claim. I see no reason to interfere with that conclusion. 25 By letter dated 27 April 2005, the Tribunal invited the appellant to a hearing. He did not attend. The Tribunal was advised by the Department that the Department had lost its file and, on 20 May 2005, it wrote to the appellant inviting him to provide a copy of his application for a protection visa and any documents or information in support of his application. He did not respond to the letter. It is hard to see what more the Tribunal could have done to afford the appellant an opportunity to present his case. The Magistrate found that, in essence, the appellant's claims in his statement (which was not before the Tribunal) were fairly reproduced in the record of decision (which was before the Tribunal). This is not a case like that which was before the High Court in Applicant NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 62 ; (2004) 221 CLR 1 (" Applicant NAFF "). This is not a case in which the Tribunal's letter dated 20 May 2005 indicated that the Tribunal member considered that the review was not complete until certain steps were carried out and those steps were not carried out (see Applicant NAFF at [31]-[33]). The Tribunal's letter dated 20 May 2005 did not refer to a further invitation to attend a hearing, but simply invited the appellant to provide documents or information. The appellant chose not to do that. 26 I raised with the parties one further matter. I raised with the parties whether, in the circumstances, the Tribunal was entitled to proceed to make a decision on the review without, after 20 May 2005, extending another invitation to the appellant to attend a hearing. In these circumstances, and pursuant to s 426A of the Act , the Tribunal has decided to make its decision on the review without taking any further action to enable the applicant to appear before it. Under s 426A of the Act , the Tribunal could proceed to make a decision on the review, or it could take further action to allow or enable the appellant to appear before it. By writing the letter dated 20 May 2005, the Tribunal did not take further action to allow or enable the appellant to appear before it but, rather, gave the appellant the opportunity to provide documents or information. The appellant did not take up that opportunity, and the power to proceed to make a decision on the review on the basis that the appellant did not appear at a proposed hearing on 20 May 2005 remained available to the Tribunal. Alternatively, the letter from the Tribunal dated 20 May 2005 was a request by the Tribunal for additional information under s 424(2) of the Act and, on the appellant's failure to provide it, the Tribunal was entitled to proceed in the manner in which it did (s 426C and s 425(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 Besanko. | appeal from orders of federal magistrate dismissing application for constitutional writs appellant applied to federal magistrates court for review of decision of refugee review tribunal affirming decision of minister's delegate refusing protection visa where tribunal made decision without access to departmental file where tribunal advised appellant that file was missing and invited appellant to provide information about claims where appellant did not provide further information whether breach of s 418(3) of the migration act 1958 (cth) led to jurisdictional error by tribunal whether appellant denied procedural fairness whether tribunal entitled pursuant to s 426a of migration act to proceed to make decision without further invitation to appellant to attend hearing. migration |
The application relates to a collusive understanding entered into between British Airways and its competitor Lufthansa Cargo Aktiengesellschaft (Lufthansa) in respect of an element in the price to be charged by them for the carriage of international air cargo between March 2002 and February 2006 (the relevant period). 2 British Airways and Lufthansa arrived at an understanding which had the purpose and likely effect of fixing fuel surcharges for their carriage of air cargo on certain international cargo routes including routes to and from Australia (the Fuel Surcharge Understanding). 3 The Commission and British Airways have put before the Court a "Statement of Agreed Facts and Admissions by [British Airways]", together with "Joint Submissions", in support of the imposition of a penalty of $5 million and the granting of particular injunctive relief. 4 The two documents entitled "Statement of Agreed Facts and Admissions by [British Airways]" and "Joint Submissions" were annexed to an affidavit. They should not have been. Apart from any other reason why they should not have been is that being part of an affidavit they could not be inspected without the leave of the Court or a Judge: see O 46 r 6(3)(a) of the Federal Court Rules . The rule applies even in respect of an affidavit that has been read in whole or in part on a hearing. Apparently the documents were annexed to the affidavit due to an oversight, and there was no opposition to my making an order on the hearing that leave was granted to any person to inspect the affidavit. 5 For the purpose of this proceeding only, British Airways has admitted that its conduct in arriving at and giving effect to the Fuel Surcharge Understanding constituted conduct in contravention of s 45 of the Act. 6 The parties acknowledge that it is for the Court to be satisfied that British Airways did contravene s 45 of the Act occurred and to determine the quantum of any pecuniary penalty and the nature of other relief that to be ordered. Carriers issue a document known as an air waybill (or bill of lading) for the carriage of air cargo. The air waybill contains the terms and conditions for the carriage of international air cargo including the price of carriage from origin to destination, and serves as the receipt for the shipper, indicating that the carrier has accepted the cargo and is obliged to carry it to its destination. Fuel surcharges, the subject of the contravening conduct were included on the air waybill. 3. Air cargo services are provided "one way" from origin to destination, either directly or using an indirect route via one or more midpoints. Most carriers provide air cargo services on a network-wide basis using their own route networks that offer regular services in different directions. Through interline and other arrangements with other carriers they also offer air cargo services to or from airports which their own aircraft do not serve directly. The networks of carriers extensively overlap such that there are various carriers operating to and from any international airport. 4. Airlines predominantly provide international air cargo services to freight forwarders although individual shippers also acquire their services. Freight forwarders generally organise the integrated transport of goods on behalf of a range of shippers. In doing so, they purchase air cargo services from the carriers. ... 5. The Commission considers, and British Airways does not dispute for the purposes of these proceedings, that the most appropriate market for analysing the conduct the subject of these proceedings is and has been at all material times a worldwide market for air cargo services, hereinafter referred to as the Air Cargo Market, and international air cargo carriers, including British Airways and Lufthansa, are, and at all material times have been, actual or potential competitors in the supply of international air cargo services in the Air Cargo Market. The respondent 6. As at 31 March 2007, British Airways had total assets of ₤11,384 million. During the year ended 31 March 2007, British Airways reported total revenues of ₤8,492 million and net profits before tax of ₤611 million. Its half year net profit before tax to 30 September 2007 was ₤593 million. 8. British Airways reported, for the fiscal year ending 31 March 2007 revenues from the carriage of air cargo of ₤618 million. 9. 10. Cargo fuel surcharges were implemented by British Airways and Lufthansa in countries and regions, including Australia, New Zealand, Thailand, United Arab Emirates, Japan, Europe and the United Kingdom, Hong Kong, South Africa, India, the Americas and Singapore. IATA Background 12. It is not asserted in this statement of agreed facts that British Airways gave effect to the IATA resolution 116ss detailed in the paragraphs below. The information in paragraphs 13 to 27 is provided by way of background, but not as material facts giving rise to British Airways' admitted contravention. 13. In the second half of 1996, the price of aviation fuel globally rose substantially. 14. On or about 25 October 1996, Lufthansa announced that with effect from 1 November 1996 it would levy across its entire route network what it termed a "fuel surcharge" of USD0.10, or the equivalent in local currency, per kilogram of air cargo carried (the 1996 surcharge). Lufthansa stated that the 1996 surcharge would be dropped when the price of fuel returned to the level of July 1996. 15. On or about 1 November 1996, Lufthansa commenced to levy the 1996 surcharge. 16. On or shortly after 1 November 1996, a number of other airlines, including British Airways, commenced to levy an equivalent fuel surcharge on international air cargo. At this time, British Airways referred to this surcharge as an "operational surcharge". British Airways levied the operational surcharge in an attempt to recover some of its increasing fuel costs but did not apply it at all times across all routes. 17. In 1997, the members of the International Air Transport Association (IATA) passed a resolution (Resolution 116ss) that IATA prepare and publish a fuel price index for its members, and providing for the application of fuel surcharges in accordance with a methodology linked to the index. IATA was at the time (and remains) the peak airline industry body of which major international airlines (including British Airways and Lufthansa) are members. 18. The IATA fuel price index measured movements in the price of aviation fuel against a base of the average of prices in 5 ports in June 1996 (index = 100). The methodology provided that when the index reached 130 for two consecutive weeks, airlines would apply the local currency equivalent of USD0.10 per kilogram of air cargo as a "fuel surcharge", and also that this surcharge would be removed when the index fell below 110 for two consecutive weeks. The methodology provided details for applying the surcharge such as the means of including the surcharge on air waybills and the freight forwarders' eligibility for commission. 19. The surcharge generated by the index did not have a direct relationship to the fuel costs of any of the particular airlines which applied it. Each airline flew different types of aircraft, purchased fuel in different places and many had hedging arrangements in respect of their fuel costs. The surcharge was also charged by weight regardless of the distance carried and did not take any account of the degree to which movements in cargo rates had otherwise taken account of the changes in fuel costs. 20. IATA advised its members that the fuel surcharge should not be applied until Resolution 116ss had received regulatory approval, including from the United States Department of Transport (US DOT). No such approval was obtained. 21. In the period 1997 to 1999, IATA continued to publish its index. In November 1999, for the first time since its publication in 1997, the index exceeded 130, the trigger point for the application of a surcharge. 22. In January 2000, IATA sought regulatory approval of Resolution 116ss from the US DOT but this was refused in March 2000. As a consequence of regulatory rejection of Resolution 116ss, IATA ceased publishing its fuel price index. 23. Accordingly, no purpose would be served by its continued circulation of this index and practice of doing so is being discontinued. Our legal advisors' strong view is that IATA Members could be exposed to serious antitrust liability if we were to continue to publish the Index or to approach PLATTS or any other entity with a request to provide the Index, or if it was suggested to one or more carriers that they approach PLATTS in this regard. While it is recognised we cannot prevent carriers from doing so on their own initiative, we have to affirmatively advise against taking any such action, for the reasons stated below. The Index has now become tainted by the DoT order finding Resolution 116ss, to which the Index was linked, to be adverse to the public interest and in violation of the law. If the carriers were to co-ordinate pricing by reference to the Index, whether pursuant to this disapproved Resolution or simply through de facto parallel pricing actions, that could be regarded as an illegal conspiracy in violation of applicable Competition laws, whether the Index is published by IATA, PLATTS, or indeed, simply calculated by each of the carriers independently. Against that background, IATA has no choice but to discontinue all activity associated with the disapproved Resolution, including calculation and dissemination of the Fuel Price Index, and it has done so. Because any further pricing actions linked to the now tainted Index could expose the carriers engaging in such pricing actions to serious antitrust liability, we must advise that carriers not engage in any pricing actions tied to the Index. As there is no further legitimate or lawful use to be made of the Index, we also recommend that carriers refrain from approaching any third party requesting them to calculate and publish the Index. While we acknowledge the desire of many Members to have the Fuel Index published, we do believe the foregoing reflects a correct analysis of the situation. For the reasons expressed, the position being taken is designed to protect both Members and IATA from serious legal liability risk. This message is being sent to all the members of the Cargo Tariff Steering Group. A similar message is being sent to the Cargo Tariff Coordinating Conference. If anyone wishes to pursue this matter further they are advised to contact their Legal Department. This correspondence was sent to the heads of cargo operations (members of the IATA Cargo Committee) at over 60 airlines, including British Airways, along with their tariff co-ordinators (members of the Cargo Tariff Coordinating Conference). 26. Notwithstanding IATA's correspondence, either before or almost immediately following the cessation of the publication of the IATA Fuel Price Index, Lufthansa commenced publishing its own fuel price index on its website which mirrored the IATA Fuel Price Index (the Lufthansa Fuel Price Index). Lufthansa also commenced publishing a methodology which stated that the surcharge of 0.10 euros (or the equivalent in local currency) would be applied when the Lufthansa Fuel Price Index exceeded 130 for two consecutive weeks, and would be removed when the fuel price index fell below 110 for two consecutive weeks. Lufthansa's methodology was otherwise the same as the methodology of Resolution 116ss. 27. Lufthansa later added a further level to its methodology, stating that the surcharge would increase to 0.17 euros (or the equivalent in local currency) when the fuel price index exceeded 170 for two consecutive weeks, and would reduce to 0.10 euros when the fuel price index fell below 150 for two consecutive weeks. The Fuel Surcharge Understanding 28. On or about 9 November 2001, British Airways' World Cargo division (BAWC) Senior Manager for UK and Ireland Sales, Carina Fleischer (Fleischer), with the approval of BAWC's Senior Vice-President Commercial, Keith Packer (Packer), issued a media release announcing a reduction of British Airways' fuel surcharge, effective 18 November 2001, to 0.06 GBP / kg. This level of British Airways' fuel surcharge was equivalent to the surcharge level charged by Lufthansa at that time of 0.10 euros / kg. 29. From in or about late 2001, Fleischer of BAWC commenced exchanging information regarding the fuel surcharge with Axel Heitmann (Heitmann), the Pricing Manager of Lufthansa. For example, in or about 28 November 2001, Fleischer discussed with Heitmann the timing of the removal of the remaining fuel surcharge and whether it should occur on 20 December 2001 or 1 January 2002. During the exchanges, Fleischer provided Heitmann with contact details for Packer. 30. Fleischer also kept other British Airways employees, including Packer, informed of the substance of the discussions with Heitmann and the information obtained about Lufthansa's plans. 31. As a result of the communications between the representatives of British Airways and Lufthansa, each became aware that the other wished to have an index that led to the same surcharge being applied at or around the same time. 32. By late 2001, the price of aviation fuel had fallen. In December 2001, airlines who had, up to that time, applied a fuel surcharge announced the withdrawal of that surcharge with effect from December 2001 or January 2002. On or about 5 December 2001, Fleischer, with the approval of Packer, issued a media release announcing the worldwide removal of British Airways' remaining fuel surcharge, effective 23 December 2001. 34. In approximately December 2001, Matthew Kemp (Kemp), BAWC's Global Pricing and Distribution Manager, was instructed by the British Airways Cargo Commercial Group (CCG) of which Packer was a member, to produce a fuel surcharge index and associated methodology for British Airways (the British Airways Methodology). The CCG was a group which met weekly (including participation by telephone) and included various managers within BAWC, including Packer, the Regional Vice Presidents and Kemp. Kemp was instructed that the surcharge movements and amounts generated by the index must closely match the surcharge generated by the methodology used by Lufthansa, which was the market leader for international air cargo services. Kemp was also instructed to speak to Roy Hurley, the BAWC accredited representative to IATA (Hurley), because Hurley had been involved in the passage of Resolution 116ss. 35. Between January and March 2002, Kemp received a copy of Resolution 116ss from Hurley and was informed by him that it had been rejected by regulatory authorities. Hurley also informed Kemp that Lufthansa had started publishing the methodology of Resolution 116ss as their own, and that airlines could legitimately publish the methodology as their own and proceed to adopt it. 36. In about January 2002, Fleischer obtained from Heitmann Lufthansa's planned index trigger levels and corresponding surcharge amounts. Kemp used that information, which was subsequently available on the public record, in creating the British Airways fuel surcharge index and associated methodology. 37. In or about January 2002, Lufthansa publicly announced a new fuel surcharge methodology with smaller increments at more frequent intervals. The new methodology was as follows (the Lufthansa Methodology): Level Fuel Surcharge Imposition --- index Removal --- index 1 0.05 euro / kg 115 100 2 0.10 euro / kg 135 120 3 0.15 euro / kg 165 145 4 0.20 euro / kg 190 170 38. The British Airways Methodology differed from the Lufthansa Methodology in that the British Airways index was based on the averages of four spot fuel markets rather than five, and used a different index base. Although the index and methodology used by British Airways was not identical to that developed by Lufthansa, and was intended to look quite different from the Lufthansa Methodology, the British Airways Methodology was designed in such a way that it was intended and expected that British Airways' fuel surcharge would be substantially the same as Lufthansa's fuel surcharge in its amount and timing. 39. Similar to resolution 116ss, the Lufthansa Methodology and the British Airways Methodology calculated the fuel surcharges based on the actual per kilogram weight of international air cargo and used a two week period for an index threshold to trigger a fuel surcharge increase or decrease. The fuel surcharge was applied in euros or the equivalent in local currency. 40. In about March 2002, the CCG approved the British Airways Methodology proposed by Kemp. British Airways' expectation was that this index and associated methodology would generally match the surcharge amount and timing resulting from application of the Lufthansa Methodology. 41. On 15 March 2002, British Airways announced that it would apply the British Airways Methodology to its international air cargo services, converted where necessary to the local currency. 42. Several other airlines announced and charged fuel surcharges in accordance with the Lufthansa Methodology. A few airlines, including British Airways, adopted their own fuel surcharge methodology which led to substantially the same outcome as application of the Lufthansa Methodology. 43. In this Statement of Agreed Facts, a reference to the "Surcharge Methodology" is a reference to the Lufthansa Methodology, or to a methodology which led to substantially the same outcome as application of the Lufthansa Methodology. 44. At various times between January 2002 and October 2005, Lufthansa added additional levels to its methodology as the fuel index approached the highest level on the existing methodology (Additional Levels). [A table records the Lufthansa Methodology, incorporating the Additional Levels. ] 45. British Airways also added additional levels to the British Airways Methodology such that the position was maintained whereby the British Airways Methodology would lead to the same or substantially the same outcome as the application of the Lufthansa Methodology including the Additional levels. Further, as set out below, British Airways discussed the Additional Levels with Lufthansa prior to each one being added. 46. British Airways admits that, by March 2002, it arrived at an understanding with Lufthansa containing a provision that they would each exchange information relating to the proposed application by each of them of a fuel surcharge on cargo carried internationally by air across their global networks in accordance with each carriers' Surcharge Methodology, except where local conditions in a particular port or in a particular geographic area prevented the application, or full application, of the fuel surcharge, which provision had the purpose and likely effect of confirming and coordinating the application of the fuel surcharge in accordance with each carriers' Surcharge Methodology (Fuel Surcharge Understanding). British Airways admits that the relevant provision of the Fuel Surcharge Understanding had the purpose and likely effect of fixing or maintaining a component of the price for the international air cargo services of British Airways and Lufthansa. 47. 48. In 2005, a formal authorisation process was implemented requiring authorisation from nominated executives before departing from the specified surcharges. Packer, and Kemp, at Packer's direction, frequently communicated by telephone with Heitmann to give and receive assurances that a relevant fuel surcharge increase or decrease in accordance with the Surcharge Methodology would be applied. These communications occurred before each airline made a formal decision to alter an existing fuel surcharge. In the case of Lufthansa, this decision was made on Mondays at the meeting of the Business Management Team. In the case of British Airways, this decision was made on Wednesdays at the CCG meeting. 50. Further details of the communications between Lufthansa and British Airways are as follows [Five instances are set out in sub-paras 50.1-50.5] 51. The purpose and effect of these communications between Packer, Kemp and Heitmann was to confirm and ensure that British Airways and Lufthansa applied fuel surcharges substantially in the same amount and substantially at the same time in accordance with the Surcharge Methodology. Packer and Kemp thereby gave effect to the Fuel Surcharge Understanding. 52. Further, the communications between Packer and Kemp on the one hand and Heitmann on the other amounted to the giving and receiving of assurances as to the imminent application of surcharges and therefore gave rise to further arrangements or understandings between British Airways and Lufthansa to apply fuel surcharges in accordance with the relevant level in the Surcharge Methodology on all carriage of air cargo, except where local conditions prevented the application, or full application, of a fuel surcharge from a particular port or in a particular geographic area. 53. At all times following the Fuel Surcharge Understanding being reached in early 2002, Kemp in his dealings with Lufthansa assumed that Lufthansa had arrived at similar understandings with other airlines but did not specifically inquire of Lufthansa to confirm that. 54. There were exceptions to the application by British Airways of fuel surcharges in accordance with the Surcharge Methodology in cases where local conditions prevented the application of a surcharge in accordance with the British Airways methodology (or the full and/or immediate application of that surcharge) from a particular port or in a particular geographic area. This occurred in Hong Kong and the United Arab Emirates, for example. 54.2 There were occasions in ports outside the United Kingdom where airlines with a significant share of cargo services from a particular port or in a particular region declined to apply a fuel surcharge, or a particular fuel surcharge level, causing British Airways to form a view that the application of a surcharge in accordance with the Surcharge Methodology would be commercially unworkable because it would lead to a significant decline in sales. During the period from around March 2002 to February 2006, and pursuant to the Fuel Surcharge Understanding, British Airways applied surcharges globally in accordance with the Surcharge Methodology, except where local conditions prevented the application, or full application, of a fuel surcharge in a particular port or geographic area. 56. [Attached to the statement of agreed facts was a table recording the surcharges applied by British Airways and the corresponding trigger levels from the British Airways Methodology. ] Implementation of changes in the fuel surcharge generally lagged behind the fuel price index reaching an index threshold by approximately 2 -3 weeks to give British Airways time to notify customers of the new charges. 57. The conduct ceased in February 2006, when allegations concerning the Fuel Surcharge Understanding were publicised following raids undertaken by competition regulators in the United States and Europe. 58. In these proceedings, British Airways only admits it gave effect to the Fuel Surcharge Understanding where it applied the full surcharge in accordance with the Surcharge Methodology. British Airways states that the full surcharge was not applied on its outbound cargo from Australia and accordingly, it does not admit a contravention in respect of such cargo. British Airways admits, for the purposes of these proceedings, that during the relevant period [between March 2002 and February 2006], British Airways implemented the Fuel Surcharge Understanding on certain international cargo routes involving Australia. Of the total of the amounts referred to in the last column at paragraph 10 above, ₤3,446,655 is referable to fuel surcharges being applied by British Airways on routes to Australia in the full amount of the fuel surcharge. 59. British Airways admits that arriving at, and giving effect to, the Fuel Surcharge Understanding in the manner set out above had the purpose and effect of fixing a component of the price for the supply of international air cargo services, including in competition with Lufthansa, within the meaning of section 45A(1) of the Act and is, therefore, deemed to have the purpose or effect of substantially lessening competition within the meaning of section 45(2)(a)(ii) and 45(2)(b)(ii) of the Act. 8 As paras 58-59 of the "Statement of Agreed Facts and Admissions by [British Airways]" demonstrate, for the purpose of this proceeding only, British Airways admits that it arrived at and gave effect to provisions of the Fuel Surcharge Understanding, which had the purpose, effect and likely effect of fixing and controlling the price of the fuel surcharge for the carriage of cargo by air supplied by the parties to the Fuel Surcharge Understanding to their customers. British Airways admits that s 45A of the Act applies to the conduct and that, as a result, the conduct occurred in contravention of s 45(2) of the Act. British Airways' admission is limited, however, to the situation where it applied the full surcharge in accordance with Surcharge Methodology. 9 The conduct ceased in February 2006, when allegations concerning the Fuel Surcharge Understanding were publicised following "raids" undertaken by regulatory bodies in the United States and Europe. 11 British Airways further admits that the communications between its staff and Heitmann amounted to the giving and receiving of assurances as to the imminent application of surcharges and therefore gave rise to further arrangements or understandings between British Airways and Lufthansa to apply fuel surcharges at the relevant level in the British Airways and Lufthansa Methodologies. 12 The parties accordingly submit that the Court can proceed to the fixing of penalty and the making of other orders against British Airways on the basis that in giving effect to the Fuel Surcharge Understanding from March 2002 to February 2006, British Airways contravened the Act. 13 A penalty can only be imposed for a contravention occurring within 6 years prior to institution of proceeding on 28 October 2008: see s 77(2) of the Act. That period began on 28 October 2002. 14 The Commission states that it regards the present contraventions as extremely serious because they derived from an understanding between multinational carriers which are two of the largest airlines in the world. 15 British Airways rightly accepts that its conduct, constituting as it does contraventions of per se provisions of the Act, namely s 45(2) read with s 45A, is "extremely serious". Such contraventions must be seen as amongst the most serious of the non-criminal contraventions of the Act, given that Parliament has deemed such conduct to substantially lessen competition. The Act's prohibitions against price fixing have been the subject of numerous proceedings brought by the Commission. Some of those proceedings have resulted in multi-million dollar penalties, which have been extensively and widely publicised. At [16]---[27] of the Qantas Reasons for Judgment, under the heading "Legal Principles Relevant to Level of Penalty", I have summarised such principles and will not repeat them here. The conduct subject to penalty was engaged in by British Airways throughout much of the world and continued for 4 years. The conduct by the responsible employees, the Global Pricing and Distribution Manager and a Senior Vice President of a division of British Airways, British Airways World Cargo (BAWC), was deliberate. 46. The Global Pricing and Distribution Manager assumed that Lufthansa had arrived at similar understandings with other airlines but did not specifically inquire of Lufthansa to confirm that. 47. The conduct of British Airways ceased in February 2006, when allegations concerning the understanding were publicised following "raids" undertaken by regulatory bodies in the United States and Europe. The amount of loss or damage caused 48. During the relevant period, the revenue generated by British Airways carrying cargo to Australia that it admits was produced by the Fuel Surcharge Understanding was approximately $[sterling]3.4 million. This was a subset of the wider revenue of British Airways generated by the Fuel Surcharge Understanding worldwide. 49. The revenue generated from fuel surcharges does not demonstrate the actual loss to shippers or their customers because, absent the Fuel Surcharge Understanding, some price increases would likely have occurred to cover the increased costs of fuel, which did increase substantially over the relevant period. It may have also been that some carriers would have elected to exit certain routes, allowing the remainder to impose other increases with less constraint. 50. The Fuel Surcharge Understanding did not reflect the parties' actual costs as both parties to the Fuel Surcharge Understanding had different arrangements for the acquisition of fuel and acquired it in different places. Further, the fuel surcharge was a flat charge regardless of distance travelled, and therefore did not reflect or seek to reflect actual fuel costs on any flight or route. British Airways also had hedging arrangements. Further, a surcharge increase could stay in place even after the price increase that triggered it had gone: different trigger steps were used in the Surcharge Methodology when it was reducing from when it was increasing. 51. Neither the Commission nor British Airways are aware as to what proportion of the surcharge was ultimately borne by any particular consumer or business in Australia. The surcharge was charged, in the main, to freight forwarders who passed it on to their customers directly and without commission. As a general rule, the ultimate consumer will bear most if not all of the transport cost, in the price paid for the cargo: others in the supply chain, such as a wholesaler or retailer will absorb some part of the cost some part of the time. These others involve persons both in Australia or overseas. They will be more likely to absorb the loss if the goods comprising the cargo have been sold prior to the transport cost increase but may also have to do so if their competitors do not have the same costs. The size of the contravener 52. As noted in the statement of agreed facts, British Airways has assets of [sterling]11 billion and during the relevant period was the 10th largest airline in the world in terms of freight carried. Over the relevant period Qantas Airways Limited (Qantas) carried approximately 24% of the air freight to and from Australia and its nearest competitor carried about 14%. British Airways represented about 3%. Its profits before tax for the half year ended 30 September 2007 was [sterling]593 million. It derived revenue of [sterling]618 million from the carriage of air freight for the fiscal year ending 31 March 2007. The period over which the contravening conduct extended 53. British Airways' contravening conduct for which penalties can be imposed extended over a four year period from 2002 to 2006 inclusive. Degree of power it has, as evidenced by its market share and ease of entry into the market 54. British Airways does not know, and does not have access to any reliable information to allow it to assess, its share of the Air Cargo Market. 55. In the segment to and from Australia, British Airways holds about 3%. There are at least ten significant competitors which are major international carriers and which have market shares to and from Australia of between about 2% and 10%. British Airways was unable to act in the Australian segment of the Air Cargo Market without being constrained by its competitors. The circumstances in which the conduct took place 56. Whilst the volatility of jet fuel prices certainly sparked the conduct, and some price adjustment would have been implemented by participants unilaterally to reflect this, the fuel surcharge timing and amount did not reflect actual cost changes of each airline or the degree to which general price rises already included movements in fuel costs. 57. British Airways was aware that the US Department of Transport had comprehensively rejected the conduct as anticompetitive. Moreover, a number of airlines, including British Airways, were specifically warned by IATA that if they coordinated pricing by reference to a common index, they were at serious risk of violating antitrust laws. Participation of senior management 58. British Airways' participation in the Fuel Surcharge Understanding was arranged by Kemp, the BAWC Global Pricing and Distribution Manager and Packer, BAWC Senior Vice President and implemented by regional managers in offices around the world. British Airways asserts, and the Commission does not dispute for the purposes of these proceedings, that the conduct was not known to the British Airways Board or its most senior managers. Culture of compliance with the Trade Practices Act 59. British Airways did have a program of trade practices compliance in place during the period of the contravening conduct. However, persons responsible for monitoring and preventing such conduct only became aware of it after raids of airlines' premises overseas were conducted by regulatory agencies. 60. British Airways has upgraded the program and its new program is presently being implemented throughout the world. Co-operation and Contrition 61. British Airways has co-operated with the Commission's investigations since British Airways contacted the Commission in mid 2006. British Airways promptly provided the Commission with information about collusive understandings, including admissions of its own participation in those understandings. British Airways did so aware that immunity was not available to it in relation to its fuel surcharge conduct and knowing that it was highly likely to face substantial penalties. 62. To this end British Airways made staff and former staff available for interview by the Commission, and voluntarily searched for and produced documents from its operations throughout the world relevant to its and other airlines involvement in the contraventions. It brought to Australia at its own expense staff willing to be interviewed by the Commission even though those staff could not have been compelled under section 155 of the Act. It has undertaken to bring such staff and former staff to Australia as the Commission requires. The Commission has not needed to serve any section 155 notices on British Airways. 63. British Airways' efforts have made available to the Commission information and documents identifying the involvement of other participants which have not been produced or made available as yet by these persons. 64. Whilst British Airways was not able to secure the co-operation of some of its former staff, the Commission is satisfied it has used, and will continue to use, its reasonable endeavours to do so. British Airways has offered to the Commission, and undertakes to the Court, to continue to provide this high level of assistance with the investigation, and possible prosecution, of cases against other participants. 65. British Airways through its solicitors willingly participated in a series of discussions with the Commission to bring an agreed resolution of the matter before the Court. As a result of those discussions British Airways and the Commission have reached agreement as to the appropriate penalty to be suggested to the Court. British Airways has also assisted the Commission in the preparation of the relevant settlement documents including the admissions. 66. As already mentioned, British Airways has reviewed and upgraded its current trade practices compliance program. 67. The Commission considers that British Airways is entitled to substantial credit for having admitted contravening the Act, assisting the Commission in its investigations, upgrading its compliance program and agreeing with the Commission on the appropriate penalty to put to the Court (see Trade Practices Commission v TNT Australia Pty Ltd [1995] FCA 1166 ; (1995) ATPR 41 --- 375). British Airways' co-operation with the Commission has saved the Commission and the Court (and ultimately the community) the cost and burden of litigating an extremely lengthy and expensive case. 68. It is obviously of benefit to the Commission's investigations that respondents are encouraged to co-operate in appropriate cases. In these circumstances the parties submit British Airways is entitled to a substantial discount of approximately 40% on the penalty that otherwise would have been appropriate. Given the regularity of the contravening conduct over the four year period and the maximum applicable penalty per contravention of $10 million, that penalty absent the cooperation discount would have been much higher. This discount should reflect not only its assistance in locating witnesses and material, which has been second only to that of British Airways, but also in making certain admissions and in using its reasonable endeavours to assist in the investigation and possible prosecution of other participants. 70. Considering British Airways' high level of cooperation in relation to its own case and as against other parties, the Commission has accepted a substantial reduction in agreeing on an appropriate penalty to recommend to the Court. Similar conduct in the past 71. The Court has not previously found contraventions against British Airways in relation to the Act. Other regulators 72. The Commission notes that British Airways was fined US$300 million in proceedings brought by the United States Department of Justice, in respect of fuel surcharges applied on the carriage of both cargo and passengers, including fuel surcharges on cargo shipments from the United States to Australia. British Airways is also the subject of proceedings in the European Union. The penalty in the United States was substantially discounted as a result of British Airways' co-operation with authorities there. Conclusion on appropriate penalty 73. The Commission and British Airways submit that, when all the factors and circumstances referred to above are taken fully into account, a pecuniary penalty of $5 million is appropriate, in that the parties consider that the suggested amount falls within the range that the Court, unaided by the parties' agreement, would have considered appropriate. Those submissions were also made by the Commission in this present proceeding as well as in the Qantas proceeding, and, subject to one matter not presently relevant, were supported by British Airways. 19 I will not repeat what I have said in the Qantas Reasons for Judgment but will indicate by reference to the headings that I used in them, matters of special relevance to the present proceeding. 21 With reference to [31] of the Qantas Reasons for Judgment, it is to be noted that British Airways carries on business within Australia. 22 Although the Fuel Surcharge Understanding in the present case was only between British Airways and Lufthansa and was therefore different from the Fuel Surcharge Understanding in the Qantas case, the Air Cargo Market was the same in both cases, that is to say, a worldwide market for the international carriage of cargo by air, which, or part of which, was within Australia within the meaning of s 4E of the Act. 24 British Airways produced its own methodology, but that methodology was designed in such a way that it was intended and expected that the fuel surcharge imposed under it by British Airways would be substantially the same as that imposed by Lufthansa, both in amount and timing. 26 At [49] I set out in a table the global fuel surcharge revenue, the fuel surcharge revenue on routes to and from Australia, and the penalty proposed in respect of each of Qantas and British Airways. 27 From time to time British Airways did not impose a surcharge on particular routes or for particular customers, including in circumstances in which Qantas did impose a surcharge, so that a simple comparison of the surcharge revenues of Qantas and British Airways may give a false picture. As noted at [54] of the Qantas Reasons for Judgment and at [8] above, British Airways admits only that it gave effect to the Fuel Surcharge Understanding where it applied the full surcharge in accordance with the Surcharge Methodology in its case. 29 British Airways holds approximately 3% of the market share in the segment to and from Australia. It had the smallest share of all airlines that lay above 2% (see [62] of the Qantas Reasons for Judgment). 30 The Commission considered that British Airways merited a slightly higher base penalty than $7 million by reason of its market share. The final penalty arrived at by the Commission, including a 40% discount, was $5 million. The initial figure prior to discount must have been approximately $8.33 million. I think that this figure lies within the range of penalties that I would have imposed, leaving to one side any discount (see below). 32 The Commissioner considered that British Airways merited a higher discount than 30%. 33 British Airways made available 11 witnesses to the Commission. The Commission assures the Court that it would not have obtained the information that it has obtained without the cooperation of British Airways in providing it. 34 I accept that a 40% discount is appropriate. Left to myself, I would have allowed a substantial discount of that general order in the light of the supplementary open submission and the confidential submission provided by the Commission (see [18] above and [29], [30] and [68] of the Qantas Reasons for Judgment. For the reasons I gave at those paragraphs mentioned, an injunction against British Airways limited to five years in duration is appropriate. 37 As requested by the parties, I also ordered British Airways pay the Commission a contribution towards its costs of this proceeding in an agreed sum of $200,000. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | contravention of pt iv of trade practices act 1974 (cth), s 45(2) arriving at and giving effect to understanding having purpose or likely effect of substantially lessening competition understanding between respondent (british airways) and other international airlines as to surcharge to be imposed on international carriage of freight in consequence of increases in price of fuel fuel surcharge understanding agreed statement of facts and joint submissions penalty of $5 million and injunction for five years sought by both parties consideration of relevant factors and of role of court relevant considerations appropriateness of injunction of limited duration. held : pecuniary penalty and injunction in terms as agreed. trade practices |
The plaintiff, the Deputy Commissioner of Taxation, seeks a winding-up order on the ground of insolvency under s 459P of the Corporations Act 2001 (Cth). The application is unopposed but an issue has arisen as to the costs of a supporting creditor, Workers Compensation Nominal Insurer (WCNI). 2 The cost issue arises in the following way. The Deputy Commissioner's originating process was filed in this court on 24 January 2008 and was returnable today. WNCI commenced an identical application for winding-up on the grounds of insolvency in the Supreme Court of New South Wales by originating process filed on 22 January 2008. 3 Although the WCNI application was first in point of time of filing, it was last in point of time as to its return date. The originating process in the Supreme Court is not returnable until 6 March 2008. The WCNI has, therefore, taken the step of coming to this court as a supporting creditor. 4 WNCI seeks to have its costs as supporting creditor paid out of the winding-up of the defendant company, but it wishes to have these costs include the costs of the application which was made in the Supreme Court of New South Wales. 5 Coincidentally, both the Deputy Commissioner of Taxation and WCNI's solicitors, sought to have the same firm of accountants, Messrs Simms Partners, or more accurately a person from that firm, appointed as the liquidator of the company. The solicitor for WCNI has spoken to a member of the firm of accountants who is apparently likely to take the conduct of the matter. That firm of accountants has indicated that the question of costs is a matter for the Court. 6 The effect of the communications is that the proposed liquidator would not oppose the making of an order in the terms sought by WCNI. The only question is whether or not the Court has power to make the order. 7 The present situation has come about through no fault on the part of either the Deputy Commissioner or WCNI. This is because when the originating process was filed in the Federal Court on 24 January 2008, an ASIC search did not, and could not, have then revealed the existence of the earlier originating process. Accordingly, the Deputy Commissioner filed the originating process in this Court without any knowledge of the existence of the earlier proceeding in the Supreme Court. 8 In my view I do have power to make the order sought by WCNI. The power is to be found in s 43 of the Federal Court of Australia Act 1976 (Cth). In DSE (Holdings) Pty Ltd v InterTAN Inc [2004] FCA 1251 at [14] , Allsop J said that s 43 is a broad and ample power, which is not to be read down otherwise than by judicial principle conformable with its amplitude. His Honour's remarks were made in a different context, but I consider that they are applicable to the present application. 9 It seems to me that what is necessary for the exercise of the power is to find some connection between the Supreme Court proceeding and the proceeding in this Court, in order to justify the order for payment of the supporting creditor's costs, including the costs of commencing in the Supreme Court, out of the process of the winding-up. 10 The course which has been followed by WCNI, in coming to this Court as the supporting creditor, is the cheapest and most expedient course which could have been followed. In my view this step has rationalised the processes before this Court and has, indeed, rationalised both sets of proceedings, in a way which produces the most convenient and expeditious result in terms of costs incurred in the Court's processes. 11 What, in effect, has happened is that WCNI has taken the convenient course of coming here as a supporting creditor, in circumstances in which it had, on foot, an identical application in another court, although that application is not due to come before the Supreme Court until next month. Its status as a supporting creditor today is inextricably linked to the fact that it commenced the earlier winding-up application in the Supreme Court of New South Wales. 12 In my view the order which is sought, therefore, falls within the broad power to which Allsop J referred in considering the amplitude of s 43 of the Federal Court Act . It follows that I propose to accede to the application made to me by Mr Davis of counsel for WCNI. 13 Mr Davis's instructing solicitor is in Court and he has informed me that when the Supreme Court proceedings are returnable on 6 March, an order will be sought that the proceedings be dismissed, with no order as to costs. Plainly, the Supreme Court could not now entertain the application to wind-up the company, because I will make a winding-up order this afternoon and in light of the course proposed today, the obvious approach in the Supreme Court is that there be no order as to costs sought in that matter. Mr Davis's instructing solicitor has undertaken to the Court to seek those orders in the Supreme Court on 6 March 2008. 14 Accordingly, the orders that I will make this afternoon are as set out in [1] to [3] of the originating process filed by the Deputy Commissioner of Taxation on 24 January 2008. I will also order that the costs of WCNI, as supporting creditor, be paid out of the assets of the defendant, and in particular that those costs include the costs of WCNI of and incidental to proceedings No. 1199 of 2008 in the Supreme Court of New South Wales, Equity Division. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | insolvency application for winding up order supporting creditor applied previously for winding up order in supreme court of new south wales order for supporting creditor's costs of supreme court proceeding to be paid out of the assets of the defendant procedure |
The settlement relates to an earlier proceeding, VID 3203 of 2002 ("the primary proceeding"), and a related appeal, VID 83 of 2005 ("the appeal"), involving essentially the same persons. In order to set aside the settlement, he seeks to have a Deed ("the Deed") also entered into by these persons set aside. He seeks to do so on the basis that Mr Rambaldi, the liquidator of a company formerly controlled by him, executed the Deed in bad faith. 2 For the reasons I am about to give, I would dismiss Mr Spalla's application. He has failed to show that Mr Rambaldi acted in bad faith in executing the Deed. On the contrary, the evidence shows that Mr Rambaldi acted in good faith in his dealings with Mr Spalla and as Irlmond's liquidator. Irlmond traded in motor cars under the name "Essendon Mitsubishi and North City Daewoo" ("Essendon Mitsubishi"). Mr Spalla also controlled a related company, APS Wholesale Pty Ltd ("APS"), which purchased new cars and acted as the wholesale company for the dealership. 4 St George Motor Finance Limited ("St George Motor Finance") and St George Wholesale Finance Pty Ltd ("St George Wholesale Finance") (collectively, with St George Motor Wholesale Pty Ltd, referred to as the "St George parties") provided finance for Irlmond and APS by way of a floor plan. 5 On 12 February 1999, the St George parties appointed Mr Andrew William Beck and Mr Andrew Stewart Home, both from Deloitte Touche Tohmatsu ("Deloittes"), to be the receivers and managers of the property of Irlmond and APS. Messrs Beck and Home retired on 8 August 2003. On 23 September 2003, Mr Simon Wallace-Smith, a partner at Deloittes, was appointed receiver and manager of Irlmond and APS in their place. Deloittes and Messrs Beck, Home and Wallace-Smith will be referred to collectively as the "Deloitte parties". 6 Mr Guiseppe Michele Rambaldi, a partner at Pitcher Partners, was appointed liquidator of Irlmond on 7 February 2001. He is sometimes referred to below as "the liquidator". Finkelstein J held that their appointment was lawful: see Spalla v St George Wholesale Finance Pty Ltd [1999] FCA 513 (" Spalla (No 1) "). In his reasons, his Honour addressed the question of whether Irlmond and APS were insolvent at the time receivers were appointed. Mr Spalla contended that the companies were not insolvent at that time. His Honour held, however, that "the fact that the companies were insolvent is an inescapable conclusion from the evidence": see Spalla (No 1) at [140]. 8 Mr Spalla appealed against the decision of Finkelstein J to the Full Court. The Full Court, which was constituted by Heerey, Sundberg and Weinberg JJ, upheld his Honour's decision: see Spalla v St George Wholesale Finance Pty Ltd [1999] FCA 1566 (" Spalla (No 2) "). The Full Court held, amongst other things, that the primary judge was correct to find that Irlmond and APS were insolvent at the time receivers were appointed: see Spalla (No 2) at [61]-[70]. 9 In proceeding V 7877 of 1999, St George Wholesale Finance unsuccessfully petitioned for a sequestration order against Mr Spalla based on an alleged failure to comply with a bankruptcy notice. The notice claimed that Mr Spalla owed a debt pursuant to the judgment obtained in proceeding V 74 of 1999 before Finkelstein J. Mr Spalla contested the sum specified. In St George Wholesale Finance Pty Ltd v Spalla [2000] FCA 1094 at [40] - [41] , Heerey J concluded that "St George is not sure itself what is really owing under the judgment" and that "this proceeding amounts to an abuse of the procedures provided by the Act". 10 On 14 April 2000, Mr Spalla and Mr Andrew David Bentley Still (an accountant and company secretary of Irlmond and APS until 12 February 1999) were charged with 22 counts of dishonest false accounting in respect of their conduct at Irlmond. There was a trial in the County Court of Victoria. On 10 September 2002, the number of charges was reduced to four. On 19 September 2002 a jury, by direction of Judge Hart, acquitted Mr Spalla and Mr Still. In his ruling, his Honour said "[t]he evidence in support of the proposition that the accused acted only for the purpose of benefiting the company is overwhelming [and there] is no evidence which the Crown can point to which is inconsistent with this proposition". 11 A new proceeding, referred to above as the "primary proceeding", was filed in the Federal Court on 17 October 2002, shortly after Mr Spalla and Mr Still were acquitted of the criminal charges. Irlmond joined the primary proceeding as an applicant. On 6 May 2005, pursuant to the Deed that is the subject of this proceeding, Irlmond settled all of its claims in the primary proceeding and the appeal. The procedural details and history of the primary proceeding are discussed in more detail in the Court's factual findings below. He filed an amended notice of motion on 30 May 2005. On 22 June 2005, French J ordered that the notice of motion be treated as an application by way of originating process in a new proceeding. Accordingly, this proceeding was allocated a separate file number (VID 631 of 2005). On 18 April 2006, Mr Spalla filed a third further amended notice of motion with the leave of the Court. An Order that the Deed ... was entered into in bad faith and breach of the Litigation Funding Agreement dated 15th March 2002. An Order that the Deed ... was entered into in bad faith, in breach of [the liquidator's] duties pursuant to sections 180 (2) (a) & (d) 181 (a) & (b), 182 (a) & (b) and 184 (c) & (d) of the Corporations Act . An Order that the Deed ... be set aside on the grounds of it being void ab initio. An Order on appeal from the decision of the [liquidator] executing the Deed ... pursuant to section 1321 and 1321 (d) of the Corporations Act , and pursuant to that appeal, orders reversing or modifying such decision. An Order pursuant to section 236 (1) (a) (i) and 236 (2) of the Corporations Act 2001 that the Applicant be granted leave to intervene in proceedings No. 3203 of 2002 and Appeal No. VID 83/05 for the purpose of taking responsibility on behalf of the company for those proceedings and in the company's name. An Order pursuant to section 237 that an application for and granting leave for reasons purpose as defined in section 237 (a), (b), (c) and (d) be granted. An Order for costs on an indemnity basis against [the liquidator] in respect [of] the mediation, preparation and lodgement of all Appeal documents. Such other relief as the Court may Order. Mr Spalla also sought to rely on an affidavit sworn by him on 1 June 2005. For reasons given during the hearing, I excluded that affidavit. Mr Spalla also called Mr Phillip Frank Borden of Home Wilkinson and Lowry ("HWL") as a witness. 16 Both Mr Spalla and Mr Rambaldi gave oral evidence in chief and were cross-examined. 17 Mr Rambaldi and Irlmond also relied on an affidavit (and exhibits) sworn by Mr Rambaldi on 27 May 2005 and three affidavits sworn by him on 9 September 2005. They also relied on an affidavit sworn by Mr David Raj Vasudevan of Pitcher Partners on 9 September 2005. 18 By consent, two unsworn statements of Ms April Arslan of HWL together with exhibits were admitted into evidence. Further, an affidavit sworn by Mr Andrew Jonathan Fisher on 24 September 2003 and an exhibit thereto (both of which were filed in the primary proceeding) were tendered by Mr Spalla without objection. There were a relatively small number of other documents admitted into evidence in the course of the trial. 19 The St George parties and the Deloitte parties did not present any evidence. 20 Unsurprisingly, given the subject matter of the present dispute, claims for legal professional privilege were raised from time to time. For the most part, they were not pursued or they were waived. Privilege was, however, claimed and pursued with respect to a relatively small group of documents, largely consisting of the written advices of counsel. In relation to these documentary communications, the St George parties and the Deloitte parties voluntarily undertook not to seek access without leave of the Court and not to plead waiver of privilege by reason of events occurring at trial. 21 There was also an issue, particularly at the commencement of the trial, as to whether or in what circumstances evidence could be given of what happened at mediation on 29 April 2005. This mediation was central to Mr Spalla's present application. Ultimately, counsel for Irlmond and Mr Rambaldi specifically stated that they did not wish to take the point that evidence could or could not be adduced of statements at mediation. Mr Spalla presented his case on the basis that any such evidence should be given. The Deloitte parties and the St George parties did not argue for a different approach. 22 Section 53B of the Federal Court of Australia Act 1976 (Cth) does not prevent the parties from adopting such a stance in this case, because there was no order made under this provision. Section 53B(a) provides that "[e]vidence of anything said, or of any admission made, at a conference conducted by a mediator in the course of mediating anything referred under section 53A is not admissible ... in any court". Section 53A(1) provides that the Court "may by order refer the proceedings ... to a mediator. " At the commencement of the trial, the parties expressed uncertainty as to whether mediation in this case was pursuant to Court order or simply pursuant to agreement between them. A thorough review of the files and relevant transcripts from the primary proceeding and the appeals (VID 3203 of 2002, VID 54 of 2005 and VID 83 of 2005) establishes that the Court in fact made no order referring the proceeding to mediation, although it gave encouragement to the parties to do so. 23 On 14 February 2005, Black CJ ordered (in both appeals) that the matters be referred to a judge of the Court for directions concerning possible mediation. The matters subsequently came before North J for directions on 16 March 2005 and 21 March 2005. At the directions hearing on 16 March 2005, his Honour discussed the utility of mediation with the parties, without ordering a referral to mediation. His Honour simply ordered that the matter be stood over for mention, if necessary, on 21 March 2005 and reserved costs. On 21 March 2005, his Honour inquired of the parties whether they had agreed upon the identity of a mediator and, when informed they had not, ordered that the matter be stood down to a date to be fixed and reserved costs. As it happened, the parties ultimately agreed upon the identity of a mediator and proceeded to mediation pursuant to a mediation agreement. None of the parties to this agreement relied on its terms in connection with the evidence given or sought to be given about the mediation or any related matter. 24 Further, s 131 of the Evidence Act 1995 (Cth) does not prevent the parties to the present proceeding from giving evidence about the mediation. Subject to s 131(2) , s 131(1) prevents parties to litigation from adducing evidence of "a communication ... between persons in dispute ... in connection with an attempt to negotiate a settlement of the dispute". Counsel for Mr Rambaldi submitted that s 131 did not in fact apply to communications between Mr Spalla and Mr Rambaldi, because they were not "persons in dispute" for the purposes of s 131(1). I accept this submission. No-one submitted to the contrary. At the time of the mediation, Mr Spalla and Mr Rambaldi were not in dispute. Furthermore, neither of them was in dispute with Mr Borden, Ms Arslan or Mr Bowman. 25 Further, neither the Deloitte parties nor the St George parties submit that evidence of communications at the mediation between them and the applicants in the primary proceeding should not be given. Section 131(1) does not prevent evidence being given in this case of communications with the Deloitte parties and the St George parties and Mr Rambaldi, Mr Spalla, Mr Borden, Ms Arslan or Mr Bowman, even if they were parties in dispute for relevant purposes. This is because s 131(2) provides that s 131(1) does not apply if, amongst other things, "the persons in dispute consent to the evidence being adduced in the proceeding concerned"; "the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute"; "the proceeding in which it is sought to adduce the evidence is ... a proceeding in which the making of such an agreement is in issue"; or "making the communication ... affects a right of a person": see s 131(2)(a) , (e), (f) and (i). In the circumstances of this case, these provisions operate to take out of the reach of s 131(1) , evidence of any communication that might otherwise fall within this provision. 26 Finally, whatever confidentiality once pertained to the Litigation Funding Agreement, discussed below, was lost by the time of the trial. Those applicants were Mr Spalla and his wife, Stella, Mr Still, and Anstella Nominees Pty Ltd ("Anstella") as the holder of all shares in Irlmond and APS. Irlmond was not one of the original parties to the primary proceeding. The original respondents included St George Motor Finance, St George Wholesale Finance, Messrs Beck and Home, and Deloittes. By their original statement of claim, the applicants alleged that the respondents had given false evidence in the proceeding before Finkelstein J and raised various claims relating to the receivership of Irlmond and APS. The applicants also claimed that the respondents had conspired wrongly to subject Mr Spalla and Mr Still to criminal conspiracy charges. 28 Prior to May 2003, Mr Rambaldi retained the firm of Darrer Muir Fleiter to advise him with respect to the primary proceeding and, in particular, as to Irlmond's prospects if it were to join in the proceeding. On 22 November 2002, Mr Rambaldi sought quotations for insurance litigation funding. In a facsimile dated 3 February 2003, Mr Rambaldi's solicitors subsequently wrote to Mr Spalla's solicitors stating that, as liquidator of Irlmond, Mr Rambaldi was not in a position to join in the primary proceeding, or institute his own proceeding, until he had entered into an acceptable funding arrangement, although Mr Rambaldi had "his own legal advice that various claims against the Respondents, or a combination of them are likely to be successful". 29 Throughout February and March 2003, Mr Rambaldi, assisted by Mr Vasudevan negotiated with IMF (Australia) Ltd ("IMF"), represented by Mr Clive Bowman, to secure litigation funding and, in particular, concerning the terms of a litigation funding agreement, which Mr Rambaldi required before agreeing to Irlmond becoming an applicant in the primary proceeding. The contemporaneous correspondence shows that control of the litigation was an important issue. By a letter dated 6 March 2003, IMF specifically noted that it wanted to avoid "Spalla attempting to block, or interfere with, a settlement which Irlmond wishes to pursue". It reiterated this concern in an email of 29 April 2003. Ultimately, a funding agreement was reached with Insolvency Litigation Fund Pty Ltd ("ILF"), a wholly owned subsidiary of IMF. He also sought leave for Irlmond to join the primary proceeding. In his supporting affidavit, he deposed that, in the absence of the funding agreement, Irlmond could not join the proceeding since it would not have the funds to do so. The Spalla Interests and the Liquidator agree that the Solicitors shall, after Court approval, conduct the Proceeding on behalf of the Liquidator and the Spalla Interests. The provisions of clause 13 shall apply to this clause if the liquidator and the Spalla Interests do not agree to so instruct the solicitors. Mr Jones argued that the agreement, as then drafted, improperly limited the liquidator's discretion to settle claims on behalf of Irlmond. Mr Jones noted that clauses 13 and 14 of the proposed funding agreement allowed the Spalla Interests to object to the liquidator accepting a settlement offer made only to Irlmond and, in the event of such an objection, delegated to an arbitrator the decision whether to accept such an offer. Mr Jones claimed that this arrangement was an unlawful restraint on the liquidator's discretion. His Honour said that it appeared that Mr Jones was correct on this point. Mr Jones also argued that the proposed funding agreement --- which allowed ILF to withdraw at any time on seven days' notice but still take part in a distribution of any recovery --- gave ILF a potential windfall if it withdrew shortly after executing the agreement. 33 After the hearing of 8 May 2006, the parties to the proposed funding agreement negotiated further, in order to amend it so as to meet the concerns expressed by Finkelstein J. In particular, as part of these further negotiations, the parties considered the issue of control over any settlement offer to Irlmond and the issue of ILF getting a 'windfall' if it withdrew its indemnity shortly after executing the agreement. They prepared a new draft funding agreement. On 12 May 2003, Mr Rambaldi filed this new draft in the Court, together with counsel's supplementary submission in support of the new agreement. 34 This supplementary submission stated that the amendments to the proposed funding agreement "address the criticisms made by Mr Jones". Clause 9, relating to control of the proceedings, was unchanged except "clause 14" was substituted for the words "clause 13" in clause 9.3. A new clause 13 dealt with "Recoveries". If the parties cannot agree on a mediator within 2 Business Days of receipt of the written notice by the other parties, the parties agree that any one or more of the parties may request the President for the time being of the Law Institute of Victoria to nominate a mediator. The draft agreement provided that the liquidator could not instruct his solicitors to settle or discontinue the proceeding without obtaining the consent of the other applicants. If there was a dispute, the matter had to go to arbitration. There is a view that, while a liquidator may listen to the opinion of others on what steps he should take in a particular situation, in the end he must exercise his own judgment on what is or is not in the best interests of the creditors or contributories. For this reason he cannot give up control of litigation in which his company is a party. This is the view taken by Lightman J in Grovewood Holdings Plc v James Capel & Co Ltd [1995] Ch 80. This is in fact what occurred. The liquidator was able to negotiate the removal of the restriction on his ability to settle or discontinue the proceeding if Irlmond became a party to the action. " Clause 4.2 required the Spalla Interests to provide the liquidator with a letter confirming that the Spalla Interests have sufficient funds to settle these costs. • Pursuant to Clause 5.1, the Spalla Interests agreed to indemnify Irlmond and the liquidator in respect of legal costs claimed by their joint representatives in the proceeding. • Clause 6.1 provided that ILF would indemnify the liquidator for any costs for which he becomes personally liable in relation to his and Irlmond's participation in the primary proceeding. Pursuant to Clause 6.2, "[t]he indemnity provided by ILF to the Liquidator in respect of any Costs Order will not be a continuing indemnity, but may be terminated by ILF, in its absolute discretion by giving 7 days written notice to the Liquidator". This right of termination was subject to a proviso that ILF would remain liable for any personal costs orders against the liquidator up to the time of termination. • Clause 7 related to the appointment of solicitors and counsel and provided that solicitors and junior and senior counsel would be retained to act for the liquidator, Irlmond and the Spalla Interests. In accordance with clause 1.1, the solicitors were to be HWL "or such other firm of solicitors retained to act for the Liquidator and Irlmond from time to time" and senior counsel was to be Peter Hayes QC "or such other lead Counsel retained to act for the Liquidator and Irlmond from time to time". • Clause 15 contained certain warranties, including that the "Spalla Interests warrants [sic] that it [sic] has sufficient financial resources to carry out its [sic] obligations under this Agreement and shall continue to have such financial resources. Mr Spalla's original retainer with HWL required Mr Spalla to pay $80,000 upfront with the balance to be at HWL's prevailing hourly rates, plus a 20% uplift fee to be paid on the successful outcome of the matter. Mr Spalla was to meet all HWL's disbursements and counsel fees. Mr Spalla reached a similar "no win, no fee" arrangement with Mr Hayes QC. Mr Spalla paid the initial amount of $80,000 to HWL and funded the litigation in accordance with these agreements. He did not, however, have sufficient funds to meet the costs of the litigation had all of the lawyers' costs been due at the time they were incurred. 39 Mr Rambaldi was aware of Mr Spalla's costs agreement with HWL and informed HWL that he had no objection to HWL's costs being calculated and paid on the basis of that agreement. By a letter dated 20 May 2003, Mr Rambaldi confirmed with Mr Borden that Mr Rambaldi and Irlmond retained HWL to act for them with respect to the primary proceeding, although the Spalla Interests would meet HWL's costs and disbursements. Mr Rambaldi emphasized that Mr Borden was to take instructions from him before making any commitment on his behalf to the Spalla Interests or the respondents. Mr Rambaldi also confirmed with counsel, including Mr Hayes QC, that, although retained by him and Irlmond to act on their behalf, he, Mr Rambaldi, would not be liable for counsels' fees, which the Spalla Interests were to meet. 40 On 25 June 2003, Still & Co, solicitors then acting for the Spalla Interests, wrote to Mr Rambaldi stating that the firm held "sufficient funds in trust to settle the costs as set out in Clause 4.1 of the Funding Agreement". With the LFA executed, Irlmond began participating in the primary proceeding as an applicant, with the main issue being the terms of any new application and statement of claim. On 15 May 2003, the applicants filed a proposed amended statement of claim that named Irlmond as the fifth applicant. On 16 December 2003, the applicants filed a Further Amended Statement of Claim pursuant to leave granted by Goldberg J on 9 December 2003. First, there was an issue as to whether there was a potential conflict of interest between Mr Rambaldi as liquidator of Irlmond and Mr Spalla as a potential debtor of Irlmond. Mr Borden addressed this issue in a facsimile sent on 8 June 2004 to Mr Rambaldi. Minter Ellison, as solicitors for the Deloitte parties, had apparently initiated consideration of the issue by their letter of 27 May 2004. However the obligation to pursue him would only apply if there were a prospect of recovering some funds. As you know, Spalla is totally without funds and has no assets at all. In my view, the best course to adopt is to continue to co-operate with Spalla in the proceedings so that any assets that are recovered by Irlmond can be used for the benefit of the company's creditors. Finally, it should be noted that Spalla claims to be a creditor of Irlmond, rather than a debtor. 42 It also proved difficult for the applicants to frame a viable statement of claim and the respondents foreshadowed applications for indemnity costs against Mr Rambaldi personally and ILF. 43 On 21 May 2004, the Deloitte parties filed a notice of motion seeking to strike out the applicants' further amended statement of claim. St George Motor Finance and St George Wholesale Finance filed a similar notice of motion on 24 August 2004. 44 On 16 July 2004, Minter Ellison sent a letter to HWL regarding the Deloitte parties' strike out motion. Those concerns should in turn inform a serious concern regarding the consequences of continuing proceedings where it does not appear to us that he is receiving advice independent of Mr Spalla one of the applicants who happens to be maintaining the action and who will benefit from Irlmond's preparation and prosecution of its claim. His Honour also ordered that the applicants pay the respondents' costs of their respective motions. Amongst other things, his Honour held that many of the allegations in the further amended statement of claim involved allegations of fact that contradicted the factual findings made by Finkelstein J in proceeding V 74 of 1999. In these respects, the further amended statement of claim could not stand "against the res judicata estoppel and the issue estoppels generated by the judgment in the first proceedings": see Spalla (No 5) at [4]-[5] and [44]. 46 The primary proceeding was originally fixed for trial beginning on 19 July 2004. As a result of the various strike-out motions, that date was vacated and the matter was re-listed for hearing in February 2005. On 13 October 2004, HWL advised Mr Spalla (by a letter, which was also copied to Mr Rambaldi) that they would terminate their retainer with Mr Spalla if the February 2005 hearing date were vacated for any reason. Amongst other things, the letter said, "[w]hilst we regret having to take this position, we simply cannot afford the ongoing burden of the case and the impact it is having on the firm overall". This does not include any uplifting fee which was outlined in our costs agreement. In this facsimile, Mr Beck referred, amongst other things, to the order for costs that French J had made on 28 September 2004 against the applicants and in favour of the Deloitte parties. He stated that his solicitors had informed him that the Deloitte parties' costs were about $50,000 on a party and party basis and that the Deloitte parties sought these costs from ILF "in its capacity as a non-party". He also wrote that if "the matter proceeds and Irlmond is unsuccessful, we will look to ILF for its entire costs of the matter and we reserve all our rights to seek those costs from ILF, not only on a party and party basis but on an indemnity basis". 49 The next day, on 20 October 2004, Mr Beck sent a facsimile to Mr Rambaldi in similar terms to that sent to Mr Bowman. Mr Beck again referred to the order for costs that French J had made in favour of the Deloitte parties and to the Deloitte parties' solicitors' estimate of the amount of these costs. He wrote that the Deloitte parties sought these costs from Mr Rambaldi personally and added that, should the matter proceed and Irlmond fail, the Deloitte parties "will look to you personally for [their] entire costs of the matter ... not only on a party and party basis but on an indemnity basis". 50 Pursuant to French J's orders of 28 September 2004, a third further amended application and a third further amended statement of claim were filed in the primary proceeding on 19 October 2004. This statement of claim named Mr Spalla, Mr Still and Irlmond as the first, second and third applicants. No other applicants were named. The first to fifth and seventh and eighth respondents were the same as those in the present proceeding. The sixth respondent was the Australian Securities and Investments Commission ("ASIC"). 51 By the third further amended statement of claim, Irlmond brought numerous claims against the St George parties and the Deloitte parties arising out of the receivership of Irlmond. Against the St George parties, Irlmond claimed breach of mortgagee's duties, conversion and contravention of s 52 of the Trade Practices Act 1974 (Cth). Against the Deloitte parties, Irlmond claimed breach of receiver's duties and conversion and sought restitution of the receiver's fees. Irlmond claimed restitution of the sum of $1.3 million together with other payments against St George Motor Wholesale. 52 Also by the third further amended statement of claim, Mr Spalla and Mr Still brought claims against Messrs Beck and Home for malicious prosecution and injurious falsehood. Mr Spalla and Mr Still also brought a claim for malicious prosecution against ASIC. 53 On 20 December 2004, French J ordered that most of the statement of claim in the primary proceeding be struck out: see Spalla v St George Motor Finance Ltd (No 6 ) [2004] FCA 1699 (" Spalla (No 6) "). In essence, his Honour held that most of the statement of claim was an abuse of process because it sought to relitigate issues that had been determined by Finkelstein J in proceeding V 74 of 1999: see Spalla (No 6) at [2]-[3], [71]-[108]. His Honour struck out all of Irlmond's claims for conversion and breach of duties against the St George and the Deloitte parties. 54 The only claim of Irlmond that was not struck out was the claim for $1.3 million against St George Motor Wholesale. That claim related to the application of proceeds of the sale of Essendon Mitsubishi which was a discrete event that post-dated the judgment of Finkelstein J. For this reason, his Honour concluded (at [91]-[92]) that the claim should not be struck out as an attempt to relitigate a matter already determined by Finkelstein J. At [92], however, his Honour expressed doubt as to whether "the impugned payment of $1.3 million" would be shown "to be anything other than a continuation" of practices already approved by Finkelstein J. His Honour did not strike out Mr Spalla's and Mr Still's claims for malicious prosecution and injurious falsehood: see Spalla (No 6) at [110]-[116]. This application was given proceeding number VID 54 of 2005. On 31 January 2005, Irlmond also sought leave to appeal from the orders of French J that were unfavourable to it. This application was given proceeding number VID 83 of 2005. These two proceedings (hereafter "the appeals") were to be heard together. 56 With the judgment of French J in December 2004 and the institution of the appeals in January 2005, the primary proceeding entered a new stage and, so far as ILF, Irlmond, Mr Rambaldi and HWL were concerned, led to their reappraisal of the litigation. 57 On 13 January 2005, prior to Irlmond filing its appeal, Mr Vasudevan, Mr Bowman and Mr Stephen Foale from ILF, and Mr Borden and Ms April Arslan met at the offices of Pitcher Partners, in order to discuss French J's judgment. Mr Rambaldi did not attend although, as copies of Mr Vasudevan's emails of 13 and 23 January 2005 attest, Mr Vasudevan kept him informed. In these emails, Mr Vasudevan reported to Mr Rambaldi that Mr Bowman was concerned about ILF's exposure to any personal costs liability incurred by Mr Rambaldi or its own liability for costs as a "third party" beneficiary of the action. Mr Vasudevan also reported to Mr Rambaldi that HWL estimated that solicitor/client costs for the respondents would be between $1 million and $2 million. Spalla will not be a factor in settlement negotiations as if he does not come to the party, then IMF, HWL and the liquidator will drop this matter. 58 Around this time, a dispute arose between ILF and Pitcher Partners concerning the provision of a written opinion by junior counsel (Mr Ian Martindale) in mid November 2002. In a letter of 17 January 2005, Mr Bowman complained to Mr Rambaldi that ILF had not been provided with this opinion at the time it was given. Mr Bowman claimed that the opinion was significantly different from an opinion of Mr Hayes QC upon which ILF had based its decision to provide Mr Rambaldi with indemnity insurance. Mr Bowman intimated that this failure might be a breach of the LFA and stated that ILF reserved its rights in respect of the matter. Mr Rambaldi defended his position in a letter to Mr Bowman of 24 January 2005 (see below), denying that there had been any breach of the LFA. 59 On 21 January 2005, Messrs Rambaldi and Vasudevan attended a further meeting with Messrs Bowman and Foale, during the course of which Mr Bowman and Mr Foale confirmed that ILF was only prepared to maintain ILF's indemnity insurance for Mr Rambaldi in order that a settlement might be negotiated. Upon the evidence as outlined below, I am satisfied that, whether or not HWL actually received an emailed copy of Mr Rambaldi's letter of 24 January 2005, Mr Vasudevan and Mr Rambaldi believed that they had. For present purposes, all that matters is that HWL became apprised of ILF's attitude with respect to its involvement in the litigation by the end of January 2005. Mr Borden stated in evidence that, as at 21 January 2005, he was not aware that "the desired outcome ... was ... a walk away offer", although, in cross-examination, he conceded that he was aware in January 2005 that ILF was actively considering withdrawing its support. What Mr Borden said in cross-examination is borne out in the evidence concerning a meeting on 28 January 2005: see below at [62] --- [67]. 62 A meeting was scheduled for the afternoon of 28 January 2005 at the offices of HWL, for Mr Rambaldi and Mr Vasudevan and ILF's representatives to meet with HWL's solicitors. In the course of the morning prior to the meeting, at around 11.33 am, Mr Vasudevan sent an email to Ms Arslan and Mr Borden. As dsicussed [sic] yesterday, I've attached a copy of our response to [ILF] in relation to the Martindale issue. Unfortunately I will be absent. I think Phil [Borden] will be there. I have let him know. Ms Arslan could not recall having received or read Mr Rambaldi's letter of 24 January 2005 that was supposedly attached to Mr Vasudevan' s 28 January 2005 email. Mr Borden's evidence was to the effect that he did not receive the letter. Searches at HWL failed to locate any copy of Mr Vasudevan's email (whether electronic or kept as a print copy). On balance, having regard to the evidence, I accept that Mr Borden and Ms Arslan did not read the letter of 24 January 2005, although I accept that Mr Vasudevan and Mr Rambaldi believed that they had. This belief was reasonable in the circumstances . I also find that Mr Vasudevan sent the email, with its attachment (the letter of 24 January 2005) and received a reply from Ms Arslan. I make no finding as to whether the attachment was actually received by Ms Arslan or Mr Borden. Nothing ultimately turns upon this issue. 64 In the afternoon of 28 January 2005, Messrs Rambaldi, Vasudevan, Bowman and Foale met at the offices of HWL with Mr Borden and, for a shorter period, Ms Arslan. For the benefit of Mr Borden and Ms Arslan, Mr Rambaldi explained that ILF intended to withdraw the indemnity insurance to him, although ILF had not determined whether to do so before or after the hearing of the appeals. Also at this meeting, Mr Rambaldi said that, if ILF withdrew, then he would not proceed with the litigation unless Mr Spalla set aside funds for future legal costs, including funds to meet adverse costs orders against the liquidator personally. He estimated that, in order to do so, Mr Spalla would need to set aside $1.5 million. 65 There can be no doubt that, by the end of this meeting, Mr Rambaldi, Mr Vasudevan, Mr Borden and Ms Arslan understood ILF's position and that, so far as ILF was concerned, the principal issue related to the timing of the withdrawal of its indemnity insurance. The very next day after the meeting, Mr Vasudevan sent an email to Mr Rambaldi, Mr Borden and Ms Arslan, which purported to summarise the substance of this meeting. Five days later, on 3 February 2005, Mr Borden emailed his diary notes of the 28 January 2005 meeting to Mr Rambaldi and Mr Vasudevan. The only question was whether he would withdraw that support before the appeal was heard or after it was heard. In its estimation about $1.5 million would be needed for this. Mr Bowman was keen to negotiate a settlement with the respondents before the appeal proceedings were heard, whilst Mr Rambaldi wanted to postpone these negotiations until after the hearing. Mr Borden's diary note makes it clear that he also knew of this difference of opinion. 68 On 3 February 2005, Mr Bowman replied to Mr Rambaldi's letter of 24 January 2005. He reiterated that junior counsel's opinion "would be relevant to a funder in determining whether or not to offer funding or an indemnity" in respect of the primary proceeding and that Mr Spalla had not, in ILF's view, honoured his obligations under the LFA to fund the proceedings. Mr Bowman also said that "it [was] not correct that at our meeting on ... Friday 21 January, we advised that [ILF] will withdraw its litigation support after the appeal is heard". Rather, according to Mr Bowman, "[w]e said ... that we reserve our rights, to withdraw the indemnity and to refuse indemnity in respect of costs up to the date of ... withdrawal". He added that ILF did "not intend to prematurely advise the defendants of any threat or decision in relation to the indemnity, until such decision is communicated to you" and he agreed that ILF and Mr Rambaldi "should work closely in an effort to resolve the proceedings in the most favourable manner possible". 69 On 11 February 2005, Mr Rambaldi wrote to Mr Spalla care of Mr Borden. It has not, however, decided when its withdrawal will take place and is considering whether to do so either before or after the appeal is heard. In the circumstances, cash held by me in trust is the only arrangement that would be considered satisfactory to me. I estimate ... in that regard a minimum amount of no less than $2 million ... will need to be paid into my trust account ... to ensure that Irlmond does not withdraw from the action upon the withdrawal of [ILF] from the [LFA] . As you will be aware, any attempts to negotiate with the defendants after [ILF] withdraws from the funding arrangement, would put me in a disadvantageous position as I will be notifying the Court of such withdrawal. The mediation was scheduled for 29 April 2005. A Full Court, which was constituted by Hill, Finn and Kenny JJ, heard argument in proceeding VID 54 of 2005 on 10 May 2005 and, on 13 May 2005, granted leave to appeal and dismissed the appeal: see Beck v Spalla [2005] FCAFC 82. On account of what happened at the mediation on 29 April 2005, proceeding VID 83 of 2005 did not proceed before the Full Court on 10 May 2005. I accept that a file note of that meeting, which Mr Borden had prepared the following day, accurately records the discussions at that meeting. 72 At the meeting of 27 April 2005, Mr Rambaldi repeated that ILF was considering withdrawing its litigation support and that he would be unable to continue with the litigation if it did so. He also said that, if ILF withdrew after the mediation, he would take whatever offer was made, including a walk-away offer. He reported that if ILF withdrew its support, he would not be able to proceed any further with the litigation. He requested ILF to advise whether they would continue support past Friday, as he will need to know this when taking on board any offers that might be made. If the support is withdrawn after Friday, Gess advised that he would take whatever offer was made including a walk-away if that was available. Mr Borden's file note records that Ms Arslan "advised that the bottom line was somewhere between $2 [million] and $3 [million] plus interest and costs". 73 Mr Borden also sought to dissuade ILF from withdrawing their litigation support prior to the appeal. He pointed out to Mr Foale that "it made no sense for ILF to withdraw support until after the appeal if the matter did not settle" at the mediation. He argued that the prospect of an order for costs against the liquidator personally was remote because the appeal was brought on reasonable grounds. 74 In cross-examination at the trial, Mr Spalla agreed that neither he nor Mr Borden objected to Mr Rambaldi's statement that he would not be able to proceed any further with the litigation if ILF withdrew its support. Further, he conceded that neither he nor Mr Borden objected to Mr Rambaldi's statement that he would, in circumstances to which Mr Rambaldi referred, take whatever offer was made, including a walk-away offer. 75 After the meeting on 27 April 2005, Mr Borden had at least two telephone conversations with Mr Spalla by telephone. In my view, Gess would be entitled to adopt this course if ILF withdrew its support and Tony would be unable to complain about it. This would bring the Irlmond claim to an end. 76 By the time of the mediation on 29 April 2005, HWL had about $800,000 of billed time recorded (plus a 20% uplift) on its files for the primary proceeding and the appeals. Thus, under its retainer with Mr Spalla, HWL would have sought to recoup approximately $1 million from any recovery. Mr Hayes QC had already billed over $600,000 of time on the matter. Mr Rambaldi's firm had expended about $300,000 of fees on the matter. Unless the lawyers and Mr Rambaldi were to take what Mr Borden called a "haircut", taken together (and including the apportionment due to ILF under the funding agreement), this meant that Irlmond needed to recover about $3 million or more before any money would have been available to unsecured creditors. Immediately prior to the mediation, Mr Rambaldi and Mr Spalla met outside the venue. Mr Spalla told Mr Rambaldi that he was endeavouring to find a new liquidator. He said that he had engaged a former liquidator to assist him in his search and that he was meeting a potential new liquidator on Monday, 2 May 2005. In cross-examination, Mr Spalla said that he had contacted this potential new liquidator "so that we would have some alternatives in the event of something happening". 78 Present for the applicants at the mediation were Mr Spalla, Mr Gary Spalla (Mr Anthony Spalla's son), Mr Rambaldi, Mr Borden, Ms Arslan, Mr David Still (the second applicant in the primary proceedings), and Mr Ian Still (Mr David Still's father and a solicitor with Still & Co). Mr Bowman also attended at the request of Mr Rambaldi. Mr Hayes QC did not attend the mediation. Also attending the mediation were representatives of the ASIC, the St George parties and the Deloitte parties. Messrs Beck and Wallace-Smith and their solicitor represented the Deloitte parties. 79 The mediator invited the parties to state their cases, which they did. The parties then proceeded to separate rooms. The mediator met with the applicants and the issue of a walk-away offer was ventilated. As it happened, however, on the morning of the mediation, no-one made any offer. 80 At the mediator's suggestion, later in the morning, Mr Rambaldi met with Messrs Beck and Wallace-Smith without their solicitors being present. In this meeting, Mr Wallace-Smith told Mr Rambaldi that the Deloitte parties had received legal advice that Mr Rambaldi could be held personally liable for costs of approximately $1.3 million. Mr Wallace-Smith also said that the Deloitte parties would not pay any money toward a settlement but he would raise the matter with the St George parties. After this meeting (which lasted 15 to 30 minutes), Mr Rambaldi returned to the applicants' room. 81 I interpolate here that Mr Borden's evidence was that he did not recall any morning meeting between Mr Rambaldi and the Deloittes representatives. Mr Borden was not involved in this meeting and little of significance transpired at the meeting concerning him. It is, therefore, unremarkable that he did not recall the meeting. Mr Rambaldi was a participant and the conversation with Mr Wallace-Smith touched him personally. He would be more likely than Mr Borden to recall it. I find that the meeting did take place and I accept Mr Rambaldi's evidence concerning it. 82 Mr Rambaldi left the mediation after noon to attend an unrelated creditors' meeting. He left with Mr Bowman and they stopped briefly at a café. Mr Bowman told Mr Rambaldi that ILF's board had decided to withdraw its litigation indemnity in his favour. Mr Bowman said that ILF would provide written notice, as required by the LFA, later that day. 83 Mr Rambaldi returned to the mediation venue at approximately 1.15 pm. He did not inform those present on the applicants' side (including Mr Spalla and Mr Borden) that ILF had decided to withdraw its indemnity for him. Shortly after returning, and to the knowledge of Mr Spalla, Mr Borden, Ms Arslan and Mr Bowman, Mr Rambaldi again met with Messrs Beck and Wallace-Smith. 84 The evidence of Mr Borden and Mr Spalla was that Mr Bowman joined Mr Rambaldi for this meeting. Mr Rambaldi's evidence was, however, that Mr Bowman was not present when he again met with Mr Beck and Mr Wallace-Smith. I accept Mr Rambaldi's evidence on this issue. Although Mr Borden and Mr Spalla said that they saw Mr Bowman leave the applicants' room at the same time as Mr Rambaldi, this does not establish that Mr Bowman attended the meeting with the Deloitte parties. Further, Mr Rambaldi, who attended the meeting, is more likely to have an accurate recollection of who was present. I reject the proposition advanced by Mr Spalla that Mr Rambaldi specifically asked for Mr Bowman to meet with Mr Beck in Mr Borden's absence. The source of this proposition is a file note made by Mr Borden in the week after the mediation. However, Mr Borden said, in examination in chief, that Mr Rambaldi did not say that he did not want Mr Borden to come with him. Mr Rambaldi denied that he made any such request. I accept that Mr Rambaldi did not specifically seek to exclude Mr Borden from meetings with the respondents against Mr Borden's wishes or judgment. 85 At this second meeting, Messrs Beck and Wallace-Smith told Mr Rambaldi that neither the St George parties nor the Deloitte parties would offer money to settle the Irlmond claim. They also said that the St George parties' representatives were already on their way to the airport to catch a flight to Sydney. Mr Rambaldi asked them if they (and the St George parties) would be prepared to make an offer to settle the Irlmond claim on a walk-away basis. The meeting adjourned to allow Mr Wallace-Smith to contact the St George parties regarding Mr Rambaldi's suggestion. 86 Mr Rambaldi subsequently had a discussion with Mr Bowman outside the applicants' room, in the course of which he told Mr Bowman that he was attempting to get a walk-away offer from the respondents that would remain open for at least the period in which he was still indemnified by ILF. Mr Bowman said that his office would shortly deliver a typed termination notice. Mr Rambaldi briefly returned to the applicants' room where Mr Spalla and Mr Borden were present. He was called out to meet again with Messrs Beck and Wallace-Smith. As Mr Rambaldi left, Mr Spalla said words to the effect that he should not come to any agreement with the respondents without talking to him first. According to one of his 9 September 2005 affidavits, Mr Rambaldi said words to the effect that he would do his best to try to get an offer from the respondents. 87 In addition, according to Mr Borden's file note of the mediation, which was typed the following week, Mr Rambaldi confirmed that before any offers were accepted, he would bring them back to Mr Spalla for discussion. Mr Rambaldi denied making a statement to this effect. I prefer Mr Rambaldi's evidence on this point. His evidence was that after Mr Bowman informed him that ILF was going to withdraw his litigation indemnity, he said nothing about the matter to anyone because he wanted time to reflect on what had occurred and, upon this reflection, he formed the view that from this point onwards he had to proceed with the negotiations as liquidator, having primary regard to the interests of Irlmond and its creditors, and, in particular, without reference to Mr Spalla, or Mr Borden (whom he believed was in a position of conflict). For this reason, he did not inform the Spalla Interests or Mr Borden of the forthcoming withdrawal of his indemnity. In this circumstance, it is improbable that he would have given the alleged assurance. It must be borne in mind that this particular file note was not contemporaneous with the meeting and came into existence in the week immediately after the mediation on Friday, 29 April 2005. At best, this part of Mr Borden's file note indicates what Mr Borden had understood, or wanted to understand, that Mr Rambaldi had said. 88 At the subsequent meeting, Messrs Beck and Wallace-Smith told Mr Rambaldi that they had instructions to put a walk-away offer to Irlmond on behalf of both the St George parties and the Deloitte parties. Mr Rambaldi said that he required an offer that would be left open for at least seven days to enable him to consider various factors, including the need to discuss with his partners effectively writing-off approximately $300,000 of time invested in the Irlmond file. 89 Mr Rambaldi gave evidence that, as a partner of Pitcher Partners, he had authority to write-off fees. Thus, he did not need to meet with his partners to write-off the $300,000 of time invested in the Irlmond claim. Also, he had been writing-off Irlmond-related fees throughout the litigation. Thus, it was not the case that $300,000 of fees needed to be written-off before the settlement could be executed. Rather, Mr Rambaldi had already written-off approximately $250,000 of fees and $50,000 remained to be written off. Mr Rambaldi gave evidence that he referred to the need to write-off fees mostly as a way of getting the respondents to agree to keep the offer open for the seven days remaining for the indemnity. He testified that he expected that his partners would ultimately adopt his recommendation concerning the Deed. I accept this evidence. 90 After Mr Rambaldi left his meeting with Messrs Beck and Wallace-Smith, he met with Mr Bowman in the reception area and, subsequently, with Mr Bowman and the mediator in the mediator's room, where Mr Rambaldi informed them both about what had happened. 91 Some time later in the afternoon, Messrs Beck and Wallace-Smith gave Mr Rambaldi a handwritten draft offer and left him for a short period. Mr Rambaldi reviewed this document in the presence of Mr Bowman and the mediator, and made handwritten amendments. When Messrs Beck and Wallace-Smith returned to the mediator's room, they discussed the draft offer with Mr Rambaldi. They said that they wished the offer to be open for no longer than three days because their solicitors had advised them that costs would have to be incurred in preparing for the appeal while the offer remained open. Mr Rambaldi said that the issue of the offer being open for seven days and being irrevocable was not negotiable. Messrs Beck and Wallace-Smith left to prepare a further draft of the offer. 92 At this point, there is another discrepancy between the evidence of Mr Rambaldi and Mr Borden. Mr Rambaldi said that Mr Borden entered the mediator's room while Messrs Beck and Wallace-Smith were absent preparing the second draft of the offer. According to Mr Rambaldi, while Mr Borden was in the mediator's room, Mr Beck returned with a copy of the first draft of the offer; and, at this point, Mr Rambaldi told Mr Borden that he was negotiating a walk-away offer and handed him a copy of the first draft. He said that, upon hearing this information, Mr Borden expressed concern that he had a conflict of interest and indicated that he would prefer not to be involved. Mr Rambaldi maintained that he also told Mr Borden that ILF was withdrawing Mr Rambaldi's indemnity under the LFA. According to Mr Rambaldi, Mr Borden inquired whether this was being done in writing. Mr Bowman then proceeded to write a notice of withdrawal by hand. Almost the moment this was done, however, the notice, in typed form, arrived from Mr Bowman's office. This notice was signed by Mr Rambaldi and Mr Bowman, and Mr Rambaldi noted that he had received it at 4.43 pm. 93 Mr Borden's evidence was different. He agreed that he had entered the room where Mr Rambaldi and Mr Bowman were present. He also agreed that Mr Rambaldi told him that ILF was withdrawing Mr Rambaldi's indemnity. He concurred that he had asked whether the withdrawal was in writing and that, in response, Mr Bowman had written a notice by hand. Mr Borden also said that, shortly thereafter, a typed notice arrived. Mr Borden agreed that Mr Rambaldi told him that he, Mr Rambaldi, was expecting an offer from the Deloitte parties and the St George parties. According to Mr Borden, however, he did not ask Mr Rambaldi about the terms of the offer and Mr Rambaldi did not tell him that he was negotiating a walk-away offer. He said that it did not occur to him to ask Mr Rambaldi about the offer. He did not recall any mention of a walk-away offer; and that, if he had been told about a proposed walk-away offer, he would have recalled it. His evidence was that he assumed that the offer would be an offer of money. Mr Borden conceded that it was his choice not to ask any questions about the nature of the offer. He also chose to leave Mr Rambaldi and Mr Bowman to themselves and return to the applicants' room. He was not asked to leave. 94 Both Mr Rambaldi and Mr Borden agreed that Mr Rambaldi told Mr Borden that ILF had given notice that Mr Rambaldi's indemnity under the LFA had been withdrawn and that Mr Rambaldi was negotiating an offer of settlement with the Deloitte parties and the St George parties. Even if Mr Rambaldi did not use the expression 'walk-away' offer, I reject Mr Borden's evidence that he did not turn his mind to the possibility that Mr Rambaldi had such an offer in mind. The possibility of a walk-away offer had been raised at the commencement of the mediation. Further, two days' earlier, Mr Borden had specifically warned Mr Spalla that, if ILF withdrew Mr Rambaldi's indemnity, Mr Rambaldi would be likely to seek to negotiate a walk-away offer. This was in the context of the meeting of 27 April when Mr Rambaldi had clearly stated to both Mr Borden and Mr Spalla that he would take this course if ILF withdrew his indemnity. Whether or not Mr Rambaldi actually used the words 'walk-away' offer, Mr Rambaldi would reasonably have assumed that, once Mr Borden knew that his indemnity had been withdrawn and that he was negotiating an offer from the respondents in respect of the Irlmond claim, that offer was, in all probability, a walk-away offer. If Mr Borden did not make any specific inquiries (as he said), then he did not do so because he knew that the offer being negotiated by Mr Rambaldi was likely to be a 'walk-away' offer and he believed that he was likely to be in a clear position of conflict if he asked for and received further details of the offer being negotiated. I reject Mr Borden's evidence to the contrary. 95 Ultimately, it is of limited importance whether Mr Rambaldi told Mr Borden about the walk-away offer at that particular time. Mr Rambaldi's evidence was that, once Mr Bowman told him that the indemnity would be withdrawn that day, he decided to act independently of Mr Spalla and HWL. This is why, when he returned from the lunch-time creditors' meeting, he did not inform Mr Borden, Ms Arslan or Mr Spalla that ILF had told him the indemnity was being withdrawn. 96 A discrepancy also arose between the evidence of Mr Borden and Mr Spalla. Mr Borden said that, after he saw the written notice of withdrawal, he returned to the applicants' room and informed Mr Spalla that ILF had withdrawn Mr Rambaldi's indemnity and an offer was expected. Mr Spalla had no recollection of being told by Mr Borden that Mr Rambaldi's indemnity had been withdrawn. For reasons explained below, I find that Mr Spalla's recollection is to be preferred on this issue. 97 After Mr Borden had left the mediator's room, Messrs Beck and Wallace-Smith returned with a further handwritten offer titled "Deed of Settlement". The parties to the Deed were the Deloitte parties and the St George parties, Irlmond and Mr Rambaldi. The Deed provided that Irlmond would withdraw or discontinue its appeal in VID 83 of 2005. Irlmond also agreed to release the Deloitte parties and the St George parties from all claims in the primary proceeding. The parties agreed to bear their own costs and not to enforce any costs orders in their favour. The Deloitte parties and the St George parties agreed to release Mr Rambaldi, Irlmond and ILF from all claims. Its operation is otherwise irrevocable. The Deed was signed by Mr Beck, Mr Home, Mr Wallace-Smith, Deloittes, Mr Peter Sinn (as solicitor for the St George parties) and Mr Rambaldi (for himself and Irlmond). 98 Between 5.15 pm and 5.30 pm, Messrs Rambaldi and Bowman returned to the applicants' room where Mr Spalla, Mr Borden and Ms Arslan were present. Mr Rambaldi spoke first and attempted to explain what had happened. At trial, the parties strongly disputed what he said. I advised that the walk-away offer was subject to the agreement of my partners - the consent of my firm, I think I used the term - as to its acceptance. I then attempted to explain the circumstances under which I obtained the walk-away offer. I explained that the - I had been served with a notification from ILF in which it was withdrawing the indemnity arrangement that was in place, and that the notification allowed for a seven day time frame by which the indemnity would then terminate. And I recall that that discussion was only a matter of moments. It certainly took place in less than one minute, and I recall that as I was communicating this information people started to get agitated. I can recall people standing up. I can recall that Mr Spalla then got abusive, and directed all of his abuse to Mr Clive Bowman. He used disparaging comments. I think, from memory, he referred to Mr Bowman acting improperly, or words to that effect. I know the language was quite disparaging. Mr Spalla maintained that Mr Rambaldi told the meeting that he had "entered into a Deed and it can't be reversed". It is clear that Mr Spalla formed the impression that a final binding settlement had been reached. Mr Borden also recalled that Mr Rambaldi said that he had entered into a "settlement" rather than an "offer". 100 In written submissions, Mr Spalla argued that the account of Mr Borden was to be preferred to that of Mr Rambaldi because Mr Borden took contemporaneous notes of the meeting. The problem with this argument, from Mr Spalla's perspective, is that Mr Borden's notes support Mr Rambaldi's recollection. Mr Borden's handwritten notes, which he says were taken as Mr Rambaldi was speaking, say " offer irrevocable 7 days" (emphasis added). The same note stated "conditional on getting consent of partners w/o 300K fees. Need to get partners to consent". I accept Mr Rambaldi's account of the meeting. In my view, it is clear that Mr Rambaldi used the term "offer" and explained, as best he could in the circumstances, the terms of the Deed. 101 Furthermore, Mr Borden's handwritten notes of what happened at this time show that Mr Rambaldi stated that ILF had given notice of the cessation of Mr Rambaldi's indemnity in seven days' time, and not, as Mr Spalla would have it, cessation forthwith. Mr Borden's note of what Mr Rambaldi said reads, "Clive [Bowman] issued letter putting me on notice that funding protection will expire w/i 7 days". 102 Mr Spalla and Mr Borden, who were not familiar with the Deed, misunderstood Mr Rambaldi's explanation. This is not surprising. The explanation was very brief and took place in an emotionally charged atmosphere. Although Mr Spalla forcefully insists that his recollection is correct, the evidence shows that he was highly agitated during this meeting. Accordingly, I find that his memory of what occurred (at least in relation to the exact words said by Mr Rambaldi) is not reliable. 103 I also infer, from the fact that Mr Spalla's anger was directed at Mr Bowman, that Mr Borden had not previously informed Mr Spalla that ILF was withdrawing Mr Rambaldi's indemnity. I infer from the evidence of Mr Spalla's reaction that Mr Spalla was surprised by that news. Therefore, I accept Mr Spalla's evidence that he had been unaware that the indemnity was being withdrawn until that point. 104 Mr Spalla left the room after his heated discussion with Mr Bowman. Around the same time, Ms Arslan left the room to make copies of the Deed for those present. Mr Rambaldi said to those remaining that he had no choice but to sign the Deed as the indemnity had been withdrawn in circumstances where the respondents had said they would pursue costs against him personally. Following Mr Rambaldi's return, this meeting in the applicants' room lasted only a short time. 105 The parties did not further address the events of the mediation until the following Monday, 2 May 2005. On that morning, Mr Hayes QC, Mr Spalla, Mr Ian Still, Mr Borden and Mr Rambaldi attended a conference in Mr Hayes' chambers. Mr Rambaldi arrived after the other participants. The discussion in Mr Hayes' chambers became heated and ended when Mr Rambaldi, Mr Spalla, Mr Borden and Mr Ian Still left for the coffee shop at Owen Dixon Chambers. 106 In the coffee shop, Mr Rambaldi again attempted to explain the terms of the Deed. He said that the Deed gave Mr Spalla seven days to find another liquidator to take over from him. He reiterated that he had no choice but to execute the Deed. He said that he had a gun pointed to his head in the sense that ILF was withdrawing its indemnity from him and he had limited options with respect to the affairs of the company. According to his file note, which was made that day, Mr Borden added that, "[i]f he had not been supplied with an alternative litigation funder in that period or if he had not been replaced with another liquidator, the terms of the settlement could then become binding". Mr Borden suggested that, as the Deed was in operation subject only to Mr Rambaldi's partners not agreeing to it, there was nothing left for another liquidator to litigate. Mr Rambaldi disagreed, saying that his partners would follow his advice and that, if another liquidator was found, then his partners would not ratify the Deed. 108 Later that day, Mr Spalla and Mr Rambaldi met with Mr David Lofthouse, who was an accountant and liquidator with some familiarity with Mr Spalla's affairs, to discuss the options available to Mr Spalla including the possibility of finding another liquidator. After this meeting, the parties made enquiries to determine if another registered liquidator would accept the appointment as liquidator of Irlmond in Mr Rambaldi's stead. They were ultimately unable to find anyone willing to take Mr Rambaldi's place. 109 In the late afternoon of 2 May 2005, Mr Rambaldi attended the chambers of Mr Rodney Randall of counsel, to obtain his advice. Mr Randall gave Mr Rambaldi written advice the next day, 3 May 2005, stating, amongst other things that, based on his instructions, he had "no hesitation in endorsing the actions and conduct of the Liquidator" and that it was "open to the partners of Pitcher Partners to ratify the Deed of Settlement". 110 On the same day, 3 May 2005, acting on counsel's advice, Mr Rambaldi sent a facsimile to Mr Spalla informing him that the decision whether or not to ratify the Deed would be made on Friday 6 May 2005. He wrote that, before his firm made that decision, he would give Mr Spalla the opportunity to do one of three things by 4.00 pm on Thursday, 5 May 2005. Obtain approval of the Court for the officers of Irlmond to conduct the litigation on its behalf. This left the second and third options, both of which were pursued. 111 From 3 May to 6 May 2005, there was an exchange of correspondence between the parties and their lawyers. On 4 May 2005, Still & Co. sent Mr Rambaldi two letters by facsimile. The first letter was said to be written on behalf of David Still and the second, on behalf of all the Spalla Interests. He advised Mr Spalla that an application would be made to the Supreme Court of Victoria for the appointment of an alternative liquidator or for Irlmond's officers to take control of the conduct of Irlmond's claim. Mr Spalla expressed a preference for the latter of these options. 113 On 5 May 2005, solicitors acting for Mr Rambaldi, Frenkel Partners, replied by facsimile to Still & Co.'s letters of 4 May 2005. After noting that the Spalla Interests had not addressed the options in Mr Rambaldi's letter of 3 May 2005 to Mr Spalla, the letter advised that an application would be made to the Supreme Court to seek the Court's guidance on the conduct of the litigation and that this application was likely to be heard the following morning. Still & Co. replied the same day, also by facsimile, advising that they could not accept service and that Michael Brereton & Co. would be acting for the Spalla Interests. 114 On 5 May 2006, Mr Rambaldi filed an application, pursuant to s 511 of the Corporations Act 2001 (Cth) ("the Act "), in the Supreme Court of Victoria. The application sought an order that the "officers of Irlmond ... be authorised to conduct the litigation [namely the primary proceeding and the related appeals] on behalf of the Company". In a supporting affidavit, Mr Rambaldi outlined the background to the application and exhibited various documents including the LFA, memoranda from Mr Hayes QC of 3 and 4 May 2005, and Mr Randall's memorandum of 3 May 2005. 115 The application was heard by Hansen J on 6 May 2005. Mr Randall appeared for Mr Rambaldi. Mr Spalla appeared in person. Mr Randall said that, although Mr Rambaldi had come to Court to put the option of allowing the officers of Irlmond to take over the litigation, "his preference is that the court declines to make the orders". Mr Spalla spoke also. He expressed disapproval of how Mr Rambaldi had acted in signing the Deed and said that he wished to take control of the litigation. At the conclusion of the hearing, his Honour declined to make the orders sought and gave reasons: see Rambaldi v Spalla [2005] VSC 162 (" Rambaldi "). 116 Hansen J found that he had insufficient information to form a view on the likelihood of success of Irlmond on appeal or at trial: Rambaldi at [19]. Therefore, he was unable to determine if it was in the best interests of the company to continue with the litigation. He noted that Mr Spalla had not made any "proposal by which the position of the company in relation to the adverse costs orders which are to be released under the settlement could be secured, that is to say if authority was given to Mr Spalla to continue with the proceeding, that the company would be no worse off than it would be in that respect under the settlement": Rambaldi at [20]. Similarly, his Honour noted that he had no "assurance beyond that stated by Mr Spalla, as to how the company's ongoing costs are to be paid": Rambaldi at [20]. 117 Later that day (but before 5.00 pm), Mr Rambaldi procured the consent of his partners to the Deed. 118 Before turning to the parties' submissions, I note that Mr Borden properly conceded that he could not recollect the precise words used at the mediation or in pre-mediation conferences and that, in general, his file notes are likely to be more reliable than his present recollection. I accept this and further I accept that Mr Borden's handwritten notes, which were made at the time of the mediation, are even more reliable than his typed notes of the mediation. 119 It will be apparent from the foregoing that, in general, where there is conflict, I have preferred the evidence of Mr Rambaldi, whom I found a credible witness, to the evidence of Mr Spalla and Mr Borden. 120 In relation to the events of the mediation, Mr Spalla contended that I should prefer the evidence of Mr Borden over the evidence of Mr Rambaldi because Mr Borden kept a contemporaneous file note, while Mr Rambaldi did not, and because Mr Rambaldi was a party, while Mr Borden was not. The circumstances from which the litigation arises do not, however, support the proposition that, in contrast to Mr Rambaldi, Mr Borden can be regarded as a neutral third party. Further, as already noted, the typed file note upon which Mr Spalla placed much weight was not made until some time in the week after the mediation, when the controversy between Mr Spalla and Mr Rambaldi was evident. In some respects, as the forgoing account shows, Mr Borden was an unsatisfactory witness. 121 I accept that Mr Spalla gave his evidence honestly, without any intention to mislead the Court. As the foregoing account shows, however, Mr Spalla has been intensely and emotionally involved in this and related proceedings for some time now. Some of the events about which he gave evidence were emotionally-charged so far as he was concerned. On account of this, and his strong commitment to pursuing his grievances in this and related litigation, he has drawn conclusions from what he has seen or thought he heard that have not always proved reliable. That section allows a "person aggrieved by any act ... or decision" of a liquidator to appeal to the Court in respect of the act or decision. The Court can "confirm, reverse or modify the act or decision". Citing Westpac Banking Corporation v Totterdell (1998) 29 ACSR 448 (" Westpac v Totterdell ") , Mr Spalla submitted that he had standing to bring an appeal under this section as a creditor of Irlmond, of which he was also the sole director. Mr Spalla also maintained that he had standing as an applicant and the funder in the primary proceeding. He also pointed out that he and his wife were the owners and controllers of Anstella, which in turn held all the issued shares in Irlmond. Mr Spalla identified "the decision of Mr Rambaldi to execute the Deed of Settlement on 29 April 2005 and subsequently seek and obtain the ratification of the Deed by his partners on 6 May 2005" as the subject of the appeal. 123 Under r 14.1(2) of the Federal Court (Corporations) Rules ("the Rules") any appeal under s 1321 of an act, omission or decision of a liquidator must be filed within "21 days after the date of the act, omission or decision appealed against". Mr Spalla argued that his appeal was not out of time because, even though his initial notice of motion did not refer to s 1321 of the Act , this proceeding was initiated within 21 days of the execution of the Deed. In the alternative, Mr Spalla sought an extension of time to bring an appeal under s 1321. He argued that an extension of time was appropriate because his initial notice of motion put Mr Rambaldi and other interested parties on notice of the nature of Mr Spalla's complaints against him. 124 Mr Spalla also sought to rely on s 536 and s 1324 of the Act . As I accept that s 1321 is an appropriate vehicle for Mr Spalla's challenge to the Deed, it is unnecessary to discuss these sections of the Act further. 125 Mr Spalla conceded that, where an appeal under s 1321 of the Act is against a liquidator's discretionary decision or a decision involving business judgment, the Court would not reverse the liquidator's decision unless it was satisfied that the liquidator acted unreasonably or in bad faith: see Re Jay-O-Bees Pty Ltd (In Liquidation); Rosseau Pty Ltd (In Liquidation) v Jay-O-Bees Pty Ltd (In Liquidation) (2004) 50 ACSR 565 (" Jay-O-Bees ") at 575 per Campbell J. Mr Spalla submitted that there were many grounds for concluding that Mr Rambaldi acted in bad faith by executing the Deed. As he raised so many grounds, Mr Spalla's submissions were somewhat diffuse. In what follows, I attempt to outline his main arguments. 126 Perhaps foremost among Mr Spalla's arguments is his claim that Mr Rambaldi acted in breach of the LFA. Additionally, he argues that, by his conduct, Mr Rambaldi breached his obligations under the Act , including under s 180. In particular, in breach of the LFA, Mr Spalla alleges that Mr Rambaldi breached clauses 9.1, 9.3, 14 and 21 of the LFA. Under clause 9.1, HWL were to "conduct the Proceeding on behalf of the Liquidator and the Spalla Interests". In Mr Spalla's view, Mr Rambaldi breached clause 9.1 by negotiating the terms of the Deed without consulting his solicitors. 127 Under clause 9.3, the Liquidator was not permitted to instruct the solicitors to settle the "proceedings as a whole" or to "settle, amend, vary, abandon or discontinue any claim made or the relief sought by the Spalla Interests" without consent of the Spalla Interests. Mr Spalla argued that the words "any claim made" included the claim made on behalf of and in the name of Irlmond. 128 Further, Mr Spalla argued that Mr Rambaldi breached clause 9.3 by settling the "Spalla Interest claim" (as defined in the LFA). In support of this contention, Mr Spalla argued that the "Spalla Interest claim" and the "Irlmond claim", as defined in the LFA, are indivisible. He said that, in essence, there was only "one claim" in the primary proceeding. If these claims are indivisible then, according to Mr Spalla, Mr Rambaldi could not settle the Irlmond claim without Mr Spalla's consent. 129 The LFA defined "Spalla Interests claim" as "the claim(s) being prosecuted in the Proceeding by the Spalla Interests as referred to in Clause B of this Agreement. " Mr Spalla noted that clause B states that the Spalla Interests "have prosecuted the Proceeding" by, among other things, filing an amended statement of claim naming APS and Irlmond as the fifth and sixth applicants. In Mr Spalla's view, this shows that the Spalla Interests should be taken to be 'prosecuting' those claims brought by Irlmond. 130 Mr Spalla also emphasised that the primary proceeding was commenced solely by the Spalla Interests and that Irlmond joined the proceeding later. In Mr Spalla's view, this showed that Irlmond's claims in the proceeding were also claims prosecuted by the Spalla Interests. 131 Mr Spalla submitted that Mr Rambaldi also breached the LFA by refusing to participate in mediation. As already noted, on 4 May 2005, solicitors acting for Mr Spalla and Mr Still wrote to Mr Rambaldi advising him that their clients believed that a dispute had arisen under the LFA and they required "the dispute resolution procedure provided in Clause 14 of the Agreement to be implemented". Mr Spalla claims that, pursuant to clauses 9.3 and 14, Mr Rambaldi was required to submit to mediation upon receiving such a notice. In support of this contention, Mr Spalla referred to an e-mail sent by Mr Bowman to Mr Vasudevan on 12 May 2003, which, amongst other things, asked whether the amendment to Clause 9.3, which was effected following the hearing before Finkelstein J on 8 May 2006, "nevertheless mean that any dispute in relation to settlement can be dealt with under the procedure in new Clause 14.1" and an e-mail sent by Mr Vasudevan to Mr Borden on the same morning, in which Mr Vasudevan said, amongst other things, that he agreed with ILF's suggestion that "there should be a dispute resolution procedure in place with Clause 9.3" and that "[t]he new Clause 14 should apply". 132 Mr Spalla claimed that these purported breaches of the LFA showed that Mr Rambaldi acted in bad faith. Especially, so he argued, because Mr Rambaldi knowingly breached the LFA. Mr Spalla claimed that Mr Rambaldi was familiar with the LFA and his obligations under that agreement. He also emphasised that he had reminded Mr Rambaldi of his obligations under the LFA immediately before Mr Rambaldi left the applicants' room at the mediation centre to negotiate the Deed with the Deloitte parties and St George parties. Further, according to Mr Spalla, Mr Rambaldi told Mr Spalla that he would not settle the proceeding without consulting with him. Mr Spalla argued that, in these circumstances, any breach of the LFA was deliberate and strong evidence of bad faith. 133 Mr Spalla also contended that there was a "secret variation" of the LFA by Mr Bowman and Mr Rambaldi. Clause 21 of the LFA provided that any amendment or variation of the LFA was not valid unless it was in writing and signed by all the parties to the agreement. In Mr Spalla's view, Mr Bowman breached this provision at the meeting of 21 January 2005 when he varied the agreement so that ILF was only indemnifying Mr Rambaldi to enable settlement of the proceeding. Mr Spalla claimed that this "variation" of the agreement was kept secret by Mr Rambaldi who did not inform Mr Borden that Mr Bowman's "desired outcome" was a walk-away settlement. Mr Spalla claimed that this "secret variation occurred in the context of Mr Bowman threatening by letter dated 17 January, 2005 not to honour the indemnity for any adverse costs orders incurred to date". 134 Mr Spalla submitted that Mr Rambaldi behaved dishonestly on 29 April 2005. In particular, Mr Spalla claimed that Mr Rambaldi deceived him, Mr Borden and Ms Arslan by not informing them, when he returned after the lunch break, of the fact that his indemnity was to be withdrawn and that he would attempt to procure a walk-away offer. Mr Spalla argued that Mr Rambaldi was obligated to inform the other applicants and their joint solicitors of what had occurred and of his intentions. By not informing them, so Mr Spalla submitted, Mr Rambaldi gave them a false impression of what was occurring during the afternoon's negotiations. 135 Mr Spalla claimed that Mr Rambaldi acted dishonestly by not honouring his promise to consult with Mr Spalla before settling Irlmond's claims. Central to this submission is Mr Spalla's contention that Mr Rambaldi settled Irlmond's claims on 29 April 2005 when he signed the Deed. In Mr Spalla's view, the Deed was not an offer of settlement from the respondents to Irlmond. Rather, Mr Spalla claims that the plain language of the Deed shows that it was a final settlement. 136 Further, Mr Spalla argued that the Court should draw an inference against Mr Rambaldi on the ground that Mr Rambaldi failed to call other witnesses (such as Messrs Beck and Wallace-Smith) who were present when the terms of Deed were negotiated. Mr Spalla argued that the Court should infer that, had such witnesses been called, their evidence would not have supported Mr Rambaldi's contention that the Deed was entered into on the understanding that it was an offer of settlement. Mr Spalla also contended that the Court should infer that, had Mr Bowman been called, his evidence would not have assisted Mr Rambaldi's contention that he was not part of the settlement discussions. I have dealt with this latter submission above. 137 Mr Spalla submitted that Mr Rambaldi could not delegate his statutory power to settle the proceeding in the best interests of the company. Mr Spalla argued that this means that the Deed's condition precedent (which made the Deed's operation conditional on the consent of Mr Rambaldi's partners) could not be seen as a delegation to the firm of Mr Rambaldi's power to settle the proceedings. Mr Spalla concluded that, by signing the Deed, Mr Rambaldi "has settled the proceeding and has merely left the issue of his partners [sic] consent as a condition that must be fulfilled before the deed can take effect. Mr Spalla claimed that, in light of these purported acts of dishonesty, the Court should prefer his and Mr Borden's evidence over that of Mr Rambaldi. 139 Mr Spalla argued that, after the Deed had been signed, Mr Rambaldi did not make a good faith effort to assist him in procuring another liquidator or to have the conduct of Irlmond's claim transferred to him as a director. Mr Spalla said that the s 511 application before the Supreme Court was a "sham" because Mr Rambaldi did not provide the Court with information as to the merits of Irlmond's claims and did not support the application. Further, Mr Spalla submitted that, even if he had been authorised to conduct the litigation or a new liquidator had been found, Mr Rambaldi's partners would have considered whether to ratify the Deed based on "their view of prospects of fee recovery and exposure of the firm and Mr Rambaldi to adverse costs orders" rather than on their view of the best interests of Irlmond's creditors. Thus, according to Mr Spalla, there was no reason to think that the litigation would have continued even if he had complied with one of the three options outlined in Mr Rambaldi's letter of 3 May 2005. 140 In support of a claim that Mr Rambaldi acted unreasonably and in bad faith, Mr Spalla argued that the Deed settled a good and valuable claim and provided no benefit to Irlmond's creditors at all. In Mr Spalla's view, the Deed only benefited Mr Rambaldi. Mr Spalla noted that Mr Rambaldi had endorsed Irlmond's claims in the primary proceeding on many occasions. Mr Spalla submitted that, as late as the morning of the mediation, Mr Rambaldi had said that Irlmond had a good claim. Further, Mr Spalla emphasised that Irlmond's claim (as set out in the third further amended statement of claim) was based on a report by Banks Group Services that estimated Irlmond's current and long-term assets on the date of appointment of receivers (12 February 1999) to be over $10 million. Mr Spalla said that it had been the view of the applicants, including Mr Rambaldi, that Irlmond was entitled to millions of dollars from the respondents in the primary proceeding. He noted that Mr Rambaldi had received advice from HWL and Mr Hayes QC supporting this view. Mr Spalla argued that, as Irlmond had no assets other than its prospects of success in the primary proceeding, the creditors of Irlmond got nothing from the terms of settlement outlined in the Deed. In his view, this showed that Mr Rambaldi was only concerned with his own interests when he signed the Deed. 141 Mr Spalla submitted that Mr Rambaldi signed the Deed under the influence of improper pressure applied by the Deloitte parties and Mr Bowman. Mr Spalla noted that the Deloitte parties repeatedly told Mr Rambaldi that they would seek costs from him personally. Mr Spalla said that it was wrong for them to do this when Mr Rambaldi was not a party to the proceeding and had acted with good faith on legal advice. Mr Spalla claimed that that the Deed should be set aside because this illegitimate economic pressure caused Mr Rambaldi to sign the Deed under duress. 142 Further, Mr Spalla suggested that the Deloitte parties and the St George parties induced Mr Rambaldi to breach the LFA. He said that the Deloitte parties had seen a copy of a redacted version of the LFA and thus knew about the LFA when they negotiated the Deed with Mr Rambaldi. He claimed that the Deloitte parties and the St George parties knew that their dealings with Mr Rambaldi were inconsistent with Mr Rambaldi's duties under the LFA. Therefore, in Mr Spalla's view, they were guilty of intentional interference with contract. 143 Mr Spalla also argued that Mr Rambaldi breached s 477(2A) of the Act by compromising a debt for an amount over $20,000 without approval of the Court, or of the committee of inspection or creditors in general meeting. This submission was based on a misunderstanding as to what constitutes a "debt" under the relevant section: see Re Luxtrend Pty Ltd (In Liquidation) (1996) 135 FLR 170 at 171-172; [1997] 2 Qd R 86 at 87-89 per Moynihan J; Farrow Finance Co Ltd (In Liquidation) v ANZ Executors and Trustees Company Ltd (1996) 136 FLR 154 at 179-180; [1998] 1 VR 50 at 74 per Hansen J; and Re Tietyens Investments Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (1999) 31 ACSR 1 at 20-22 per Weinberg J. It is unnecessary to discuss it further. 144 Finally, Mr Spalla claimed that when the dispute between ILF and Mr Rambaldi emerged in January 2005 there were numerous options available to Mr Rambaldi. In particular, Mr Spalla claimed that, rather than sign the Deed, the liquidator should have resigned and allowed the creditors to appoint a new liquidator pursuant to s 499 of the Act . Alternatively, in Mr Spalla's submission, Mr Rambaldi could have applied to the Court for his removal upon his personal indemnification ending on 6 May 2005. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Mr Rambaldi noted that Mr Spalla has been caught up in litigation --- including the failed criminal prosecution --- for many years now. Mr Rambaldi submitted that these difficult circumstances have impacted on Mr Spalla's ability to consider the issues and events relating to this case in a dispassionate manner. According to Mr Rambaldi, this has lead to Mr Spalla misremembering some conversations such as the meeting at the conclusion of the mediation. 146 Mr Rambaldi submitted that, as Mr Spalla alleged bad faith, the Court is not being asked to decide whether Mr Rambaldi achieved the best settlement possible. Mr Rambaldi sought to distinguish bad faith from negligence. With bad faith, he submitted, the enquiry is directed to the actual state of mind of the decision-maker against whom bad faith is alleged. He argued that there is no such thing as constructive bad faith. 147 Mr Rambaldi argued that bad faith is a serious allegation and that the Court must reach a comfortable satisfaction that the case is made out in accordance with the Briginshaw test: see Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 (" Briginshaw ") at 361-362 per Dixon J. He submitted that, as there is no precise definition of bad faith, whether the case is made out will depend on the particular facts. Mr Rambaldi contested that there were any grounds in this case for concluding that he had acted in bad faith. Mr Spalla had failed, so Mr Rambaldi said, to adduce evidence to satisfy the Court, on the balance of probabilities, that, in entering into the irrevocable offer, Mr Rambaldi was actuated by bad faith. 148 Further, counsel for Mr Rambaldi contended that Mr Rambaldi, at all times, acted in good faith. Counsel asked for a positive finding that Mr Rambaldi was acting in good faith when he entered into the offer and recommended to his partners that it should be given effect. A key element of Mr Rambaldi's submissions was his claim that a liquidator who is not funded or is without indemnity is not expected to continue a proceeding. Accordingly, Mr Rambaldi could not have been expected to continue his involvement in the primary proceeding beyond 6 May 2005. Mr Rambaldi noted that Mr Borden, who was the lawyer of Mr Rambaldi and Mr Spalla jointly, had said that Mr Rambaldi could not be expected to continue the proceedings without an indemnity and would be entitled to accept a walk-away offer in those circumstances. 149 Mr Rambaldi argued that, once he was informed on 29 April 2005 that his indemnity was to be withdrawn, he knew that he would not be able to continue with the litigation after 6 May 2005 and he behaved reasonably to protect the interests of creditors in those circumstances. He said that he procured an offer at the mediation that would stay open for seven days, thereby providing an opportunity for options for continuing the litigation to be explored. He claimed that he procured his partners' consent to the Deed only after no reasonable way to continue the litigation was found. He said that his conduct was consistent with the LFA. Mr Spalla was utterly wrong to characterize what he did to preserve Mr Spalla's position for seven days as a "facade". 150 Needless to say, these submissions are inconsistent with Mr Spalla's views on the construction of the LFA and the Deed. Mr Rambaldi rejected Mr Spalla's construction of these documents. With respect to the LFA, Mr Rambaldi argued that it gave him complete autonomy to settle the Irlmond claims. He said that the plain language of the LFA supported this view. Further, he noted that counsel had submitted to Finkelstein J that the revised draft of the LFA removed "any restriction on the power of the liquidator to accept a settlement offer made to the company. " According to Mr Rambaldi, clause 9.3 related only to decisions to settle the matter as a whole or to settling or discontinuing a claim brought by the Spalla Interests. Mr Rambaldi argued that clause 9.3 did not relate to settlement of the Irlmond claims. Further, he rejected Mr Spalla's contention that the Irlmond claim and the Spalla Interests claim were indivisible. Mr Rambaldi argued that such a view found no support in the text of the LFA. 152 Mr Rambaldi rejected the suggestion that he settled Irlmond's claims on 29 April 2005. He relied on the plain language of the Deed's condition precedent. He said that, under the Deed, he was not required to seek his partners' consent to the terms of settlement. He claimed that, had he not done so, the Deed would have lapsed and the matter would not have settled. In these circumstances, he said it was clear that the Deed was an offer. Further, Mr Rambaldi denied that he told Mr Spalla on 29 April 2005 that he had settled the proceeding. However, he argued that it was not relevant to what was said at the contentious meeting at the end of the mediation because the Deed spoke for itself. 153 Mr Rambaldi denied that he had acted dishonestly by not immediately informing Mr Spalla or HWL when he discovered that his indemnity was to be withdrawn. Mr Rambaldi conceded that, when he returned after the lunch break, he did not tell Mr Spalla or Mr Borden about what Mr Bowman had told him. Nevertheless, Mr Rambaldi argued that he was entitled to act independently exercising his judgment as a liquidator. He submitted that there was nothing improper in taking that course. Further, Mr Rambaldi denied breaching an undertaking given at the mediation to Mr Spalla to discuss any offer before settling Irlmond's claims. Rather, Mr Rambaldi said that he did exactly what he said he would by procuring an offer that remained open for seven days. 154 Finally, Mr Rambaldi rejected Mr Spalla's claim that he entered into a clearly unreasonable settlement that delivered nothing for the creditors of Irlmond. Mr Rambaldi agreed that the settlement did not deliver any monetary return to Irlmond's creditors. He maintained, however, that it protected Irlmond from potential adverse costs orders should Irlmond be unsuccessful in the appeal and the primary proceeding. Mr Rambaldi suggested that this was a significant benefit to the company. He emphasised that, as a liquidator, he had a responsibility to minimise costs incurred by the company even where the company would not be able to pay such costs. Mr Rambaldi suggested that Mr Spalla failed to appreciate this responsibility. Mr Spalla objected to the Deloitte parties being allowed to make submissions on the ground that they did not participate in the hearing or submit any evidence. I allowed the Deloitte parties to file submissions. They are parties to this litigation and, as parties to the Deed, have an interest in the result. They should not be denied an opportunity to be heard simply because they, for whatever reason, declined to submit evidence. 156 The Deloitte parties submitted that the conduct of Messrs Beck and Home was not improper and did not cause Mr Rambaldi to enter into the Deed. They noted that Mr Rambaldi testified that he did not consider their conduct improper and that he understood that parties would express their position at its strongest at mediation. They were, so they said, entitled to raise with the liquidator the prospect of his risk of exposure to a personal costs liability. The Deloitte parties also noted that Mr Rambaldi said that it was the removal of the indemnity by ILF, rather than any improper pressure from the respondents, that motivated him in signing the Deed. 157 With respect to the claim that they induced Mr Rambaldi to breach the LFA, the Deloitte parties submitted that they only had access to a redacted version of the LFA and that this version did not include the clauses relied upon by Mr Spalla. As, however, this redacted version of the LFA was not in evidence it appears that there is no evidentiary basis for this submission. 158 The Deloitte parties rejected Mr Spalla's claim that there is no third party who has acted in good faith and by reference to the Deed who would be prejudiced by it being set aside. The Deloitte parties submitted that there was no evidence that they had acted in bad faith in telling Mr Rambaldi that they might seek costs against him personally. Given that they did not act in bad faith, they argued, the Court should consider the effect on the Deloitte parties of setting aside the Deed. 160 Various statutes have used the expression "person aggrieved" and courts have discussed its meaning in numerous cases: compare the much quoted passage in Ex parte Sidebotham; In re Sidebotham (1880) 14 Ch D 458 at 465-466 per James LJ; Northbourne Developments Pty Ltd v Reiby Chambers Pty Ltd (1989) 19 NSWLR 434 (" Northbourne ") at 437-438 per McLelland J; and Bridgeport --- Advisers & Asset Managers Pty Ltd (2005) 221 ALR 146 (" Bridgeport ") at 162 per Barrett J. As Gibbs CJ said in Koowarta v Bjelke-Peterson [1982] HCA 27 ; (1982) 153 CLR 168 at 184-185, the meaning of the expression must ultimately depend on the context of the particular statute. Having regard to the circumstances outlined above, I find that Mr Spalla has standing under this provision. None of the respondents contended that he did not. 161 I do not base this finding on Mr Spalla's claim to be a creditor of Irlmond. Mr Spalla's claim to be a creditor is in tension with the fact that, in this and the primary proceeding, Mr Spalla relied on the report by Banks Group Services, which, amongst other things, estimated directors' loans to be $1,230,000. The evidence as it stands does not permit me to find whether in fact Mr Spalla was a creditor of Irlmond. As previously noted, some important issues concerning the financial status and dealings of Irlmond have already been found to be subject to res judicata and issue estoppels. This proceeding has focussed on the conduct of Mr Rambaldi, particularly in entering the Deed. I have not been required to make findings about the financial affairs of Irlmond. Nor have I been presented with a proper evidentiary foundation to make such findings. It is unnecessary to decide whether it is sufficient for standing under s 1321 that Mr Spalla claims to be a creditor of Irlmond: compare Starmaker (No 51) Pty Ltd v Mawson KLM Holdings Pty Ltd [2005] SASC 313 at [49] - [51] per Layton J. 162 I am satisfied that Mr Spalla has standing because of his role in the primary proceeding. Mr Spalla is a moving party in the primary proceeding, which is the subject of the Deed and settlement, and, under the LFA, he (and others) undertook to pay the legal costs in the primary proceeding of Irlmond and Mr Rambaldi. Even though the Spalla Interest claims were not settled (see below), it is reasonable to assume that the settlement of the Irlmond claim would significantly affect Mr Spalla as a party to the primary proceeding and deprive him of the advantage of Irlmond's participation. It also affected his rights and obligations under the LFA. Thus, for example, the Deed did not include any release against costs orders in favour of Mr Spalla and the Spalla Interests. Because of this, Mr Spalla claims that the Deed left him exposed to adverse costs orders in relation to Irlmond's claim in the primary proceeding. Mr Spalla has a "legal grievance": compare Northbourne at 438. Mr Spalla's role in the primary proceeding, both as a principal party and under the LFA, is sufficient to give him the standing as a "person aggrieved" under s 1321. 163 Under r 14.1 of the Rules, Mr Spalla requires an extension of time to bring an appeal pursuant to s 1321 of the Act . Mr Spalla did not purport to bring an appeal under this section until 18 April 2006 --- well outside the 21 day period for which r 14.1(2)(a) provides. The Court has the power to grant an extension of time under r 14.1(3) of the Rules. When deciding whether to grant such an extension, the Court has regard to all the circumstances of the case, including the extent and circumstances of the delay and any potential prejudice to other parties. In this case an extension is warranted. As Mr Spalla submitted, his notice of motion of 18 May 2005 was filed within 21 days of the challenged act and put Mr Rambaldi on notice of the points he wishes to raise in the appeal. In all the circumstances of the case, and in light of this fact and the fact that the respondents have not opposed an extension of time, I would grant the extension Mr Spalla seeks. 164 Section 1321 of the Act provides an appropriate vehicle for Mr Spalla's challenge to Mr Rambaldi's actions. The section confers jurisdiction in respect of matters arising in liquidations and "provides a species of review into the decisions of ... liquidators in the original jurisdiction of the court notwithstanding the reference in the section to an 'appeal to the court'": see Re Hedge (No 2) (2002) 196 ALR 557 at 574 per French J. Also, it provides the Court with broad discretion regarding remedies. Therefore, I find it unnecessary to consider any other bases of jurisdiction. Some of these bases, such as s 536 of the Act , would apparently require Mr Spalla to meet a higher threshold before securing the Court's scrutiny: see Re Glowbind Pty Ltd (In Liquidation); Takchi v Parbery [2003] NSWSC 1190 ; (2003) 181 FLR 208 (" Glowblind ") at 217 per Burchett AJ (noting that an inquiry under s 536 will be appropriate only if the Court "considers that inquiry to be 'in the public interest'" and "'it is satisfied that there is a prima facie case' to justify subjecting the liquidator to it"). 165 The decision to accept a settlement on behalf of Irlmond, and the preliminary decision to sign the Deed, were clearly discretionary decisions of the liquidator. They also involved matters of business judgment. It is well settled that where an appeal is brought against such a decision "the court will reverse the liquidator's decision only when it is satisfied that he was acting unreasonably or in bad faith": see Jay-O-Bees at 575 and the authorities referred to. This is in contrast to an appeal against a rejection of a proof of debt where the Court hears the issue de novo: see Jay-O-Bees at 575-576. The "general approach ... in a case like this is that [the Court] should not interfere with a decision made by the liquidator unless either there is fraud, or it can be said that the discretion has not been exercised bona fide, or it can be said that the liquidator has acted in a way which no reasonable liquidator could have acted": Bridgeport at 161-162 quoting Yeomans v Walker (1986) 5 NSWLR 378 at 383 per Hodgson J. 166 Mr Spalla has attempted to satisfy this standard of review by showing that Mr Rambaldi acted in bad faith in executing the Deed. This is a serious allegation, involving the imputation of moral turpitude. The standard of proof to be applied is proof on the preponderance of probability with due regard to the seriousness of the particular issue being determined. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. ... Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature or consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences. 167 Section 181(1) of the Act relevantly provides that an officer of a corporation --- a term that includes a liquidator (s 9) - must exercise powers and discharge duties in good faith in the best interests of the corporation and for a proper purpose. Whether there has been bad faith will depend on the particular circumstances of the case. 168 Want of good faith on a liquidator's part in the present context and elsewhere in the Act (e.g., in s 181) is not precisely the same as the concept of want of good faith in other areas of the law, as for example, in public law. The Act does not, however, define the concept of "good faith"; and the concepts of good and bad faith in the common law and elsewhere in statute are plainly related to the present matter. Thus, "there are many ways in which bad faith can occur and it is not possible to give a comprehensive definition": SBBS v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 194 ALR 749 (" SBBS ") at 756 per Tamberlin, Mansfield and Jacobson JJ. The focus of an inquiry concerning an allegation of bad faith is the state of mind of the decision-maker. The Court is not simply evaluating the wisdom of an impugned decision. But this is not to say that the test is objective. The inquiry is directed to the actual state of mind of the decision-maker. There is no such thing as deemed or constructive bad faith. It is the ultimate decision ... which must be shown to have been taken in bad faith. This means that "mere error or irrationality does not of itself demonstrate lack of good faith ... [b]ad faith is not to be found simply because of poor decision-making": SBBS at 756 [45]. Rather, the circumstances must show dishonesty (or capriciousness) on the part of the decision-maker: compare Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576 at [70] - [78] per Weinberg J. Something is done in "good faith" when done honestly. Something is done in "bad faith" when done dishonestly. These general principles must be applied to each of the purported bases of bad faith as alleged by Mr Spalla. 169 In the context of this case, two considerations must be borne steadily in mind. First, s 545(1) of the Act provides that a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property. Secondly (by way of reiteration) the courts are generally "loath to enter into the area where the professional liquidator has made a commercial decision which he considers benefits the stakeholders whom he represents, at least unless something is pointed to which suggests that there are some vitiating factors which entered into the making of the decision": see Star v Silvia (No 1) (1994) 12 ACLC 600 at 604 per Young J; Sanderson v Classic Car Insurances Pty Ltd (1986) 4 ACLC 114 at 116 per Young J; Northbourne at 440; Westpac v Totterdell at 453-454 per Ipp J (with whom Pidgeon and White JJ agreed); and Cook v Northoak Holdings Pty Ltd (1997) 25 ACSR 517. This is not a difficult question. The terms of the Deed make it very clear that it was an irrevocable offer from the St George parties and the Deloitte parties to Irlmond. 171 Specifically, the condition precedent is unambiguous on this issue. The condition provided that the Deed would not take effect unless Mr Rambaldi procured his partners' consent to the Deed. I accept Mr Rambaldi's submission that, under this provision, he was not required to do anything. If Mr Rambaldi had not acted to procure the consent of his partners the Deed would not have come into effect. This makes it clear that the Deed was an offer from the respondents to Irlmond. It was irrevocable only in the sense that the respondents were not able to withdraw their offer for seven days. 172 In support of his contention that Mr Rambaldi settled Irlmond's claim at the mediation, Mr Spalla relied on his own evidence regarding what Mr Rambaldi said at the 5.15 pm meeting on 29 April 2005. This evidence is largely irrelevant to this issue as the Deed speaks for itself. In any event, I have rejected Mr Spalla's account of that meeting and accepted the evidence of Mr Rambaldi. Mr Rambaldi, as best as he could in the circumstances, attempted to explain that he had procured an offer from the respondents. 173 Further, I reject Mr Spalla's suggestion that I should draw inferences (under the rule in Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298) against Mr Rambaldi because Mr Rambaldi failed to call those with whom he negotiated the terms of Deed. Mr Spalla claimed that there was no explanation for the failure to call these witnesses and that they could have provided evidence as to whether the parties understood the Deed to operate as an offer of settlement. While the surrounding circumstances may be relevant to construction, the terms of the condition precedent are clear. No reasonable observer could have interpreted the Deed as anything other than an offer. The language of the document admits of only one meaning: compare Australian Broadcasting Commission v Australian Performing Right Association Ltd [1973] HCA 36 ; (1973) 129 CLR 99 (" ABC v APRA ") at 105-107 per Barwick CJ and 114-115 per Stephen J. The subjective views of the parties to the Deed are not relevant: see Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 (" Pacific Carriers ") at 461-462 per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 (" Toll ") at 179 per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ. Accordingly, the fact that Mr Rambaldi did not call the other parties to the Deed does not bear on the issue. 174 In the afternoon of 29 April 2005, Mr Spalla had asked Mr Rambaldi not to come to an agreement with the respondents without first consulting him. At no time that day, did Mr Rambaldi conclude an agreement with the respondents. Mr Spalla was notified of the respondents' offer at the close of business that day. At that point, he had seven days in which to satisfy Mr Rambaldi that Irlmond, with Mr Rambaldi as liquidator, should continue to pursue the primary proceeding and the appeals, alternatively, to make some other arrangement that would permit Irlmond to litigate its claims, though without Mr Rambaldi. It is true that it was not for Mr Spalla to decide whether to continue with or terminate Irlmond's participation in the primary proceeding. This decision was left with Mr Rambaldi, who might or might not act to secure his partners' consent. This was, however, in keeping with the LFA and the duty of a liquidator to act independently, in the best interests of the company and its creditors: compare Re Club Superstores Australia Pty Ltd (In Liquidation) (1993) 10 ACSR 730 at 734-735 per Thomas J (and the cases there cited); Re Allebart Pty Ltd (In Liquidation) and the Companies Act [1971] 1 NSWLR 25 at 28 per Street J; and AR Keay, McPherson The Law of Company Liquidation (4 th ed, LBC information Services, 1999) at 291. In any event the effect of the offer was made clear at the meeting at the coffee shop on the Monday morning. Mr Rambaldi acted consistently with this in the days prior to 6 May 2005. If this were true, Mr Rambaldi would have knowingly breached a contractual obligation when he executed the Deed. This would be a significant factor supporting the view that Mr Rambaldi acted in bad faith. However, I find that Mr Rambaldi did not breach the LFA. To the contrary, the LFA clearly gave him the authority to act independently when deciding whether to settle on behalf of Irlmond. 176 The LFA was a commercial contract. The High Court outlined the principles for construing such contracts in Pacific Carriers and Toll . In Pacific Carriers at 462 the High Court said that the process of construction "requires consideration not only of the text of the documents, but also the surrounding circumstances known to [the parties to the contract], and the purpose and object of the transaction": Pacific Carriers at 462. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction . This suggestion has fundamental consequences for the construction of the most relevant clauses of the agreement. Specifically, if claims are indivisible then, under clause 9.3, Mr Rambaldi might have been required to seek Mr Spalla's consent before settling any claims in the primary proceeding. This is because that clause clearly limits the liquidator's ability to settle the Spalla Interests claim. Considering the background and text of the LFA, however, I find that there is no substance to Mr Spalla's submission on this issue. 178 The Spalla Interests claim is defined as "the claim(s) prosecuted in the Proceeding by the Spalla Interests as referred to in Clause B of this Agreement". The Irlmond claim is defined in similar terms as "the claim(s) prosecuted in the Proceeding by Irlmond as referred to in Clause B of this Agreement". Clause B states that the "Spalla Interests have prosecuted the Proceeding by" filing or delivering various statements of claim, including by "delivering a Further Proposed Amended Statement of Claim in the Proceeding ... naming Irlmond as the Fifth Applicant", and filing a notice of motion seeking leave with respect to that proposed pleading. 179 These provisions do not lead me to accept that the Spalla Interest claim and the Irlmond claim are indivisible. First, the claims are defined as those "prosecuted by" the relevant parties. The ordinary understanding of a claim "prosecuted by" a party is that of a claim brought in legal proceedings in that party's name for legal redress of a wrong done to that party. I see no reason to depart from this natural reading of each definition. An examination of the relevant statement of claim in the primary proceeding enables the clear identification of the two different classes of claims, namely, the claims of and by Irlmond, in respect of which it sought relief, and the claims of and by the Spalla Interests, in respect of which they sought relief. Mr Spalla argued that Clause B (to which the definitions refer) effectively states that the Spalla Interests "prosecuted" all of the claims in the primary proceeding. This is not a sensible way to read the reference to Clause B. The reference is simply a device to identify the relevant pleadings. I conclude that the Spalla Interests claim and the Irlmond claim were those claims brought by the respective parties in their own names to redress a wrong done the respective claimants. 180 Many provisions of the LFA would be nonsensical if the Spalla Interests claim and the Irlmond claim were indivisible. For example, clauses 9.2, 11 and 12 clearly assume that the Spalla Interest claim and the Irlmond claim were separate claims. Clause 9.2 assumes particular significance in this regard. That clause provided that "subject to clause 9.3, the Spalla Interests will not interfere with the conduct of the Proceeding by the Liquidator in respect of the Irlmond claim". This would be a startling provision if the Irlmond claim and the Spalla Interest claim, as defined in the LFA, were indivisible as it would have the consequence that Mr Spalla could not interfere in the conduct of the malicious prosecution claim brought in his name (a claim that had nothing to do with Irlmond and that Mr Spalla continues to prosecute in the primary proceeding). 181 Mr Spalla contended that clause 9.3 prohibited the Liquidator from settling "any claim" unilaterally. This argument takes the words "any claim" out of context. Clause 9.3(b) refers to "any claim made or the relief sought by the Spalla Interests " (emphasis mine). In context, the words undoubtedly refer to claims brought by the Spalla Interests. Overall, it is clear that clauses 9.2 and 9.3, when read together, create a regime whereby Mr Rambaldi had complete autonomy with respect to claims brought by Irlmond but was required to seek the consent of the Spalla Interests before settling the entire proceeding (including those claims brought by the Spalla Interests) or settling, amending or discontinuing any claims brought by the Spalla Interests. 182 For these reasons, I conclude that Mr Rambaldi was not required to participate in mediation after he received the letter from Still & Co. of 4 May 2005 demanding that he do so. Clause 9.3 required mediation (pursuant to the procedure outlined in clause 14) where the parties could not agree with respect to settlement of the proceeding as a whole or claims brought by the Spalla Interests. However, mediation was not required with respect to the settlement of Irlmond's claims. 183 The circumstances surrounding the creation of the LFA strongly support this view. Of particular significance are the submissions made to Finkelstein J on 12 May 2003 that the new draft of the LFA "remove[d] any restriction on the power of the liquidator to accept a settlement offer made to the company" and that "[n]o limitations are imposed upon the liquidator at all in this regard" (emphasis mine). These submissions were made by counsel for the liquidator in circumstances where the Spalla Interests were also supporting the application and had an opportunity to be heard on these issues. Effectively, all the applicants in the primary proceeding represented to the Court that the LFA placed no restrictions whatsoever on the liquidator to settle Irlmond's claim. This is a strong indication that this is how they understood the terms of the LFA. 184 Mr Spalla now contradicts the representations made to Finkelstein J by arguing that the LFA required the liquidator both to consult with him prior to settling Irlmond's claim and required the liquidator to participate in mediation if agreement could not be reached. Leaving aside issues of estoppel, I would not conclude that the parties to the LFA intended the terms of that agreement to mean something other than what was suggested to the Court without a very strong showing from Mr Spalla. No such showing has been made. In fact, there is no reason to interpret the LFA in a manner inconsistent with the 12 May 2003 submissions to Finkelstein J. 185 Mr Spalla relied on the email exchange outlined at [131] above. This exchange does not support Mr Spalla's interpretation of the contract. In that exchange, Mr Bowman and Mr Vasudevan agree that clause 14 will apply to disputes concerning settlement that arise under clause 9.3. As previously noted, however, clause 9.3(b) only relates to disputes that involve a claim brought by the Spalla Interests. Clause 9.3(a) relates to "the Proceedings as a whole", which would, of course, include the Spalla Interests claim. Neither clause applies to the claim(s) brought by Irlmond alone. 186 The final issue to consider with respect to the LFA is whether the LFA required Mr Rambaldi to consult with his solicitors before settling the Irlmond claim. Mr Spalla relied on clause 9.2 which provides that "[t]he Solicitors shall at all times be instructed by the Liquidator in respect of the Irlmond claim" for his contention that Mr Rambaldi was obligated to consult HWL before executing the Deed. Clause 9.2 does not support Mr Spalla's submission. Rather, that clause (which appears in a section of the LFA entitled "Control of the Proceedings") concerns who has control over the Irlmond claim. Its significance is that the liquidator, rather than the Spalla Interests, has the control over the Irlmond claim and has authority to instruct the solicitors concerning that claim. It is a general principle that parties are entitled to communicate with opposing parties and settle their cases without consulting their solicitors. There is nothing in the LFA that derogates from this general principle. I also note that Mr Borden did not form the view that Mr Rambaldi was required to consult with him prior to executing the Deed. Further, once Mr Bowman informed Mr Rambaldi that ILF was going to give notice that afternoon withdrawing his indemnity, Mr Rambaldi reasonably took the view that Mr Borden was in a position of conflict and unable to advise him properly. 187 Overall, I conclude that there was no breach of the LFA. The LFA gave Mr Rambaldi autonomy over the settlement of the Irlmond claim and he was entitled to execute the Deed without first consulting with Mr Spalla or HWL. Also, he was not required to mediate a dispute concerning a settlement that covered only the Irlmond claim. As I have found no breach of the LFA, the issue of inducement to breach does not arise. The evidence does not support this conclusion. Although Mr Rambaldi did make occasional references to having a "gun to his head", his evidence was that this was a reference to his indemnity being withdrawn and his having limited options with respect to the affairs of Irlmond. I accept this evidence. I have already found that ILF withdrew the indemnity under the LFA by giving notice in accordance with the LFA. 189 Clearly, Mr Rambaldi's conduct was heavily influenced by the prospect that his indemnity was being terminated in seven days time. It was not unreasonable for Mr Rambaldi to be influenced by this. I accept his submission that he could not be expected to continue his involvement in the litigation after his indemnity was terminated. Thus, on 29 April 2005, he knew that he would need to withdraw from the litigation by 6 May 2005. Faced with this prospect, he chose to procure an offer that protected Irlmond from adverse costs orders. Although he may have had other options, this was a reasonable decision in the circumstances: see below for further discussion of the reasonableness of the terms of the Deed at [203]-[208]. 190 I do not find that the St George parties or the Deloitte parties acted improperly at the mediation. It may be accepted that they stated their case very strongly. But, as Mr Rambaldi himself noted, this is hardly unusual behaviour at mediation. Whether or not they would ultimately have been successful in a claim for costs against Mr Rambaldi personally, they did not place improper pressure on Mr Rambaldi by suggesting that they might seek such costs. Although a lay person, Mr Rambaldi was a sophisticated actor with prior experience with litigation and access to legal advice. Mr Rambaldi could --- and did --- seek advice as to the likelihood of being liable personally for costs. He received advice that it was unlikely that he would have to pay such costs. He knew, nonetheless, that it was open to the respondents to seek such costs and that they had stated that they would do so. In this circumstance, he was entitled to bear this consideration in mind and not to rule it out of account as a possibility. 191 I also address Mr Spalla's suggestion that Mr Bowman placed undue influence on Mr Rambaldi by improperly "varying" the LFA. Mr Spalla noted that the LFA could not be varied except in writing by all the parties. He claims that, from about January 2005, Mr Bowman and Mr Rambaldi agreed that the ILF would only indemnify the liquidator for the purposes of allowing him to settle the action. I do not find that Mr Rambaldi and Mr Bowman "varied" the LFA, as Mr Spalla would have it. Although Mr Bowman frequently mentioned that ILF might withdraw from the LFA, this was not illegitimate as ILF was entitled unilaterally to withdraw from the agreement under clause 6.2. The evidence shows that ILF became increasingly dissatisfied with the manner in which the primary proceeding was being conducted and Mr Bowman, on its behalf, stated to Mr Rambaldi that it was considering withdrawing its indemnity at some stage. This evidence showed a change in circumstances and not a change, or variation, in the agreement. 192 Further, I find that ILF's conduct had no impact on Mr Rambaldi's conduct of the Irlmond claim until 29 April 2005 when Mr Bowman told him that ILF would provide notice of the indemnity's termination under clause 6.2 that afternoon. Until then, Mr Rambaldi had continued with the appeal and participated in the mediation pursuant to the advice of his and Mr Spalla's solicitors. He repeatedly expressed his preference to ILF that it should at least wait until after the appeal was decided before it withdrew his indemnity. It was only after ILF provided the notice of termination pursuant to the LFA that Mr Rambaldi procured a walk-away offer from the respondents. In these circumstances, I find that Mr Rambaldi did not act under duress and was not influenced by any improper pressure. This is a serious accusation to make and I reject it. 194 First, Mr Spalla argued that Mr Rambaldi "deceived" him and Mr Borden by not informing them, after lunch on 29 April 2005, that ILF was withdrawing the indemnity. I have already found that, under the LFA, Mr Rambaldi had control of the conduct of the Irlmond claim and that he was not required by the LFA to inform Mr Spalla or Mr Borden of what he had been told or that he intended to procure a walk-away offer. Further, it is important to recall that under clause 9.2 the Spalla Interests were not to interfere with Mr Rambaldi's conduct of the Irlmond claim. Therefore, Mr Spalla can have no complaint that Mr Rambaldi decided to act independently of him when procuring an offer. 195 Mr Spalla's case was, in part, that Mr Rambaldi deliberately excluded Mr Borden from his meetings with Messrs Beck and Wallace-Smith and did not inform Mr Borden of the withdrawal of his indemnity and the forthcoming offer when he knew one was imminent. These propositions are, however, contrary to the facts as I have found them to be. Furthermore, in assessing Mr Rambaldi's conduct on the afternoon of 29 April 2005, it must be recalled that Mr Rambaldi had already put Mr Spalla (and Mr Borden) on notice that he would accept a walk-away offer if ILF withdrew his indemnity and Mr Borden had acknowledged that this course was properly open to him. Further, as already noted, Mr Rambaldi believed (as was by then the case) that Mr Borden was in a position of conflict and could no longer advise him properly. 196 Mr Spalla also said that Mr Rambaldi deceived him when, before meeting with the respondents on the afternoon of 29 April 2005, Mr Rambaldi told Mr Spalla that he would discuss any offer with Mr Spalla before accepting the offer on behalf of Irlmond. Although he was not required under the LFA to make such a promise, Mr Rambaldi acknowledged that he told Mr Spalla that he would confer with him before settling Irlmond's claim. Mr Spalla alleges that Mr Rambaldi broke this promise because he settled the proceeding on the afternoon of 29 April 2005. I have already found that Mr Rambaldi did not settle Irlmond's claim at the mediation. Rather, he procured an irrevocable offer from the respondents. Consistent with his earlier representation, he did discuss this offer with Mr Spalla prior to settling Irlmond's claim. 197 Mr Spalla also suggested that Mr Rambaldi was fabricating his claim that the condition precedent, which required the offer remain irrevocably open for seven days, was included for his, Mr Spalla's, benefit. Mr Spalla said that Mr Rambaldi had said nothing of the sort and that this was just recent invention on Mr Rambaldi's part. I reject this suggestion. I accept that Mr Rambaldi was prevented from explaining himself adequately in the evening of 29 April 2005, by reason of the general hubbub and confusion that prevailed. He plainly did explain himself in these terms on the first occasion that it was reasonably practicable for him to do so, in the coffee shop the following Monday morning. 198 Finally, Mr Spalla referred to Mr Rambaldi's discussions at the mediation with the respondents. Mr Rambaldi said that, to ensure that the offer stayed open for seven days, he told the respondents, inaccurately, that he required the consent of his partners to write-off fees. I find no fault in Mr Rambaldi's conduct here. Mr Rambaldi was in a difficult situation. The period of grace he sought to negotiate did not benefit him personally but it was of potential benefit to Irlmond (and to Mr Spalla). He sought to protect the interests of Irlmond by negotiating an offer that stayed open while his indemnity remained. At the same time, he did not want the respondents to know that his indemnity was being withdrawn. He reasonably considered that that would have been a disaster for Irlmond and that no offer of any kind would have been forthcoming had the respondents known this fact. Accordingly, he gave an excuse for why he wished the offer to stay open for seven days. He reasonably believed that it would not have assisted Irlmond had he applied to Court at this stage because in so doing Irlmond's and its liquidator's position would have been disclosed. In his letter to Mr Spalla of 11 February 2005, he had already expressed a similar view. Seen in context, Mr Rambaldi's conduct in this regard was not out of the ordinary. Rather, Mr Spalla argued that the liquidator's conduct in the week after 29 April 2005 was a "sham" intended only to "cover his tracks". I reject this contention. I find that Mr Rambaldi made a good faith effort to assist Mr Spalla to locate another liquidator or find some other reasonable way of continuing the litigation on behalf of Irlmond. 200 It is notable that, well prior to the mediation, Mr Spalla was on notice that ILF might withdraw the indemnity before the appeal was heard. Just before the mediation began, Mr Spalla and Mr Rambaldi discussed obtaining another liquidator and the possibility that ILF might withdraw Mr Rambaldi's indemnity. Two days before the mediation, Mr Rambaldi had specifically drawn Mr Spalla's attention and the attention of the others at the meeting that day to this possibility. Further, Mr Spalla was informed by both Mr Rambaldi at this meeting and Mr Borden subsequently that the liquidator would be forced to negotiate a settlement if this occurred. Indeed they specifically alluded to a walk-away offer. Even earlier, on 11 February 2005, Mr Rambaldi wrote to Mr Spalla informing him that, if ILF withdrew his indemnity, he would only be able to continue prosecuting Irlmond's claims if Mr Spalla deposited $2 million in his trust account. Mr Spalla did not reply to that letter. At trial he said that he did not have the requested funds. Indeed, the matter of ILF withdrawing its support had been raised as early as January 2005 as a real possibility. Plainly enough, by the time of the mediation, Mr Spalla knew or ought to have known that Mr Rambaldi might not be able to continue with the litigation. Consistent with this, he was searching for a new liquidator even before the mediation. 201 After the mediation, Mr Rambaldi informed Mr Spalla that he had three options to consider before the Deed was ratified. These options were: (1) depositing $2 million in Mr Rambaldi's trust account; (2) procuring the appointment of a substitute liquidator; or (3) obtaining the approval of the Court for the officers of Irlmond to conduct the litigation on its behalf. Because of Mr Spalla's lack of funds, the first option was unavailable. Mr Spalla, with Mr Rambaldi's help, tried to procure the appointment of a substitute liquidator but one could not be found. In cross-examination, Mr Spalla agreed that Mr Rambaldi co-operated with him in attempting to find another liquidator. Finally, Mr Rambaldi made an application to the Supreme Court of Victoria to give Mr Spalla the opportunity to argue that he should be given leave to conduct the litigation as a director of Irlmond. 202 On legal advice, Mr Spalla did not make an application to take over the carriage of the primary proceeding for Irlmond. Having sought his own independent legal advice, Mr Rambaldi did apply to the Supreme Court. Mr Spalla claims that the application to the Supreme Court was not made in good faith because Mr Rambaldi did not support it. Mr Rambaldi explained that he did not support the orders sought by the application because he did not believe that Mr Spalla was an appropriate person to have conduct of the Irlmond claim in the primary proceeding. He explained that, in his view, Mr Spalla was too emotionally involved with the litigation and might not be able to bring sufficient objectivity to the commercial decisions associated with managing litigation on behalf of a company in liquidation. This does not show that Mr Rambaldi brought the application in bad faith. As liquidator of Irlmond, Mr Rambaldi was required to advise the Court of his position in relation to the application. Although he did not support the application, by bringing it he gave Mr Spalla the opportunity to seek an order giving him authority to conduct the litigation. As I have said, Mr Spalla takes the opportunity to seek that authority. He wishes to be able to conduct the litigation and, as discussed with counsel, I could make such an order under s.511(1)(b) of the Act if, in my view, it was otherwise appropriate to do so. I find that it was filed in a good faith attempt to seek the guidance of the Court and to allow Mr Spalla an opportunity to put his case to the Court. Overall, I find no reason to conclude that Mr Rambaldi acted in bad faith in the week before the Deed was ratified. Absent any other evidence of bad faith, the question must be whether or not, in executing the Deed and ultimately settling Irlmond's claim, Mr Rambaldi acted in a way that no reasonable liquidator could have acted: compare Bridgeport at 161-162. In this context, it must be borne in mind that courts are especially reluctant to second-guess settlement decisions. Public policy favours settlement. As Chesterman J said in Dew v Richardson [1999] QSC 192 at [42] , settlement helps "reduce the level of disharmony in society and conserve the resources both of litigants themselves and the community which funds the courts. " Others have seen the virtue of settlement in promoting certainty that permits litigants to deal with their affairs in an orderly way looking to the future. Experience shows that cases with the brightest prospects of success somehow fail and it is difficult to underestimate the value of the certainty provided by a settlement as opposed to the continuing risks of litigation through to judgment". Mr Spalla argued that, as Irlmond had no funds to pay adverse costs orders, they got no advantage from a settlement that simply protected Irlmond from adverse costs. This submission is based on a fundamental misunderstanding of the responsibilities of the liquidator. A liquidator has a responsibility to minimise the costs incurred by the company regardless of whether the company has the funds to pay them. The Deed benefited the company by providing a release from all claims by the respondents, securing the respondents' undertaking not to enforce any costs orders against it (which according to Mr Borden were considerable) and its liquidator, and precluding liability arising from potential adverse costs orders in the future. Further, the company's winding-up was permitted to continue unimpeded by the litigation. 205 Mr Spalla also contested Irlmond's insolvency. The fact is, however, that Finkelstein J found that, as at the date of the appointment of the receiver, Irlmond was insolvent. An appeal against his Honour's judgment was dismissed. The finding that Irlmond was insolvent when it went into receivership is now res judicata and the subject of issue estoppels. In light of Finkelstein J's finding, it cannot be said that Mr Rambaldi settled a good claim on behalf of a solvent company, as Mr Spalla would have it. Further, the evidence shows that the primary proceeding needed to yield about $3 million before there could be any return to creditors. The evidence also shows that, at the 27 April 2005 meeting, Mr Spalla and the others in attendance were contemplating accepting any offer between $2 and 3 million. Under the LFA, this would only have permitted the lawyers and others involved in the primary proceeding to be paid out. 206 Mr Spalla submitted that the liquidator had received legal advice that Irlmond had a good claim and that the appeal was likely to be successful and that, if Irlmond was successful, then it was unlikely to incur significant costs orders. Mr Spalla submitted that it was unreasonable for the liquidator to disregard such advice and act as he did. Leaving aside the issue of whether the liquidator made the best decision open to him (which does not arise for consideration), numerous factors militated in favour of Mr Rambaldi's decision to execute the Deed. First, at mediation, the respondents told him that they would make no monetary offer and no such offer was forthcoming from them. Secondly, it is fair to say that the applicants were in difficulties in the primary proceeding. Their statement of claim had gone through over ten drafts and had been struck out three times. Bearing in mind the appeals, which were subject to the usual contingencies of litigation, no trial was imminent. Thirdly, legal fees and other costs had reached a point where the company needed approximately $3 million before unsecured creditors would have seen any return from the litigation. Moreover, the applicants' solicitors, HWL, had stated that they might not continue with the litigation much longer. Fourthly, Mr Spalla did not have sufficient funds to pay legal fees other than on a 'no win, no fee' basis. Thus, it might have been very difficult to find alternative experienced solicitors if HWL withdrew. Fifthly, as already noted, Mr Rambaldi's indemnity was being terminated, with the consequence that he could not continue as liquidator. Mr Rambaldi reasonably believed that it would not have assisted Irlmond if he applied to Court at this stage because in so doing Irlmond's and its liquidator's position would have been disclosed and no offer from the respondents would have been forthcoming at all. Sixthly, Mr Rambaldi negotiated a seven day period of grace, which was of potential benefit to Irlmond, because it allowed other options to be considered. Seventhly, Irlmond and its liquidator obtained releases from all claims by the respondents, as well as from costs orders in the respondents' favour. These factors all support Mr Rambaldi's decision. 207 Ultimately, there were also additional factors militating in favour of Mr Rambaldi procuring his partners' consent to the Deed on 6 May 2005, thereby settling the matter. Attempts to find a substitute liquidator had failed. Mr Spalla had neither provided the funds for him to continue nor obtained court approval to conduct the Irlmond claim on its behalf. He had independent counsel's advice as to the propriety of his conduct. 208 Again, it is important to note that the question is not whether Mr Rambaldi made the best decision in the circumstances. Rather, the issue is whether he acted so unreasonably that the Court should set aside his actions. In my view, the terms of settlement provide no reason to conclude that Mr Rambaldi acted in bad faith or otherwise acted so unreasonably that the settlement should be set aside. In essence, the relief he seeks is that the Deed be set aside and that he be given leave to conduct the primary litigation on behalf of Irlmond. For the foregoing reasons, I have found no ground for setting aside the Deed. Therefore, I need not consider whether Mr Spalla should be given leave to conduct the litigation on behalf of Irlmond. I would order that the third further amended notice of motion be dismissed. 210 On the evidence, there is no basis for finding that Mr Rambaldi acted in bad faith in executing the Deed at the end of the mediation on 29 April 2005. On the contrary, the evidence shows that Mr Rambaldi acted in good faith throughout. He honestly believed on reasonable grounds that it was in the best interests of Irlmond and its unsecured creditors to procure the offer, to which the Deed gave rise. 211 I propose to hear the parties on costs after they have had an opportunity to consider these reasons. | motion to set aside deed in relation to settlement of proceedings lack of good faith asserted liquidator's duty to act independently in the best interests of the company practice and procedure insolvency |
The first respondent, Harbeth Holdings Pty Ltd seeks judgment against the applicants pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) ("the Act "), alternatively that the statement of claim be struck out pursuant to Order 11 rule 16 Federal Court Rules 1976 (Cth) on the grounds that it does not disclose a reasonable cause of action against Harbeth. 2 By its motion the second and third respondents seek the same relief except that in addition they seek orders that the statement of claim be struck out and the action dismissed under each of the grounds found in Order 20 rule 2. The case concerns an option to purchase granted to Dandaven, first under a Contract to Lease and subsequently under a Lease. Dandaven alleges that the option is in respect of the whole of the Land. The second applicant was nominated by Dandaven as purchaser when it purported to exercise the option in 2007. Harbeth has refused to perform the contract of sale said to have been created upon the exercise of the option. Dandaven seeks an order for specific performance of this contract or damages in lieu. The proceedings concern, principally, questions as to the proper construction of the option. In the event that the meaning and effect of the option is construed adversely to the applicants, their claims then are for orders under s 87(1A) of the Trade Practices Act 1974 (Cth) ("TPA") and/or in equity for rectification. The TPA claims for such relief are brought under s 51AA and/or s 51AC of the TPA. There are also estoppel claims. Alternatively, the applicants claim damages against Harbeth for breach of warranty and for breaches of ss 51AA , 51AC and 52 of the TPA, and against Mr Healey and PA (2004) for breach of s 52 of the TPA and/or s 10 of the Fair Trading Act 1987 (WA). PA (2004) is the corporate vehicle of Mr Healey. 4 Harbeth contends, in effect, on the construction point, that the option is in respect of only part of the Land and therefore a part of a lot, and thereby void as contrary to s 136 of the Planning and Development Act 2005 (WA) ("Planning Act") . The applicants submit that this construction would involve attributing to the parties an absurd presumed intention. In any event they submit that in respect of its claims for rectification and related relief, there was a subjective intention for the option to apply to the whole of the Land and for it to be effective, and not void. The second reading speech of the Migration Litigation Reform Bill 2005 which introduced s 31A stated that its purpose was to strengthen "the power of the courts to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases": Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 70 IPR 146 at [45] ; Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60 at [124] . 6 Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. It advertised the sale of its business in January 2006 through Russell Lyon of Performance Business Brokers. Mr Lyon provided to Mr Reynolds an advertising brochure for the sale of the business which stated "The premises and the land on which they stand are or [sic] owned by the vendor and the freehold is for sale along with the business. " It is not disputed that such a brochure was given to Mr Reynolds, but it is said that a later brochure was prepared which simply stated "Freehold price: TBA". It is not said that Mr Reynolds or anyone else on behalf of the applicants was given this new brochure. 8 Harbeth had instructed Mr Healey to assist in the sale of the business. Mr Healey also provided accounting services to Harbeth as a consultant to PA (2004) which was also retained to act as settlement agent for Harbeth. 9 There was a conversation between Mr Reynolds and Mr Lyons on behalf of Harbeth, on 8 February 2006, in which Mr Reynolds indicated that he required an option to purchase the whole of the Land. This is not disputed in the respondents' affidavits. 10 There then followed further conversations between Mr Reynolds and Mr Pannekoek on behalf of Harbeth, between 8 and 10 February 2006, in relation to an option to purchase, although the details of the conversations are in dispute. 11 A written agreement dated 10 February 2006 for the sale and purchase of the business for $1.485 million was executed. It was an express condition precedent to the performance of this agreement that Harbeth and Mr Reynolds, or an entity formed by him, would enter into a Contract to Lease. It is a standard form document in the form of an offer and acceptance provided by the Real Estate Institute of Western Australia. As to the first of these he said: " Thanks for the changes to the lease. For avoidance of doubt I think the option to purchase should state that it is an option to purchase the whole property. It could be misinterpreted at the moment that it is only the 'leased portion'. What do you think ? It is not clear whether or not Harbeth, through Mr Pannekoek, had executed the Contract before Mr Reynolds signed it. There is evidence to suggest Harbeth had done so. First, Mr Healey in his email to Mr Reynolds said that if there were changes made then Mr Pannekoek would need to re-sign the Contract. Second, in an email sent at 9.16 am to Mr Pannekoek, three minutes after his email to Mr Reynolds, Mr Healey again stated that if there were any changes to the Contract Mr Pannekoek would have to re-sign it. A Deed of Lease was, in due course, prepared although not by the Lessor's solicitors but by the Lessee's solicitors. It was executed by Harbeth and Dandaven on 7 April 2006. Dandaven had been nominated as Lessee by Mr Reynolds. Again, part only of the Land was leased. 17 On 3 April 2006 prior to the execution of the Lease and completion of the sale of the business, there was a conversation, according to Mr Reynolds, in which he was asked by Mr Pannekoek how he considered the parties should apportion rates and land tax as between the area being leased and the whole of the land. Mr Reynolds says that he told Mr Pannekoek that he would bear the costs of all the rates and land taxes on the whole Land as outgoings, given the goodwill between them, and as he would have to pay for it all the following year in any event once he owned what he described as "the Property". He was there referring to the whole of the Land. 18 On that day and on 4 April 2006, and arguably consistent with Mr Reynold's version of this conversation, PA (2004) as Harbeth's settlement agents, sent settlement statements to Mr Reynolds showing that the applicants would bear all the rates and land taxes on the whole of the Land as from the date of settlement. Mr Pannekoek may have seen these settlement statements at about the time of settlement. 19 The expression "Leased Premises" is defined by Clause 1.1 of the Lease. It relevantly provides that "unless the context otherwise requires ... the "Leased Premises" means the premises ... described in the Schedule ...". "Leased Premises" That part of the Building and/or Land known as Part of 13 Baldwin Street, Kewdale, WA, comprising approximately 3,500 (three thousand five hundred) square metres which area for identification purposes only is outlined blue on the plan annexed hereto. 22 The applicants submit however that the "context otherwise requires" that the term "Leased Premises", when used in the option provision in special cl 11(2) of the Schedule, should not be given its defined meaning if that meaning is construed to refer to part only of the Land. Such a construction, it submits, would impute to the parties the absurd and commercially unreasonable intention of recording the grant of a void option. They point to the traditional doctrine that courts should be astute to adopt a construction that will preserve the validity of the contract: Meehan v Jones [1982] HCA 52 ; (1982) 149 CLR 571 at 589, and to prefer a construction which will encourage performance rather than avoidance of contractual relations: Ankar Pty Ltd & Arnick Holdings Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15 ; (1987) 162 CLR 549 at 556-557; Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191 at 202. The Contract to Lease and the Lease each created a valid demise in that a demise of part of the Land for less than 20 years did not contravene the subdivision provisions of the Planning Act : s 136(1)(a). However the option to purchase would contravene s 136(1)(d) of the Planning Act and hence would be void, if it is construed as referrable to a purchase of part only of the Land. The proper construction, in that context, the applicants submit, is that the option is in respect of the whole of the Land. 23 The applicants' submit that such a construction is reinforced by the mutually known background circumstances. They rely upon the circumstances surrounding not only the Lease but also the Contract to Lease. 24 The process of construction normally requires a consideration of not only the text and context of the written agreement, but also the surrounding circumstances known to the parties, as well as the purpose and object of the transaction: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 179, [40] ; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at 461-2. The "history" of a contract is part of the context in which a contract takes its meaning: International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3 ; (2008) 242 ALR 47 at [8] . Even where there is no linguistic ambiguity extrinsic evidence may be considered in aid of construction: Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144 ; (2006) 156 FCR 1 , particularly at 49-53. Ambiguity is not confined to a competition between two meanings. It extends to meanings which, for example, are doubtful, uncertain, or indistinct and which therefore require a consideration not only of text but also context: Colby Corporation Pty Ltd v Commissioner of Taxation (2008) 165 FCR 133 at [42]-[43]. It may also be admitted to identify the subject matter of a contract, its nature and scope: Codelfa Constructions Proprietary Limited v State Rail Authority (NSW) [1982] HCA 24 ; (1982) 149 CLR 337 at 349. The meaning arrived at in this way may not be the most obvious or most grammatically correct: Australian Broadcasting Commission v Australian Performing Right Association Limited [1973] HCA 36 ; (1973) 129 CLR 99 at 109. Words may generally be supplied, omitted, or corrected in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency: Fitzgerald v Masters [1956] HCA 53 ; (1956) 95 CLR 420 at 426-427 and 437. 25 In my opinion, the context, background or history of the Contract to Lease may arguably involve a consideration of at least the terms of the advertising brochure, the discussions between Messrs Reynolds and Pannekoek between 8 and 10 February 2006 and the content of the emails passing between Messrs Reynolds and Healey on 13 February 2006. 26 Harbeth's case is that Mr Healey's email does not state or imply that Mr Pannekoek on its behalf would sign an amended contract. Rather, the import is that Mr Reynolds could alter the document after it had been executed by all parties, but that the altered document would then need to be re-executed. It also submits that the only statement about re-signing by Mr Pannekoek is that 'he would then need to resign it'. This it says plainly carries the implication that Harbeth would have to agree to the changes. This is a statement, it says, about what is required to formalise a variation, and is not a statement about an agreement in advance to sign such a variation. It submits that there is no express or implicit assertion to the effect that the Option, as worded, related to the whole of the Land and not just part of it. Finally Harbeth contends that there is no statement or implied assertion about the plain intention arising from the wording. If anything, it says Mr Reynolds is being given a reason why the doubt expressed by him in his email had a proper basis. 27 The second and third respondents adopt the submissions of Harbeth but add that Healey's email makes clear that any change to the wording of the option would have to be taken up with Mr Pannekoek directly by Mr Reynolds with a view to obtaining his agreement to the change. 28 The applicants make the following submissions as to the 13 February emails. Their case, in effect, is that Mr Reynolds was concerned that the terms of the option could be misinterpreted to mean it related only to the leased portion and not the whole of the Land. His email says as much and seeks a response as to this concern prior to his signing the Contract to Lease, and in particular whether the terms of the option should be amended to remove this doubt. Mr Healey in response allayed his concerns by assuring him that such a misinterpretation was not open because it was impossible (as a matter of law) to sell part only of a lot but that if he wanted to change the wording to put it beyond doubt, then that would be acceptable to Mr Pannekoek who would, however, have to re-sign it if he adopted that course. 29 Consideration of this extrinsic material arguably, in my view, may demonstrate that it was mutually known by the parties to the Contract to Lease that one of its purposes was to ensure that Mr Reynolds or the entity used by him to acquire the business should have the option to purchase the whole of the Land. Viewed in that way it has a tendency to support the construction contended for by the applicants. Certainly there is a serious dispute raised as to the proper construction of the option and the extent to which, if at all, the extrinsic material is relevant. 30 The respondents contend however that, whatever be the position in relation to the Contract to Lease, none of this extrinsic material is even arguably relevant to the construction of the option in the Lease itself which they say is clear in its terms and was drawn by the applicants' solicitors. I do not consider that this necessarily follows. The context, background or history to the Contract to Lease may arguably, in my view, also be relevant to a consideration of what is intended by the option in the Lease. The Contract for Lease, as I observed earlier, by clause 23 contemplated that any Lease would contain the terms of the offer in the Contract to Lease. Both are inter-related in this sense. There was no evidence as to what instructions were given by the applicants to their solicitors for the preparation of the Lease. It is reasonable to infer however that they were provided with the Contract to Lease: Jefferson Ford Pty Ltd v Ford Motor Co of Australia Ltd [2008] FCAFC 60 at [132] per Gordon J. It is hardly surprising then that any ambiguity, absurdity or shortcoming in the Contract to Lease, could be repeated in the Lease. Additionally, in respect to the Lease, relevant extrinsic evidence would arguably also include a consideration of the conversations which, on the applicants' case, took place on 3 April 2006, concerning payment of rates and taxes as well as the content of the settlement statements sent to Mr Reynolds on 3 and 4 April 2006. 31 I do not think that it can be said that the applicants have no reasonable prospects of success of demonstrating that the proper construction of the option in the Lease is as they contend, aided by a consideration of the above extrinsic circumstances. There are real issues of fact and law to be determined. The rights of the parties depend upon their resolution. In these circumstances it is appropriate that the matter should go to trial: Hicks v Ruddock at [13]. The second and third respondents submit that neither of them were agents to effect the commercial relations between Dandaven and Harbeth. This, they say, was the function of Performance Business Brokers. Mr Pannekoek, in his affidavit sworn on 21 December 2007 at [6] said that, in January 2006 he arranged for the Signs Business to be advertised for sale through Russell Lyon of Performance Business Brokers and that subsequently he instructed Mr Healey to assist. He did not explain what assistance it was that Mr Healey was to render. He said that Mr Healey provided accounting services to Harbeth and related entities as a consultant to PA (2004) Pty Ltd, the third respondent. In his affidavit sworn 10 March 2008 at [6.2] Mr Pannekoek said that PA (2004) acted as Harbeth's settlement agent. 33 The emails of 13 February 2006 from Mr Healey to each of Mr Reynolds and Mr Pannekoek concerned the Contract to Lease. The contents of each, in my opinion, arguably, is evidence that he, or by implication PA (2004), to which he consulted, acted as agent for Harbeth in relation, at least, to the Contract to Lease as pleaded by the applicants. Arguably, any such agency may extend to the formation of the Lease including the option. The Contract to Lease was inextricably tied up with the Lease and both were interrelated with the agreement for the sale of the business. Accordingly there are questions of fact and law as to the allegations of agency, which will require further exploration at trial. This is sufficient to overcome the dismissal application on this ground. Because of the conclusions I have reached in respect to that material, it follows that I am not persuaded that those causes of action have no reasonable prospect of success. 35 The respective submissions of the parties as to the alleged breach of warranty disclose a serious dispute as to the meaning and effect of cl 12.1(e) of the General Conditions of the Agreement for the Sale of the Business, in particular whether this provision relates only to a then existing Lease and whether the warranty is one continuing until completion. It cannot be said, in my opinion, that the applicants' case in this respect has no reasonable prospects of success. 36 The motions to strike out the statement of claim were not the subject of written submissions and were not, it seemed to me, pressed in oral argument. The brief oral submissions made by counsel for the second and third respondents complained about paragraphs [49]-[51] of the statement of claim which concern the claims under the Trade Practices Act and the Fair Trading Act . These set out the pleading of inducement following on from the pleaded representation in the context of the interrelationship between the Contract to Lease and the Lease. The submission however focussed on the evidence going to the pleaded allegations rather than the structure of the pleading itself. I do not consider that grounds exist for the statement of claim, in whole or part to be struck out. 37 Both motions should be dismissed. The respondents should pay the applicants' costs. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | motions for dismissal of proceedings pursuant to federal court of australia act 1976 (cth) s 31a alternatively for statement of claim to be struck out federal court rules order 11 rule 16 or order 20 rule 2 construction of option in contract to lease and subsequent deed of lease consideration of evidence of extrinsic material in aid of construction common intention unilateral mistake estoppel equitable estoppel breach of warranty unconscionable conduct ss 51aa and 51ac of trade practices act 1974 (cth) misleading and deceptive conduct ss 6(3) and 52 trade practices act and s 10 fair trading act 1987 (wa). practice and procedure |
These are my reasons. 2 At 5.00 pm yesterday, (15 October 2008) the ship 'Samsun Veritas' was arrested in Port Hedland. The vessel is fully laden with 140,000 tonnes of iron ore. Variable spring tides are particularly significant at present. There is a very real likelihood of the fully laden vessel running aground. Last night its keel was less than half a metre from the ocean bed in the port. Safety and financial considerations in those circumstances are very significant. From a safety perspective it is essential that the ship be moved out of the port. 3 This application was brought by an Admiralty Marshal of this Court on an urgent basis seeking directions from the Court in relation to the movement of the ship from its berth in Port Hedland to a proposed anchorage point outside the Port's area and beyond the territorial waters of Australia. 4 In support of the application was an unsworn affidavit of Mr Clive Cassin, Admiralty Marshal. The Admiralty Marshal gave an undertaking to the Court that the affidavit would be sworn at the earliest opportunity. I have therefore proceeded on the basis that the facts set out in the affidavit are, at least in a preliminary way, properly before the Court. I have been informed by the Port Hedland Harbour Master Mr Lindsay Copeman that as the ship "Samsun Veritas" is fully laden it will need to be moved to a point beyond 12 nautical miles from the port to enable safe anchorage. From my discussion with the Harbour Master I undstand (sic) this will be outside port limits, but inside port control, which extends 20 nautical miles. I verily believe that the Programmed shipping movements at Port Hedland required the "Samsun Veritas" move from its current berth at the earliest opportunity. Concerns have also been raised by BHP's Roger Richardson regarding lack of safe draught clearance between the ship's keel and ocean bed should the vessel not be moved by 9am this morning. 5 Additionally there is before the Court an affidavit sworn by Jenney Bazakas on 15 October 2008 in support of the application for an arrest warrant. 6 Time did not permit the collation of all evidence on affidavit as this hearing was held in the early hours of the morning (WST) of 16 October 2008. I was informed, however, by counsel for BHP who intervened as the owner of the berth, that if the vessel is unable to get away by tomorrow, it will be at least a week before it can do so safely for tidal reasons. Even today the tides are such that it needed to leave by 9.00 am. 7 The cargo value in relation to four other ships waiting to berth and which would be affected by a delay of a week was $12 million per day. The total loss (including other claims) in a week was estimated at about US$86 million. As stated four other ships are presently awaiting the berth occupied by the ship Samsun Veritas. Although the safety considerations are the paramount considerations, the financial issues are certainly not insignificant. 8 The particulars of the plaintiff's claim are that on 15 October 2007 Samsun Logix Corporation (SLC) time chartered the ship 'Tai Hawk' from its owner, the plaintiff. On 1 October 2008, SLC provided notice in writing to the plaintiff that it intended to redeliver the Tai Hawk before the contractual delivery date under the Time Charterparty. Accordingly it is argued that SLC was in repudiatory breach of the Time Charterparty. The plaintiff accepted the breach on 15 October 2008 and claims for unpaid hire due under the Time Charterparty and damages for the repudiatory breach pursuant to s 19 of the Admiralty Act 1988 (Cth). 9 The plaintiff's current estimate of damages which will be sustained as a result of the repudiatory breach of the Time Charterparty is approximately US$1,600,000 together with interest and legal costs. At present pursuant to an order of the United States District Court, Southern District of New York made on 9 October 2008 an order for the Issue and Process of Maritime Attachment has been made against SLC in the sum of US$2,600,000. The order has been served on Chase Manhattan Bank and New York Bank in New York where funds belonging to SLC in the sum of US$2,600,000 have been secured but are the subject of challenge. I was informed by counsel for the plaintiff that the plaintiff is not intending to 'double up' on its claim for security and steps will be taken to release those funds if they have not already been released. 10 The plaintiff accepts the concerns as to the safety and financial risks and proposes that the vessel be permitted to sail under arrest to the Port of Dampier which is on route to its ultimate destination in Asia. It will incur additional costs in berthing at Dampier. I was informed that in a practical sense it is possible for the ship to berth at Dampier in about 12 hours' time from its departure from Port Hedland. Undertakings as to damages and fees of the Marshal have been given and funds have been advanced in respect of the Marshal's expenses. 11 In Sovremenniy Kommercheskiy Flot v 'Socofl Stream' [1999] FCA 42, the applicant was the consignee of a cargo of steel coils. It sought orders permitting the vessel to sail from the port of arrest (Brisbane) to Newcastle in order to discharge the cargo. The arresting party did not oppose the order. The applicant offered cash security to cover the Marshal's expenses of the voyage. There was evidence that it would not be necessary for the vessel to leave the territorial sea in the course of the voyage so the vessel could at all times remain within the jurisdiction of the Federal Court. However the Marshal opposed the application on the basis that nothing could prevent the ship making a break for the international waters if the master so decided. The Court accepted the Marshal's argument and declined to make the orders. The situation here is somewhat different. The consignee has not been heard from, indeed, the owners of the vessel have not appeared and the Marshal does not oppose the ship going to Dampier provided adequate security arrangements both in a physical and financial sense are accommodated. Above all, there are very significant public interest considerations. On the other hand, it will leave territorial waters for part of that voyage. 12 In Den Norske Bank (Luxembourg) S.A. v The Ship 'Martha II' [1996] FCA 136 the Martha II was arrested in Melbourne at the instance of a mortgagee. Against opposition from the mortgagee, orders permitting the Ship to continue its voyage were made subject to certain conditions being fulfilled and undertakings being given by the Time Charterer. These included payment before the ship left Melbourne of the Marshal's costs of supervising the movement and the cost of arrest up to the time of the order. The Marshal and two armed members of the Australian Protective Service were onboard. The ship proceeded to Botany Bay where some cargo was offloaded. On the same day Sheppard J varied the original orders made by Olney J to direct that no new cargo be loaded onboard, the refinancing, which was expected, not having eventuated. His Honour ordered the ship to proceed from Botany Bay to Port Jackson to berth or anchor in the custody of the Marshal. Sheppard J distinguished that case from orders for movements of a ship and discharge of the cargo in an earlier decision in Malaysia Shipyard and Engineering Sdn Bhd v Iron Shortland (1995) 59 FCR 535 concerning the Ship 'Iron Shortland' in which his Honour had approved orders permitting the arrested vessel to sail between Port Hedland, Western Australia and Port Kembla in New South Wales. His Honour observed that in that earlier case, the orders were made by consent undertakings being provided by Australian Third Party Charterers and the case involved public interest considerations, namely, the potential shortage of iron ore at the Port Kembla steel works. 13 Similarly, in this case there are very urgent and paramount public interest considerations. On the other hand, Sheppard J's judgment may be taken as agreeing with the earlier view of the Court of Appeal to the effect that an arrested ship should not be permitted out of the Court's jurisdiction. 14 I am also particularly mindful of orders, similar in nature to those I would make, being made by Allsop J in Commandate Marine Corp v The Ship "Boomerang I" [2006] FCA 859 concerning the Ship 'The Boomerang I'. As observed in SC Derrington and JM Turner The Law and Practice of Admiralty Matters (1 st ed, Oxford University Press, 2007) at 7.31, similar orders have been made in New Zealand. The learned authors are critical of such and approach. 15 The 'Samsun Veritas' has now left for Dampier --- to do so it will sail outside of territorial waters. Any orders attempting to preclude that would be quite inappropriate for safety reasons. There is a jurisdictional question as to making orders which purport to take effect, in part, beyond territorial waters. The power of the Marshal is one basic consideration. On the facts of this case, however, the ship could not stay where it was, nor could it be ordered to be anchored outside of the 12 mile zone. There was no application to set aside the arrest and release the ship. There is precedent for the pragmatic approach and general liberty to apply on short notice. Making the orders does not preclude the jurisdictional debate being raised at a later time. The ship the 'Samsun Veritas' presently under arrest in Port Hedland, Western Australia be permitted whilst under arrest as soon as practical with all dispatch and without deviation to sail to the port of Dampier, Western Australia and to proceed directly to a designated berth, buoy or other anchorage and remain there until further order of the Court. 2. The plaintiff be permitted to place a representative to remain on board the 'Samsun Veritas' for the period of voyage by and movement of the ship under this order. 3. The Marshal may authorise to be on board the 'Samsun Veritas' such persons as he shall, in his discretion, deem appropriate for the purpose of retaining the safe custody, control and preservation of the ship from leaving the anchorage in Port Dampier. 4. There be liberty to any party or any person affected by these orders to apply on 2 hours notice. 5. The costs of and incidental to this application and this order be reserved. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | urgent ship arrest serious safety and financial risks in ship remaining in port urgent orders sought permitting ship to move beyond the 12 mile zone orders made permitting ship to make 12 hour trip to suitable port jurisdictional questions balancing interests admiralty |
2 In 2002 Charben sued the plaintiff, Environmental & Earth Sciences Pty Limited, and Caltex Petroleum Pty Limited for, amongst other things, damages for misleading conduct in relation to two reports concerning the service station site. 3 On 8 April 2004 Charben obtained a judgment against the plaintiff in the sum of $2,147,800 in respect of the misleading conduct. 4 On or about 17 May 2004 the plaintiff paid $1.4m to Charben in partial satisfaction of the judgment and on 21 May 2004 the plaintiff paid a further $747,800 to Charben's lawyers to be held in trust to abide the outcome of the plaintiff's appeal from the judgment at first instance. 5 On 22 December 2005 the plaintiff's appeal was upheld, the orders made at first instance on 8 April 2004 were set aside and, in lieu thereof, an order was made that the proceeding against the plaintiff be dismissed. On 20 January 2006 an application for special leave to appeal was filed in the High Court but that application has yet to be determined. 6 The costs of the proceeding at first instance and of the appeal were reserved, directions being made for the filing and service of written submissions thereon. 7 On 19 January 2006 the Full Court relevantly amended the directions given by it on 22 December 2005, extending the time for the filing of written submissions in respect of costs. Charben's submissions in reply were due to be filed by 5pm on 17 February 2006. 8 On 19 May 2006 the Full Court which determined the appeal ordered Charben to pay 80% of the plaintiff's costs on the appeal, to pay the costs of the plaintiff on the hearing at first instance and to pay the costs of the plaintiff on the costs application. 9 On or about 6 February 2006 the plaintiff was repaid the amount of $747,800 which had been held in trust by Charben's solicitors pending the outcome of the appeal. However, notwithstanding a demand for payment, none of the balance of $1.4m, paid by the plaintiff to Charben on or about 17 May 2004, has been repaid. 10 On 9 March 2006 the plaintiff issued a statutory demand on Charben for the repayment of the balance of $1.4m. That demand was not satisfied within the requisite 21 day period. 12 Under s 436E of the Act the administrator of Charben, Mr John Vouris, the first defendant, was obliged to convene a meeting of the company's creditors (the 'first meeting') in order to determine whether to appoint a committee of creditors and, if so, who should be members of that committee. The first meeting took place on 7 April 2006. It will be appreciated that as at the date of that meeting no orders for costs had relevantly been made against Charben in the plaintiff's favour even though the plaintiff had been successful in its appeal and it had been ordered that the proceedings brought against it by Charben be dismissed. Costs claimed are on party/party basis being 2/3 thirds (sic) of the actual costs incurred by EES. See copy of Colin Biggers & Paisley Billing Status Report for period 1 January 2001 to 5 April 2006 attached. Two-thirds of that amount is, of course, a little more than the $617,000 claimed in the plaintiff's proof of debt. 15 The schedule to the proof of debt bears an endorsement disclosing that its author was 'TMD', whom I would understand to be Tina M Douglas a solicitor in the employ of Colin Biggers & Paisley who was working under the supervision of Mr Peter Harkin, a partner in that firm, who was the solicitor for the plaintiff in relation to the submission of the proof of debt and the current proceedings. 16 In an affidavit sworn 21 April 2006 Mr Harkin deposed to having caused the proof of debt to be faxed to the administrator under cover of a letter from his firm dated 6 April 2006. 17 At the first meeting of creditors of Charben held on 7 April 2006 the administrator admitted the plaintiff's right to vote in respect of the debt of $1.4m but rejected the claim in respect of the legal costs incurred in respect of the proceedings in which the plaintiff had, in the result, been successful. It reserved costs so there was no debt or claim in existence at the date ... [the administrator] was appointed. On that occasion the plaintiff resubmitted its proof of debt of 6 April 2006 to which reference has earlier been made. On 27 April 2006 the administrator once again rejected the proof of debt for voting purposes to the extent to which the plaintiff sought to prove for an amount greater than $1.4m. As we have indicated to you in our view they are not. Relevantly however section 444A(4)(i) states that the Deed must specify the day (being a day not later than the day when the administration began) on or before which claims must have arisen if they are to be admissible under the Deed. The word " claims " is not defined in the Act although the definition contained in 553 of the Corporations Act which deals with debts provable in a winding up is often used as the definitions in a Deed as to which claims are provable in the Deed. The question arises whether the asserted right of Caltex and EES to the benefit of Costs Orders is a claim which has " arisen " as at the date that the Administrator was appointment (sic) . In our view the claims had not " arisen " at that date. The New South Wales Supreme Court recently considered this position when determining whether the costs incurred by an applicant in seeking to wind up a company are provable in a subsequent Deed of Company Arrangement in circumstances where no Order had been made for costs with respect to that application prior to the Administrator's appointment. The Court held that such costs were not provable in the Deed of Company Arrangement ( see McDonald v Deputy Commissioner of Taxation [2005] NSWSC 2 ; (2005) 23 ACLC 324). The logic behind these decisions is that the award of costs is a matter which is wholly within the discretion of the Court. While in many cases it is fairly predictable as to how that discretion will be exercised (ordinarily costs follow the event so that the successful party would expect an Order to be made in their favour with respect to costs) until the Court actually exercises its discretion to make an Order it is wholly impossible for an Administrator or Liquidator to make an assessment that the discretion will be exercised in a particular way. The issue concerning costs is complicated. There are clearly complex matter to be taken into account in determining what if any Costs Orders should be made and it seems to us those complexities only reinforce the importance of the following the previous authorities and not allowing EES or Caltex to vote with respect to any amount they may claim for legal costs nor to participate in any distribution that may be under any Deed of Company Arrangement that may be proposed. There is some authority for the proposition that contractual arrangements between the parties may alter the legal position. If for instance a party agrees in a contract to be responsible for another parties legal costs then there is an argument that the costs have arisen under that contract and so may be provable. In Re: Pasminco Limited [2002] FCA 231 ; (2002) 20 ACLC 782 considered whether costs associated with pursuing a personal injury action against the Company would be provable. The Court considered alternative views as to the nexus between incurring costs and obtaining compensation for personal injury but reinforced the general principle that costs are not provable in the absence of agreement to the contrary or an Order for their payment. To the extent that an Order is made by the Court subsequently those costs will be claimable against the Company and it may be if Caltex and EES intend to pursue their claim for costs (if an order is made in their favour) that it is important for the purposes of any Deed proposal that the directors commit to continuing to resist the making of any Order for Costs and give some consideration as to how any Order against the Company would subsequently be funded. It seems to us little point in proceeding with a Deed of Company Arrangement if the commercial reality is that the Company will subsequently face insolvency by breach of its inability to meet an adverse Costs Order. See also Expile Pty Limited v Jabb's Excavations Pty Limited ('Expile') (2004) 22 ACLC 667 at 675 [33]). 25 By an amended originating process filed in Court on 11 May 2006 the plaintiff sought, inter alia, a declaration that the administrator's rejection or partial rejection of the plaintiff's proof of debt 'made on 7 April 2006' was invalid, an order that the plaintiff's proof of debt be admitted in full or, alternatively, an order that the administrator's rejection of the plaintiff's proof of debt be modified or varied so as to allow the plaintiff's proof of debt in whole or in part as the court may deem appropriate. 26 Upon the matter being called for hearing on 22 May 2006 the administrator sought and was granted leave to file in Court an interlocutory process in which he now seeks directions pursuant to s 447D of the Act as to whether in the circumstances of the making of the costs orders by the Full Court on 19 May 2006 he would be justified in admitting the plaintiff to proof for the purpose of voting at the adjourned creditors meeting in the amount claimed in the 'costs Proof of Debt dated 6 April 2006 or in some other amount. (b) If the said proof of debt should not be so admitted, should an order now be made under section 447A of the Act which would cause the Act to operate so as to allow the plaintiff to vote in respect of its costs entitlement (the Second Question). Given that the plaintiff's entitlement in respect of its costs on the appeal was limited to 80% of its costs, a just estimate would be a lesser amount. At the conclusion of the hearing of the applications leave was granted to the plaintiff to file and serve evidence on the appropriate quantum for which a right to vote at the adjourned meeting of creditors on 23 June 2006 should be allowed by the administrator. Liberty was granted to either party to apply should such party wish to be further heard in respect of the relevant additional evidentiary material. No such application has been made within the time allowed for that purpose. 31 In an affidavit sworn 26 May 2006 Dean George Bitsis a solicitor in the employ of Colin Biggers & Paisley, has deposed to the fact that as at 25 May 2006 the costs and disbursements incurred by the plaintiff through Colin Biggers & Paisley have totalled $937,140.20. Mr Bitsis has referred to the fact that the plaintiff was originally represented by Levy Peatman solicitors and later by Hunt & Hunt solicitors before Colin Biggers & Paisley were retained as the solicitors for the plaintiff on 23 April 2003. 32 According to Mr Bitsis the appeal proceedings commenced on 28 April 2004. Mr Bitsis apparently assumed the conduct of the matter for the plaintiff under the direction of Mr Skehan, who was the solicitor on the record, in July 2004. 33 Mr Bitsis says that the plaintiff's costs and disbursements in relation to the trial including GST totalled $188,479.51. In respect of the appeal he says that the plaintiff's costs and disbursements including GST totalled $917,128.43. 34 It is difficult to reconcile with precision the earlier claim in respect of costs as recorded in the proof of debt of 6 April 2006 with the figures now provided. Be that as it may, the total costs of the plaintiff of the trial and of the appeal to 25 May 2006 are now said to have been $1,105,607.94. In respect of this sum the question arises as to what amount would represent a just estimate of the value of the claim for costs in the light of the Full Court's judgment in relation to costs of 19 May 2006. In Mr Bitsis' affidavit he suggests that in respect of professional costs it is likely that on taxation there will be a reduction of 15% to 25% in respect of the amount claimed and that, in respect of disbursements, there is likely to be a 10% reduction in respect of the amount claimed. These percentages are, of course, inconsistent with the discount which Mr Harkin considered appropriate when formulating the proof of debt, namely one-third. 35 If one applies Mr Harkin's one-third discount to trial costs and disbursements totalling $188,479.51, the resultant just estimate becomes $125,653.00. Again, if one applies Mr Harkin's one-third discount to the amount said to have been incurred by way of appeal costs and disbursements totalling $917,128.43, a just estimate becomes $611,418.95. In relation to this figure Mr Bitsis accepts that there should be a further 20% discount in the light of the order made by the Full Court in respect of the plaintiff's entitlement to be paid costs on the appeal. This would reduce the just estimate in respect of the appeal costs to $489,135.16. 36 Mr Bitsis propounds that a just estimate of the plaintiff's costs should be $157,323.58 for the trial and $644,926.99 for the appeal, a total of $802,250.57. In my opinion the administrator would be justified in allowing for voting purposes an amount of $125,653 in respect of the plaintiff's costs and disbursements of the trial and an amount of $489,135.16 in respect of the plaintiff's costs and disbursements of the appeal, a total of $614,788.16. This, of course, is subject to the plaintiff establishing that it has an entitlement to have its proof in respect of costs admitted, at least in part, for voting purposes. Once again liberty was granted to either party to apply to be heard in respect of any such additional evidentiary material. No such application has been made within the time allowed for that purpose. 38 As it transpires Charben was a week or two late in filing its submissions on costs and the plaintiff was late to a similar degree, if allowance is made for the late service of Charben's submissions. Charben did not file and serve any submissions in reply. 39 In the circumstances, it does not seem to me that it can be suggested that Charben's delayed compliance with the directions of the Full Court in relation to submissions on costs could be relevant to any order that might be thought appropriate under s 447A of the Act. The traditional approach has been to treat as creditors for the purposes of s 439C those persons who would be entitled to prove in a winding up of the company in accordance with s 553 of the Act (see Brash Holdings Limited (Administrator Appointed) v Katile Pty Limited (1994) 13 ACSR 504 per Brooking, J D Phillips and Hansen JJ at 513; see also Selim v McGrath ('Selim') [2003] NSWSC 927 ; (2003) 47 ACSR 537 per Barrett J at 554-5 and in particular [67]-[68]). So also, with provable claims. 42 In McDonald v Commissioner of Taxation ('McDonald') [2005] NSWSC 2 ; (2005) 187 FLR 461 at 472 [36] Barrett J noted that s 553(1) of the Act directs attention not to the time at which a debt or claim arises but to whether 'the circumstances giving rise to' the debt or claim occurred before the 'relevant date'. In the administration of a company that is being wound up in insolvency, a debt or liability, present or future, certain or contingent, being an ascertained debt or liability or a liability sounding only in damages, may be admitted as a claim against the company. 47 The Corporations Law was extensively amended by the Corporate Law Reform Act 1992 (Cth). Amongst other things Part 5.3 was repealed and it was replaced by a new Part 5.3A entitled 'Administration of a company's affairs with a view to executing a deed of company arrangement'. Sections 439A-439C, which make provision for decision meetings of creditors, are to be found in Division 5 of Part 5.3A. 48 By s 92 of the Corporate Law Reform Act , the former s 553 of the Corporations Law was repealed and replaced by new sections 553, 553A, 553B, 553C, 553D and 553E under the heading 'Subdivision A --- Admission to proof of debts and claims'. A new heading 'Subdivision B --- Computation of debts and claims' was inserted before s 554 of the Corporations Law. Section 554 was itself amended by s 93 of the Corporate Law Reform Act and by s 94 of that Act new sections 554A, 554B and 554C were inserted as part of Subdivision B. The reforms embodied in these provisions reflect the recommendations of the Harmer Report in relation to the making of claims in insolvency. As the reforms relate to matters which under the current law are dealt with under the Bankruptcy Act , and incorporated into the Corporations Law by reference under s 553, the implementation of these reforms has necessitated the incorporation in the Corporations Law of provisions modelled on sections in the Bankruptcy Act . This is in line with the general policy implicit in the Harmer Report that the provisions dealing with insolvency of companies should, as far as practicable, be located within the Corporations Law rather than included by reference. As a result of the current application of the Bankruptcy Act provisions, demands in the nature of damages arising otherwise than by reason of contract, promise or breach of trust are not provable in the winding up of a company ( Bankruptcy Act , subsection 82(2)). The Harmer Report noted that this could result in a number of anomalies, not the least of which is that a set of circumstances can produce both a claim in tort and in contract. ... The Harmer Report made the point that there was no justification for such a distinction and noted that this could result in significant injustice where a claim could only be framed in tort. In such cases the claimant would make no recovery at all. The Harmer Report noted that the only substantial argument against permitting claims for unliquidated damages in tort was the problem of quantification. The Report noted too that this had not prevented claims for unliquidated damages arising from contract being made. The operation of proposed sections 553 and 554A overcome the effect of subsection 82(2) of the Bankruptcy Act and thereby permit claims in tort which are unliquidated at the time of the winding up to be admissible in the winding up. Proposed section 554A provides for the determination of the value of debts and claims of uncertain value. The Harmer Report recommended a procedure for quantification in corporate insolvency where the amount of the claim is not certain. Proposed section 553 re-enacts those parts of existing subsection 553(1) which are not dealt with by other proposed provisions, and provides that in every winding up, all claims against the company (present or future, certain or contingent, ascertained or sounding only in damages) are admissible to proof against the company. Proposed subsection 554A will give effect to the recommendation of the Harmer Report that a mechanism be provided for the estimation of a debt or claim of uncertain value. A comprehensive system. A basic aim of insolvency law is to deal comprehensively with all the debts and liabilities of the insolvent. In the case of an individual insolvent, the aim is to have all claims to which the insolvent was subject at the time of the commencement of the formal administration resolved so that the insolvent can made a fresh start. This reflects the rehabilitative aim of insolvency law. In the case of a company, the aim is to deal with all the claims against a company so that its affairs can be fully wound up or so that it can resume trading. A simple procedure. To facilitate the proving and administration of claims, the procedure provided should be as simple as possible and the rules relating to various aspects of the procedure (particularly the quantification of claims) should be clear. Terminology. The process whereby creditors are required to notify the trustee or liquidator of their claims against the insolvent is currently referred to as "proving a debt". The Commission prefers the expression "making a claim" as being more comprehensive and therefore more accurate, and the term "admissible" as describing a claim that may be accepted by the insolvency administrator. The need for wide categories of admissible claims. The categories of claims which are admissible should be as wide as possible so that the financial affairs of the insolvent are dealt with comprehensively [emphasis added]. In the case of individuals, this promotes the policy of rehabilitation and thus primarily favours the debtor by including the maximum number of claims in the insolvency process and releasing the debtor from those claims. It also reduces the wasteful cost of pursuing (usually, to no productive end) claims which are not admissible. In the case of corporate insolvency, it completes the insolvency process . In the case of an insolvent winding up, it also favours creditors, since, if the creditors are unable to make their claims in the insolvency, they are unable to recover at all [emphasis added] (unless they have a basis for action against either directors of the company or a guarantor of the company's debts or unless the winding up is stayed). The Commission recommends that this basic principle should also apply to a voluntary insolvency administration, such as under Part X of the Bankruptcy Act and the proposed deed of company arrangement form of administration. 779. The Commission's view that the categories of admissible claims should be as wide as possible required a review of the admissibility of claims for unliquidated damages in tort and fines [emphasis added] . Neither of these categories is admissible in an individual bankruptcy or a corporate involvency (sic). Current law. ... The present Australian law in relation to tort claims in an insolvency is that tort claims which are unliquidated at the commencement of the insolvency cannot be made against an insolvent company (except in a scheme of arrangement) or against an insolvent individual who is subject to a formal insolvency administration. Arguments for reform. As mentioned, the right to make a claim under the present law may depend merely on a technical distinction between framing the claim in contract and framing it in tort. There is no justification for such a distinction. Furthermore, if a claim cannot be framed in contract, the claimant makes no recovery at all. In the case of an individual bankrupt, the person who has suffered the tort at least retains the right to sue the bankrupt (although this may well be an empty right). However, this result impairs the fresh start philosophy of bankruptcy. It could result in a double or second bankruptcy for that individual. Even more serious is the situation where a company is being wound up in insolvency. There, the entity against which the person suffering the tort has the claim most often simply goes out of existence and the tort claimant recovers nothing. The problem of quantification. The only substantial argument against permitting claims for unliquidated damages in tort is the problem of quantification. However, this has not prevented claims for unliquidated damages arising from contract being made. Moreover, a claim for unliquidated damages in tort can be made under the Insolvency Act 1967 (NZ). From the inquiries made by the Commission, this has not presented any problems in practice in that country. The Cork Committee agreed that it was unacceptable that tort claims be left outside the category of provable debts. Now, under the new Insolvency Act 1986 (UK), unliquidated claims in tort may be made in any insolvency administration, whether of an individual or a company. Recommendation. The Commission therefore recommends that claims for unliquidated damages arising from tort should be admissible. Problems of quantification. Frequently the amount of claims may not be certain and an estimate of the amount may be required. This may occur, for example, because the claim is subject to a contingency. It is therefore necessary to have a method by which the value of such a claim may be estimated. Such a provision is particularly important if claims for damages in tort are to be admitted (although, as mentioned, the problems of quantification may be precisely the same as for a claim in contract which is admissible under existing law). Recommendation. The Commission recommends a procedure for quantification in both individual and corporate insolvency where the amount of claims is not certain. The Bill is the most significant piece of legislation, in terms of the content of Australia's corporate law, introduced during the life of this Parliament. On the contrary, as is the case with all of the Government's corporate law reform initiatives, the four main elements of this Bill have their origins either in a major law reform report or in calls by industry for the introduction of particular changes. For example, the insolvency reforms in this Bill, result from a report of the Australian Law Reform Commission. 56 The regulation making power contained in the Act is to be found in s 1364. 58 In relation to meetings of creditors convened under Part 5.3A of the Act regulations 5.6.12 to 5.6.36A are to apply to the convening and conduct of and voting at such meetings by virtue of subregulation 5.6.11(2). Subregulation 5.6.11(2) is expressed to be 'Subject to subregulation (3)'. By virtue of subregulation 5.6.11(3) the relevant regulations do not apply to meetings of creditors convened under Part 5.3A if the regulations are inconsistent with a particular requirement of the Act, the regulations or the rules [in this case the Federal Court Rules ]. 59 Whilst regulation 5.6.17(1)(c) of the Regulations provides for meetings convened by administrators to be chaired by the relevant administrator 'or a person nominated by [the administrator]' it is clear that by virtue of regulation 5.6.11(3)(c) of the Regulations an administrator may not nominate another person to chair a meeting of creditors under s 439C of the Act. Section 439B(1) of the Act makes it clear that decision meetings, convened under s 439A, at which resolutions may be passed under s 439C, must be presided over by the relevant administrator. 60 Plainly, the Regulations cannot be used to determine what is meant by the expression 'the creditors' in s 439C of the Act. However under the Regulations the rights of creditors to vote at decision meetings may be restricted. Hence the relevance, in particular, of regulations 5.6.23 and 5.6.26. . Given their length they have not been repeated in these reasons. 66 In re British Goldfields of West Africa ('British Goldfields') [1899] 2 Ch 7 is not authority for the proposition for which it was cited by the administrator's solicitors in their letter of advice of 19 April 2006. 67 That case concerned the winding up of a company to which s 37 of the Bankruptcy Act, 1883 (46 & 47 Vict. c. 52) of the United Kingdom applied by virtue of s 10 of the Judicature Act 1875 (38 & 39 Vict. c. 77). Section 37 was expressed in terms quite different from s 553(1) of the Act. In such a case there is no provable debt to which the costs are incident, and there is no liability to pay them by reason of any obligation incurred by the bankrupt before bankruptcy; nor are they a contingent liability to which he can be said to be subject at the date of his bankruptcy. The applications of two of the shareholders were heard which resulted in orders in favour of the shareholders and orders that their costs be paid. The other applications were stood over until after the first two were disposed of, but there was no order that they should abide the result of the two which were decided and there was no order as to the costs of those which were stood over. After the applications which were heard had been decided favourably to the two applicants and before anything more was done with the other applicants, the company was ordered to be wound up. Shortly thereafter the other applicants sought leave to proceed with their applications and liberty to prove for the amounts which they sought to recover and also for their costs. Their right to be removed from the register and to prove for the amounts which had been paid for their shares was not contested. An order for rectification of the register was made accordingly. However the official receiver/liquidator refused to allow the other applicants to prove for their costs against the company. Even though no orders had been made for the other applicants' costs, it was held that they were entitled to prove for such costs. The costs are therefore properly added to the debts provable. The costs of the appeal were therefore properly added to the debts provable. In In re William Hockley Ltd ... Pennycuick J. suggested as a definition of "a contingent creditor" what is perhaps rather a definition of "a contingent or prospective creditor", saying that in his opinion it denoted "a person towards whom, under an existing obligation, the company may or will become subject to a present liability upon the happening of some future event or at some future date". The importance of these words for present purposes lies in their insistence that there must be an existing obligation and that out of that obligation a liability on the part of the company to pay a sum of money will arise in a future event, whether it be an event that must happen or only an event that may happen. A building contract creates, as soon as it is entered into, an obligation upon the building owner to pay the contract price, either as a whole upon a future event or, more usually, by progress and final payments each of which is to be made on a future event. The event or events may not happen, but if and when one of them does happen the building owner, by force of the contractual obligation, must pay the builder a sum of money. It is, I think, nothing to the point that the event may be complex, as where the payment is agreed to be made when the whole or some part of the work has been done to the satisfaction of an architect as expressed in a certificate or to the satisfaction of an arbitrator as expressed in an award: the building owner is bound from the time the contract is made to pay money to the builder upon a contingency; and that in my opinion makes the builder a contingent creditor of the owner. 73 In The National Bank of Australasia Limited v Mason [1975] HCA 56 ; (1975) 133 CLR 191 Barwick CJ adopted the same approach as had been adopted by Kitto J in Engwirda . 74 In FAI Workers Compensation (NSW) Limited v Philkor Builders Pty Limited ('Philkor') (1996) 20 ACSR 592, Young J, as his Honour then was, held that the prospect of a plaintiff securing an entitlement to costs in winding up proceedings under the Corporations Law did not enable such a plaintiff to contend that a contingent debt was payable by the company to the plaintiff in circumstances where, before a winding up order was made, the company was placed in administration and a deed of company arrangement was thereafter executed following a resolution of the majority of creditors of the company that it should do so. Such resolution had not been supported by the plaintiff. This decision is quite unexceptional and has no real bearing on the resolution of the issues in the present case. The preferable analysis ... is that it is the state of insolvency found by the court to exist that forms the basis of the winding up order. The applicant's debt is the source of the applicant's standing to seek a winding up order. That debt may also cause a presumption of insolvency to apply via the statutory demand process provided for in Div 2 of Pt 5.4 for the purposes of the winding up application. But even then, it is the court's positive decision that insolvency exists, rather than the particular circumstance of non-payment of the applicant's debt, that forms the basis for the exercise of the jurisdiction to make a winding up order. 77 In Fisher v Madden as Receiver and Manager of Dataflow Computer Services Pty Limited ('Fisher') [2002] NSWCA 28 ; (2002) 54 NSWLR 179 the New South Wales Court of Appeal was concerned to determine whether a payment ordered by the Industrial Relations Commission of New South Wales to be made under s 106 of the Industrial Relations Act 1996 (NSW) would be entitled to priority under s 556(1)(h) of the Corporations Law . In the course of his reasons for judgment Meagher JA adverted to s 553 of the Corporations Law at 183-5 [7] and [13]. The word "contingent" is a slippery word. ... A contingent creditor, like an elephant, is rather easier to recognize than to define. The following statement by Pennycuick J in Re William Hockley Ltd ... is well known: 'The expression "contingent creditor" ... must, I think, denote a person towards whom under an existing obligation, the company may or will become subject to a present liability upon the happening of some future event or at some future date'. In Re Gasbourne Pty Ltd [1984] VR 801 at 837, Nicholson J said that he did not regard that description as exhaustive, and with respect I would not disagree. She has the bare right to make a claim, nobody knowing whether it will succeed or not, or if so in what amount, or subject to what terms or conditions. Ms Fisher had only a right to take proceedings in the Industrial Relations Commission to vary the contract to that end. Moreover, even if the Industrial Relations Commission declared the contract unfair, varied it ab initio and ordered Dataflow to make a retrenchment payment to Ms Fisher, it remains true that at the relevant date of Mr Madden's appointment no amount for retrenchment payment had become payable before, on or after the relevant date. 80 Following the process of reasoning indicated in Fisher , Gzell J held in Silbermann v One.Tel Limited (No 2) [2002] NSWSC 295 ; (2002) 20 ACLC 846 at 850-1 that an application to the New South Wales Industrial Relations Commission for the variation of a contract of service to include an indemnity against a director's liability in respect of corporate credit cards issued by American Express International Inc and Diners Club Pty Limited did not constitute future claims within the meaning of s 553 of the Act which were admissible to proof against the respondent, One.Tel Limited. If there was no obligation on the respondent on the date on which the winding up is taken to have begun, to indemnify the directors against their personal liability to the credit card companies or to pay to the directors amounts sufficient to enable them to discharge their liabilities to the credit card companies and such obligations can only arise if and when the Industrial Relations Commission makes orders, there was, in my view, no future claim against the company. In my view, such a construction of s 553(1) would place an intolerable burden on a liquidator whose responsibility it is to determine which future claims are to be admitted to proof and in what amounts. claims for future rent and future breaches of covenant] are admissible to proof in a winding-up. This appears to be clear from the terms of s 553 itself and s 554B, which provides for the discounting in accordance with the Regulations of debts payable on a future date. See also McPherson, The Law of Company Liquidation (3 rd ed, p376). If the position were otherwise, the clear intention of Pt 5.3A to enable a company, the subject to a deed of company arrangement, to make a "fresh start", free of the claims of creditors arising out of pre-administration dealings, would be frustrated. Her Honour found that in the deed of company arrangement there under consideration the lessor was a creditor of the company so far as its claims for future rent under the lease were concerned (see 169-70). 85 McCluskey v Pasminco Limited (Administrators appointed) ('Pasminco') [2002] FCA 231 ; (2002) 120 FCR 326 was concerned with the status of claims for legal costs and expenses incurred in prosecuting claims for injury compensation prior to the date of the commencement of the administration of Pasminco Limited and 21 other companies in the Pasminco Group. Prior to the appointment of the administrators there were approximately 442 claims outstanding against three of the Pasminco companies for injury compensation. The Pasminco Group carried on a number of lead and zinc mining and smelting operations. Goldberg J held that the claims for injury compensation were admissible to proof in the administration they being present claims sounding in damages under s 553(1) of the Act, the relevant workplace events giving rise to the claims having occurred prior to the commencement of the administration. His Honour found that the claims for injury compensation were present claims which had to be valued or quantified by the administrator and in respect of which a just estimate of value must be made before the relevant claimants were allowed to vote at a creditors meeting. His Honour proceeded to find that any claims for legal costs and expenses incurred in prosecuting the claims for injury compensation prior to the date of the commencement of the administration were admissible to proof as contingent claims because of their association and connection with the primary claims for injury compensation, even though there had not been any costs orders obtained for the payment of such legal costs and expenses prior to the commencement of the administration. (See 338 at [39]-[41]). 86 Pasminco may be distinguished from the present case in that the legal costs and expenses, which Goldberg J held were admissible to proof as contingent claims, were costs and expenses in relation to claims for injury compensation against the relevant Pasminco companies which had not, at the time of the appointment of the administrators, proceeded to judgment against those companies. On the other hand, if what is recovered is provable, so are the costs of recovering it: see Emma Silver Mining Co. v. Grant. So also the criticism by Chesterman J of the proposition for which Emma Silver Mining Co v Grant (1880) 17 ChD 122 was cited as authority in British Goldfields , in Southern Cross Mine Management Pty Limited v Ensham Resources Pty Limited [2006] QSC 7 at [27] - [35] . 88 In Expile at 675, Palmer J distinguished claims for costs against a company arising incidentally to a claim for damages or other relief against wrongdoing from costs incurred in an application to wind a company up for insolvency. His Honour found it unnecessary to explore the nature of a costs claim against a company arising incidentally to a claim for damages or other relief against wrongdoing. However he did observe that substantive claims depend upon the existence of legal rights, whilst awards of costs are always in the discretion of the Court, even though the way in which the discretion will be exercised will be fairly predictable in most cases. 89 Palmer J addressed what was meant by 'future claims' and 'contingent claims' in s 553(1) of the Act. A typical example of a future claim is a claim for rent which will become due in the future under a lease which is in existence at the commencement of the winding up. But where the relevant proceeding is for a winding up order which does not, of its nature, entail substantive relief grounded in any particular anterior act or omission of the company, no such link is apparent. 92 Firstly, the Bankruptcy Act was concerned with debts and liabilities to which a bankrupt was subject at the date of the bankruptcy, or to which he may become subject before his discharge by reason of an obligation incurred before the date of his bankruptcy. Section 553(1) of the Corporations Law, prior to its amendment in 1992, was silent in respect of any question of prior 'obligation'. It provided for 'all debts payable on a contingency' and for 'all claims' against the company to be admissible to proof against the company. Section 553(1) of the Act is concerned with debts and claims 'the circumstances giving rise to which occurred before the relevant date'. 93 Whilst the Harmer Report, the Explanatory Memorandum and the Second Reading Speeches are silent on the reasons for the expression 'the circumstances giving rise to which occurred before the relevant date' being used in s 553(1) of the Act, it seems to me that the change in terminology cannot be overlooked. The observations in the Harmer Report, to which emphasis has been added above, and the reliance placed upon that report by the Parliament as indicated in the Attorney-General's Second Reading Speech, support the proposition that the new provisions in what was then the Corporations Law, and what is now ss 553 et seq of the Act, were intended to make the categories of claims which might be admissible to proof as wide as possible. 94 Secondly, s 82 of the Bankruptcy Act qualified 'all debts and liabilities' with the phrases 'present or future, certain or contingent' and also the expression 'or to which he may become subject before his discharge by reason of an obligation incurred before the date of the bankruptcy'. Section 553(1) of the Corporations Law , prior to its amendment, qualified 'all claims' with the phrases '(present or future, certain or contingent, ascertained or sounding only in damages)' and s 553(1) of the Act qualified 'all debts payable by, and all claims against' with the phrases '(present or future, certain or contingent, ascertained or sounding only in damages)'. In addition, s 554A made provision for the valuation of debts or claims that, at the relevant date, did not bear a certain value and s 554B made provision for the discounting of debts that were not payable at the relevant date but at a later ascertained or ascertainable date. 95 In my opinion it is questionable whether for the purposes of establishing admissibility to proof, at least for voting purposes, it is necessary to be able to identify a prior 'obligation' out of which a debt or liability, or, for that matter, a claim, arises. However, such considerations would, no doubt, bear upon the determination of just estimates of the value of claims that may be made. It is also questionable whether the traditional concepts of 'future' and 'contingent' as applied to 'debts payable by' a company, necessarily have the same connotations when applied to 'claims against' a company within the meaning of s 553(1) of the Act (cf. the observations of Finkelstein J in McLellan at 330 [9] and 333 [16]). 96 In the present case, Mr Aldridge SC, counsel for the plaintiff, submits that his client had, as at the date of the appointment of the administrator to Charben, a 'present' 'claim' for costs in respect of the trial and of the appeal to the Full Court, 'the circumstances giving rise to which occurred before the relevant date', namely the success of the plaintiff on its appeal with the consequential orders made in the plaintiff's favour on 22 December 2005 in respect of the disposition of the appeal and of the proceedings. Therefore, he submits, that such claim was admissible to proof against the company and the plaintiff was entitled to have its value determined in accordance with s 554A of the Act. 97 In the alternative, counsel for the plaintiff submits that the plaintiff had, as at the date of the appointment of the administrator to Charben, a 'contingent' 'claim' for such costs 'the circumstances giving rise to which occurred before the relevant date' with the same consequences. 98 To use Barrett J's expressions in McDonald , the eventual liability of Charben under the costs orders of the Full Court made on 19 May 2006, following the appointment of Charben's administrator on 31 March 2006, had its 'genesis' in the judgment of the Full Court in the plaintiff's favour, handed down on 22 December 2005. One could also say that 'the seeds' of the costs orders were the circumstances occurring before 31 March 2006, namely the delivery of the judgment in the plaintiff's favour on 22 December 2005. 99 In my opinion the plaintiff had, as at the date of the appointment of the administrator to Charben, a present claim for costs to which s 553(1) of the Act applied. Accordingly, subject to compliance with the regulations, the plaintiff would be entitled to vote at the adjourned decision meeting under s 439A-439C of the Act on Friday 23 June 2006 as a creditor of Charben in respect of both the debt of $1.4m which has already been admitted and also in respect of the plaintiff's costs and disbursements. 100 It seems to me that this conclusion is generally in sympathy with the judgment of the Court of Appeal in England in British Goldfields. 102 In my opinion, an amount so determined would constitute a just estimate of the value of the plaintiff's unliquidated claim for costs and disbursements in respect of the earlier proceedings. 103 Subject to the foregoing, the first question should be answered in the affirmative. 106 In light of the conclusion I have reached as to how the administrator should deal with the plaintiff's claim for costs at the adjourned meeting, it is probably unnecessary to reach any formal conclusion as to the orders that should be made in respect of the plaintiff's appeal against the rejection, in part, of its claim, for the purposes of voting, which I would understand to have been brought under regulation 5.6.26(3) of the Regulations within 14 days after the decision on the plaintiff's claim on 7 April 2006, although that regulation was not specifically referred to in the plaintiff's originating process. 107 It seems to me that, for the reasons given above, the administrator erred in rejecting the plaintiff's claim as he did on 7 April 2006 even though the order for costs had not at that stage been made by the Full Court. In my opinion the administrator should have made a just estimate of the value of the claim in accordance with regulation 5.6.23(2)(c) and admitted it for voting purposes in whatever that amount may have been in accordance with regulation 5.6.26(1). I certify that the preceding one hundred and seven (107) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | entitlement to vote at a meeting of creditors called pursuant to s 439a of the corporations act entitlement to vote in respect of the costs of a trial and of a successful appeal where no order for the payment of such costs by the company had been made prior to the appointment of an administrator to the company corporations |
In the judgment, I awarded the sum of $A850,000.00 by way of salvage reward to the plaintiffs. The Short Minutes have now been filed, and there is a dispute as to the form they should take. 2 The present dispute between the parties concerns costs. 3 When the matter was before me for hearing, two open offers were made by the defendants. The first was made at the outset of the hearing, and was an offer to pay $750,000.00 for salvage reward plus interest and costs. The second open offer made during the course of the hearing was for an amount of $500,000.00 plus interest. Each of these offers was less than the quantum of the award eventually made, namely $850,000.00. Both offers were rejected by the plaintiffs. 4 I have now been furnished with several other "Offers of Compromise" which the defendants say were made "without prejudice" and in accordance with O 23 of the Federal Court Rules . That Order relates to Offers of Compromise and Payment into Court. The Order provides for the form of offer, the time for making or accepting an offer, and other matters such as the withdrawal of acceptance and non-disclosure to the Court. The main offer for present purposes is that made on 9 December 2005, which purported to be in the required form and provided for the payment of $1,050,000.00 by the defendants to the plaintiffs, together with interest on that amount at 9% until the date of acceptance. The Offer provided for payment of the plaintiffs' legal costs to be taxed on a party-party basis, and made provision for the plaintiffs to execute a "satisfactory deed of release. " That Offer remained open for 14 days. The response by the plaintiffs on 22 December 2005 was that the Offer was defective because it did not comply with O 23 r 4(2). An explanation for this position was sought by the defendants in correspondence. There was no request by the plaintiffs to clarify what was meant by the phrase "satisfactory deed of release" as referred to in the Offer of Compromise. 6 In a further letter of 23 December 2005, the plaintiffs' solicitors raised an objection that the Offer did not comply with O 23 because the sum of money was inclusive of interest and costs. It was also said that the individual identification of costs and interest did not prevent them from being "included" in the defendants' Offer. The solicitors also stated that the included component of the Offer in respect of interest was not "specified" in accordance with O 23, and that a subsequent partial particularisation of that component could not remedy the defect. Again, there was no suggestion that the Offer lacked effect because it referred to a "satisfactory deed of release". On 23 December 2005, under cover of a "Without Prejudice" letter, a further Notice of Offer of Compromise in similar terms was sent by the defendants to the solicitors for the plaintiffs. On 23 January 2006, another Offer of Compromise was sent raising the offer of salvage reward to $1,350,000.00. None of these Offers of Compromise were accepted. On 9 January 2006, the plaintiffs sent to the defendants' solicitors a Notice of Offer of Compromise for an amount of $3.5 million inclusive of interest and costs. The Notice stated that the sum of $2,156,862.75 was in respect of the principal of the claim, the interest component was $735,547.77 calculated at the rate of 9%, and recoverable costs were in the sum of $607,589.48. The defendants did not accept this Offer. 7 The defendants' submission is that as from 11am on 10 December 2005 they are entitled to costs incurred on an indemnity basis. The plaintiffs respond that no Offer of Compromise in compliance with O 23 was made. It is submitted by the plaintiffs that even in the event that the Court waives strict compliance with the requirements of O 23, it should not order costs against the plaintiffs on an indemnity basis after 10 December 2005. Rather, it is said that the Court should "otherwise order" within the meaning of O 23 r 11(5) having regard to disentitling conduct on the part of one or more of the defendants. In addition, other documents such as the Certificate of Registration, Classification Society records, Bridge Master's standing orders, sounding records, echo sounding records, course recorder trace manoeuvring data documents, fuel and fresh water figures, location documents and Port State inspection reports were destroyed on board the ship prior to the sale of the vessel, or were disposed of in France following the completion of the vessel's sale. The plaintiffs say that the destruction and failure to preserve records or copies of the records constitutes reprehensible disentitling conduct on the part of the defendants, providing a sufficient basis for the Court to refuse to make any Order that the plaintiffs should bear costs of the defendants on and after 10 December 2005 on an indemnity basis. Other disentitling conduct alleged relates to the fact that documents regarding the question of the identity of the beneficial owner were only made available at a late stage. 10 The defendants responded by saying that the documents which had been destroyed or were not available could not have played an important part in the decision as to the quantum of the award. This is not, in my view, a reason for concluding that the destruction of the documents and the failure to keep records of documents transferred on the sale is not conduct which attracts criticism. However, I consider that the evidence as to veering, manoeuvring and similar dangers on which the plaintiffs relied was thoroughly canvassed in the hearing, and I accepted the submissions of the plaintiffs on this point as to the nature and extent of these problems. In my view, although open to some criticism in the circumstances of this case, I am not persuaded that the conduct of the defendants in respect of the documents is sufficient to displace the general rule that costs should be paid by plaintiffs where an Offer of Compromise such as that in the present case has been made. Furthermore, I do not consider that the late discovery of documents relating to the beneficial ownership issue amounts to conduct which attracts criticism or should disentitle the defendants from recovery of costs on an indemnity basis. 11 The second matter relied on by the plaintiffs is the alleged uncertainty and oppressiveness of the offer in requiring the plaintiffs to execute a "satisfactory deed of release". It is said that this expression is undefined and subjective, and that if it were enforced, it would result in oppression to the plaintiffs because it would expose the plaintiffs to the unilateral requirements of the defendants and may allow unreasonable requirements, including indemnity obligations, to be imposed by the defendants. 12 It is correct that no deed of release was proffered by the defendants with the Offer of Compromise. However, there is no suggestion in the early correspondence from the plaintiffs that the insertion of such a provision was objected to or was the basis for refusal of the Offer. There was no request for clarification from the plaintiffs in relation to the proposed contents of any potential deed of release. Instead, the plaintiffs elected to rely on an argument as to formal non-compliance, which, having regard to the substance of the settlement offer and its clear and precise terms, I do not accept. Moreover, I am not persuaded that the expression "satisfactory deed of release" or that particular requirement is uncertain or oppressive. 13 In Meehan v Jones [1982] HCA 52 ; (1982) 149 CLR 571, the Court considered a contract which referred to "a satisfactory agreement ... for the supply of a satisfactory quantity of crude oil. " In that case, it was submitted that the contract was illusory and that it merely gave a discretion or option to one party as to whether the promise would be carried out. The Court rejected this submission, and although it agreed that it was for the purchaser to determine whether he had entered into a satisfactory agreement for the supply of a satisfactory quantity of crude oil, it also held that the purchaser had an obligation to act honestly in deciding whether the terms of an offer of finance were satisfactory. In addition, Gibbs CJ observed at 578-579 that the expression "satisfactory" could be given content. This observation is relevant in the present circumstances. Although each case must turn on its factual context, in my opinion, the Court can and will give content to the expression "satisfactory deed of release" as expressed in the Offer of Compromise in the present case. 14 Having regard to the evidence, it is my view that the insertion of this requirement played no significant part in the rejection of the Offer of Compromise because there was no reference to it in the challenges to the terms of the Offer made by the plaintiffs'solicitors. The subsequent offer made in January 2006 by the plaintiffs seeking twice the amount offered by the defendants indicates that it was the amount of the award offered by the defendants which was the real cause of the dissatisfaction of the plaintiffs. The requirement relating to a "satisfactory deed of release" was not an operative cause of the rejection. 15 For these reasons, I do not accept that the Offer of Compromise was uncertain, illusory or oppressive in any sense, or incapable of being accepted by a reasonable addressee. 16 A further matter raised by the plaintiffs is that there were inconsistent assertions and misleading conduct on the part of the defendants in the form of representations made at various times concerning the relationship of the defendants to the ship. It is said that the notices of appearance and correspondence expressed different and inconsistent interests in the vessel on the part of the defendants. 17 Although it is true that there were different descriptions of parties in the appearances, I do not consider these assertions can be said to amount to disentitling conduct in relation to costs when regard is had to the real substance of the refusal of the Offers of Compromise, which was the amount of the award sought by the plaintiffs. The evidence does not persuade me that there was any deliberate attempt to misrepresent or mislead as to the position of the defendants, and the notices of appearance and correspondence are not matters that carry such weight as to amount to a ground for refusing to follow the general rule as proscribed by r 11(5). 18 In addition, in my view, it would not have been imprudent, reckless or unreasonable to expect the plaintiff to accept the Offer of Compromise in this case. 19 My conclusion, therefore, is that r 11(5) should apply and that, subject to my observations below in relation to other considerations, the defendants are entitled to an Order that the plaintiffs pay the defendants' costs in respect of the claim after 9 December 2005, taxed on an indemnity basis. 20 The plaintiffs seek an Order that the first, second and fourth defendants should pay the costs of the third defendant. In my view, there is no justification for such an order because the Court, having considered the extensive documentation produced by the parties, has concluded that the third defendant was not liable. Although it was properly joined as a defendant, the plaintiffs' case against it failed. Therefore, it is appropriate that the plaintiffs, and not the defendants, pay the costs of the third defendant. 21 The plaintiffs also contend that they were successful in relation to the issue of liability salvage which is discussed in the principal judgment. I accept this submission because in substance the primary position taken by the defendants was rejected. Accordingly, a costs order in the plaintiffs' favour should be made in relation to this issue on a party-party basis. 22 The plaintiffs submit that there should be a hiving off of the costs attributable to the issue of agency in favour of the plaintiffs, as well as the costs of, and incidental to, the question of whether the services provided were salvage services. It is pointed out by counsel for the defendants that the agency issue was greatly reduced on the hearing by agreement between the parties and that the issue was narrowed down substantially. I do not think, having regard to the fact that the parties were able to reach agreement as to the role of the first plaintiff with respect to the second and third plaintiffs, that any separate award should be made in respect of this issue. I think a similar position should be taken in relation to the costs of, and incidental to, the question of whether the services were salvage services. After it was announced prior to the hearing that there was no dispute as to the services being salvage services, substantially the same work was involved in relation to this issue as was involved in the final determination of the matter. Having regard to the fact that the parties reached agreement and eliminated this issue from consideration, and because such a co-operative course of conduct should be encouraged, I do not think any separate order for costs should be made in respect of this matter. 23 With respect to the costs of the present proceedings, I consider there should be no order as to costs because each party has succeeded to some extent on the positions taken by them. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | offer of compromise made by defendants prior to hearing application of o 23 r 11(5) whether offer of compromise was defective because the sum of money was inclusive of interest and costs and/or the offer required the plaintiffs to execute a "satisfactory deed of release" whether "satisfactory deed of release" requirement is uncertain or would result in oppression to plaintiffs whether defendants had engaged in disentitling conduct such that the court should not award indemnity costs. costs |
The respondent has informed me that it proposes to commence fresh proceedings for declaratory, injunctive and other relief against the applicants and others upon the basis that the structures which underpin the applicants' case in these proceedings constitute an unregistered management investment scheme, based upon the Full Court authority of Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd [2009] FCAFC 147. There is no opposition to the respondent being released from that implied undertaking. The purpose for seeking the release is a legitimate one. Accordingly, in respect of the document which is Exhibit CWP-2 to the affidavit of Craig William Owen Phillips sworn on 27 October 2009, I release the respondent and its lawyers from the implied undertaking. By a second Notice to Admit Facts dated 2 October 2009, the applicants sought to require the respondent to admit further matters. The second Notice contains 84 separate paragraphs. In addition, some of those paragraphs are split into several subparagraphs. The respondent addressed the first Notice to Admit Facts and admitted many matters which were the subject of that Notice. In respect of the second Notice it has taken a position which can fairly be described as blanket opposition to admitting any of the matters set out in that Notice. The applicants have applied to the Court for relief designed to flush out whether the matters which currently stand not admitted are truly in dispute and, if so, the basis for such dispute. The respondent has made a number of submissions in support of its resistance to an order requiring it to make further admissions. The first of those submissions is that the Court has no power to make the orders sought by the applicants. The orders sought by the applicants in respect of the Notices to Admit are that the respondent ought to be required to admit all of the matters set out in the Notices or, in the alternative, if it continues to refuse to make those admissions, the solicitor for the respondent should be required to file and serve an affidavit in which he identifies with precision those matters which are not admitted and in which the deponent should be required to state on oath that each and every one of those matters is bona fide in dispute. It was submitted that, in respect of each of the disputed matters, the deponent should be obliged to state brief grounds as to why the particular matter cannot be admitted. In the Motion in which these orders are sought, the applicants seek an additional order that, in the event that the orders which they seek in respect of the Notices to Admit are not complied with, the respondent's defence be struck out. It may well be that the Court does not have power to require a party to admit a fact or matter, as the terms of the Federal Court of Australia Act 1976 (Cth) and Federal Court Rules currently stand. I do not, however, need to decide that question for the purposes of the present application, because I do not propose to require the respondent to make any admissions. The alternative way of looking at the matter is encapsulated in the applicants' proposal that the solicitor for the respondent be compelled to file and serve an affidavit in which, in effect, he should explain the respondent's position. In my view, I have power to make an order along those lines under the general directions power reposed in a Judge of this Court. The making of such an order would be a legitimate exercise of the Court's case management powers given that, in the 21 st century, litigation is required to be conducted as efficiently and expeditiously as possible, paying due regard to the interests of justice but also to the efficient use of Court time. Ordinarily, litigants should not be permitted to approach the proof of facts by their opponents upon the basis that they are entitled to "put them to proof " even when those facts are not genuinely or seriously in dispute. The facts and matters covered by the two Notices are facts and matters which are, for the most part, within the respondent's knowledge. Most of them are facts (as distinct from opinions, conclusions and mere assertions). They are not so numerous or difficult to grasp as to constitute oppression on the face of the Notices, having regard to the complexity of the current proceedings and the context in which they were commenced. I did not detect in the submissions made on behalf of the respondent any suggestion that I did not have power to make an order of the kind sought by the applicants in the alternative. The real question in the present circumstances is whether I should make such an order in the proper exercise of the discretion of the Court. Counsel for the respondent submitted that I should not do so, because the outstanding requirements under the two Notices to Admit Facts impose an oppressive obligation on the respondent, being an obligation imposed only two months before the start of a lengthy and complex trial, with the consequence that it would be unjust to require the respondent to deal further with the subject matter of the two Notices. It was also submitted on behalf of the respondent that, having regard to the stage at which the second Notice in particular has been served, the applicants should be in a position to prove all of the matters the subject of the Notice in any event, thus making the prejudice to the respondent even more significant when the competing interests of the parties are being weighed in the balance. On the other side of things, Senior Counsel for the applicants submitted that the matters the subject of the two Notices were all matters well within the knowledge of the respondent which had been the subject of close scrutiny over the last several years in the context of the Cole Inquiry and other proceedings and hardly constituted oppression, as the respondent would have me believe. In particular, Senior Counsel drew my attention to the fact that there was no evidence at all tendered by the respondent in the present application to suggest that compliance with the outstanding Notices would, in fact, be oppressive, and no explanation forthcoming from the respondent as to the basis upon which resistance to admitting the relevant facts was being maintained. I have read the two Notices. The matters covered by these subparagraphs are all matters of fact. The respondent must know whether the facts required to be admitted by means of these subparagraphs are true, or not, and ought to be able to provide the answer to that enquiry without too much difficulty. If there is some genuine and appropriate reason why these matters cannot be admitted, then the respondent should be required to provide that explanation. I do not think that the respondent will be compelled to devote an enormous amount of time, effort or money to answer the requests for admissions made in those subparagraphs. Nor do I think that those matters are likely to be genuinely in dispute. The second Notice deals with a number of matters which involve consideration of the corporate structure of the respondent, its personnel and various details concerning grain contracts relevant to these proceedings. In some paragraphs in the second Notice, the respondent is being asked to admit that certain persons occupied positions with the respondent within the meaning of certain terms used in the ASX Listing Rules. I do not think that the respondent should be required to address these matters. They involve more than the consideration of mere facts. In order to respond to these matters, the respondent would be required to interpret the particular terms in those Rules and then come to a conclusion as to whether the functions and duties of that particular individual were within that interpretation. In addition, paragraph 65, on its face, appears to require the respondent not only to admit facts but also to admit complexions on the facts or conclusions arising from the facts which, in my view, the respondent ought not be asked to address. But, subject to the two exceptions to which I have referred at [21] and [22] above, it seems to me that the Notice on its face is otherwise entirely regular and canvasses material which the respondent ought to be able to address, either by way of admission or by way of explanation as to the basis upon which the admissions sought cannot or should not be made. I am not prepared to make an order in those terms at the moment. That is not to say that I would not entertain an application in due course should there be appropriate grounds for making that order. I would only consider making such an order after there has been full argument and fair consideration of the respondent's position in relation to such an order. I make orders accordingly. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. | release from the implied undertaking preventing the use of documents for any collateral purpose (see hearne v street [2008] hca 36 ; (2008) 235 clr 125) notices to admit facts whether facts genuinely in dispute party not admitting facts required to explain its position practice and procedure |
Viewed superficially, their formal relationship was that of supplier and exclusive distributor. Their relationship over time, though, was considerably more complex than that. It contained elements that could loosely be described as those of a joint venture. There was little reflected in the contract which, for the purpose of this matter, purportedly defined their relationship. AMC (or its precursor) first began dealings with Hamilton in 1988. By the early 2000s, their business relationship began to fray. For practical purposes, it came to an end in 2006. What is now perfectly clear is that there was by then a total failure of mutual trust and confidence between the principals of the two companies. If the business form they had chosen had been a company or a partnership, the unravelling of their relationship could have occurred reasonably expeditiously using well known and well worn statutory procedures which can be availed of when mutual trust and confidence have been destroyed: for companies, see Corporations Act 2001 (Cth), s 461(k) ; for partnerships, Partnership Act 1891 (SA), s 35(d). Here the parties left it to the law of contract to define their relationship. Unlike in some other legal systems, ours does not have well developed default rules and procedures governing the termination of long term contracts for cause (including irreparable breakdown of mutual trust and confidence where such is essential for the functioning of the contractual relationship): see eg German BGB §314 (in translation see www.iuscomp.org/gla/statutes/BGB.htm). And so began a long and complex litigation which has traversed in detail much of the history of the parties' relationship. Their respective allegations and recriminations have found legal expression in a significant number of causes of action and in about 1,000 pages of final submissions. The best that can be said about the matter is that it again demonstrates how inadequately our contract law can serve parties in long term business relationships which falter for whatever reason. It is not a reasonable response to say that they should have made better provision for their rights, etc into the future in the terms of their agreement. Contract law in its default rules should serve as well those who are not gifted with an all encompassing foresight. In the result, while each party has secured victories of sorts, they each have sustained reverses. It could hardly have been otherwise despite their hopes, given the nature of their relationship and their manner of dealing. To assist in the reading of what regrettably have to be lengthy reasons I have annexed two tables, the one being of the principal persons and companies referred to in these reasons; the other, of trade marks and pharmaceutical products. The first relates to the evolution of the parties' relationship; the second, to AMC's intellectual property rights in aspects of the packaging and get up of the two principal Hamilton products distributed by AMC. Dr Keung's purpose was to investigate the importation of one of Hamilton's products into Hong Kong, China and Macau for sale principally to the Chinese speaking population of those localities. That product, Urederm was a 10% urea cream. An analgesic balm, it was used as a skin moisturiser. The dealings of the parties progressed to the point that on 29 March 1990, Hamilton appointed the predecessor of AMC to be its sole distributor of a range of Hamilton products in Hong Kong and Macau. Those products included Urederm and, relevantly for present purposes, Rubesal (a topical analgesic balm used to treat muscle and joint pain). At the completion of the initial 5 year period, this agreement may be extended for a further 5 years subject to review at the end of each year with respect to satisfactory sales performance. Thereafter, it shall be subject to the conditions set out in Clause 4(b). HAMILTON may then offer the Product to others. Clause 4(b) contained the only express reference to termination in the document. On 11 May 1995 a further five year term was agreed in relevantly identical terms save that the agreement now extended to Taiwan and that the minimum sales figures (which now encompassed both Urederm and Rubesal in various package sizes) were to be notified annually. Between 1990 and 1998 (and excepting Mr Blake (Hamilton's managing director)), Dr Keung's dealings with Hamilton's personnel were with Mr Koerner, a director (until 1996) and International Sales Manager, and with Mr Lock, Hamilton's then export manager. In 1998 Dr Ovcharenko took over the functions in relation to AMC previously performed by Koerner and Lock. This change, as I will later indicate, is of considerable significance. It appeared to increase Mr Blake's direct involvement in Hamilton's dealing with AMC. For reasons to which I will later refer, by late 1998, Mr Blake wished to formalise Hamilton's relationship with AMC. During 1999 negotiations were conducted between Dr Ovcharenko and Mr Keung for a distribution agreement, a draft of which had been proposed by Hamilton. It will be necessary to outline those negotiations in some detail when considering the "Contract claims" below. A final form of the agreement was executed in March 2000 (but back dated to 1 July 1999) although it is AMC's case that the parties' contract was, in the circumstances, partly written and partly oral. The four clause, two page letter of appointment (with short annexures) of 1995 had become a twelve page, fifty clause agreement with five schedules in 2000. The Distribution Agreement, for present purposes, contained provisions dealing (i) with extending the term of the "Distribution Agreement": cl 8.1; and termination of the "Licence" to resell given under the agreement: cll 4 and 41; (ii) with the reciprocal duties of the parties to use best efforts to prevent the sale of Hamilton's products in the geographic area covered by the agreement by persons other than AMC or a sub-distributor: cll 6.2 and 9.1; and (iii) with the supply to, and purchase by, AMC under the agreement: cll 11 and 13. The first , alleges premature and unlawful termination, of the distribution agreement, by letters of 13 July 2006 and 23 March 2007. The wrongs alleged turn upon the construction propounded by AMC of what it describes as the provision for a "rolling 5 year term" and of the cl 41 termination provision. Needless to say the contract claims made here are twinned with alleged contraventions of s 52 of the Trade Practices Act 1974 (Cth). The second class of claims allege a failure by Hamilton to use its best efforts to prevent sales of its product in the area of the agreement otherwise than by AMC and its sub-distributors. AMC alleges that Hamilton allowed the parallel importation of its products by others into the Hong Kong market between 2000 and 2002, although AMC concedes it can only prove comparatively small amounts of parallel importation occurred in 2001-2002. The third class of claim relates to Hamilton's wrongful cessation of supply of products to AMC and in particular, Hamilton's failure to fulfil four orders immediately prior to the termination of the agreement. These claims raise questions of construction which turn on the alleged structure of the Distribution Agreement itself. The one matter I would emphasise about the claims made is that, notwithstanding the parties have been in sequential long term contractual relationships, AMC --- and for that matter Hamilton --- has not made any claim founded upon an alleged breach of an implied duty of good faith and fair dealing: on which duty see generally Cheshire and Fifoot's Law of Contract 10.43-10.46 (9 th Aust ed). By way of relief, AMC seeks damages, a declaration that Hamilton's purported terminations of the agreement were unlawful and ineffective, and rectification of the contract's terms so as to embody the "rolling five year" term. Hamilton has a number of layered defences to the contract claim. It is asserted that the Distribution Agreement was wholly in writing and was validly terminated on the giving of 60 days notice on 13 July 2006 as provided by cl 41.1.6 of the agreement. It is asserted additionally that, if that notice was invalid, the agreement was validly terminated by notice of 2 March 2007, in reliance upon some number of breaches of contract which were relied upon for that purpose or which could have been so relied upon. It is not meant to represent findings. Hamilton's products were required by Dr Keung for sale, principally, to Chinese reading markets. The initial product containers and packaging were English language only. The uncontroverted evidence is that the words "Urederm" and "Rubesal" as such would be practically incomprehensible to Chinese readers and a transliteration of them would mean nothing to the Chinese reader. To obviate this difficulty Dr Keung developed Chinese character names for Rubesal (in 1988) and Urederm (in 1988). Representations of these appear later in these reasons. The transliteration of the Urederm characters was "Fuyunhon"; for Rubesal, "Tuotoning". Neither of the names has any linguistic, phonetic or transliterative relationship with the words "Urederm" and "Rubesal" respectively. As will be seen, they have quite distinctive meanings. The "Fuyunhon" name was used from 1990 for thirteen other Hamilton products apart from Urederm. I would note in passing that, on 31 December 1996, AMC changed its Chinese character name. In translation it then became "Australian Fuyunhon Pharmaceutical Co Ltd". Both Fuyunhon and Tuotoning were later registered as trademarks in Hong Kong. Transliterated, the words were "Australian Fuyunhon" and "Australian Tuotoning". Their priority dates were, respectively, 11 August 1999 and 8 October 2002. Hong Kong pharmaceutical legislation apparently required that all pharmaceutical products sold in Hong Kong which made therapeutic claims had to have product indications written in Chinese characters. Each such product had also to be registered with a government authority and was required to show its registration number on the packaging. Dr Keung undertook such part of the design and redesign of the packaging for Urederm and Rubesal as embodied the Chinese character marks, the product indications (in Chinese and in English) and the Hong Kong permit number. It is Dr Keung's evidence, which I accept, that he regarded the product indications and instructions for use as important tools for attracting the buying public to a particular pharmaceutical product. That part of the packaging design for which Dr Keung so assumed responsibility has been referred to in the proceedings and in the pleading: FASC [25]; as the "Hong Kong packaging". Put shortly, AMC claims copyright in that packaging (including the English language product indications). Initially, the Hong Kong packaging was attached to Hamilton's English language packages with stick-on labels. Later the packages were manufactured by Hamilton using Hong Kong packaging designs supplied by AMC. AMC's claim is that when it supplied the Hong Kong packaging to Hamilton, it authorised Hamilton to reproduce it for the purpose of packaging products for supply to AMC. It should be added that Dr Keung did not seek to remove the English language product names from the packaging. Indeed the packaging for all Hamilton products remained predominantly that of Hamilton. AMC alleges that Hamilton sold infringing product to an Australian company, Crafers Trading Services Pty Ltd, and that these had been on-sold into Hong Kong. In so doing it is said Hamilton (i) breached AMC's copyright in the Hong Kong packaging as also its copyright in the English language product indications for Urederm: FASC [28A]-[32], [57]-[61], [61A]-[61C] and [62]; (ii) passed off its products as Fuyunhon and Tuotoning as if they were products being manufactured for, and distributed by, AMC: FASC [49]-[56]; and (iii) converted the products so sold by depriving AMC its right to possession of the infringing products: FASC [63]-[69]. The relief sought is damages for infringement of copyright, passing off and conversion. Based on s 52 of the Trade Practices Act 1974 (Cth) and s 56 of the Fair Trading Act 1987 (SA), they allege misleading or deceptive conduct. Two of those counts relate to representations allegedly made by Dr Ovcharenko to Dr Keung during the negotiations for the 1999 distribution agreement. They related to the term of the agreement (the "rolling five year term") and to the meaning of the termination provisions (cl 41): FASC [84A]-[84B]. The remaining claims relate to Hamilton's unauthorised use of AMC's intellectual property: FASC [45]-[47]. The relief sought is damages under s 82 of the TP Act/s 84a of the FT Act and corrective orders under s 87, TP Act/s 85 FT Act including orders to vary the distribution agreement to reflect the representations as to terms made by Dr Ovcharenko. I will refer separately below to Hamilton's defences to the non-contractual claims and to what remains of its cross-claims. Those differences have necessarily put in issue the memories and the veracity of the principal witnesses on each side. The course of evidence has in turn raised assertions of self-serving reconstruction from documents --- and there are many --- and of evidence being given strategically. There are clear instances of both of these phenomena and from both sides. While the case itself has become in substance a documents case given, as I will indicate, the unreliability of much of the oral evidence, the documents themselves pose quite some difficulties as does the absence of documentary evidence in circumstances where it could be expected to be produced to resolve evidentiary inconsistencies and uncertainties. It is clear that some of the documentary evidence lacks candour or has been prepared for strategic purposes. What is obvious from the oral evidence of Dr Keung and Mr Blake and from their later correspondence is a palpable mutual dislike. This, I am satisfied has infected aspects of their evidence and on occasion their objectivity. The evidence relates to events spanning the period 1988 to 2007. For some periods it is quite sparse, though not uncontroversial for that reason. In others, it is detailed but confusing. Largely because of the difficulties I have foreshadowed above, some number of the evidentiary controversies and allegations made must be left unresolved. Before expressing views on the principal witnesses individually, I should make the following general comments. First, to put the matter somewhat inexactly, the evidence relates to four relatively discrete phases or periods. The first , from 1988 to 1997, covers that from the earliest dealings between AMC and Hamilton to the genesis of the circumstances giving rise to the long form Distribution Agreement. In this period I accept in the main Dr Keung's evidence on matters of importance. It is supported by documentary evidence. In the main I reject Mr Blake's. It was the product of an understandably fallible memory. The second period, from 1998 to 2000, covers the period of negotiation and signing of the Distribution Agreement. The evidence from this period discloses many of the vices I referred to above. What I would wish to emphasise is that the principal, commonly shared vice in the evidence of the witnesses is selective reconstruction from documents. Dr Keung and Mr Blake admittedly have read a significant body of documents in preparing both their affidavits and for this proceeding. Dr Keung's memory of them was much the better. I have considerable reserve about a deal of his evidence. It involved, on occasion, inadequately accounted for inconsistencies; reconstruction; and evasion. This will become apparent later in these reasons. Some of his answers in cross-examination were clearly unresponsive but often, in my view, because he misapprehended the burden of some of the questions asked of him. Others were, variously, obstructive, strategic in character, and on occasion quite unbelievable. Mr Blake's evidence for this period suffers significantly from a reconstructed extrapolation from documents often in a fashion advantageous to his company's interests. It also revealed the beginning of his lack of candour and fair dealing with Dr Keung. The third period, from 2001 to 2005 marks a market weakening for Hamilton products in Hong Kong and the failure to establish a presence in China, the decline and collapse of the parties relationship and the growth in animosity between Dr Keung and Mr Blake. The principal catalyst to this rupture in business relations was the issue of parallel importation of Hamilton products into Hong Kong and then the parties' dispute over the Chinese trade marks. The reliability of documentary exchanges suffered in this process. Exaggeration, deception, lack of candour for whatever reason and, particularly from AMC, inflammatory accusations were commonplace in communications. The final period from 2005 to 2007 involved the process of termination of the relationship. It was in this period that, as I have found, Hamilton lawfully terminated the Distribution Agreement and AMC misappropriated and used a confidential product formulation for Hamilton's 10% urea cream. I have been asked by Hamilton to conclude that Dr Keung lied consistently and persistently both in and out of the witness box. This, it is said, not only discredited him, it also undermined AMC's affirmative case and its defence to Hamilton's cross-claim. Dr Keung was on occasion guilty of egregious untruth. Nonetheless, I have not as of course discounted his information in the ways Hamilton has suggested. In certain periods and in certain matters I have accepted his evidence. I have, though, treated much of his evidence with circumspection and some disbelief. This will become apparent in the ensuing pages. I would say additionally of Dr Keung that he clearly regarded deception as an appropriate instrument to be used self-interestedly in the give and take of an ongoing business relationship. Perhaps paradoxically, he also understood the significance of, and need for trust, as the cement of such a relationship. I have found much of Mr Blake's evidence unreliable, essentially for the reasons I have given. I acquit him, though, of being consciously untruthful. The one matter I would emphasise is that he, no less than Dr Keung, played a part in the collapse of their mutual trust and confidence. He was insensitive to the impact that Hamilton's actions in relation to Crafers had on that collapse and, in particular, to the causes of AMC's distrust of Hamilton. Dr Ovcharenko was not an impressive witnesses. Inconsistency, improvised explanation and argumentation marked a deal of his evidence. His answers often were entirely unresponsive or else a lengthy statement of his reasoning. I have treated his evidence guardedly. The specific factual material relevant to AMC's individual claims will be referred to when those claims are separately considered below. He settled in Sydney but returned to Hong Kong after three months to recommence his medical career and to explore business opportunities. His family remains in Sydney and he regularly visits them. While in Australia Dr Keung investigated the potential for commercialising various therapeutic products for on-sale into Hong Kong. He concluded there was a potential market for 10% urea cream in Hong Kong. It was at the time underutilised by the medical profession but presented an available treatment for a range of less serious dermatological conditions and symptoms which commonly affect the general population, such as mild or "housewife" dermatitis, dryness of the skin and winter chapping of the hands. It was not, in his view, difficult to manufacture and there were no particular regulatory conditions about its manufacture. In 1988 there were at least eight brands of 10% urea cream available in the over the counter market ("OTC") in Hong Kong. Dr Keung considered that, because there was nothing distinctive in the product itself, his market success in Hong Kong would be very much affected by the extent and success of the brand under which it was sold. With his target market being Chinese reading people he considered the cream had to be marketed under a brand name consumers would find appealing and the ailments for which it could be used to treat had to be described in terms which lay consumers could understand. Dr Keung put his views into effect. As already noted he evolved distinctive Chinese brand names for the Hamilton products he sold; he addressed product indications to the lay reader; and he engaged in extensive promotion and advertising of Hamilton's products. Being of the view that potential customers in the medical profession and pharmaceutical industries had a great deal of respect for the quality of Australian products, he decided that sourcing the product from Australia for importation into Hong Kong, China and Macau would be more profitable than sourcing it from elsewhere. As his business experience at the time was not substantial, Dr Keung sought assistance from a business acquaintance (now deceased), Mak Chu Keung. Mak was a Hong Kong based import-export merchant who traded under the registered business name "Medic-care (Far East) Company". Mak assisted Dr Keung in the early years of the business, particularly as Dr Keung had little time to devote to it because of his commitments as a medical practitioner. The business was conducted from Mak's premises and in Mak's business name. The arrangement continued in this way until AMC was incorporated in December 1990. Between April 1988 and September 1989 Hamilton supplied a quantity of 10% urea cream in the order of several hundred 100g tubes. They were used to test the market. At about the same time Hamilton also provided Dr Keung with test quantities of its Rubesal cream, a topical analgesic balm used to treat muscle and joint pain. There were many brands of such balm available in Hong Kong. The first Chinese character product name used by Dr Keung for the Hamilton products (which was attached to the products and packaging with a stick-on label) was, as transliterated, "Kui Loon Mei". Loosely translated this meant "attractive, young and beautiful". The label was used in 1988 and into 1989, although as earlier noted, Dr Keung coined the Tuotoning brand name in 1988 and the Fuyunhon name in 1988. From 1989 the latter two names alone were in use. The initial response to the 10% cream from doctors and retailers was positive. Dr Keung now sought to order the urea cream in 50g tubes. To do this, Hamilton required orders of 10,000 or more tubes because these were to be provided specifically for the Hong Kong market. An order for 10,000 tubes was placed in August or September of 1989. In January 1990 Dr Keung appointed YC Woo & Co Ltd as the Hong Kong sub-distributor for Hong Kong for Hamilton's 10% urea cream. YC Woo continued in this role until 1997. From early 1990, promotion in Hong Kong of Hamilton products, particularly 10% urea cream, was initiated through a program directed at both doctors and consumers. Advertisements appeared in newspapers. Leaflets were dropped at aged-care homes, distributors and doctors' surgeries. Although no examples of the leaflets remain, it is Dr Keung's evidence which I accept that they referred to the skin conditions in the lay terms "housewife dermatitis, winter itch and winter chapping". The leaflets advocated the use of the 10% urea cream as an every day treatment of these conditions. The leaflets were supplemented by advertising in the Chinese language media. The advertising was successful in Dr Keung's view, to the point where supplies were exhausted in the early part of 1990. A further 10,000 tubes of 50g 10% urea cream was ordered urgently to meet the demand. When it arrived, it sold quickly. Having concluded that the Fuyunhon branded 10% urea cream was likely to prove to be a successful and profitable product, Dr Keung now wished to explore the possibility of a long term relationship with Hamilton. In early 1990 he arranged to travel to Adelaide to meet Hamilton representatives at its business premises. At this meeting Dr Keung (for Medic-Care (Far East) Co) and Mr Blake (for Hamilton) signed the Letter of Appointment, the principal terms of which have been set out above. The minutes of the meeting are in evidence. Aspects of this meeting are controversial particularly as they relate (i) to such "licence" as was given to Dr Keung to develop bilingual packaging and to arrange the artwork; and (ii) to the extent of the disclosure (if at all) of the Fuyunhon and Tuotoning names. These are matters which are considered in detail in the context of the copyright claims below. Suffice it to say for present purposes that I am satisfied Dr Keung showed Mr Blake and Mr Lock illustrations of his Chinese language advertising and promotional catalogues for both the urea cream and the analgesic balm and that he explained that the two brand names he used had their own particular meanings. On 21 December 1990 AMC was incorporated in Hong Kong. It had five directors, one of whom was Dr Keung. The evidence in this proceeding is that he alone of the directors and shareholders positively participated in the company's affairs. There were 10,000 issued shares. Dr Keung held 6,000. The four other shareholders each held 1,000. In April 2002 Dr Keung transferred his shares to Wing Tak Investment (HK) Ltd. There is a question in this matter which I do not need to resolve whether that transfer without Hamilton's consent brought the distribution agreement to an end pursuant to the provisions of cl 41.1.5 of the agreement. A further meeting was held in Adelaide on 26 February 1991 with Mr Koerner and Mr Lock. The minutes recorded that a new letter of appointment was signed (to accommodate the incorporation of AMC); Dr Keung provided, or would provide, copies of the advertising; sales of Urederm for the 12 months were "excellent"; and sales of Rubesal, unlike Urederm, did not vary with advertising. The last of these is unsurprising as 95% of sales of Rubesal were to government bodies (mainly hospitals) . The next meeting with Mr Blake, Mr Koerner and Mr Lock on 11 March 1992 opened with a review on the previous twelve months. Results were excellent and far exceeded forecasts. Dr Keung presented a thirty second advertising video for Urederm. Dr Keung observed (not for the first time) that while sales could be maintained when the product was advertised, the costs of advertising were not recoverable from sales. It was at this meeting that Dr Keung was asked if he would "like Taiwan included in his territory". I would note in passing that Mr Blake had no independent recollection of this meeting. By the beginning of 1993 Hamilton had begun to comment on what it saw as a significant drop in the volume of Urederm being purchased by AMC. At the 1993 annual meeting in Adelaide Dr Keung explained that there was now significant competition in Hong Kong. During 1993 preparations were being made to appoint Zuellig Pharma Inc, a multinational pharmaceutical distributor, as AMC's sub-distributor in Taiwan with AMC remaining totally in charge of marketing and distributing Hamilton products. Preparations were likewise in train for AMC to appoint a sub-distributor in Canada where again the packaging would be bilingual. Mr Koerner visited AMC in Hong Kong in September 1993. In his report of the visit he spoke glowingly of Dr Keung: "we have found a real marketer"; and he noted he was advertising heavily in Hong Kong newspapers during peak seasons and Urederm was currently being advertised on TV at peak viewing times. I would note in passing that the tenor of communications between Dr Keung and Mr Koerner betrayed personal regard and warmth. By March 1994 Dr Keung was conceding to Mr Koerner his disappointment with the markedly reduced sales of Urederm as similar products appear on the market. The review of sales he prepared for the 20 April 1994 meeting at Hamilton's acknowledged a loss of market share to new entrants. His view was that Urederm had reached the top in the locality of Hong Kong. In order to increase its sales "we have to introduce the product to other places, such as Taiwan and Mainland China". A distribution and marketing agreement was entered into between AMC and Zuellig on 6 February 1995. It appointed Zuellig AMC's exclusive distributor in Taiwan for four products including Urederm and Rubesal. AMC's letter of appointment was, in turn, extended to include Taiwan on 11 May 1995. On 22 May 1995, Mr Koerner signed a "To Whom It May Concern" document confirming that Zuellig had been appointed AMC's exclusive distributor in Taiwan for 3 years. Zuellig was unsuccessful in obtaining a pharmaceutical licence for 10% urea cream in Taiwan. It advised there were already a number of existing creams on the Taiwan market. Having produced no significant results, Taiwan was not included in the 1999 distribution agreement. By the 1995 annual meeting Urederm forecasts for China were agreed and the Chinese artwork had been settled but Dr Keung was experiencing difficulties with appointing a local distributor in China. This had been, and was to continue to be, the subject of correspondence between himself and Mr Koerner for over a year. AMC had not by the end of 1995 been able to obtain a licence to import Urederm into China as a pharmaceutical product. It was reduced to importing it as a cosmetic product. This had punitive tax consequences. In October 1995 a Letter of Appointment was signed between AMC and Health Medic-Care (Canada). AMC (Canada) was appointed AMC's sole distributor for 3 years. To anticipate matters, the Canadian venture yielded little. The Canadian company was related to Health Medic-Care (Hong Kong) Ltd ("HMC"). Albert Chung was a director of both companies. As will be seen, he came to play a not insignificant part in destabilising AMC's relationship with Hamilton. In January 1996 AMC won a tender to supply the Hong Kong Department of Health with Rubesal in 25g tubes. The minimum requirement was anticipated to be 100,000 units per annum. Dr Keung was responsible for preparing the artwork and Chinese characters. On 3 February AMC and HMC signed an "agency agreement" (it was a limited sole distributorship) under which HMC was appointed sole agent in respect of the marketing, sale and distribution of Rubesal in Hong Kong and Macau to all "HA hospitals and clinics", government hospitals and clinics, private hospitals, private medical clinics, elderly homes and pharmaceuticals retailing drug stores/dispensaries except the two retailing chains (Watsons-The Chemist and Manning Dispensaries). On 23 April 1996 AMC's own Letter of Appointment was further extended to include China. In its report prepared for the annual Adelaide meeting with Hamilton on 16 July 1996 Dr Keung indicated that Urederm sales were stable in Hong Kong at about 80,000 to 90,000 a year, but could not be increased "since more and more competitors are coming into the market". As earlier noted, in January 1997 AMC changed its Chinese language name to incorporate the "Fuyunhon" characters. On 9 January it obtained a permit to import cosmetics into China. This included Urederm but not Rubesal. It later failed to get a pharmaceutical licence for Urederm. During 1997 AMC unsuccessfully sought a distributor in China with nation-wide distribution. Dr Keung was, as he indicated in his market review for the June 1997 Hamilton meeting, "negotiating with the giant distributors in China that are supplying their products to more than 1,000 provincial hospitals". In the context of seeking a future distributor in China, Dr Keung wrote to Mr Blake on 14 May 1997 describing the guarantees that the "giant distributors" required. In cross-examination he said, it was a reasonable assumption that he was in consequence asking for at least 5 years notice to AMC before Hamilton terminated its agreement. He added: "It is not a position that we would have agreed to at that time frame. Company Policy requires that we introduce a forward ordering system whereby orders are committed by firm orders four months in advance, which already applies to our other distributors world-wide. I am a bit bewildered when I read your fax because so far Medic-care has not refused to take the goods put down in the forecast although the dates of their delivery have been delayed at times. In fact we have tried hard to keep our promise even though a lot of goods cannot be sold by the expiry date because we do not want Hamilton to suffer any loss from our wrong forecast. Apart from those expired goods in China we have about ten thousand units of Urederm 50gm tubes (China pack) that are near expiry in Hong Kong and about 8000 units of Heads Shampoo that have got expired in July 1997. We are still waiting for the extension of the expiry of Urederm from Hamilton. We are willing to bear the loss of the lot of Urederm that are going to expire because we know that the products we are going to sell have keen competition in China and the market there is very erratic since a lot of factors are new to us. In fact Hamilton should have some responsibility to help Medic-care develop the market in China by keeping some more stock in case the need suddenly arises after advertising instead of discouraging Medic-care by the enforcement of the rule of placing our orders four months in advance. In my fax Ref. 48/97 I have made it clear that we shall order Hong Kong pack for China so that we do not have to let our goods get expired if we cannot sell the estimated quantities. We have appointed Edward Kellter to distribute our products in China but they do not want to launch new products in the coming months because of the recent economic turmoil in Asia. Anyway the extra 30000 units of Urederm already manufactured can be sold in Hong Kong in the coming winter. They can be sent here in August. I guarantee that Hamilton will not suffer any loss except the delay in delivery. I refer to these two facsimiles in detail as they herald changes in the parties relationship that were soon to be accentuated as Dr Ovcharenko took over the responsibilities of Mr Koerner and Mr Lock. Dr Ovcharenko commenced employment with Hamilton on 14 January 1998. He reported to Mr Blake. The April 1998 meeting in Adelaide included Dr Ovcharenko for the first time. The matters discussed reflected the recurrent issues for that year noted above. A foreshadowed substantial price increase for Rubesal led to significant correspondence in the ensuing months and resulted in opening up direct communication between Mr Chung's HMC and Hamilton. Between April and September 1998, a new pricing structure for Rubesal was agreed, as was a four month advance ordering system. I believe this will mutually benefit your company as well as ours. He proposed a meeting between Mr Chung and Dr Ovcharenko in Hong Kong when Dr Ovcharenko made a visit planned for February 1999. A meeting was later arranged for, and occurred on, 27 February 1999. It was attended by Dr Ovcharenko, Mr Chung and Mr Peter Yeun, another director of HMC. HMC produced a "Business Review" at the meeting which set out the market and industry background in Hong Kong. Much of the information in it was adopted by Dr Ovcharenko in his March 1999 report to Mr Blake. The Business Review complained that indirect sourcing (ie via AMC) "results in non-competitive pricing" and there was a "frequent out-of-stock situation" and "lack of support from sole agent". The strategy HMC sought was securing "direct sourcing from supplier". Dr Ovcharenko's 27 February meeting with HMC was followed on the same day with a meeting arranged by HMC with the Hong Kong Chief Pharmacist, Mr Lee Jark-pui. At that meeting, according to Dr Ovcharenko's report to Mr Blake, Mr Lee "strongly suggested" Hamilton should sign a long term agreement with HMC for the supply of Rubesal. Mr Chung then commented he was willing to sign a full distributor's contract. That meeting was held on 1 and 2 March 1999. The detail of the meeting will be referred to, as will the course of subsequent negotiations, when the "Contract Claims" are considered below. For present purposes it is sufficient to note several matters referred to in Dr Ovcharenko's report of it. In anticipation of the meeting he collected information about the Hong Kong pharmaceutical market as a whole, as well as "confidential information concerning the commercial channels and chain politics of [AMC]" and he held a number of "preliminary confidential meetings". This, he said allowed him to establish "a clear and arguable position for the negotiations". On one hand, I couldn't suggest that Dr Keung was not telling the truth, for reasons of ethics and on the other hand, Dr Keung undoubtedly felt that I knew much more than I actually said, but he was not aware of the degree of completeness of my information. Also, he was undoubtedly surprised that I knew all his sales prices, having just arrived from Australia. Having been demoralised by the logic of numbers and arguments at the beginning of our meeting, he later, understood that his position was weak, and quickly attempted to focus the discussion on subjects where my position could not be strong --- on the subject of agreements that were signed a few years ago. On 16 May 2000 the registration was sealed by the Trade Mark Office and a priority date of 11 August 1999 was given the mark. On 11 June 1999, Hamilton, through Dr Ovcharenko, gave instructions to its patent attorneys to register Rubesal as a trade mark in both its English and Chinese character forms. A copy of a Rubesal carton was provided for the purpose. The attorneys wrote to Dr Ovcharenko indicating that the Examiner had rejected the application on the ground that the mark was directly descriptive of the goods in question. After protracted, although reasonably narrowly focussed negotiations, Dr Keung signed the Distribution Agreement for the first time. Finalising the agreement proved to be more difficult (there was only one copy signed in February). On 9 March 2000 the agreement was again executed. On 30 April 2000, Pharmalines, a company based in the United Arab Emirates requested a quotation from Hamilton for Urederm cream. On the tubes we have the Chinese name, but on the cartons we have directions and indications in both English and Chinese, together with our Hong Kong distributors contact details in Chinese lettering. For your information I attach photocopies of both. The export to the UAE of Urederm tubes began on 5 June 2000. In his first affidavit Dr Keung states that he was informed by certain retailers and distributors of AMC products in Hong Kong that Hamilton's 10% urea cream was available in the market from sources other than AMC. He said he assumed these alternative supplies were "counterfeit products". He said in cross-examination that by October 2001 he was unsure whether he was facing competition from counterfeit products or from parallel imported Hamilton products. By December 2001, he knew there was parallel importation from batch numbers of which he was aware. I will deal later in detail with how Dr Keung communicated his concerns about parallel importation to Hamilton. Suffice it to say here that his approach was that of "hinting" and "polite advice" so as to avoid damaging the business relationship. He would not make an allegation without direct proof. Mr Blake in contrast subsequently regarded Dr Keung as deliberately withholding knowledge of it. By March 2001 the Australian dollar had again fallen and Hamilton relied upon this to justify an increase in prices. So began a short and argumentative exchange of emails between Dr Keung and Dr Ovcharenko. I have not got your answer yet. This situation happened two years ago when I asked Hamilton to reduce the price increases after I had increased the price of Rubesal spontaneously due to the falling dollar six months before the last price increase was put forward. On 1 April 2001 AMC employed Dr Calvin Lam. He was instructed to trace the source of what Dr Keung says he thought were counterfeit products and to devise strategies to stop their being sold in Hong Kong. The evidence concerning this is detailed in "Parallel Importation" below. Hamilton entered into an exclusive distribution agreement with Pharmalines on 1 February 2001. The "Territory" within the agreement encompassed the UAE, several of the Gulf States, and some Middle Eastern Countries (including Iran). That Territory was extended by an amendment in June 2005 to additional Middle Eastern States. On 20 October 2001 Dr Keung wrote to Hamilton requesting that a $2000 deduction be made from an invoice sent him "as arranged with Dimitri [Ovcharenko] in the Agreement". This is a reference to Schedule 5 of the agreement and, apparently, reflected his understanding of what was agreed. Hamilton responded indicating that the agreement provided differently for rebates, a matter returned to at Dr Keung's meeting with Mr Blake and Ms Carpenilli on 24 October 2001. Dr Ovcharenko was not present. DO to discuss with Dr Keung. Also, according to the DA, the rebate of AUD2,000, related to the Urederm, should be paid at the end of the financial year because it is related to the volume of sales of Urederm during the whole year. RSB said that DO is able to send him a letter upon his request to guarantee the continuity of the DA for a certain date, as reflected by the Agreement. RSB to provide DO with the full explanation regarding this matter. The detail of Hamilton's dealings with Crafers is set out in section on "Parallel Importation" below. The rebate issue was taken up by Dr Keung in an email to Dr Ovcharenko of 4 December 2001. It is notable for the allegations and accusations it makes. However, in the version signed on 9 March 2000 you added that this only applied to the year 1999-2000. I wonder if you had mentioned this point before you sent me the actual agreement for signature. I only noticed this when I asked for the deduction of $2000 from each lot ordered during my last visit to Hamilton [ie on 24 October 2001]. This will severely jeopardize my faith in you or Hamilton. I formally ask Hamilton to withdraw and review these two clauses and discuss Schedule 5 or the whole Agreement again. In the past, Hamilton and I have always conducted our business dealings in the most direct and honest fashion, whereby any proposed changes to our contract were preceded by direct discussion. Only after such a discussion, be it in writing or in the verbal form, would documentation of the changes then be made. Had changes been made, I trusted that I would have been notified directly for discussion, and an agreement on both sides reached, before the process of official changes to the document would be allowed to proceed. I would like to discuss further with Mr Blake and you my objection to the validity of my signing of the Agreement, and hope that we will come to an agreement which will not allow the misunderstanding on this occasion to hinder or jeopardize our business relationship in the future. It is of some importance in this proceeding. You were one of the first of our partners with whom we signed the full version of this new Distribution Agreement. In the first version of our agreement, only one point was added, regarding the payment of a bonus rate of $6,000 in the 1999/2000 year. However it was not specified for which product and under which circumstance this would occur. You separately signed this point in that agreement (copy attached). This last point was the subject of much discussion between Richard Blake and our company secretary Geoff Pritchard and many discussions also took place regarding all aspects of this point with you prior to your signing. However, in this case, point 2 of Schedule 5 was a new point and I was under the belief that you had been fully aware of its content. With this in mind, Richard Blake and I have closely read your claims and are ready to discuss them with a view to introducing mutually acceptable changes and additions in Schedule 5, should you consider this to be necessary. It was at this time that Dr Keung informed Dr Ovcharenko that Dr Lam had been appointed to AMC to do the importation, distribution and promotion of Hamilton products. On 30 July 2002 Dr Keung sent his first unequivocal communication to Hamilton concerning parallel importation. I will when dealing with parallel importation refer to earlier emails and particularly that of 30 January 2002 to Dr Ovcharenko which Dr Keung asserts put Hamilton on notice of the problem. Originally I put the blame on the weak economy at the present moment. In the past three months two wholesalers refused to get Hamilton products from Medicare. However, they have Hamilton goods to sell to the retailers at prices that are somewhat lower than our selling prices to the wholesalers. This makes me feel that there should be imitated goods or parallel imports of Urederm 50gm tube getting into the Hong Kong market. If Hamilton has not sold any products bearing the HK packing with our Chinese company name and logo "FUYUNHON" to other places or countries leading to possibility of parallel imports I am certain that these two wholesalers have got imitated goods from somewhere and we shall inform the bureau of commercial crime and take appropriate legal action against them for compensation. The ensuing correspondence is dealt with later in these reasons. I should note, though, that in the course of it Dr Keung reiterated AMC's claim to the Chinese language packaging, and trade marks. In fact, after discussions I had with you on this issue it was my understanding it was a general description of the goods and related to the Hamilton product name on the label. It has certainly been the understanding of all at Hamilton that there were no restrictions on the use of these words. Had you advised at any time it was the trade mark of your Company I would not have accepted that it be included on Hamilton packaging. In asking these characters to be added to the labelling of our product you have conveyed to us that this is acceptable for Hamilton to use for Chinese speaking communities, not only in Hong Kong. Please advise why this company name is on our packaging, who does this company belong to and an explanation as to why it was included without our prior approval. It is our understanding that these characters express an interpretation of our brand name Rubesal. Please advise if this is otherwise. Again, if you claim this to be the trade mark of your company I must advise that this is not acceptable to Hamilton. There was a deal that was self-servingly misleading in statements made on behalf both of AMC and Hamilton. Legal proceedings were threatened by AMC and compensation demanded. Hamilton rejected any involvement by it in parallel importation. I deny the allegations you have made about Hamilton's deliberate involvement in parallel importation. These are untrue and insulting. "Forward Company" was the business name of Hong Kong Tung Tak Tong Ltd. It had purchased Hamilton products from Teemlink Ltd, a Hong Kong importer, which had purchased those products from Crafers or from a company related to Crafers. On 21 October 2002 AMC was to institute legal proceedings in Hong Kong against Tung Tak Tong seeking injunctive and other relief for infringements of trademark. In early October 2002 Mr Blake attempted to arrange a meeting with Dr Keung in either Sydney or Adelaide at Dr Keung's convenience on 14 October: he considered it imperative that this meeting go ahead if they were to resolve issues relating to the HK distribution. The meeting continued to be deferred. In cross-examination on Mr Blake's 4 October communication Dr Keung indicated he interpreted it to be "threatening" but he did not think it was possible to terminate the Distribution Agreement according to the agreement. I would note, though, that he did not raise with Mr Blake at that time Dr Ovcharenko's alleged assurance concerning cl 41.1.6. By late October 2002 Hamilton, through its solicitors, was asserting ownership of the Urederm trademark, the subject of the Hong Kong proceeding. This in turn led to allegations (eg by Calvin Lam on 11 December 2002) that Hamilton was supporting "the HK defendants". In mid-November 2002 Dr Ovcharenko informed Dr Keung that, because of the dispute between "our two companies, the board at Hamilton have decided not to hold any reserve stock for Australian Medic-Care". In late 2002 Albert Chung of HMC again opened discussions with Hamilton and agreed to meetings in Adelaide on 15 to 17 January 2003. On 10 January 2003, Albert Chung and Peter Yuen of HMC prepared a "Marketing Plan for Products of Hamilton Laboratories in Hong Kong Market", which was later presented at the Adelaide meetings. The burden of it was to have HMC appointed to take over the Hamilton's "present agency" in Hong Kong. The document HMC acknowledged that it was without doubt that AMC contributed "a lot" in securing the success of Urederm "making it to be the market leader". It attributed that success to the effect of advertising, the Chinese trade name and the nature of the product. During the meetings Mr Blake acknowledged Hamilton had an issue with AMC with regard to the trademark. The minutes recorded him as saying: "Australian Medic-Care is taking control of our brand". Correspondence on the parallel importation issue continued well into 2003. It differed little in its tone and recriminations from that which had preceded it. Mr Blake continued to complain of Calvin Lam's "offensive" communications. Dr Ovcharenko visited Hong Kong in October 2003 during which he met with Albert Chung and Peter Yuen, as also several other companies. At these meetings he discussed the possibility of each becoming a distributor of Rubesal, Urederm and a Voltaren equivalent product. Dr Keung was not informed of these meetings and was not contacted by Dr Ovcharenko. Mr Blake continued to extend invitations to Dr Keung and Dr Lam to visit Adelaide. I feel that this results in possible misunderstandings and lost business opportunities and would like it resolved. The ownership of these marks will only become an issue if the distribution agreement between our companies ends. Hamilton does [not] want, nor has any plans to terminate our agreement and in fact Hamilton would like to build our sales in your territory. We believe you wish to do the same. As a way of allowing this to happen I propose without either party conceding their position on this matter we put it aside at this time so it does not become a barrier to building our business. I would however suggest that you, Dimitri and I, meet at a neutral venue. I presume you regularly travel to Australia to see your family and suggest that a meeting in Sydney would be appropriate and the first step towards re-opening relationships between our companies. It was attended by Dr Keung, Mr Blake and Dr Ovcharenko. The long term nature of this agreement gives both parties the incentive to further develop these important markets. It did not state that AMC had an "exclusive distributorship". This was later rectified. If you have no objection I shall ask him to proceed with the matter in Australia. It is just a legal step used to bring an end to the incidence of parallel importation and allow AMC to get back our damages and legal cost earlier. I am extremely reluctant to take this step but I hope you understand our situation and the difficulty for me and AMC to initiate tedious legal proceedings in Australia. [Emphasis in original. Mr Blake responded by email on 3 June 2005. This will destroy all trust between our organisations. It will also become expensive, time wasting without any benefit and destroy the business both companies have worked to built up over the years. Dr Keung sent Mr Blake an email the following day. While offering a form of settlement (which Mr Blake rejected: "[Hamilton] will defend all its rights under the distribution agreement": email 30 June 2005), the email dwelt upon Hamilton's responsibility to compensate AMC; its involvement in parallel importation; and AMC's right to the Chinese Fuyunhon mark. Nonetheless, commercial dealings continued between the two companies. Dr Keung informed Dr Ovcharenko on 12 June 2006 of AMC's use of its company trademark on generic products. Dr Blake responded that Hamilton considered that action breached the Distribution Agreement. On 13 July 2006, Dr Blake forwarded to AMC a 60 day notice of termination of the Distribution Agreement under cl 41.1.6 of the agreement. This raised immediately a dispute with Dr Keung as to the term of the agreement; the "guarantee" given at the 23 March 2005 meeting; and the proper operation of cl 41.1 of the Distribution Agreement: see "The Contract Claims". Dr Keung was informed that the two most recent orders would not be satisfied as delivery would be after the termination date. A further dispute arose over Hamilton's requirement that AMC transfer to it, the product registrations for Urederm, Rubesal and Stingose in China, Hong Kong and Macau. AMC indicated it had no obligation under the Distribution Agreement or elsewhere to do so. On 2 February 2007, AMC instituted the present proceedings. On 23 March 2007 a second notice of termination was sent to AMC. It guarded against the contingency that the 13 July 2006 notice was ineffective. This notice relied upon (i) a failure to notify a change in control of more than one half of AMC's issued share capital on 19 April 2002, giving rise to a right to terminate the licence under cl 41.1.5(c) of the Distribution Agreement; and (ii) AMC's refusal to remedy its default in paying an invoice for A$35,091.12 which was due on 6 August 2006 so authorising Hamilton's termination of the licence under cl 41.1.3 of the Distribution Agreement. A. Many, though, presuppose particular favourable or unfavourable findings by me on logically anterior claims or defences. For this reason I intend to deal first with those claims and defences which are fundamental in character. The first, and most important of these are (i) AMC's claim that Hamilton's purported termination of the Distribution Agreement, by its notices of 13 July 2006 and 23 March 2007, and its subsequent failure to supply product to AMC, constituted a repudiation of the Agreement which AMC accepted; and (ii) Hamilton's defences that the first or else second of the notices gave rise to a valid and effectual termination of the Distribution Agreement. I will deal with these compositely. I will deal with these in turn. (i) A partly oral and partly written agreement? The case law on this matter has recently been essayed by Campbell JA (Allsop P and Bastin J concurring) in Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234 at [90] . If it is possible to make a finding about what were the words the parties said to each other, the meaning of those words is ascertained in the light of the surrounding circumstances: ... Secondly, the rights and liabilities of the parties to a contract are determined by the "principle of objectivity": Pacific Carriers Ltd , at [22]. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. Nonetheless, evidence of prior negotiations is, as a rule, to be excised from the "context". The orthodoxy in this country --- and the orthodoxy recently reaffirmed in English law: see Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38 --- is that the negotiations of the parties prior to their contracting and their statements of their subjective intentions are, as a general rule, excluded by the parol evidence rule and cannot be used in the interpretation of the contract: see generally Lewison, The Interpretation of Contracts , 3.08 (4 th ed, 2007). Given the recent decision of the House of Lords, I would note without disrespect that this rule does not as of course commend itself in all parts of the common law world and, in particular, in parts of the United States: see Restatement of Contracts, Second, §214(c); and generally, Farnsworth, Contracts, §7.12 (4 th ed, 2004); Yoshimoto v Canterbury Golf International Ltd [2001] 1 NZLR 523 at [76]-[78]. Fourthly, although the present state of the law in this country is not yet settled on whether it is possible to use post-contractual conduct as an aid to construction of a written contract, the more favoured view is that it is not: see Masterton Homes, at [114]; FAI Traders Insurance Co Pty Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343. The criticisms of this view are, in the main, directed at its inflexibility particularly in relational contract settings: see eg GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 at [351] ; see also Unidroit Principles of International Commercial Contracts: 2004 , Art 4.3. Fifthly, a commercial contract is to be given "a businesslike interpretation": International Air Transport Association v Ansett Australia Holdings Ltd at [8]; or as Lord Steyn put it ( Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] UKHL 19 ; [1997] AC 749 at 771); "a commercially sensible construction". Finally, I would comment that in a case such as the present where there are both a dispute as to whether the contract is or is not partly oral and claims as well of misleading or deceptive conduct in the negotiations for the contract, the evidence of the parties' negotiations can be admitted on those issues and can result in the court obtaining an informed appreciation not only of the object and intent of the contract itself but also of individual clauses of it. Where it is found that the contract is, in fact, wholly written, to require the parol evidence rule to be applied to the construction of the contract in disregard of that informed appreciation does sit rather oddly with the concept of party autonomy. To understand the variety of contentions this apparently simple question has raised, it is necessary to refer both to a deal of contextual material and then to the terms of the contract (insofar as presently relevant) as I find those terms to be. 1. Hamilton's position is that that Agreement contains the entirety of the parties' agreement. AMC's position is that the agreement is partly oral as well. Importantly for present purposes, the alleged oral provisions bear directly upon the written provisions stipulating "the term" of the Distribution Agreement: cl 8; and the provision for termination of the "Licence": cl 41.1.6. It is appropriate at this point to set out those provisions of the agreement that, in light of the parties' contentions, have some bearings on the termination issue. Part II is headed "The Licence". The term "licence" is defined in cl 1 to mean "the right to resell Products in the Territory" (a defined term). By cl 3 the Supplier (Hamilton) granted a licence to the distributor (AMC). The licence was only for "the Term": cl 7. The term was the period specified in Item 1 of Schedule 1 or as "shortened or extended under this agreement": cl 1. Item 1 had the term beginning on 1 July 1999 and ending on 30 June 2004, ie it was for 5 years. I would note that this ultimate version of cl 8.1 was that put forward by Dr Keung. Clause 9 made the distributor's rights under the licence exclusive. Clause 10 (which dealt with the performance of the distributor) dealt amongst other things with the minimum purchases it had to make annually on the various products covered by the agreement. Part 3 of the agreement dealt with supply of products. It imposed an obligation on the supplier, to the extent it was able, to "sell to Distributor which must buy all Products needed for resale": cl 11.1. In the event that the Licence ends before 30 June 2006, the parties agree to negotiate to determine any entitlement Distributor may have. Supplier grants to Distributor a licence to resell the Unsold Products in these circumstances. If Supplier does not wish to repurchase the Unsold Products, then Distributor is responsible for reselling them. Supplier grants Distributor a licence to resell Unsold Products in these circumstances. (a) Prior to commencing negotiations for their 1999 Distribution Agreement AMC and Hamilton had previously signed two sequential sole distributorship agreements each for 5 year terms. These both permitted Hamilton to terminate the distributorship by giving at least 3 months notice if sales did not meet the agreed minimum annual sales figures contained in the respective Schedule B to each agreement. (b) While, that the relationship between Dr Keung and the Hamilton officials with whom he dealt prior to 1999 primarily, Mr Koerner and Mr Lock was cordial and constructive and appeared to be one of mutual respect, there were, nonetheless difficulties progressively affecting the distributorship over time. From 1994 Dr Keung began complaining of the effects of increased competition on sales. By 1998 recurrent issues in the parties' relationship were Hamiltons insistence upon introducing regularity in the system for ordering and delivering its products to AMC; the profitability to both parties of prevailing pricing arrangements and the economic downturn in Asia; and the lack of success in securing appropriate licences for Urederm and Rubesal in China and in appointing a Chinese distributor. (c) In 1998 Dr Ovcharenko took over the responsibilities Mr Koerner and Mr Lock had in relation to AMC. (d) On 10 February 1999 Dr Ovcharenko raised the issue of a new "Distribution Agreement" with Dr Keung suggesting misleadingly (see Ovcharenko's email to Keung of 23 January 2002) that all other distributors with whom Hamiltons did business abroad have such an agreement. The meeting took place on 1 and 2 March 1999 but prior to it Dr Ovcharenko had covert meetings with Mr Chung of HMC in Hong Kong. Under cover of his 10 February letter Dr Ovcharenko enclosed copies of "our official Distribution Agreement and also a shorter, simpler version Distribution Terms". Only the latter is in evidence. What should be emphasised about it is that, on its face, its 5 subclauses were intended to operate independently of each other. I would also note that the Distribution Terms did not draw any operative distinction between "the Licence" granted under the Terms and the agreement constituted by the Terms. Neither do the Terms make express provision for the proposed duration (or "term") of the agreement or for its renewal. The possible significance of both of these matters will become apparent when AMC's contentions are considered below. There is a deal of conflicting evidence as between Dr Ovcharenko and Dr Keung concerning what transpired at the meeting and particularly as to what was said in relation to the operation of cl 41.1 and of cl 41.1.6 in particular. It is necessary to deal with this at some length as the meeting and its aftermath is of crucial importance to the principal contract claim. Before turning to the 1-2 March meeting, I should refer, first, to Dr Ovcharenko's Business Report of March 1999 which he gave to Mr Blake towards the end of that month. On its face it appears not to have been finally completed until at least 30 March (as the postscript to it attests). The Report covered a range of topics (not all presently relevant) but it contained the nearest to a contemporaneous account, albeit one-sided, of the meeting. As it stated in its opening, the object of the Hong Kong visit was to increase the profit from product exported to Hong Kong and increase existing sales to A$600,000. It recounts Dr Ovcharenko's meetings with Mr Chung and the intelligence he gained about the market in Hong Kong. In the "General Chronology" I referred to, and will not repeat, Dr Ovcharenko's account of his meeting with Dr Keung. Dr Ovcharenko's Report noted that as a result of all negotiations, Dr Keung agreed to sign the Distribution Agreement "with two insignificant changes". 8. I note in passing that subsequent negotiations resulted in Hamilton's acceptance of what became cl 8.1 in the agreement as executed. At the March meeting there was agreement in principle to the inclusion of a minimum purchase requirement in the Distribution Agreement. This was not a subject of further negotiations and became cl 8.2 of the signed Agreement. The tenor of the Business Report strongly suggests that of the two documents sent to Dr Keung on 10 February 1999, the negotiations were conducted on the basis of the "official Distribution Agreement" and not the "Distribution Terms". As I have noted the Terms did not contain a provision for renewal. On 2 March we concentrated exclusively on pricing. Apart from the discussion of pricing, the course of the discussion on 1 March 1999 followed the order of the draft distribution agreement which Mr Ovcharenko had provided to me on 10 February 1999. Casebook 106-113 is a copy of the draft distribution agreement, entitled, "DISTRIBUTION TERMS," including the schedule to the draft distribution agreement, which is blank except for Hamilton's address for service. The headings in this schedule roughly correspond with the agenda for and course of the discussion on 1 March 1999. During the discussion on 1 March 1999, I placed special emphasis on the continuing importance to AMC of a "rolling" term of about five years i.e. a term which would periodically automatically be updated so that AMC would always have at least five years notice of the ending, by termination by notice of either party, of the agreement. I said words to the effect, "Promotion and advertising are very expensive and you do not get a profit back on these things straight away. Hamilton has to guarantee AMC a rolling five year term so that AMC will have time to reap a profit on its investment in advertising and promotion. Also, AMC has to be able to guarantee its distributors that they will have time to reap a profit on their investments". I also said words to the effect, "the term of the distribution agreement has to update automatically each year so that the term will always be for a further five years minimum. I recall that the purpose of that period was to permit time for AMC to undertake necessary work associated with the end of the Term of the Distribution Agreement including, for example, running down remaining inventory. In his second affidavit, which was filed and served, prior to the filing of Dr Ovcharenko's affidavit, Dr Keung returned to the 1-2 March meeting. He stated: In addition to the short-form distribution agreement sent to me in the letter from Hamilton dated 10 February 1999, I also received a copy of Hamilton's official Distribution Agreement. This is referred to in Hamilton's letter of 10 February 1999 (Casebook 105). I no longer have a copy of this Agreement, however, I believe it contained the a clause equivalent to clause 41 of the signed Agreement (Casebook 342). This clause appears in a draft Agreement (as clause 43.1). I later received from Hamilton attached to a letter from Dimitri Ovcharenko dated 23 March 1999 (Casebook 129-152). During my discussions with Dimitri Ovcharenko on 1 March 1999 or in subsequent telephone conversations, the date and circumstances of which I can no longer remember but before the end of July 1999, I spoke to him about this clause. In particular, I raised a concern that the 60 day notice of termination clause (clause 41.1.6) appeared inconsistent with the length of the Agreement being a rolling 5 year term. Mr Ovcharenko stated that the 60 day notice of termination would only be effective if one of the preceding paragraphs in that clause applied. I reminded Richard Blake of Hamilton of my discussions with Mr Ovcharenko in an email dated 17 July 2006 (Casebook 592-593) shortly after Hamilton purported to terminate the Agreement. In cross-examination Dr Keung reiterated that the document they worked from and the document they worked through at the 1-2 March meeting was the Distribution Terms. In the discussion as to the term (ie duration) of the proposed agreement, when it was pointed out that no actual term was referred to in the Distribution Terms, Dr Keung said: "it was filled in by [Dr Ovcharenko] later". As to cl 24 (on termination) Dr Keung indicated he "had a discussion with Dimitri". And Dimitri explained to you that the clause, the purpose of the clause, was to enable either you or Hamilton to terminate the agreement on 60 days notice?---I don't have that answer. The answer is 24.5 is only confined to that paragraph and there is a funny saying from after that --- a funny --- a proverb from Dimitri, he said, "No one would like to cure a hen laying golden eggs," from that I implied that it means long-term cooperation. We have the distribution agreement with the subdistributors, which Hamilton knows. We have distribution agreement with Canada, two to three years. We have distribution agreement with Zuellig Pharma for three years. We have distribution agreement with HMC, which Hamilton has very good contact, two to three years. I refer below to the circumstances in which what became cl 50 of the Agreement was proposed by Dr Ovcharenko by facsimile on 27 May 1999 and was agreed to by Dr Keung. That clause, for present purposes, requires that all negotiations between the parties that took place prior to the signing of the Agreement were to be "considered null and void as from the day of its signing". In cross-examination on the burden of this clause, Dr Keung, while acknowledging that the written contract was to be the whole of the contract between AMC and Hamilton, nonetheless said he had had full explanation orally and he presumed "that also includes this". That's why I explain orally to him again and again, about the clauses. And finally, we come to a written version that is fully explained what we said orally. AMC affirmed this in final address. As both Dr Ovcharenko's Business Report and a number of passages in Dr Keung's own evidence demonstrate, Dr Keung on a number of occasions expressed concern at the cost of establishing Hamilton's presence in China (especially in relation to the costs of licences) and of the time needed to recoup these costs. Dr Keung wanted to ensure in the Distribution Agreement that, "having invested a lot of money in China ... we should be allowed a certain period to get back our investments". This led to the inclusion of cl 31.3 in the agreement (dealing with compensation for benefits to Hamilton from AMC's activities under the agreement in the event of the licence ended before 30 June 2006). I would comment in passing that cl 31.3 is of some importance in the scheme of the Agreement. Hamilton's original proposal (in the then draft cl 33.3) was that at the end of the Licence AMC was "not entitled to payment for any benefit to [Hamilton] from [AMC's] activities under this agreement". AMC objected to this. We are still investing on the market of China with the profit we got from Hong Kong. A lot of investment is required in China for the coming two years. If the Term of this Agreement has been extended twice for the coming 24 months as stated in Clause 8, we will not ask for any benefit from Hamilton at the end of the Licence. The wording in Clause 33.3 can remain the same if we have this mutual understanding. In the event that the Licence ends before 30 June 2006, the parties agree to negotiate to determine any entitlement Distributor may have. And it was intended to give you compensation if the distribution agreement wasn't renewed or extended?---As I said before, if I had seven years' representation, at least, you know, and we can have a chance to get back all we have spent. And just listen to me put something to you in two propositions, if I might? The purpose of this clause was to give you compensation for hard cash that you outlaid, if either the agreement wasn't renewed, or if it was terminated before June 2006. Do you agree?---Yes. If we have seven years' representation, it's all right. Did you discuss that with Dr Ovcharenko?---I discussed --- I haven't given him a fixed date, but as I said, we have at least seven years to represent before we can get back the money we spent. Clause 41, you understood, had nothing to do with protecting the reward of your investment?---Clause 41, of course, is the most important to protect our investment. Because it's an international agreement, we have sold so much investment for our distributors, sub-distributors. He underlined the references in cl 42 to cl 41.1.6 and the last two sentences of cl 42.3. He denied that, from his then reading of the clauses, he concluded Hamilton was correct in its assertion in the notice of termination that the Distribution Agreement would come to an end under cl 41.1.6, 60 days after delivery of the notice. For the sake of completeness, on 17 July Dr Keung wrote to Mr Blake concerning the notice of termination. The sequence of exchanges it prompted encapsulated the positions taken in this proceeding. I think you have to ask Dimitri about the content and minutes of our meeting in 1999 concerning the discussion on Clause 41.1.6. In response to this enquiry the explanation given to me by Dimitri in our meeting in 1999 was as follows: It is common sense that the Term was fixed for at least five years to protect the reward for our investment. Clause 41.1.6 was inserted and put at the end of Paragraph 41.1 because it followed the conditions listed in Clause 41.1.1 to 41.1.5, i.e. when the conditions in these five clauses happened one party could notify the other one about the end of the Licence. The end would be effective 60 days after the notification. Perhaps you can clarify if conditions listed in the above clauses have occurred. This was documented in the minutes of our meeting printed by Dimitri. How come the Term could be been shortened to 60 days by intentionally misinterpreting one clause out of one paragraph without taking the conditions or reasons leading to the end of the Licence into consideration? I presume you are going to compensate AMC and our distributors for the early termination of our Agreement only on your side. [Emphasis in original. Hamilton has validly exercised its right and consequently AMC's distribution licence will come to an end on 13 September 2006. No compensation is payable to AMC pursuant to the Distribution Agreement (or otherwise). You acknowledge in your email that at the meeting you were aware of (and discussed) the termination right subject of clause 41.1.6 of the Distribution Agreement. However, you now assert that Mr Ovcharenko told you that that right would only be available to Hamilton in circumstances where all of the "events" set out in clauses 41.1.1 --- 41.1.5 had occurred. Such an argument in my view is fanciful and contrary to common sense. Even if Mr Ovcharenko had made the comments as alleged (which he vigorously denies) it is difficult for me to believe that you would have accepted and relied upon a construction of the Distribution Agreement which clearly defies commercial common sense. I note that in any event the conversation to which you refer occurred prior to the execution of the Distribution Agreement. Hamilton maintains that the terms of the Distribution Agreement are clearly and unambiguously recorded in the written Distribution Agreement. As such the conversation to which you refer is irrelevant in that it is alleged to have occurred during the period of negotiation which led to the written terms of the Distribution Agreement (which agreement is expressed to be the entire agreement between Hamilton and AMC). Hamilton's position on this issue is supported by clause 45 of the Distribution Agreement. [The "entire agreement" provision. There are a lot of things that need to be settled to achieve a smooth transition; otherwise there will be interruption of supply of your products on the market. Even though Clause 41.1.6 can be explained in your own way it is impossible for the Licence to end in 60 days. The definition of the "Licence" is "the right to sell Products in the Territory". This is different from the D.A. which has a rolling 5 year Term. [Emphasis in original. Nonetheless he acknowledged there was discussion of the proposed terms for a formalised distribution agreement but they "were very preliminary in nature". His affidavit went on: Dr Keung and I agreed that the term of the agreement should be based on a period of 5 years. This would allow AMC to plan the continuation of its sub-distribution relationships and the like. Rather it reflected what he proposed. It is, in my view, highly improbable that Dr Keung would then have agreed to such a term. Dr Ovcharenko reiterated in cross-examination that there was discussion about the initial term of the Distribution Agreement being for 5 years. He accepted that Dr Keung wanted automatic extension and his reasons were that because of promotion and advertising costs, he would have to have some guarantee of a rolling 5 year term and that AMC would need to guarantee its distributors that they would have the time to recoup their investments. There likewise was agreement there would be a provision on minimum purchases. Very briefly. It was, again, very brief discussion. We have discussion, and Dr Keung have told me what it wants if it is possible. Again, if it is possible, what our distribution agreement will be automatically extended each time for next couple of years. I told, like, it's --- of course, a renovation of the agreement, it is subject of the terms of the discontinuance and termination of the agreement. Dr Keung said to you that he had been promoting Hamilton products for a number of years, didn't he?---Yes. I haven't told about the particular point, but I told, if our cooperation will be successful for both of us, in that case, of course, we will --- if it is not any other ..... , in that case, of course, we agreed to renovate our agreement automatically. And he said that AMC would need to guarantee their distributors that they would have the time to recoup their investments?---Yes, he told me. I explained to Dr Keung that either AMC or Hamilton could use this clause to terminate on 60 days notice. I further told Dr Keung that there would be no point either party terminating if the relationship was running smoothly and said words to the effect that " no one is going to kill the chicken who is laying the golden eggs. He denied telling Dr Keung that subclause 41.1.6 would not be used by Hamilton unless one of the preceding things in cl 41.1 occurred. His affidavit also emphasised that from the time the first draft version of the Distribution Agreement was made available to Dr Keung in February 1999 until the execution of the finalised version in March 2007 the only changes made to the termination provisions were (a) its renumbering as cl 41 and (b) the insertion of the restrictive covenant cl 41.1.7 in July 1999. Hamilton's defence, it should be noted, contains certain admissions in relation both to the rolling 5 year term and to cl 41.1.6. In [165] Dr Ovcharenko said: Further to my discussions regarding clause 43 with Dr Keung in March 1999 (discussed at paragraph 92 above) AMC raised a concern with me, in or about May 1999, regarding the perceived conflict between a 5 year term and the ability of either party to terminate on short notice. Dr Keung conveyed to me that AMC's concerns were related specifically to the money which AMC was outlaying to obtain pharmaceutical product registrations in China when considered in light of clause 33.3 (later in a different form to become clause 3.1 as described below) of the distribution agreement. " [Casebook 523 and 541. I would note in passing that Dr Ovcharenko's cross-examination on [165] illustrated one of the difficulties with his evidence: first, he denied that the conversation referred to in the paragraph occurred; when shown his affidavit, he said it did but it was about cl 33.3 not cl 41.1.6. The first relates to the inclusion of what became cl 50 in the Distribution Agreement. In May 1999, Dr Keung sought from Hamilton some concession in pricing because of the appreciation of the Australian dollar relative to the Hong Kong dollar. While this request was refused, Hamilton proposed a bonus arrangement. The bonus offer could be included under Schedule 5. It went on to say that he would be able to have discussions with Dr Ovcharenko in mid-June "after my lawyer has given me comments about the Distribution Agreement". Dr Keung raised no issue about the proposed cl 52 prior to execution of the agreement: he said there was not "any need to object" and he did not discuss it with his legal adviser. My opinion was as soon as we will sign distribution agreement all points which will be in the signed copy of the agreement they have highest priority compared to all previous negotiations, draft copies, letters, etcetera, etcetera. So the final agreement covers all previous negotiations. Secondly , as Dr Keung's facsimile response to the 27 May fax illustrates, AMC was representing to Hamilton that it was obtaining legal advice on the Distribution Agreement. While representations to this effect were made on at least 5 occasions in May and June of 1999, the most significant for present purposes were contained in a fax of 7 June 1999 to Dr Ovcharenko. It opened with the observation: "Following this fax are the comments by our adviser and further clarified by me. " The following 4 pages raised questions and made comments and proposals on 13 clauses of the then draft of the Distribution Agreement. These did not include cl 41.1, cl 45 or cl 50. An order that AMC and Dr Keung discover documents containing, recording etc legal advice relating to the terms of the Agreement or AMC's entry into it, was made on 24 June 2008. No such documents were produced. In cross-examination Dr Keung diminished the significance of legal advice: "It's not the most important issue for me. " He went on to say that the only legal advice he had was from a judicial friend; he did not discuss the agreement with any practising lawyer. He only spoke to his friend on 2 or 3 occasions and his friend spoke to him only about three things: duration, the trademark and pricing. Again to anticipate matters, the respondent invites me to disbelieve Dr Keung and to accept that his company did have a legal adviser as he represented was the case. Thirdly , the nature of the relationship between Dr Keung and Dr Ovcharenko and their respective views of the bargaining process have some significance. Dr Keung acknowledged he had been on very friendly terms with Mr Lock and Mr Koerner and their relationships were ones of reciprocal trust. He admitted in essence, though, that from the time of the 1-2 March meeting he did not trust Dr Ovcharenko: "his faith in him has decreased. " This was because Dr Keung had learned of Ovcharenko's secret meetings with Mr Chung of HMC and of the strategic advantage in price negotiations that this gave Dr Ovcharenko --- as Ovcharenko himself acknowledged in this Business Report of March 1999. There is at least some contemporary evidence indicating that at least by June 1999 Dr Keung was well aware of the covert meetings: see his fax to Dr Ovcharenko of 16 June 1999. What also is apparent from the evidence of both Dr Keung and Dr Ovcharenko is that each on occasion resorted to studied misrepresentation in negotiation. I am left with the very clear appreciation that each saw advantage taking by such means as an acceptable aspect of the negotiating process. Fourthly , in the "General Chronology" I referred to deterioration in the parties' relationship beginning in 2002 over the parallel importation issue and the related cycle of accusatory exchanges of correspondence. By an email of 4 October 2002, Mr Blake made plain he was "having second thoughts" about the continuation of the AMC distributorship. Dr Keung saw this, though, as a threat. He made no mention at the time of Dr Ovcharenko's assurance. I refer to this matter, as Hamilton relies upon it, to support the claim that AMC's claim relating to cl 41.1 is a recent invention. I referred earlier to the draft cl 8 Dr Ovcharenko included in his Business Report to Mr Blake. That provision, which gave Hamilton (but not AMC) the power to extend the Term for a period of 5 years by written notice to AMC at 2 years before the end of the Term, was included in the draft Distribution Agreement sent to Dr Keung on 23 March 1999. By 14 April 1999, the period of extension was reduced to 12 months (in now cl 8.1) and required the agreement of Hamilton and AMC. On 7 June AMC sent Hamilton a facsimile commenting on (inter alia) cl 8.1. On 29 June 1999 it provided Dr Keung with a further draft of the Distribution Agreement containing a clause 8.1. On 16 July 1999 Dr Keung in turn sent a revised draft agreement with his proposed alterations and comments to Dr Ovcharenko. His draft cl 8.1 was in identical terms to that in Hamilton's draft of 29 June. Hamilton's next draft of 29 July 1999 accepted Dr Keung's proposal without comment. I note in passing that Dr Ovcharenko's evidence is that he reassured Mr Blake that Hamilton still had rights to terminate under cl 41.1.6. For the sake of completeness I would note, and it seems to be agreed that there were no cl 8.2 minimum purchase agreements at all after the signing of the Distribution Agreement and prior to the purported 2006 termination. Distinctly, as I have noted, one of the justifications Dr Keung advanced for having a rolling 5 year term with a 4 year notification of termination period was the need to be able to guarantee AMC's distributors that they will have time to reap a profit on investments. A deal of evidence was put on in relation to AMC's sub-distributorships and their contractual terms. It is unnecessary to rehearse those contracts here other than to note that none appears to have been for a term of 5 years; they were generally for 2 to 3 years; one at least was for an indefinite term; termination of these agreements was commonly on notice of a designated duration, eg 3 or 6 months. There appears to have been little relationship between the term of the Distribution Agreement and those of sub-distributorships. 2. That question, though, raises in turn a further question which bears on those two clauses. Was the contract wholly in writing and contained in the Distribution Agreement, as Hamilton contends? Or was it partly in writing and partly oral, as AMC contends at least in the alternative? AMC also contends that cl 41.1 on its proper construction would not, in any event, have authorised the purported termination of the Distribution Agreement. The conversations raise further, discrete questions insofar as it is alleged they gave rise to representations which contravened the Trade Practices Act , or else could found a claim based on estoppel. There is a supplementary question relating both to cl 8.1 and cl 41.1.6. It is that, if either written clause on its proper construction does not accord with the respective oral representation allegedly made by Dr Ovcharenko, on 1-2 March 1990 or subsequently, the Distribution Agreement should be rectified under s 87(2)(b) of the Trade Practices Act . This question is premised upon the proposition that AMC has suffered damage by Dr Ovcharenko's conduct which contravened s 52 of that Act. For convenience in exposition, I will consider this sequence of questions by first considering whether the contract was wholly in writing or was partly oral. I take this course for the reason that the circumstances of the 1-2 March 1999 meeting and a later telephone conversation between Dr Ovcharenko and Dr Keung prior to July 1999 provide part of the factual matrix to be considered both when determining whether or not the contract was wholly in writing and, distinctly, for the purposes of determining whether Hamilton, through Dr Ovcharenko, engaged in misleading or deceptive conduct during the negotiations. What I should emphasise at the outset is that AMC does not rely upon conduct subsequent to the execution of the Distribution Agreement, but which is inconsistent with its terms, to evidence an oral variation of the agreement: cf GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [224]-[231]. Neither has there been any attempt to rely upon subsequent conduct for the purpose of interpreting the Distribution Agreement: see Cheshire and Fifoot's Law of Contract , [10.16] (9 th Aust ed). Distinctly, there is no allegation made that in exercising its cl 41.1.6 power Hamilton breached its duty of good faith and fair dealing to AMC or otherwise acted unconscionably: cf 67 Am Jur 2d, "Sales", §343. The AMC case can be put shortly. It is that cl 8.1 provides the mechanism for setting the "Term" (ie the duration) of the Distribution Agreement. Unless and until either (or both) of the parties gave "the written notice of its desire to terminate" the Agreement, or "to alter its terms and conditions" (such notice to be given 4 years before the expiration of the 5 year term) "the Term in this Agreement was automatically extended for 12 months to make up the Term to 5 years". In other words, subject to the non-occurrence at the end of the first year of the term of the stipulated condition (which, if it had occurred, would have limited the term of the agreement to a further 4 years (the remaining of the initial term), the initial term was automatically extended a further year. In this sense, it allowed for a rolling 5 year term. Further, it provided expressly for four years notification of a party's "desire to terminate" the Agreement. It could not otherwise be terminated (save by later express agreement). Importantly, it could not be terminated under cl 41.1.6. Clause 8.2 (on agreeing minimum purchases for the period of the extension) did not, AMC contends, impose a condition precedent to extending the term. Rather it imposed an obligation on the parties consequential upon the extension effected by the operation of cl 8.1. The significance of this is that at the end of the first year of the Distribution Agreement (ie 30 June 2000), while no cl 8.1 notification was given by either party, neither were minimum purchases agreed for the 12 months 1 July 2005 --- 30 June 2005. AMC's contention is that Hamilton "waived" its right to insist (later put as elected not to insist) upon a minimum purchases agreement for that year, and it did likewise in all subsequent years. As to cl 41.1, AMC contends, its concern on its face was with the Licence and with when it ceases. To terminate the Licence, it is said, was not to terminate the Agreement. The premise of this is that the structure of the Distribution Agreement was such as to treat the Licence as a distinct part of the overall agreement. Its termination would still leave the balance of the Agreement on foot. I will refer, further, to this fragmentation of the Agreement below in my own consideration of the parties' contentions. Relatedly, AMC says the scheme of cl 41.1 to cl 41.5 was to identify events which would end the licence. Clause 41.1.6 was intended to provide the mechanism bringing the Agreement to an end on the occurrence of any of those events, i.e. the giving of 60 days notice. It did not provide a separate and independent basis for terminating the licence. An independent reading of the subclause, it is said, is contra-indicated by the terms of the Distribution Agreement, read as a whole, because the Licence and the supply agreement are co-extensive (sic); the length of the Term (even if only for a fixed 5 years) is inconsistent with such a construction; that a long term was vital to AMC in its markets in 2000 was patently obvious; the rolling five year Term is inconsistent with this construction; clause 31.3 was inconsistent with such a construction (a consistent wording of clause 31.3 would have identified the date as 30 June 2004, not 30 June 2006); and the supply arrangement separately agreed between Hamilton and AMC required four months prior notice for orders, ie at least 120 days. Alternatively, if cl 41.1.6 is equivocal, it was submitted it should be interpreted in light of the representation attributed to Dr Ovcharenko concerning the subclause's operation. I need not consider this latter submission as I have found no such representation was made. First, it is contended that there were no oral terms such as suggested by AMC; Dr Ovcharenko did not qualify cl 41.1.6 as pleaded by AMC, but did in explanation of the subclause indicate that Hamilton would not exercise its right save where the Agreement was no longer commercially viable or acceptable to Hamilton. Secondly, it is said that cl 41.1.1 to cl 41.1.6 created six independent events on the happening of which the "Licence ends". That the subclauses were intended to be independent is self-evident from the terms of cl 41.1 itself, and this conclusion is made the more apparent from the terms of cl 42 which indicated expressly that each of subclauses 41.1.1 to 41.1.6 were independent of each other. Thirdly, Hamilton submits that while cl 41.1 referred in terms to the ending of the licence, that ending on the proper construction of the Agreement was synonymous with the ending of the Agreement. The construction proposed by AMC, which would leave on foot Hamilton's obligation to supply AMC for a further four years after the expiry of the 60 day notice, was, it is said, "bizarre". Fourthly, cl 8.1's concern was with determining the "term" of the Distribution Agreement. It did not address termination as such. Such, inter alia (see cl 10.4.1), was the function of cl 41.1.1 to cl 41.1.6. Fifthly, the power to terminate was effectually exercised in the 13 July 2006 notice. Sixthly, in the alternative, because no minimum purchase agreement was reached under cl 8.1 by 30 June 2000, the Distribution Agreement continued after the expiry of the nominated term (ie 30 June 2004) but on the basis that either party could terminate the licence by the giving of reasonable notice. The premise of this alternative submission is that the reaching of an agreement as to the quantity of minimum purchases of Hamilton's products for the period of the one year extension under cl 8.1, was a precondition to any extension of the term of AMC's licence to distribute. No minimum purchases were agreed for after 30 June 2004. I will consider this alternative submission separately below. The findings each party has pressed upon me are tied to their respective views of the credibility of Dr Ovcharenko and Dr Keung. On this matter the parties differ sharply. While I am satisfied that the reliability of the evidence of both men is questionable for reasons I will give, my conclusions on the alleged oral terms have not been reached simply on credibility grounds. The description "rolling 5 year term" is not defined in or to be found in any document prior to the execution of the Distribution Agreement. As used in the evidence it clearly is used in a variety of senses. Dr Keung described his two 5 year Letters of Appointment in the 1990's as "the rolling 5 years". This usage seems to refer to no more than back-to-back five year agreements. A second usage refers to an agreement for five years which can be extended recurringly four years before the expiry of the then term for a further year. I will refer to this as the term extending sense. A third usage, which is Dr Keung's (and I will so describe it), adds a new feature to the second. It is that such an agreement can only be terminated by the giving of a notice of termination four years before the end of the term. (Emphasis added. That proposed construction is that cl 8.1 requires four years notice of termination and that it overrides cl 41.1.6. Putting that question of construction to one side, there is, in my view, no evidence that Hamilton ever actually accepted Dr Keung's usage prior to the execution of the Distribution Agreement. Dr Ovcharenko described the 1-2 March discussion of the terms of the proposed Distribution as being "very preliminary in nature" and that the rolling 5 year term was talked about "very briefly, very briefly". This attempt to diminish the significance of this aspect of the meeting is contradicted by his own account of the level of consensus about the Distribution Agreement provided to Mr Blake in his Business Report of late March 1999. I am satisfied that at that meeting it was well understood that the proposed agreement would, as in the past, be for five years in the first instance. I also am satisfied that Dr Keung made known what he was seeking (ie a 5 year term with automatic extensions) and why he was (ie because of promotion and advertising costs and to provide a guarantee to AMC's distributors). However it needs to be said that making known his wants was one thing. Securing Hamilton's agreement to them was quite another. As I indicate below, it was not given. I note in passing that Dr Keung made a similar intimation to Mr Blake in May 1997 in the context of guarantees to Chinese distributors (to which I earlier referred) and that Mr Blake commented in cross-examination that he would not have agreed to that time frame. I am further satisfied that, at the meeting, it was mutually contemplated that the agreement would make provision for its "renewal" or "extension". The Business Report made this much plain, even if it incorrectly asserted that Dr Keung had agreed to the draft cl 8 Dr Ovcharenko set out in the Report (that cl 8 gave Hamilton the option to extend the term for a 5 year period by written notice to AMC 2 years before the end of the term). I am prepared to accept both that the discussion of renewal envisaged that the desired effect of a renewal would be to secure a further 5 year term and, as I earlier indicated, that Dr Keung asked for the term to be extended every year to produce a rolling 5 year term. I have set out at length Dr Ovcharenko's cross-examination on the rolling 5 year term Dr Keung requested. It is clear from it, and I accept the evidence he gave, that while they discussed a rolling 5 year term in the term extending sense, Dr Ovcharenko was probably not ever alerted to let alone did he agree to, Dr Keung's usage and what it would have entailed in relation to termination of the Agreement. For reasons I give below, I consider it unlikely that at the March 1999 meeting any explicit link was made between a rolling 5 year term and a mechanism for preventing further extensions. What I do not accept is that Dr Keung and Dr Ovcharenko then and there agreed at the meeting --- and so bound their companies to --- a renewal mechanism let alone a process of renewals that produced a "rolling 5 year term" such as Dr Keung requested. The draft of 23 March 1999 (which incorporated the clause 8 of Dr Ovcharenko's Business Report) provided for no such term. As I have noted, it merely gave Hamilton an option to renew so producing, in effect, a 10 year term. I consider it quite improbable that, in the first draft provided to Dr Keung, Dr Ovcharenko would propose a renewal mechanism that was quite so at odds with what AMC alleges was agreed. Accordingly, I reject AMC's submission that, not only was the term to be for 5 years (which was the case), it would also remain for 5 years from year to year. What the 1-2 March meeting did, in my view, was to provide a basis for further consideration and, if necessary, negotiation of renewal. And that was in fact what happened. The cl 8.1 that ultimately emerged was the product of subsequent negotiation, not of prior agreement, and it embodied the actual agreement of the parties. Significantly, that cl 8.1 was based upon, but was not as unqualified as, Dr Keung's comment in his 7 June 1999 facsimile on the then draft cl 8.1. Save that the automatic extension of 1 year could only occur if neither party gave a notification in accordance with the subclause, Dr Keung obtained the provision he was by then proposing. That provision was far removed in its detail and effect both from the clause Dr Ovcharenko included in his Business Report (which was included as well in the 23 March 1999 draft) and from the varied version thereof in the 14 April 1999 draft. The two drafts in particular strongly suggest that the parties were not, as at 1-2 March, ad idem on a proposed rolling 5 year term or that such a term was to be included in the final written agreement. What the drafts do demonstrate (particularly comparing the two) was that Hamilton was actually moving away from any concept of 5 year renewals. To reiterate, the 14 April draft admitted only of a 1 year extension to the original 5 year term if the parties agreed to this 2 years before the end of that term. Importantly, in my view, the allegedly agreed oral term was to be for a rolling 5 year period until expressly terminated . Yet all of the drafts up until that Hamilton provided following Dr Keung's comments of 7 June 1999, were cast in the form permitting, first, Hamilton and, later, the parties by agreement to extend the term. No reference was made to expressly terminating it (whether unilaterally or by agreement). The mechanism of a power to notify of a desire to terminate the agreement, thus preventing further extension and fixing the duration of the term, reflected Dr Ovcharenko's response to Dr Keung' s 7 June comment. This drafting sequence is quite inconsistent with a 1-2 March agreement on express termination of the term of the agreement. Dr Keung secured in substance the provision that, by 7 June 1999, he then wanted. It was cast in language he was prepared to accept. It was, I find, unsupported by any collateral or anterior oral term. It was not the subject of a misrepresentation by Hamilton. The only issue that remained for Dr Keung was whether cl 8.1 on its proper construction had the meaning for which AMC now contends. Rather it is that an assurance was given by Dr Ovcharenko to Dr Keung in relation to cl 41.1.6 and its operation. While I am satisfied that Dr Ovcharenko did make reassuring --- or comforting --- comments to Dr Keung at the 1-2 March 1999 meeting as to the type of circumstances in which the subclause might be used to end the Licence, those comments were not to the effect pleaded by AMC. It is common ground that the term which ultimately became cl 41.1 (excluding cl 41.1.7) was raised by Dr Keung with Dr Ovcharenko. Though Dr Keung appeared to be uncertain as to when this occurred (whether at the March meeting or in a subsequent telephone call: see FASOC [8A.1]), in light of Dr Ovcharenko's evidence and of Hamilton's concession (see below), I am prepared to assume that the discussion of cl 41.1.6 occurred at the March meeting. I do, nonetheless, consider it to be of some significance that the assurance founding the alleged agreement was addressed only in Dr Keung's second affidavit. Hamilton's concession, made in [84B] of its FAD, is that on Dr Keung raising his concern about cl 41.1.6; Dr Ovcharenko confirmed that the subclause was intended to give a right of termination to both AMC and Hamilton; but that Hamilton would not exercise its right except in circumstances where the Distribution Agreement was no longer viable or acceptable to Hamilton. As I have already noted, Dr Keung's evidence is that it was the shortform Distribution Terms and not a draft of the Distribution Agreement that was discussed at the 1-2 March meeting and he was cross-examined accordingly. Save for what I have to say below as to the differences between cl 24 of the Distribution Terms and cl 41.1 of the Distribution Agreement, I will as a matter of convenience refer only to cl 41.1. Dr Keung's evidence, both oral and in his second affidavit, was that he raised a concern about the 60 day notice of termination in cl 41.1.6 because it appeared inconsistent with the "length of the Agreement being a rolling 5 year term": Second Affidavit [68]; because "there is a contradiction between the formal notice of termination or renewal and the clauses (sic) 41.1.6": Transcript 437. I have already indicated that there was no rolling 5 year term agreed at the March meeting or prior to July 1999 (which was later than any allegedly relevant telephone call on this matter). I also have indicated that "the notice of desire to terminate" was not introduced into cl 8.1 until June 1999. I am prepared though to assume for present purposes that Dr Keung raised cl 41.1.6 because of concern about its relationship with the Term of the proposed Agreement. Before turning directly to the conflicting evidence of the two men, I should indicate that the five enumerated grounds in cl 24 of the Distribution Terms on which the licence would end were clearly and unmistakeably separate and independent grounds. To foreshadow what I have to say, I am of the same view about the six enumerated grounds in cl 41.1 (which in substance include, but add to, the five of cl 24). It is Dr Keung's evidence that Dr Ovcharenko said that cl 41.1.6' s 60 day notice of termination would only be effective if one of the preceding paragraphs of the clause applied. In cross-examination Dr Ovcharenko reiterated that he told Dr Keung that the subclauses of cl 41.1 were "separate" and "independent". It would in my view be cause for surprise had he done otherwise. There are two matters emphasised by AMC as tending to confirm Dr Keung's version of the explanation given of cl 41.1.6. The first was Dr Ovcharenko's unexplained facsimile proposal of 27 May 1999 to include cl 50 in the Distribution Agreement. This clause was designed to rob all prior negotiations and correspondence of contractual significance. AMC has contended that the only reason to include this proposed clause was to protect Dr Ovcharenko from explanations, confirmations and agreements which he had reached orally with Dr Keung in the period from 1 March 1999 to the date of the facsimile. AMC further contended that the timing of the proposal was no coincidence. Reliance as to the latter contention was placed first on a paragraph in Dr Ovcharenko's affidavit, and upon his wholly unsatisfactory cross-examination on it. He denied Dr Keung raised a concern about cl 41.1.6 and its perceived conflict with a 5 year term; when shown the paragraph he admitted that the matter was raised, but for cl 33.3 purposes. In submissions AMC emphasise that the concern raised was about termination under cl 41.1.6. Neither of the above matters is, in my view, of much assistance to AMC. I accept that no explicit and convincing explanation for the cl 50 proposal has been given by Dr Ovcharenko. But none was asked for. Dr Keung merely noted the contents of the 27 May facsimile and then indicated he would discuss the Agreement with Dr Ovcharenko "after my lawyer has given me comments" on it. Dr Keung represented on a number of occasions to Dr Ovcharenko around this time that he was receiving legal advice on the Distribution Agreement. Dr Ovcharenko accepted in cross-examination that, in the proposed clause, he was saying to Dr Keung that he could not rely upon any explanation he gave to him in Hong Kong in March 1999. As he put it "the final agreement covers all previous negotiations". While the effect in fact of "four corners of the agreement" clauses requires careful scrutiny, they do not by reason of their inclusion in contracts necessarily raise suspicion about what antecedently may have been said by parties propounding such clauses. In the setting in which cl 50 was proposed I consider it unlikely that Dr Ovcharenko was intending to do more than demonstrate he was a hard and prudent negotiator, at least as he saw it, advancing a not uncommon clause. And he had been told by Dr Keung that AMC had legal advisers. Such circumstances were not obviously ones for advantage taking. Equally, Dr Ovcharenko's evidence on the May telephone conversation may have revealed both his limitations as a witness and illustrated the reason for the inutility of much of his oral evidence. Nonetheless, I am satisfied that the discussion he had with Dr Keung, as it developed, related to compensation for costs incurred in establishing the China business which led in fact to the adoption, ultimately, of cl 31.3. Dr Keung's oral evidence appears to confirm this. I would add in passing that I am satisfied that cl 31.3 (which, as I have indicated, was the product of Dr Keung's insistent negotiation) was the primary provision put into the Distribution Agreement to allow AMC to recoup outlays made for Hamilton's benefit if the Agreement was terminated earlier than 30 June 2006, ie within 7 years of its execution. My own conclusion on the alleged oral term is that the explanation of cl 41.1.6 attributed by Dr Keung to Dr Ovcharenko has not been established. Rather, I consider that the explanation propounded was at best an erroneous recent reconstruction, at worst, an invention born either of self-deception or of a sense of grievance and hostility at perceived wrongs done by Hamilton. I am satisfied it is more probable than not that the explanation given was as Dr Ovcharenko's evidence and Hamilton's concession conveyed. It was premised upon the obvious meaning and interrelationship of cll 41.1.1 to cl 41.1.6, but it gave a commercially responsible and realistic explanation of the circumstances which would be likely to prompt resort to cl 41.1.6. It is probable that Dr Ovcharenko made the "laying the golden eggs" comment --- it communicated the real constraint which would be likely to circumscribe use of a clause such as subclause 41.1.6 --- although I do not discountenance the possibility that Dr Keung's reference to it may have been prompted by his reading of Dr Ovcharenko's affidavit. Further, and consistent with Hamilton's concession, I am satisfied that Dr Ovcharenko's explanation did not differentiate between the licence and the Agreement and that, as I later indicate, the cl 41.6 power if exercised would for practical purposes bring the Agreement to an end irrespective of how long the term still had to run. As to Dr Keung's evidence, I am satisfied not only both from the manner in which this oral term was raised and from his uncertainty as to when the discussion occurred, but also from the manner in which, and terms in which, he gave his evidence, that his memory of the detail of the March 1999 meeting was slight and was confused. I am also satisfied that it would be unsafe not to recognise the real likelihood of his evidence being infected, not only by Dr Keung's distrust of Dr Ovcharenko, but also by personal animus against him and Hamilton. There is a number of final matters to which I should refer. First, it is the case that, four days after the notice of termination on 13 July 2006, Dr Keung in his letter to Mr Blake referred to "the explanation given by Dimitri" at the 1999 meeting. It was the first occasion upon which he had referred to an explanation by Dr Ovcharenko in any communication with Hamilton. This is somewhat surprising having regard to Dr Keung's prolific correspondence with Hamilton and is the more so because, as early as October 2002, the possibility of Hamilton terminating the parties' business relationship had been raised by Mr Blake on account of the accusations etc relating to parallel importing. Dr Keung did not then raise Dr Ovcharenko's "explanation". The 2006 account given of Dr Ovcharenko's explanation may have reflected what Dr Keung had by that time convinced himself was the one given in 1999. But it may well have been a contrivance such as Dr Keung resorted to on occasion in his communications with Mr Blake. In any event, it was premised upon "the Term being fixed for at least five years to protect our investment"; and it involved, not an assurance given, but a construction to be placed upon, cl 41.1. Other than demonstrating the likelihood that Dr Keung was seeking to establish a negotiating position for AMC, I do not consider that the 17 July 2006 letter, or its successor email of 2 August 2006 (both of which are set out earlier in these reasons), have any relevance in relation to the alleged cl 41.1.6 oral term. Secondly, while I have considered the two alleged oral terms separately, it is the case that the issue of the Term of the Distribution Agreement and the power to end the licence under cl 41.1.6 were not wholly discrete, hence the presumptions I have made particularly in relation to the probable reason why Dr Keung raised his concerns with cl 41.1.6. Nonetheless, as I will indicate below, I consider cl 8.1 and cl 41.1.6 to be addressing quite distinct matters. Thirdly, I have referred to Dr Keung's representations in May and June 1999 that he was receiving, then did receive, legal advice on the Distribution Agreement. However, I do not consider it necessary to make actual findings on that matter notwithstanding Hamilton's invitation that I make a positive finding that professional legal advice was being received and acted upon. The significance of the representations for present purposes is that they were an element in the context within which the negotiations were said to be taking place. As such account could properly be taken of them in evaluating the parties' actions in the negotiating process. Neither am I satisfied that the representations which informed those alleged terms were made. I make this latter finding in anticipation of what I have to say of AMC's Trade Practices Act claims. My conclusion is, then, that the signed Distribution Agreement embodied the parties' contract. It is in consequence unnecessary for me to discuss the significance and legal effect of cl 45 (the entire agreement provision) and cl 50.1 (which purports to strip correspondence and negotiations prior to the signing of the Agreement, of any contractual effect). 3. The first is that, on proper construction, cl 41.1 identified five events the occurrence of which would bring the licence to an end. Clause cl 41.1.6, provided the mechanism for actually bringing the licence to an end, ie that occurred on "the expiration of 60 days notice by one party to the other". In other words, cl 41.1.6 did not provide a separate "event" that would bring the licence to an end. The second and distinct contention is that cl 41.1 only applied to the Licence. It did not apply to the Agreement as such so that the termination of the Licence would still leave the balance of the Agreement on foot and, in particular, Hamilton's obligation to supply product to AMC. To anticipate my conclusion both of these submissions are untenable. The first --- that cl 41.1.6 did not provide an independent basis for the Licence ending --- can be dealt with shortly. It flies in the face of the language of the subclause in its setting and defies commercial common sense. I should preface what I have to say by noting that cl 41.1.7 is, as the parties acknowledge, irrelevant to this submission and can properly be regarded as a mis-numbered provision. The first comment I would make of cl 41.1.1 to cl 41.1.6 is this. Considered together, but in isolation from the rest of the Agreement or its context, the subclauses identified six circumstances in which the Licence ended. Such is their natural, and unmistakeable, meaning. Not only is this so, there are obvious reasons why commercial contractors might wish to have these identified circumstances as ones which would end the Licence. I need only refer to cl 41.1.6. It is a matter of world-wide experience that a failure to include in long-term, relational contracts a provision or provisions enabling a party to extricate itself from a situation where a relationship of trust and confidence has broken down irretrievably or where for reasons of hardship or otherwise the contract has become unviable: cf Robertson, "Force Majeure Clauses", (2009) 25 JCL 62 at 70-72; can make securing a fair and reasonable disengagement of the parties an illusory hope. I have referred to this in the opening paragraphs of these reasons. Clause 41.1.6 is a provision for the benefit of each of the parties and it enables them to address, amongst other things, such situations as I have referred to above. It is unnecessary that I refer here to such constraints as the law may place on the exercise of notice provisions for reasons of good faith and fair dealing or to preclude unconscionable conduct: but cf 67 Am Jur 2d, "Sales" §343. What I would say is that cl 41.1.6 is a quintessential example of the type of provision that a prudent commercial party would include in a relational contract such as the Distribution Agreement. It is unsurprising that Dr Keung put like termination on notice provisions in AMC's agreements with its subdistributors. When cl 41.1 is put into the context of the Agreement itself, the intention that cl 41.1.6 was to be a separate and independent ground for the Licence ending is confirmed. Nowhere is this made more clear than in cl 42.2 and cl 42.3 of the Agreement each of which expressly contemplated that the various subclauses of cl 41.1 provided separate bases for the Licence ending. The "contra-indications" on which AMC relies (which are set out at [185] above) simply misapprehend why such clauses are put in long term contracts. There is no inconsistency between a notice term of the cl 41.1.6 variety and a long term contract whether or not its term is a rolling one. To the extent that the distinction between the Licence and the Agreement is said to tell against construing cl 41.1.6 in the manner I consider it should be, I deal with that distinction below. I would also add that the times specified in cl 31.3 and the supply arrangements deal with discrete matters that throw no light on the construction of cl 41.1. I reject the submission. The second submission --- that cl 41.1 only applies to the Licence --- is similarly untenable in light of the provisions of the Distribution Agreement. In oral submissions counsel for AMC elaborated on the separate operation of the Agreement after termination of the Licence. It is put that what gave the Agreement its commercial value was the exclusive right to resell. If the Licence is ended, nonetheless Hamilton's obligation to supply future orders is said to remain as did AMC's right to resell. What is lost is AMC's "exclusivity". As I will indicate, this contention is at odds with the actual terms of the Agreement. As I earlier noted Part 2 of the Agreement is entitled "THE LICENCE". The licence which is granted under cl 3 is, unsurprisingly, defined in cl 1 to mean "the right to resell Products in the Territory". The licence itself is only for the "Term" which in turn means the period specified in Schedule 1 or "that period shortened or extended under this agreement": cl 1. The extension of the term is provided for in cl 8.1. The only candidates for a provision under the agreement to shorten the Term are some of those which deal with the ending of the licence and I refer in particular to cl 10.4, cl 10.5 and cl 41.1.6. AMC's submission, seemingly, would deny them this function. When one looks at Part 2, its provisions do not relate exclusively to the Licence and to Products. Clause 8.1 deals explicitly with the Term of the Agreement. The ensuing Parts 3 to 7 deal with those subjects one characteristically finds in agreements of the present type --- "SUPPLY", "MARKETING", "SALES", "RECORDS AND REPORTS" and "INTELLECTUAL PROPERTY". Part 8 is entitled "MISCELLANEOUS" and deals with matters relating to "the agreement" and the "THE LICENCE". Apart from cl 41.1, cl 42 is of present relevance. Put shortly, it deals variously with the rights of Hamilton and of AMC to resell or to return or in Hamilton's case to repurchase Products in AMC's hands or in transit when the licence ended. The Agreement clearly contemplated that certain of the rights and obligations it gave and imposed would subsist beyond the end of the Licence and what I will describe as the operational term of the Agreement. I refer, for example, to cl 28 (which imposes a duty of confidence which subsists "after the Term") and cl 41.1.7 (which imposes a restraint on competition for 2 years "from the date at which the term of this agreement ends"). Nonetheless, what in my view is clear that the "Term" of the Licence and the "Term" of the Agreement are clearly intended to be coterminous. There are a number of quite obvious textual and structural indications that this is so. The central elements of the Agreement were Hamilton's grant of a right to AMC to resell its products which in turn Hamilton obliged itself to supply to AMC under a purchasing regime which envisaged minimum agreed purchases would be made by AMC. These elements were manifestly interdependent. If the right to resell was lost, ie if the Licence was ended, the related obligation to supply likewise was ended. Unsurprisingly the Agreement made express provision for how, after the end of the Licence, product in transit to AMC, or unsold but in AMC's hands was to be dealt with: see cl 42. That clause envisaged that such product might, in stipulated circumstances, be sold by AMC in which case "Supplier grants to Distributor a licence to resell the Unsold Products": cl 42.2.2 and cl 42.3. Given that cl 1 of the Agreement defined "Licence" to mean "the right to resell Products" such a further and limited grant of a licence was obviously necessary after the end of the cl 3 Licence. I am in consequence unable to accept AMC's oral submission that a right to resell, albeit not exclusive, survived the ending of the Licence. Absent that right, the corresponding obligation to supply also ended. Hamilton's sales to AMC under the Agreement were for the purposes of the Licence and not otherwise. Without the Licence the Distribution Agreement lost its raison d'etre. In this sense it was brought to an end, albeit certain rights and obligations were to live on for their respective individual purposes. Hamilton's obligation to supply was not one of these. The Agreement gave "the Term" a pivotal function. The Licence was for the Term: cl 7. It was likewise with the right to use trademarks: cl 31.1. It was the Term which could be extended under cl 8.1. The restraint on competition ran from the end of it: cl 41.1.7. Its usage, in my view, was to define the life of the Licence and, for practical purposes, the life of the Distribution Agreement itself. The termination of the Licence brought the Distribution Agreement as such to an end. The applicant's attempt to splinter the Agreement so as to limit the termination to the Licence alone is artificial and contrived. I reject the submission. I am satisfied that the exercise of the power in cl 41.1.6 to end the Licence would have had the practical consequence of bringing to an end Hamilton's obligations to supply product to AMC under cl 11.1 of the Distribution Agreement. I am also satisfied that, for the purposes of the definition of the "Term", cl 41.1.6 was a power the exercise of which would "shorten" the "period" otherwise specified as the Term in Item 1 of Schedule 1. It would shorten that period to 60 days from the giving of written notice ie to 13 September 2006. This conclusion has direct bearing on the construction of cl 8.1. However, given its provenance and considered in context, I consider the subclause's meaning and purpose to be clear and commercially sensible. Despite the words I have referred to above, the concern of cl 8.1 in my view was not with terminating the Agreement as such, but rather was with setting what was to be the future term of the Agreement, this being done four years before the end of the then 5 year term. Put shortly its function was to designate from a specified point of time what was to be the outstanding balance of the term of the Agreement and/or whether its terms and conditions were to remain unchanged --- and this could be done recurrently if automatic extensions were made under the subclause, unless and until a written notification was given in which case no further one year extension would be possible. The primary purpose of cl 8.1 was to give the parties the option to extend the already agreed term of the Agreement for 12 months on its then terms and conditions provided both acquiesced in the extension, ie by not giving the prescribed written notification. If no such notification was given what cl 8.1 did was to allow automatically for the term of the Agreement to be extended, the subclause in effect procuring a "rolling 5 year term" in the term extension sense I referred to earlier. In saying this I leave out of consideration such role as cl 8.2 may have in the extension process. This is considered in the next section of these reasons. If a party did give a notification as and when specified in cl 8.1, the existing term would be fixed and frozen and would remain as such because the notification would preclude the extension being made at the time specified in the subclause. Four years later the "Term" would expire and the licence, and for practical purposes, the Agreement would be brought to an end by cl 41.1.2. This raises the fundamental question posed by AMC's submission: Did cl 8.1 on its proper construction impose its own regime for the termination of the Agreement to the exclusion of the other subclauses of cl 41.1 and, in particular, of cl 41.1.6? I think not. The description "notification of its desire to terminate this Agreement", might be thought capable of bearing a variety of possible meanings: first, that the party giving the notification wanted the agreement to terminate at the end of its already agreed 5 year term, ie there would to be no rolling 5 year term; secondly, that that party wished then and there to terminate the Agreement by terminating the Licence under cl 41.1.6 so that any further extension was pointless; thirdly, that that party was giving a four year notice of desire to terminate the Agreement as the subclause required, ie it provided the only basis for terminating the Agreement. When cl 8.1 is considered in the context of the Agreement as a whole, I am satisfied that it is the first of these that reflects its proper, commercial construction. As I indicated above, the Distribution Agreement expressly contemplated that the "Term" could be "shortened or extended under [the] agreement". Clause 8.1 provided the mechanism for extending it. Clause 41.1.6 provided an apparent mechanism for shortening it. AMC, nonetheless, would deny it this function because of what it says cl 8.1 requires. For my own part I can see no justification for so writing cl 41.1.6 out of the Agreement as this submission would require, the more so as it was a specific provision that dealt explicitly with the termination of the parties' business relationship. This rule is particularly apposite if the effect of general words would otherwise be to nullify what the parties appear to have contemplated as an important element in the transaction. I need not repeat here what I earlier said of the significance of a power to terminate on notice in long term, relational contracts. The submission that cl 8.1 was intended to guarantee a four year notice period before the agreement could be terminated cannot withstand scrutiny. The Agreement provided that AMC had minimum purchase obligations: see cl 10.2; and that if the Term was extended under cl 8.1, the parties would agree "Minimum Purchases for the period of the extension and these [would] be appended to Schedule 4". Clause 10.4 of the Agreement provided that, if AMC did not purchase products as specified in that Schedule, Hamilton could end the Licence "entirely" by written notice to AMC. There was no guarantee of 4 years notice here. Clause 8.1 was not directed to how the Distribution Agreement could be terminated. Its concern was with its Term --- with whether the agreed 5 year term would be frozen or extended. Considered in light of cl 10.4, cl 10.5 and cl 41.1 but particularly cl 41.1.6, the language of notification of desire to terminate the agreement was intended to do no more than to indicate that the party was no longer prepared to extend the Term but rather, wanted the Agreement to terminate at the end of the then 5 year period specified in Schedule 4. This is how a reasonable commercial party would have understood it in its context. Clause 8.1, I conclude, does not override or qualify in any way cl 41.1 in general or cl 41.1.6 in particular. 4. I earlier indicated that Hamilton's submissions on this are in the alternative. In this they reflect its defence which relies (a) on the cl 41.1.6 notice on the premise that the Distribution Agreement was still in effect on 13 July 2006; and in the alternative, (b) on the notice given being reasonable notice of termination of the licence, on the premise that the term of the Distribution Agreement was not extended at all beyond 30 June 2004. The bases of the second of these are, first, that the agreement of minimum purchases under cl 8.2 for a 12 month extension under cl 8.1 was itself precondition for the extension and no such agreements were ever reached; and, secondly, the Distribution Agreement itself could only be validly amended or supplemented in accordance with cl 46 ("entire agreement") and cl 50.2 (writing etc required to amend or supplement the Agreement). Both parties have made extensive submissions on the second alternative and there is quite voluminous factual material underpinning it. In its written submissions (at [389] and [392]) Hamilton indicated that the first alternative embodied its primary contention and it only became necessary to rely on the second were I to conclude (which I have not) that cl 41.1.6 was not a free standing and independent ground of termination. Notwithstanding the complexity of the questions either alternative raises, I intend to deal with this matter quite briefly. I do so because, in light of my conclusions on the alleged oral terms and on the issues of construction, I do not consider that resolving which of the alternatives is correct affects the ultimate result. That is that the Licence was validly terminated in consequence of the 13 July 2006 notice. For the Distribution Agreement to be on foot on 13 July 2006, it needed three consecutive extensions, 1 July 2004 --- 30 June 2005, 1 July 2005 --- 30 June 2006 and 1 July 2006 --- 30 June 2007, these extensions occurring on 1 July 2000, 1 July 2001 and 1 July 2002. No notification of either parties desire to terminate was given prior to any of the last three mentioned dates. Neither were any minimum purchases agreed for the three extension periods referred to. When Dr Keung made his comments of 7 July 1999 on the then draft of cl 8 he clearly indicated his own appreciation of the significance of cl 8.2. Comments: If the minimum sales in Scheule (sic) 4 are realized after each one year period, the Term will be extended automatically for a further period of 12 months to make up the Term for a period of five years. (Emphasis added. I referred in the "General Chronology" to the deterioration in the parties relationship from mid-2002 in consequence of the parallel importation issue. I equally referred to the meeting between Dr Keung and Mr Blake and Dr Ovcharenko of 23 March 2005 at Sydney Airport. The long term nature of this agreement gives both parties the incentive to further develop these important markets. Mr Blake confirmed the above minutes which were prepared by Dr Ovcharenko before they were distributed. Shortly after the meeting, the parties' relationship began to disintegrate. A catalyst to this was Dr Keung's asking Mr Blake for compensation arising out of the parallel importation and his related intimation that Hamilton was likely to be sued in Australia by AMC. I have in outlining Dr Keung's evidence referred to the correspondence between Dr Keung and Mr Blake consequent upon the sending of the 13 July 2006 notice of termination. The minutes of the meeting support my position and in this regard I note the second paragraph of item 1.1 which commences "Both parties agreed that the terms of the Distribution Agreement will continue ...". The minutes clearly reflect that Hamilton and AMC simply discussed and confirmed the existing terms of the Distribution Agreement at the meeting. Yet the parties manifestly conducted themselves as if such was not the case, although by 2004 Mr Blake entertained concerns about the absence of an agreed minimum purchase obligation. While Mr Blake attributed the absence of such an agreement to the parties being in dispute about other issues "during this period", the relevant time for entering into such an agreement under cl 8 was prior to 1 July 2002. It obviously is the case that at the time the Agreement was signed, the parties mutually appreciated that the minimum purchases regime was to be an integral part of their future relationship. But was it a precondition of any cl 8.1 extension? I do not consider that it was. Though it appeared in clause 8 and by so doing emphasised that the minimum purchases regime would run in tandem with extensions granted under the rolling 5 year term, cl 8.1's function lay in its relationship with cl 10. That dealt with making best efforts to meet the requirements of Sched 4, and the consequences of failure to make the purchases specified in that schedule. It was a contingent condition to the performance and enforcement of the rights and obligations created under cl 10.2, cl 10.4 and cl 10.5. The non-fulfilment of the condition excused AMC further performance of its contractual obligations under cl 10.2 and cl 10.4 for the year of the extension: cf Maynard v Goode [1926] HCA 4 ; (1926) 37 CLR 529 at 540; University of Western Australia v Gray [2009] FCAFC 116 at [117] ; Cheshire and Fifoot's Law of Contract , [20.1]-[20.2] (9 th Aust ed). The failure to agree as required by cl 8.2 would not of itself constitute a breach of contract by either party, although one can envisage circumstances in which one party so conducts itself in relation to the entry into a cl 8.2 agreement as to be in breach of the Agreement or of an implied term necessary to give cl 8.2 business efficacy (eg to enter into "genuine and good faith negotiations for such an agreement": cf United Group Rail Services Ltd v Rail Corporation New South Wales [2009] NSWCA 177. There is no evidence before me to suggest such was the case as at 1 July 2002. I have earlier indicated that AMC has not pleaded that the Distribution Agreement was amended after its execution so as to vary cl 8.2. I need not enter upon the matter of variation or of the possible significance of the agreement apparently made at the 23 March 2005 meeting to continue automatically to extend the Distribution Agreement each year for a further 12 months "thereby ensuring a rolling 5 year term at all times". However I would make the following observations. Neither the entire agreement clause (cl 45) nor the writing requirement of cl 50.2 provided an impediment to an oral variation of the Distribution Agreement if such an agreement was in fact reached. I considered the efficacy of "no oral modification" clauses at length in GEC Marconi Systems Pty Ltd , at [214]-[222]. The rule to be applied to such clauses reflects the observation made by Cardozo J in Beatty v Guggenheim Exploration Co 122 NE 378 (1919): "Whenever two men contract, no limitation self imposed can destroy their power to contract again". In the present case GEC Marconi has raised just this objection. The vice in it, though, is that a later oral or implied contract is itself an agreement. To say that contract law should enforce the parties' agreement, therefore, does not resolve the issue. The question is whether to enforce the first agreement or the second. This choice makes a fair amount of sense; the later agreement probably reflects what the parties want better than their earlier agreement does. I need not consider either of these responses: on election see generally Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57 ; (2008) 251 ALR 322 at [56] - [67] ; other than to say that the doctrine of election between inconsistent rights seems inapt to circumstances where cl 8, on the assumption being made, is self executing in its consequence. A claim based on estoppel, on the other hand, if it is not simply oral variation in disguise, has real prospects. The circumstances do demonstrate that from 1 July 2000 the parties conducted themselves in a way not envisaged by cl 8.2; that the contractual effect of their so doing was realised on 1 July 2004; but notwithstanding there were no longer agreed minimum purchases, the parties treated the Agreement as remaining on foot with its rolling 5 year term. Even if I am wrong both in the view I have taken both about the consequence of non-compliance with cl 8.2 and about estoppel, my ultimate conclusion would still stand. If the Term expired on 30 June 2004, the parties then continued in a relationship that clearly was contractual in character. No term having been agreed at that time (though this may have been varied by the 23 March 2005 agreement) the licence was terminable on the giving of reasonable notice (which I find 60 days to be in the circumstances), if it was not in fact ended under cl 41.1.6 (on the assumption that the provisions of the old Distribution Agreement were understood to remain applicable to the parties' business relationship insofar as they could continue to apply to it). This conclusion renders it unnecessary to consider the alternate bases advanced by Hamilton to justify termination under the 23 March 2007 notice. Both injunctive relief and damages are sought. Put in précis form, it is alleged that in 2001 and 2002, Hamilton supplied commercial quantities of Urederm and Rubesal to Crafers, an Australian company, and Pharmalines, a company in the UAE. The product so supplied either was packaged in the Hong Kong packaging which incorporated the Chinese characters both for Fuyunhon or Tuotoning marks and the Chinese character and English product indications for these products respectively, or else the English language versions of their product indications. Those marks and product indications were created by Dr Keung and are the subject of intellectual property claims considered later in these reasons. It is asserted that (i) the products so supplied to Crafers and Pharmalines were subsequently sold in Hong Kong by persons other than AMC; (ii) Hamilton was aware that the products it so sold would be on-sold into the Hong Kong market and elsewhere or else it did not make proper inquiries as to whether the products would be on-sold into Hong Kong or else it was reckless as to whether such would occur; and (iii) Hamilton did not notify AMC that the products had been so supplied and there was a possibility of their being on-sold into Hong Kong or elsewhere. There is a live controversy between the parties as to the proper construction of cll 6.2, 9.1 and 9.2. It is appropriate to deal with it at the outset. The first is that cl 6.2 imposed reciprocal and, at least in the case of parallel importation, potentially interdependent obligations on AMC and Hamilton. Those obligations could operate upon the same subject matter for the reason that each could relate, as in the present case, to genuine Hamilton products finding their way into the Hong Kong market outside of the Distribution Agreement. Further, when considered together with cl 34, one party's best efforts obligation could require it to do everything reasonable to help the other carry out its best efforts obligation. Secondly , the subclause did not impose a duty on either party to achieve a specific result, rather it was to use best efforts to secure that result: on the difference see Unidroit Principles of International Commercial Contracts : 2004, Art 5.1.4, Comment 1. The content of "best efforts" is considered below. Thirdly , the best efforts obligation was directed at preventing the occurrence of an undesired event, ie the sale "in the Territory" by third parties of products the subject of the Distribution Agreement. In this it was a less common form of the obligation, the more usual form being directed at procuring the occurrence of a desired result, eg the sale or promotion of a product: Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64 ; (1984) 156 CLR 41 at 63-64; the exploitation of an invention: Terrell v Mabie Todd & Co Ltd (1952) 69 RPC 234 ; or the advancement of a business: Sheffield District Railway Co v Great Central Railway Co (1911) 27 TLR 451 at 452. In relation to cl 9.1 AMC has submitted that this should be interpreted as encompassing selling products in the Territory "directly or indirectly". Because I have concluded there is no evidentiary basis which would permit a finding that Hamilton has sold its products in breach of para 9.1 on either of the proposed bases, it is unnecessary for me to express a concluded view on this submission. Considered in context, though, it probably is the case that the proposed construction reflects the intent of the contractual provision. The Distribution Agreement itself regulated directly the freedom to trade of both Hamilton and AMC in ways which respectively were designed, so far as they went, to prevent third parties in Hong Kong obtaining access to the Hamilton products for resale in Hong Kong. Clause 4 restricted to whom in Hong Kong AMC could resell the products supplied by Hamilton. Clause 9 not only precluded Hamilton from selling in the Territory, it also prohibited it granting rights to a third party similar to AMC's rights. That the Agreement imposed such absolute restrictions on the parties in respect of their trading is, as will be seen, a matter of which account needs be taken in giving practical content to the best efforts requirement in the context of this agreement between these parties. The "standard of endeavour" prescribed by a best efforts clause is characteristically measured by what is reasonable in the circumstances having regard to the particular contract in its business setting and to what could reasonably be expected of the party subject to the obligation: see Transfield Pty Ltd v Arlo Internation Ltd [1980] HCA 15 ; (1980) 144 CLR 83 at 101; see also Farnsworth, Contracts , §7.17. Or to put it shortly, the party's obligation is "to do what [it] reasonably could do in the circumstances": Terrel , at 237. It is nonetheless important in this setting to emphasise the importance of context in giving practical substance to the prescribed standard of endeavour. These it particularised as follows: DATE PRODUCT UNIT QUANTITY SUPPLIED UNIT SAMPLE QUANTITY SUPPLIED 17 June 2000 Urederm 25G 3,456 768 16 September 2001 Urederm 25G 576 192 1 December 2001 Urederm 25G 4,992 1,152 26 April 2002 Urederm 25G 4,992 1,152 1 December 2001 Rubesal 25G 4,992 1,152 16 September 2001 Urederm 50G 576 144 27 February 2002 Urederm 50G 1,440 288 There is no other evidence of presently relevant sales of Hamilton's products. The sales to Pharma-lines can be disposed of shortly. Nonetheless, it asserts that the circumstances of sale gave rise to a breach of cl 6.2 of its Agreement with AMC. This assertion is quite misconceived. On 1 February 2001 Hamilton entered into a Distribution Agreement which, save for immaterial differences, had terms similar to cll 3-6, 9, 33.4, 33.5, 34 and 50.2. Importantly for present purposes the Pharmaline Licence to sell was limited to "the Territory" which was prescribed in Schedule 1. Effective from 1 February 2005 an amendment in proper form was made to the Territory and to the "Products". The Products prior to the amendment were non-bulk items. The amendment varied the non-bulk items and added a list of bulk products. These included for presently relevant purposes Urederm and Rubesal, the minimum bulk kilogram size of these being respectively 400kg and 500kg. AMC's contention to the contrary is erroneous. The prohibition in sub-clause 4.2 related to marketing or selling bulk products "in any other format [ie from that of cl 4.1.2] in any other Territory " (ie other than Egypt and Syria) which are only part of "the Territory"). The sales to Pharmalines have no present relevance. There is no evidence that Pharmalines breached cl 6.1 of its Agreement. The dealings between Crafers and Hamilton were effected through Michael Lanham, the State Manager of Hamilton's Queensland office. Crafers was a Brisbane based company. Mr Lanham gave evidence, the accuracy and impartiality of which has been questioned by AMC. While I consider his evidence was conscientiously given, it needs to be treated with circumspection. He was often overly literal in his understanding of questions and this led to unhelpful sequences of cross-examination because he and the cross-examiner were at cross-purposes. Equally he had poor linear memory (which was understandable). I am, in consequence, left with real doubts as to the accuracy of the temporal sequence of his narrative, the more so because it was by no means consistent. I am also satisfied that with the passage of time he has in some degree engaged in reconstruction of events in a fashion which tends to favour Hamilton. I acquit him of any impropriety in this. As I said above, I consider he gave his evidence conscientiously. Mr Blake gave evidence of his involvement in Hamilton's dealings with Crafers. He only became aware of sales to Crafers in March 2002. As with much elsewhere in his evidence, I cannot avoid the conclusion that his evidence owes more to reconstruction from documents than to a memory jolted by documents. A Hamilton actor in the events to be described was Mr Stafford. He is alleged to have given the original authorisation to supply Crafers and to have obtained from Mr Lanham an undertaking purportedly given to Lanham by Crafers. Mr Stafford, though still a director of Hamilton, did not give evidence. The sales to Crafers originated in what has been described as a "cold call" from Reya Chartres of Crafers to Mr Lanham in early November 2001. She was the only person representing Crafers with whom Mr Lanham had dealings. There is a deal of confusion in Mr Lanham's evidence as to what was said during this telephone call and at a subsequent meeting at Crafers' office on 6 November 2001. I intend to deal with the two synoptically as little purpose would be served in attempting to disaggregate them given what I earlier said of Mr Lanham's evidence. While I am satisfied mention so was made of Hong Kong and that Mr Lanham probably mentioned the fact that Hamilton had a distributor in Hong Kong, I am not satisfied there was any discussion of the possibility of, or of any prohibition on, Crafers selling the intended purchases into Hong Kong. Insofar as Mr Lanham understood what was being proposed, it was to be a domestic sale to Crafers which in turn would sell Hamilton's products domestically for provision to ships. Mr Lanham then contacted Mr Stafford who was in charge of overseas marketing and informed him of the approach. There is inconsistency in Mr Lanham's various versions of his conversation with Mr Stafford. I accept he told Mr Stafford that Crafers required Urederm and Rubesal to be supplied mainly in Chinese language packaging. While I also accept that Mr Lanham told Mr Stafford that the sales to and by Crafers would involve domestic sales, albeit to ships for their crew and passengers, I do not accept that Ms Chartres had given Mr Lanham an assurance to that effect. Mr Lanham gave contradictory evidence as to whether he told Mr Stafford such an assurance had been given. Equally I am satisfied that Mr Stafford in authorising the sale required in effect that the product sold to Crafers was not to be sold overseas, ie it was to be the subject of domestic resale. I consider it probable that this requirement was communicated to Ms Chartres when Mr Lanham subsequently provided her with samples of the Products prior to the agreement to the supply being finalised. As I will indicate below, this would have accorded with Hamilton's then terms of trade to domestic distributors, a copy of which was provided by facsimile to Crafers on 7 November 2001. However, I am not satisfied that any express instruction was given prohibiting sales overseas to Hong Kong. I infer that the premise both of Ms Chartres' discussions with Mr Lanham and of Mr Lanham's conversation with Mr Stafford was that the Crafers sales were domestic in character. It was not purchasing products for export. After Hamilton had supplied Crafers samples of Urederm in the Hong Kong packaging the first Crafers order was placed on about 12 November 2001 for 6048 units of U50 and 1008 units of U100. Mr Lanham did not regard this to be a large or unusual order. You can send us 15000 units in the November shipment and the remaining in the December shipment. Dr Ovcharenko understood this was to be for a domestic purchase, although he was unaware of the identity of the purchaser. He telephoned Dr Keung asking whether AMC required delivery of the stock held, or whether Hamilton could sell it to fill a domestic sales request. Dr Keung consent to the sale. Dr Keung, in his own evidence, did not qualify his consent in any way when communicating his assent. On 7 November 2001 Hamilton sent to Crafers by facsimile (the fax printout indicates it was transmitted to Crafers) a copy of its "Terms of Trade" for "Industrial Product Distributor". Despite AMC's objection, I have accepted this document into evidence. Because of its late production, the circumstances of its transmission to Crafers were not the subject of direct evidence. I am not sure now this fits when supplying ships but if the ships were supplied in Australian ports for use on those ships, I think our interpretation would have been that this complied with the Trading Terms. Crafers made a credit application to Hamilton on 12 November 2001. This was approved on 20 December 2001 and a customer allocated number was allocated on 3 January 2002. In total ten orders were filled for Crafers, the last being on 25 July 2002. In early September 2002, Mr Blake directed that no further product be supplied to Crafers. At no time did Hamilton and Crafers have a specific written agreement. I will outline below the circumstances leading up to Dr Keung's first explicit claim on 30 July 2002 of parallel importation of Hamilton's product into Hong Kong. Originally I put the blame on the weak economy at the present moment. In the past three months two wholesalers refused to get Hamilton products from Medicare. However, they have Hamilton goods to sell to the retailers at prices that are somewhat lower than our selling prices to the wholesalers. This makes me feel that there should be imitated goods or parallel imports of Urederm 50gm tube getting into the Hong Kong market. If Hamilton has not sold any products bearing the HK packing with our Chinese company name and logo "FUYUNHON" to other places or countries leading to possibility of parallel imports I am certain that these two wholesalers have got imitated goods from somewhere and we shall inform the bureau of commercial crime and take appropriate legal action against them for compensation. Dr Keung's email prompted a series of internal communications within Hamilton in early August. The copy of the above email which is in evidence has some number of notations on it. These include the note from Mr Stafford to Mr Blake: "It may be that the product we sell to CRAFERS is finding its way to Hong Kong --- we should check volume and prices. " There was a note from Mr Blake to Mr Stafford and David Dart: "What is the agreement with them [ie Crafers]. " And there were two responses from Mr Stafford to Mr Blake: "Michael Lanham tells me there is no specific agreement with them" and "We have supplied over the last six months 21552 of [unintelligible] 50g $2-40". After discussions with Mr Stafford about the possibility of Crafers being a supplier of the imports, Mr Blake contacted Mr Lanham. He inquired about Lanham's "early conversations" with Crafers and he asked him to contact Crafers to reconfirm that it was not selling Hamilton's products into Hong Kong. Reya feels positive that none of their Urederm purchases from us goes into Hong Kong, in fact seemed quite surprised at this. She said that although they buy from us 6 to 7000 tubes at a time, their customer only buys in small quantise at time on a as needed basis, so no big amounts could end up in H.K. Reya said that they will make further enquiries and let us know of any thing that may concern us. They still believe that the Urederm was being used in the shipping industry. They are quite willing to state in writing, that to their knowledge the Urederm is not being supplied into H.K. While his memory of the timing was, he conceded, uncertain he thought it occurred some time in August. The above letter, Mr Blake said, heightened his suspicion about Crafers. Amongst other steps he took in this matter, on 24 August he gave a direction to one of his staff to make contact with the South Australian Trade Commission in Hong Kong and ask them to attend at 10 pharmacies in Hong Kong and purchase 3 tubes of 50gm Urederm at each store. The purpose of this was to verify AMC's assertion that 7 out of 10 products purchased from retail outlets in Hong Kong (an allegation made in an email of 9 August 2002) were parallel imports and to obtain information on batch numbers and pricing to see if Hamilton could confirm the route of supply that it suspected by then was through Crafers. On 3 September 2002 Hamilton received a package containing tubes of Urederm purchased by the Trade Commission. In the interim Hamilton had obtained further information from Crafers about its business which was said to include a joint venture in China. Mr Blake concluded it was likely that Crafers was the source of parallel imported products in Hong Kong and he gave the direction no longer to supply it. It is AMC's case that the documentary evidence establishes that the product sold to Crafers was imported into Hong Kong through a Hong Kong importer, Teemlink directly or via a Crafers-related company in Australia, Kopurlo. From Teamlink the product went to a Hong Kong company Forward Co and from it to the retail market through a distributor, Wing Keung Medicine Co Ltd. AMC denies any connection with any of these businesses. I would also note that in his March 1999 Business Report Dr Ovcharenko inserted the observation of HMC made about the Hong Kong pharmaceutical market that it was "very well protected for patented products but not parallel imports". Dr Keung, in his affidavit describes being informed by retailers in Hong Kong in December 2000 that Fuyunhon was available from sources other than AMC. While he then assumed this was counterfeit, he later began to suspect parallel importation. In April 2001 AMC employed Dr Lam to trace the source of what Dr Keung then believed to be counterfeit products and to devise strategies to try to stop such products being sold in Hong Kong. In October 2001 one such strategy that had been devised was to insert a leaflet into each box of Fuyunhon in Hong Kong before it was despatched to an AMC customer. Another was to add a small stick-on holographic label to each box of Urederm by Hamilton. These strategies, though, were not implemented until April 2002 (in the case of the leaflets) and September 2002 (the "stick-ons"). And then I suspected that there must be something wrong on the market; either counterfeit products or parallel imported products. But at that time, because of my faith in Hamilton, of course, you know, I put counterfeit products as the first line of my thought. Hamilton had delivered quantities from the same batches to AMC in 2001. He reiterated this temporal realisation on a number of occasions in cross-examination. Importantly for Hamilton's defence, Dr Keung accepts that, in November/December 2001, he did not raise directly with Hamilton his awareness that parallel imports of Hamilton products were being offered for sale. That's the usual manner for business, you know. Even if you know somebody is doing something bad, you know, you have no proof, no direct proof, you can't say this, otherwise it will damage the relationship. I also am satisfied that, apparently in common with Dr Lam, Dr Keung assumed from December 2001 that such was the case. I do not accept his later stated reluctance in being able to arrive at such a conclusion by then. An important consequence of AMC's approach is that it did not distinguish between the known fact of parallel importation and the possibility of Hamilton being complicit in it. In August 2002 Dr Keung conducted market investigations which, in his view, revealed that a significant percentage of Urederm 50g available on the Hong Kong market was parallel imported. AMC identified U50 bearing Hamilton batch numbers 54, 56, 69, 70 and 71 as being parallel imported goods. This was later independently confirmed by business records subpoenaed through Crafers. The above investigation resulted, ultimately, in the institution of proceedings against Forward Co on 21 October 2002 in the High Court of Hong Kong. In its pleading AMC alleges that from October 2001, apart from the 30 July 2002 email, three communications made by it to Hamilton put Hamilton on notice of AMC's concerns about declining sales of Hamilton "Product" and that parallel importation of its Product into Hong Kong was occurring. This correspondence has to be evaluated in light of the approach of AMC I have described above. The first of the three communications was an email of Dr Keung of 20 October 2001 to Ms Carpenelli requesting only partial delivery of an order of U50 from Hamilton. Hamilton agreed to this. This resulted in about 15,000 units being delivered in November and a slightly smaller number in December. Of itself this communication said nothing of parallel importation. The next letter, an email of 30 January 2002 --- (ie after the parallel importation had been discovered) --- seems to have followed a sequence of communications between Dr Keung and Dr Ovcharenko over the number of units in batches 54 and 56 that were sent to AMC in Hong Kong. Because of its significance, I need refer briefly to that sequence. On 3 January Dr Keung requested Dr Ovcharenko to give him the number of units of Urederm 50g belonging to Batch nos 54 and 56 "sent to Hong Kong previously". He also wished to know if Urederm 50g tubes were sent to other countries as well or only to Hong Kong. Dr Ovcharenko replied the same day that he could give the exact numbers sent to AMC from the two batches the following week. He added that Hamilton's was "regularly exporting" Urederm 50g "to Greece (Greece tubes & Greece Cartons), Canada and small quantity to Middle East countries ... (current tubes & Arabian cartons)". Thereafter Dr Ovcharenko apparently informed Dr Keung, mistakenly, that the batch numbers were for 100gm tubes and provided incorrect numbers. These errors were corrected after the 30 January email. There was nothing in the correspondence thus far that suggested Dr Keung's initial inquiry was prompted by apprehended parallel importation. It was against this background that Dr Keung sent the 30 January email. It dealt in the main with problems with the Distribution Agreement. Your reply was that all these batches were Urederm 100gm tube. However, we have found a lot of Urederm 50gm tube of these two batches gone to the hands of the dispensaries. Please check this again because I am afraid that there are imitated goods since the sales of this item drops sharply in the past two months despite massive advertising. These concerns, it is said, were "seemingly ignored by Hamilton". Then, I faxed an early warning for Hamilton via Dimitri on 30 January 2002 after I discovered many dispensaries were selling the above batch numbers before Medic-Care distributed her own. (Emphasis added. A request was made for Hamilton to keep a Urederm order and deliver it in September. I will return to these emails below. Suffice it so say for present purposes that neither on their face, nor considered in their context, could they reasonably be said to put Hamilton on notice that parallel importation of its products had been detected by AMC or that AMC had reasonable grounds for believing that parallel importation of Hamilton's products was occurring. Dr Keung held a meeting with Dr Ovcharenko in Sydney on 4 July 2002. While, amongst other things, he discussed the role of Dr Lam on his staff, he did not raise with Dr Ovcharenko his knowledge of parallel imported Hamilton products in Hong Kong. A further meeting was held with Dr Ovcharenko and Ms Carpenelli on 9 July 2002. This appears to have been the annual meeting at which Dr Keung made his "Distributor's Report". The minutes do not record any reference being made to parallel importation. However they do record that "June sales were 28% up on budget"; year to date sales were 11% up on budget; June sales were about A$70,000 lower than expected because of delay in producing Rubesal 25g for Hong Kong; and July "will be very close to budget". There are several other communications to which reference should be made for their bearing on the course of the parallel importation and, importantly, its merger with the intellectual property issues which are considered in the next part of these reasons. After sending an email on 5 August 2002 to Dr Keung foreshadowing further correspondence and expressing he was very concerned about the matters raised by Dr Keung's 30 July email, Mr Blake made his first substantive response by email on 7 August 2002. I can assure you that Hamilton have not supplied any other company in the export market with quantities of the order to which you refer, namely 30,000 units, but from time to time smaller amounts, totalling less than 30,000 units have been supplied within Australia. At no time have we, or would we, agree to supply if we became aware of any units being destined for Hong Kong. I can however assure you that any supply of Urederm 50g is at a price well in excess of that charged to Australian Medic-Care so it is difficult to see how they could compete with you and make a profit. Dr Keung was asked not to take any further action with the Hong Kong authorities until the matter had been "checked more thoroughly". This email seems to have been the first explicit communication by Hamilton to AMC that the Hong Kong packaging was being used when there were other needs for it. I would add that the second quoted paragraph of it, on the evidence before me, borders on the disingenuous. It betrays a lack of frankness which by this time was becoming a hallmark of the communications of both parties. The email produced the predictable response of merging both the parallel importation issue and AMC's claim to own the Chinese trademark for Fuyunhon. Dr Keung's email of 9 August to Mr Blake was fulsome and hostile on both these themes. I would note in passing that internal communications passing between Mr Blake and Mr Stafford after Dr Keung's 9 August email indicates that Hamilton was still contemplating making further supplies to Crafers. Mr Blake responded on 14 August taking issue with the trademark claim and the use of Chinese language packaging. Hamilton has always used its best efforts to ensure the interests of Australian Medi-Care are protected. Should another distributor or customer have broken their undertakings to Hamilton by tracing stock movements of each product and the relevant packaging we can say that this could not have affected your market earlier than December 2001. But there is no evidence that this has occurred. I would expect that your sales representatives would have a good relationship with the retailers and this would be advised to them immediately. I would note in passing that the "assurance" in the first quoted paragraph is rather belied by Hamilton's manner of dealing with Crafers. The response to this was Dr Keung's email to Mr Blake of 19 August 2002 when Hamilton was accused explicitly of being complicit in the parallel importation. It is unnecessary for present purposes to enlarge further on what became an extraordinarily acrimonious correspondence (inflamed by Dr Lam's contributions) other than to indicate that, from August 2002, non-cooperation between the parties on the investigation of parallel importation became marked. From this time all mutual trust and confidence had evaporated. I am satisfied that both AMC and Hamilton contributed to that state of affairs by acts of commission and omission. There are two further emails to which I should refer. The first is that of Dr Lam to Mr Blake of 11 December in which it was indicated while the monthly sales of Urederm 50g in July 2002 was "a mere 762 tubes", in September it was 14,764 tubes. That of Urederm 50gm tube has been decreasing since 1995 from a yearly sales of 110000 in 1991 to 90000 in 1995 and 67000 in 2000 despite continuous promotion and advertising. Parallel importation has been progressively expanding for quite some time. AMC's written submissions open with the concession that only comparatively small amounts of parallel importation in 2001 and 2002 can be proved. If there were breaches of the Distribution Agreement in that period, that small amount is advanced as the acorn for a very significant damages claim. I should add as well, though it is not the subject of any concession, that there is no evidence at all of Hamilton's products being parallel imported into Hong Kong prior to, or subsequent to, those products sold by Hamilton to Crafers. Though, as pleaded, AMC has alleged Hamilton has breached cll 6.2, 9.1 and 9.2 of the Agreement, in its submissions this appears to have been confined to cl 6.2 (the "best efforts" clause). In any event, as I will indicate, there is no factual foundation to support claims that Hamilton either sold product into the Territory (cl 9.1) or granted similar rights to a third party to those it gave to AMC (cl 9.2). The case advanced in submissions has moved somewhat from that as pleaded and Hamilton takes objection to this as will be seen. AMC's submissions on parallel importation are encapsulated in the following three propositions. First, Hamilton had insufficient measures in place to prevent Urederm and Rubesal in the Hong Kong packaging being sold in the Territory by other parties. Evidence of insufficiency is demonstrated by the Products subsequently being sold into the Territory by a third party. In consequence it ought to have been aware that the products were destined for AMC's Territory but it nonetheless failed to do what it reasonably could to have prevented this. Thirdly, none of the measures Hamilton relied upon were reasonably sufficient to fulfil its obligations under cl 6.2 in the particular circumstances of the sale to a third party of a product exclusively manufactured for a Territory and for its exclusive distributor. Further, AMC relies generally in relation to insufficiency of measures upon (a) the sales to Crafers not being subject to written trading terms excluding sales of the Products overseas, or else the waiver of such terms; (b) Hamilton did not have a "usual practice" in place to deal with the circumstance of export Products being sold in the domestic market (I am asked to reject the evidence of an oral direction not to sell the Products overseas); (c) no written confirmation was obtained from Crafers prior to supply that the product would not be sold overseas; and (d) it was commercially viable for Crafers or its purchasers to sell the Products into Hong Kong as AMC's prices incorporated the significant expense of advertising. Hamilton's defence, put in short form, is that AMC has not proved any breach of contract; has not proved any damages from parallel importation or else damages not caused by AMC itself; and the claim should be dismissed as it was formulated and prosecuted in bad faith and for ulterior purposes. Before expressing my own conclusions, I should mention two preliminary matters. First, the "Product" referred to in cl 6.2 and cl 9.1, while including Product packaged for Hong Kong with Chinese language characters, was not defined by reference to Product so packaged. Rather, it encompassed Products fitting the general description in Schedule 2 of the Distribution Agreement of the Products to which the Agreement applied. Secondly, I find in the next part of these reasons that the Fuyunhon and Tuotoning trademarks and the Chinese language product descriptions used on the Hong Kong packaging did not belong to Hamilton's but belonged to AMC or to Dr Keung. What needs to be emphasised for present purposes is that I am not concerned here with whether the Hamilton's sale to third parties of product in packaging with Chinese language characters, infringed AMC's intellectual property rights in some fashion. My concern is with cl 6.2. To the extent that it is an implication in the first of the three AMC propositions above that it was Hamilton's duty to prevent sale of the Products in the Territory by a third party which was not an AMC sub-distributor, I reject that implication. Clause 6.2 did not oblige Hamilton to secure a particular result. Its duty was to use its best efforts to secure that result. Hamilton was, and was known by AMC to be, an international exporter of its Products. AMC in consequence could not reasonably have expected that Hamilton would desist from exporting its Products in whatever labelling elsewhere in the world because of the possibility that Product so exported might ultimately find its way to Hong Kong for sale. Hamilton could not be expected to guarantee there would not be perfidy abroad. What AMC could reasonably expect is that Hamilton would take reasonable steps to ensure that the distributors to whom it supplied product overseas would not themselves resell, or facilitate resale, into the Territory of an exclusive Hamilton distributorship. The evidence before me is that Hamilton did this. In both the AMC (cl 6.1) and Pharmalines (cl 6.1) Distribution Agreements, the Licences given to resell were only for the respective Territories of each distributorship. Furthermore, each Licence (cl 4) limited the classes of persons to whom AMC and Pharmalines respectively could resell in their Territory. In other words, the distributor/purchaser was contractually regulated both as to where and to whom, it could sell. Insofar as AMC seeks to derive evidentiary support for its case from what it alleges were insufficiencies in Hamilton's "best efforts" in relation to preventing Pharmalines selling outside its Territory, that support is not there to be had. Not only is there no evidence that Product supplied to Pharmalines was sold outside the "Territory" agreed in the Hamilton-Pharmaline Distribution Agreement, there is nothing to suggest that the contractual measures taken by Hamilton did not, in the circumstances, satisfy the standard of endeavour by which the best efforts obligation was to be measured. This leaves the dealing with Crafers. This involved a domestic sale by Hamilton, not a sale to a distributor operating in a foreign country. Crafers' purchase was known by Hamilton to be primarily for Product with Chinese language packaging; it was a purchase for purposes of resale; and if the Product was to be sold to Crafers, it would have to be of Product that was being made for AMC. I infer this from what I have found Mr Lanham said to Mr Stafford and from knowledge Mr Stafford probably possessed concerning Chinese language packaged Products. I have also inferred that the premise of Ms Chartres' discussions with Mr Lanham and of Mr Lanham's conversation with Mr Stafford was that the Crafers sales were domestic in character. Crafers was not purchasing product for export by it, albeit the sales were believed by Hamilton to be for use by way of provisions for ships' crews and passengers. I have also concluded that Mr Stafford imposed the requirement on any supply to Crafers that the goods were to be resold in Australia and not overseas and that this requirement was communicated to Ms Chartres. Mr Stafford was at the relevant times a director and senior executive officer of Hamilton and his knowledge when authorising the sale to Crafers (which I infer fell within his managerial function) was Hamilton's. I would note that, in consequence of my findings above, Hamilton has no case to answer for an alleged breach of cl 9.2 because of the sale authorised by Mr Stafford. The contract did not give Crafers similar rights to those granted AMC. The second of AMC's propositions in support of its case seeks to fix Hamilton with liability for breach of cl 6.2 on the basis that, because of what Hamilton is alleged to have known, it ought to have been aware that the Products were destined for AMC's Territory yet it failed to do what it reasonably could in the circumstances to have prevented this. It is this version of the case as put in submissions to which Hamilton takes objection. I have considerable difficulties with how AMC ascribes knowledge to Hamilton as such and with how it purports to aggregate that knowledge: cf Australian Competition and Consumer Commission v Radio Rentals [2005] FCA 1133 ; (2005) 146 FCR 292 at [177] - [183] . The information to which it refers and which I earlier listed was not, at all relevant times, shown to have been possessed by any one corporate officer. Nor was it all relevantly possessed at the times the initial supplies were made. Mr Blake, for example, only became aware of the sales to Crafers in March 2002, some months after the first sales. Some, but not all of the listed matters may have been known to Mr Stafford. The basis upon which information (held by various corporate officers over time) was to be aggregated to produce the information base for the allegation that Hamilton ought to have been aware that the products were destined for Hong Kong has not been addressed: cf Radio Rentals . Nor is it said at what time Hamilton had that information base. Some of it, for example, was only acquired after the last supply had been made: eg (8) above. I agree with Hamilton's submission that some number of the pieces of knowledge propounded are, as put, unsupported by the evidence or, in my view, are misleading: eg paras (5), (6) and (8). The evidence falls far short of establishing that Hamilton actually knew that the product sold to Crafers was destined for Hong Kong. It equally does not establish that the relevant proper officers of Hamilton were at any time recklessly indifferent to how Crafers dealt with the Product. Nor did it demonstrate Nelsonian blindness to the Product's likely destination. For reasons I give below, it may properly be said that the circumstances known to Mr Stafford may have called for greater vigilance than was demonstrated. What I do not understand, though, is why a concept akin to constructive notice --- for such is what seems to be being advanced --- should in the manner proposed be sufficient to provide the knowledge platform to establish liability in the way sought. This is not to say that the knowledge actually possessed by a person subject to a best efforts clause may not be such as to require further inquiry to be made if the person is to do all that he or she reasonably can in the circumstances to secure the covenanted result. I should note in passing that a consequence of the view I have expressed on Hamilton's state of knowledge necessitates the conclusion that it was not guilty of selling its Products into Hong Kong "directly or indirectly" in breach of cl 9.1. In the end I agree with Hamilton that this second proposed basis for establishing a breach of cl 6.2 should not be countenanced. It would be unfair to require Hamilton to respond to a claim which is so vague, potentially misleading and wanting in explicit, doctrinal underpinning. I would add, it addresses a possible factual state of affairs which need not be established to make out a breach of cl 6.2 in a case such as the present. AMC has pleaded that it put Hamilton on notice of AMC's concerns about declining sales of the Products by AMC and that parallel importation of the Products into Hong Kong was occurring. The particulars given of the communications giving rise to this notice are the 30 July 2002 email and the three emails of 20 October 2001, 30 January 2002, and 18 March 2002 to which I earlier referred. The 30 July letter clearly had the effect pleaded and it led eventually to Mr Blake's direction not to supply Crafers. It should be noted, though, that no Products were in fact supplied to Crafers after 24 July 2002. I have already discussed the content of the other emails. They do not make out the pleaded notice AMC seeks to rely upon. The final way the claim has been put relates to the insufficiency of the measures relied upon by Hamilton to fulfil its obligations under cl 6.2. I have earlier indicated my findings as to (i) Mr Stafford's knowledge of Crafer's Product requirements and of the purpose of their acquisition; and (ii) the basis of his authorisation of the supply and the territorial limitation on resale he imposed, which limitation was communicated to Ms Chartres. I have made no finding as to whether Mr Stafford was aware of the Terms of Trade being sent to Crafers, or required this to be done. I am satisfied that there was no specific written agreement for the first or any other sale to Crafers. Insofar as the evidence goes, Mr Stafford's authorisation was of a contract of sale --- in the event probably partly oral and partly written --- which was subject to the Territorial limitation that Crafers was not to resell the Products overseas, ie it was to resell only in Australia. I simply note that the burden of the territorial limitation Mr Stafford imposed in fact matched that contained in cl 5 of the Terms of Trade. In these circumstances did Hamilton, through Mr Stafford, satisfy the "standard of endeavour" prescribed by the best efforts clause? Did it do all it reasonably could do in the circumstances to achieve the contractual object of cl 6.1: Hospital Products , at 64? I think not. Hamilton was supplying to Crafers identically, and very distinctively, presented Products to those supplied to AMC. The best efforts clause did not as of course require it to abstain from so doing. What it did require, though, was that Hamilton do all that it reasonably could to prevent the Product sold to Crafers being resold by a third party in AMC's Territory. Mr Stafford sought contractually to regulate where the Product was to be resold. However, unlike in Hamilton's international distributorship agreements, Mr Stafford did not seek contractually to regulate to whom the Products could be sold. For him to rely upon what Crafers (via Mr Lanham) indicated was the purpose of their acquisition was clearly insufficient in the circumstances. Hamilton had had no prior dealings with Crafers. Theirs was not a relationship of trust. Crafers, on the material before me, did not indicate how it would effectuate its purpose. It could, for example, have sold the Product to an exporter. Further there is not, in the circumstances, any proper basis for concluding that Crafers had contractually bound itself to effectuate its purpose. Given that the Products sold to Crafers were intended for use out of Australia (even if resold in Australia), it could reasonably be expected of Hamilton that it stipulate by type the person or classes of person (consistent with the understood purpose of the purchase) to whom the Products could be resold and this with the object of preventing the Products from finding their way into the export trade. If they did, given their Hong Kong packaging, there would be a likelihood of their finding their way into AMC's territory as parallel imports. And that is what occurred. Though I have dealt with AMC's final proposition somewhat differently from the precise way it was propounded, I agree with the essence of it. The measures Hamilton relied upon in its dealings with Crafers were not reasonably sufficient to fulfil its obligations to AMC under cl 6.2. It is no answer to this to say that, even if resale had been contractually regulated, Crafers could still have breached its contractual obligation. It is a matter of speculation as to how Crafers would have acted if presented with such a requirement. I find that Hamilton in selling to Crafers in the manner it did in November 2001 breached the best efforts clause of the Distribution Agreement. That breach was a continuing breach until supplies to Crafers were halted. However, this is not the end of the matter. For present purposes I need only refer to those that are premised upon my finding that, because of its failure to notify Hamilton immediately of the parallel importation (of which it had knowledge from at least 30 January 2002), AMC itself was in breach of cl 6.2: para FAD cl 35BA.2 and para 35BA.3. It is claimed that (i) cl 6.2 did not operate against Hamilton if AMC was in ongoing breach of cl 6.2; (ii) alternatively, AMC was not entitled to enforce cl 6.2 against Hamilton or to seek damages for its breach; or (iii) it was unconscionable for AMC to assert liability and claim damages on the basis of facts which were not disclosed by AMC in a timely manner; or (iv) AMC was estopped from relying on cl 6.2 or else from relying on any sales by Hamilton to Crafers after 30 January 2002. I would note there are further defences based on breach of cl 6.2 which is tied to AMC's alleged breach of cl 33 of the Distribution Agreement relating (a) to its sales to persons other than those permitted by cl 4 of the Agreement or (b) by subdistributor's not appointed in accordance with cl 37: FAD paras 39.8 to 39.10. These were not the subject of written submissions. Given the view I take of Hamilton's defences, it is unnecessary that I consider these latter defences. Insofar as presently relevant I make the following findings. (ii) The evidentiary foundation of that realisation was Dr Lam's detection of instances of 10% urea cream from Hamilton's batches no 54 and 56 being on sale in Hong Kong. (iii) Though he claims he gave "hints" of, and "polite" advice about, parallel importation on a number of occasions between October 2001 and 30 July 2002 --- he later inappropriately described these as "red flags" etc --- I find that nothing he said or did would reasonably have put Hamiltons on notice that the parallel importation of its products had been detected by AMC or that AMC had reason to believe that parallel importation of the Hamilton Products was occurring. (iv) Between December 2001 and 30 July 2002 Dr Keung had regular electronic, and occasional face to face, communication with Hamilton officials. He did not disclose his discovery. (v) The reason for his so acting was that he believed Hamilton itself was a participant in the parallel importation, or was at least complicit in it, and he wanted substantial evidence of this --- seemingly so as to be able to allege Hamilton was in breach of the Distribution Agreement. (vii) While asserting in the 30 June 2002 email that imitated goods or parallel imported Hamilton goods were for sale in Hong Kong, Dr Keung did not disclose the evidentiary basis for his personal view that parallel importation was occurring, ie Dr Lam's December 2001 discovery. That disclosure was only made, and then quite obliquely, in the 19 August 2002 email to Mr Blake by which time inflammatory accusations were being made against Hamilton. (viii) While in that 19 August email Dr Keung referred to the possibilities of Hamilton being "a victim, a collaborator or the culprit", in his actions he did not differentiate between these. Importantly, there is no evidence to suggest that he ever considered making Hamilton aware of the fact of parallel importation substantiated by his evidence of it, without at the same time accusing Hamilton of complicity in it. (ix) It may properly be said that it took Mr Blake a little over a month to direct that Crafers not be supplied. Nonetheless, I am satisfied that if Mr Blake had received such a notification as I have indicated from Dr Keung shortly after Dr Keung had obtained Dr Lam's evidence, he would not have permitted Crafers to have been supplied until further inquiries had been made. (x) The evidence does not permit a finding to be made as to when precisely in December 2001 Dr Keung came to his realisation. Hamilton, for present purposes, bears this onus. However, I am satisfied such notification could at least have been given at the end of December shortly prior to 3 January 2002 when Dr Keung commenced his communications with Dr Ovcharenko concerning batch nos 54 and 56. (xi) If such notice had been given around that time I am satisfied Hamilton would not have supplied Crafers as it did on 17 January 2002 or thereafter. (xii) Apart from the shipments made to Crafers which found their way to Hong Kong, there is no evidence at all of parallel importation of the Hamilton products into Hong Kong prior to, or after, the Crafers shipments. In consequence the only breaches for which Hamilton can be held responsible relate to those shipments. There comes a time, it is said, when a party to an agreement such as the Distribution Agreement, knowing or believing that the other party is in breach (particularly a passive breach) of a substantive obligation within that agreement, must give notice of breach to the other party, as part of employing the first party's "best efforts" to prevent breach, or further breach by the second party. It is a matter of degree when that stage is reached in a particular case. The relevant state of mind on the part of AMC was knowledge or belief that genuine Hamilton products were being distributed in Hong Kong, being products which AMC itself had not sold. Hamilton's primary submission is that that stage was reached by late October 2001 and that, thereafter, until August 2002, the applicant was in breach of clauses 6.2, 33.4, 33.5 and 34 of the Distribution Agreement in failing to report to Hamilton its knowledge or belief about parallel importation. While AMC has put Hamilton's defences in issue it has not made detailed submissions on them. It is in my view clear that AMC was in breach of its cl 6.2 obligation from at least the end of December 2001. As I indicated when considering the construction of cl 6.2, not only are the parties' "best efforts" obligations reciprocal, they are likely to be independent particularly in parallel importation cases. The reason for this is that, while it is likely to be the distributor who detects the parallel importation, it is equally likely that it will be the supplier who has the greater capacity to identify the source of the parallel importation and/or to prevent the future sale of the product into the relevant area. In such cases --- and I consider the present to be one --- unless and until the supplier is made aware of the fact of the parallel importation, it may well not be in a position to do all that it reasonably could in the circumstances to prevent the products sale in that area in the future. Hence the distributor's "best efforts" to prevent the sale of the product could require at least that it notify the supplier of the fact of, and what was known about, the parallel importation. Especially considered along with the duty to cooperate, AMC's cl 6.2 obligation required it so to notify Hamilton. It failed to do so. I am satisfied it demonstrably did not do all it reasonably could in the circumstances to prevent the sale of the Products in Hong Kong from at least the end of December 2001. First, AMC was in breach of its obligation under cl 6.2. This disentitled it from recovering damages from Hamilton for breach of cl 6.2. The reason for this, it is said, is that being ready, willing and able to perform at the appropriate time is a condition precedent to a cause of action in contract, whether for damages or otherwise. Reliance in this is placed upon Cohen & Co v Ockerby & Co Ltd [1917] HCA 58 ; (1917) 24 CLR 288 esp at 298 and upon some number of well known specific performance decisions. Secondly, by its failure to inform Hamilton of its knowledge, AMC caused the sales that occurred after "31 January 2002" (sic). Thirdly, "the applicant is not able to take advantage of its own wrong". As I understand this in light of Hamilton's pleading and submissions, this defence, in essence, is one of failure to mitigate. None of these defences were enlarged upon significantly in submissions. In light of my findings as to when AMC became aware of the reality of parallel importation but then failed, unreasonably to notify Hamilton thereof (ie in December 2001), its breach of cl 6.2 post-dated that of Hamilton's first sale to Crafers (which was on 12 or 13 November 2001). There is nothing to suggest that, as at the time of Hamilton's breach of cl 6.2, AMC was not ready, willing and able to perform its reciprocal obligation assuming it was relevantly a "concurrent obligation": cf Cohen & Co at 298. As put in its submissions, Hamilton's first defence is that, contrary to my findings, AMC became aware of the parallel importation and failed to notify this, in October 2001, ie prior to Hamilton's breach. It is unnecessary for me to consider the defence further although I would add that I express no view on the question whether it is an available defence for breaches of a provision such as is presently in question. The second and third defences, in substance, raise issues of causation and of mitigation. There have been no submissions made on the applicable legal principles, but neither are they controversial for present purposes. It is well accepted that (i) the party claiming compensation for loss has the onus of showing the loss was caused by the breach relied upon; (ii) the criteria of causation applied is a common sense one; and (iii) "the act [or conduct] of the claimant may be considered so unreasonable that it operates to break the chain of causation with the consequence that the claimant recovers nothing" for loss thereafter: Furmston (ed), The Law of Contract , 8.86 (3 rd ed, 2007); see also Mallesons Stephen Jacques v Trenorth Ltd [1998] VSCA 58 ; [1999] 1 VR 727 ; Cheshire and Fifoot's Law of Contract , [23.34]-[23.35], [28.38] (9 th Aust ed). As for mitigation, damages are not recoverable for any loss which could have been prevented by the reasonable mitigating action of the injured party: Cheshire & Fifoot , at [23.41]; Carter on Contract [41-340]; see also Farnsworth, Contracts , §12.12. It is for the party in breach to show the claimant has failed to mitigate its damage: TC Industrial Plant Pty Ltd v Robert's Queensland Pty Ltd [1963] HCA 57 ; (1963) 180 CLR 130 at 138. The claimant is not required to take all possible steps to mitigate its loss, but only those which are reasonable: Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38 ; (1998) 192 CLR 603 at [134] . In this matter, it probably is immaterial whether the claimable loss is approached through the principles of causation or of mitigation. They yield a like result. While it is misleading to speak of a "duty" to mitigate loss: see Carter at [41-340]; Farnsworth §12.12; AMC was in fact subject in cl 6.2 to a contractual obligation to take reasonable steps which, if taken, would have prevented a quite significant part of its loss being occasioned. Whether AMC's failure to do so be described as breaking the chain of causation or as failing to take reasonable mitigating action, the consequence is the same. From at least the end of December 2001, AMC's conduct disentitled it from claiming compensation for loss occasioned by Hamilton's continued supply of the Products to Crafers thereafter in breach of cl 6.2. As no cross-claim has been made by Hamilton in respect of AMC's failure to disclose its knowledge of the parallel importation once it became aware of it, it is unnecessary for me to consider whether that non-disclosure itself was in the circumstances independently actionable as, for example, under s 52 of the Trade Practices Act : cf Metalcorp Recyclers Pty Ltd v Metal Manufacturers Ltd [2003] NSWCA 213. I should make the additional observation that while Hamilton had advanced a positive case of breach of cl 6.2 by AMC, this was for the purpose of establishing that AMC should have given it explicit notice, as of the end of December 2001, of its knowledge of the reality of parallel importation. Hamilton, though, did not go on to show that, having the knowledge it did, AMC otherwise failed to use its best efforts as required by cl 6.2. Of this latter matter all I will say is this. AMC devised a strategy in October 2001 to use leaflets in, and holographic labels on, Urederm boxes to differentiate its product from parallel imported product. Notwithstanding the knowledge it acquired in December, it did not implement the leaflet strategy until April 2002, and the holographic strategy until September 2002. Equally, when Dr Keung conducted his market investigations in August 2002, parallel importation was quickly detected leading to proceedings against Forward Co in October 2002. Before turning to the question of AMC's entitlement to recover damages for loss resulting from Hamilton's breaches prior to the end of December 2001, there is one further matter raised by Hamilton's to which I should refer. It is alleged that AMC had ulterior purposes, and acted in bad faith from August 2002 in asserting Hamilton was involved in the parallel importation. While I accept that Dr Keung knowingly made unsubstantiated and occasionally knowingly false assertions and representations which do him little credit, I do not accept that such subsequent conduct and the climate in which it occurred, have any real bearing on the questions I have to determine in light of my findings. A quite large body of expert evidence, in places quite arresting in its content, has been put on by AMC in support of its damages claims. Such of it as relates to parallel importation is of virtually no assistance to me, save in relation to providing a convenient source of some arithmetical calculations. Given my findings on liability and the narrow compass of the damages inquiry they open up, I have been left to do the best I can with the available evidence. I should add that my findings on liability were a possible outcome raised directly by Hamilton in its submissions. AMC's claim as put is for loss of profits, these being made up by (a) the direct loss of profits on the goods sold to Crafers and (b) the consequential loss of profits as a consequence of the run down in sales in Hong Kong. The latter loss, as it relates to parallel importation, is claimed for the period of the 2003 financial year until into the 2007 financial year (ie from 1 April 2002 until 13 July 2006). While in closing oral submissions AMC pressed fully its claim for direct losses, it was accepted that I probably would be minded to say that it can't be the whole of the consequential loss claimed. Those losses were claimed, for example, to be $1,280,075 in the 2003 financial year and $3,454,463 in the 2006 year. Hamilton disputes both claims. Before dealing with each of the claims it is appropriate to refer to a deal of background material. While for reasons which I will later give, I am only concerned with, at the most, possibly two of the financial years dealt with by Dr Jorgensen, it is appropriate to refer to certain aspects of his report, and to indicate why the report itself is not helpful to me. I should refer first to the instructions given Dr Jorgensen. (Emphasis added. The significance of the 8% becomes apparent in the calculation of consequential loss. Mr Jorgensen had access to AMC's profits and loss statements to the 2007 financial year. ) I should note in passing that the "turnover" and "total income" figure for 2003 understate the true position by HK$1.08 million. The final part of Mr Jorgensen's report which I should mention is the assumptions he was asked to make about parallel importations. for the shelf life of the product. When he commenced business in 1988, the markets Dr Keung targeted were consumers, retailers and doctors who spoke Chinese as a first language and who might or might not speak English. For that reason, as he said in his first affidavit, "every aspect of the presentation, promotion and marketing of AMC's products was and is designed ... to appeal to Chinese speakers exclusively". I note in passing that, in the November and December sales to Crafers, two of the invoices were for Urederm 100g in English language packaging. When AMC's relationship with Y C Woo ended, AMC sold directly to a number of wholesalers in Hong Kong. It also sold direct to chain stores and took telephone orders from dispensaries. Its own salespersons visited dispensaries and medical practitioners. Dr Keung's evidence is that up until July 2006 the 10% urea cream and Rubesal were on sale in over 95% of pharmacies in Hong Kong and 280 retail outlets of the large retailers, Watsons and Mannings. Urederm 50g and Rubesal 25g and 50g were made only for the Hong Kong market. Ninety-five per cent of the R25g was sold into the Hong Kong government sector and the sale to government had a favourable flow-on effect on the sales of other Rubesal products. Urederm, for its part, was mainly a winter product and its sales were influenced by weather conditions. It had 8 to 10 competitors in the market. In early 2003 the SARS epidemic occurred in Hong Kong. It is Dr Keung's evidence that, for the most part, the government closed its clinics from February to May, and it asked for supply of Rubesal to be stopped; and, but for SARS, the sales of Rubesal should have gone up. Nonetheless, he agreed that in 2002 and 2003 he was telling Hamilton that the sales of Rubesal were falling because of competition. That of Urederm 50gm tube has been decreasing since 1995 from a yearly sales of 110000 in 1991 to 90000 in 1995 and 67000 in 2000 despite continuous promotion and advertising. Parallel importation has been progressively expanding for quite some time. This also needs to be compensated. First, the sales of U50 and R25 drop sharply from the '02 financial year to the '03 year. That drop increases in '04 for R25 but is reversed for U50. Secondly, the purchases from Hamilton in the '01 and '02 financial years reveal that at the end of the '02 year, AMC held significant excess inventory --- 32,593 units of R25 and 16,739 of U50 (down from 42,999). Earlier I referred to Dr Keung's cross-examination in which he indicated that, in October 2001, he had detected a "marked drop in sales" which led to his request to Hamilton to delay sending a portion of the November delivery of U50g. That "drop" pre-dated by about 1½ months the introduction into the Hong Kong market of Products sold by Hamilton to Crafers. The earliest date on which this occurred on the evidence appears to have been around 11 December 2001 when Teemlink made its first sale to Forward Co. I would emphasise that there is no evidence to support any allegation that Hamilton-sourced Products were parallel imported into Hong Kong before December 2001 or after its last sale to Crafers on 25 July 2002 was delivered to Hong Kong (if such was the case). On 30 January 2002 Dr Keung again reiterated there had been a sharp drop in sales of U50g "in the past two months despite massive advertising". In cross-examination Dr Keung accepted that the sales in R25 fluctuated from 2000-2007 and in some years they fluctuated a lot; the sales of it to government agencies were at discount prices; and there had been no relative downturn in the sales of Rubesal in 2001 and 2002. There is clear evidence of part at least of each of these being sold in the Hong Kong Market. Invoices to, amongst others, Forward Co demonstrate this. The balance of Crafers purchases which were onsold (or for which credits were not later given by Crafers) consisted of 12,060 units of U50g in Hong Kong packaging and 2296 units of Rubesal 50g also in Hong Kong packaging. Hamilton cannot be held liable in this proceeding for their sale and resale into Hong Kong of these products. There is a degree of opacity concerning the actual sale prices of AMC's Products in Hong Kong. Because I do not consider there would have been any likelihood of AMC purchasing the English language packaged U100g stock that Hamilton sold to Crafers (see below), I will confine my consideration of prices to U50g. For the 2002 financial year its list price was $39.50. This, according to Dr Keung. was the over-the-counter price but the sale price to government institutions was $24.00. There is some evidence as well of other discounting in 2001-2002 at prices across the $36.50 to $20.00 range. The average price Mr Jorgensen adopted was $28.54. I will assume a similar figure. The market value of the U50g sold to Crafers in November-December 2001 so valued was, to adapt Mr Jorgensen's figures, HK$269,635. The evidence of the sales from Forward Company in Hong Kong, while in large measure incomplete, is sufficient for present purposes given the narrow corridor of time with which I am concerned. It is clear that U50g was sold to WKM in December 2001 at $18 per unit and in April 2002 at $19.40 per unit. As to the latter, it is by no means clear how much, if any at all, of the Crafers sales for which Hamilton is responsible found its way into this sale to WKM. It would also appear from sales invoices of Forward Company that it otherwise sold U50g between 12 December 2001 and 1 February 2002 at varying prices which would seem to average at about $28 per unit. The respondent has called into question the extent to which the Crafers sales were exported to Hong Kong and were sold into the retail market in direct competition with AMC. Though the evidence of sales by Forward Company in Hong Kong is incomplete, I am satisfied, having regard to the invoices of Forward Company and of WKM that definitely a large proportion, but probably all, of the sales to Crafers of U50g for which Hamilton is responsible were sold into the Hong Kong market. Finally, it is probable that all of the U50g tubes that Hamilton sold to Crafers in November-December 2001 came from the stock, the delivery of which was delayed by Dr Keung, in October 2001 and which Dr Ovcharenko was authorised to sell in Australia in November 2001. As I have foreshadowed, I do not consider that there was any prospect at all of that possibility being realised in relation to the 4008 units of English language packaged U100g sold to Crafers in November and December 2001, or that the opportunity to buy those units was a valuable one to AMC. From at least February 2001 AMC sold its U100g in Hong Kong packaging. Prior to that it was sold with stick-on Chinese character labels applied to English language packaging. Having its own tailored packaging and, more importantly, a target market of consumers, retailers and doctors who spoke Chinese as a first language, I am not satisfied that AMC would have countenanced the possibility of purchasing such a quantity of English language packaged U100g. I turn now to the 9448 units of U50g. By way of general background, I would emphasise that AMC's sales of U50g peaked in the 1995 financial year (119,700 units), troughed in 1997 (85,736 units), recovered in 1999 (94,168 units) and then began a decline. In 2000, 84,014 units were sold; in 2001, 66567 units; and in 2002, 67,480 units. I would also note that in the 2001 financial year AMC had 42,999 units by way of excess inventory --- a number equivalent to about two thirds of its sales for that year and slightly greater than its purchases in the 2002 financial year (which is the year of present interest). Dr Keung's explanation for the build up of excess inventory was because, from 2000, the China market seemed to have "signs of opening up". Be this explanation as it may, in the 2001 financial year AMC was obviously running down its inventory as also its purchases from Hamilton. It is Dr Keung's evidence that from December 2000 he believed that counterfeit Hamilton U50g products were available in the Hong Kong market. In April 2001 he employed Dr Lam to trace the source of these and to devise strategies to try to stop their sale in Hong Kong. In October 2001 he had detected a "marked drop" in sales, a drop which (from his correspondence) he maintained continued at least until the end of January 2002. Whatever the causes of Dr Keung's concerns about the state of the market during 2001 until mid-December, any drop in it could not be attributed to Hamilton's parallel imported product. Its impact (if any) in late December and into the early months of 2002 was unlikely to have been marked as I will later indicate. The effect of Dr Keung's discerning the marked drop in sales induced him to request delaying the shipment of what proved to be about half of the November shipment of nearly 29,000 U50g units. And then he acquiesced in the sale in Australia of the delayed delivery stock in November 2001. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable. And (b) whether and in what amount, if at all, it would have made profits from such sales and resales? Authority binding upon me would suggest that such differentiation is necessary in a case such as the present for the reason that the realisation of the chance to make the lost profit would have depended on AMC's own decision to have purchased and resold the product. Proof on the balance of probabilities that it could and would have done so was necessary if AMC was to show that Hamilton's conduct "has caused a valuable loss of opportunity" see Price Higgins & Fidge v Drysdale [1996] 1 VR 346 at 355 (Full Court of Victoria); G W Sinclair & Co Pty Ltd v Cocks [2001] VSCA 47 ; see also Cheshire and Fifoot , [23.16] (9 th Aust ed). Ordinarily I would invite further submissions on this matter, the more so because of the apparent likelihood that AMC would not have contemplated purchasing that stock at the relevant time. The reason I refrain from taking this course is that I am satisfied, in any event, that the value of the opportunity lost to AMC was negligible for the same reason, ie the chance of AMC attempting to realise profit from such additional purchases and resales was so low as to be speculative. In saying this I have not considered it necessary to consider the additional more general factors also relied upon by Hamilton for purposes of discounting. Dr Keung did not become aware of the parallel importation until after both the November and December sales of U50g to Crafers --- hence it does not complicate my view of the counterfactual I need to consider. Given (a) his apprehensions about the state of the market; (b) his deferral of part of the November delivery "so ... there is less pressure on our go-down"; (c) his November acquiescence in the sale of the delayed delivered product in Australia; (d) his own appreciation of the generally declining market of U50g since its peak in 1995; (e) the fact that AMC's orders at this time were demand driven and Hamilton had the capacity to satisfy its forecasts for U50g; and (f) AMC's diminished purchases from Hamilton in the 2001-2002 financial year and its possession of a significant carry forward of excess inventory for the product from the preceding year --- I am satisfied for these reasons alone that AMC would not at the relevant time have envisaged purchasing the 9448 units of U50g to be sold in addition to the purchases and orders it had by then made, notwithstanding the shelf life of the product. Even if I am incorrect in regarding the value of the chance to AMC as negligible, the percentage figure I would put on it is in the order of 10 per cent of the net profit the sale of the 9448 units would probably have yielded. Adapting Mr Jorgensen's calculations, I would accept for present purposes both that the market value of the U50g tubes in Hong Kong was HK$269,635 and that an appropriate percentage profit per unit of 47.4% as proposed by Dr Jorgensen (though criticised by Hamilton as suitable especially for the entire period claimed by AMC), this would produce a net profit figure in the order of HK$126,728. I would in consequence have ordered Hamilton to pay damages in the order of HK$12,500. The claim for loss of profits on sales lost on account of parallel importation is a major part of a more general claim for loss of profits from the 2003 financial year to the 2011 financial year. Its rationale is that the losses to AMC commenced in late 2001 as a consequence of the parallel importation of Hamilton products into the Hong Kong market and that, thereafter, there was an ongoing impact upon AMC's sales, and therefore, its profits. Significantly no particularised claim is propounded for loss from parallel importation in the 2001-2002 financial year. This is of particular present importance. Hamilton, as I have found, was responsible only for the two sales of U50g made in November and December 2001. Those sales were received by Forward Co on 11 December 2001 and 12 January 2002. The 2002 financial year ended on 31 March 2002. While the subsequent sales of the U50g in the retail market may have created the risk of loss of sales and, therefore, of injury to AMC for a period, I cannot on the evidence before me infer that that injury was in fact caused or over any particular period. As is evident from the Jorgensen report, AMC has not attempted to prove its consequential loss of profits in its parallel importation case in so particular a way. Nor has any particularised claim at all been made for loss in the period prior to 1 April 2003. Given both the very limited responsibility, if any, Hamilton has for such loss as AMC may have suffered by way of run down of sales and the evidentiary silence, I am not prepared to speculate as to the actual loss, if any, AMC may have suffered on the sale of the 9448 U50g units. That loss has not been proved. To the extent that AMC suffered significant loss from the parallel importation of Hamilton products --- if it did at all --- it was primarily the author of its own harm and probably exclusively so by the beginning of the 2003 financial year. I will reject its claim for damages for consequential loss of profits. My conclusion has relieved me of the need to consider a significant body of evidence, expert and otherwise, and very detailed submissions from Hamilton in particular on AMC's alleged loss of profits. I make no comment on that material beyond what has already been said. I have already found that the Agreement was terminated under cl 41.1.6 on the expiration of 60 days written notice, which notice was given to AMC on 13 July. The actual termination date was 13 September 2006. Two of the four orders post-dated the termination date and can be disregarded. I again note I have rejected AMC's submission that the termination related only to the Licence so leaving Hamilton's cl 11.1 supply obligation on foot. The claims involve, in the first instance, an issue of construction of the Distribution Agreement. After an order is accepted by Supplier, it is binding on Distributor and cannot be changed without Supplier's written consent. (Emphasis added. That submission would seem to proceed upon a particular, but unstated, view of the proper construction of cl 11.1 when considered in light of cl 13. Hamilton's contention is that its obligation to supply did not crystallise until it had accepted AMC's orders as envisaged by cl 13.1. It recognises that cl 13 specified two grounds upon which it could refuse to meet an order. But it also appears to assert that the "unable (for any reason) to supply" ground for refusing to accept an order should be considered in the context of the Agreement as a whole including the provisions of cl 42 and cl 16 which, it says, provide in the circumstances a "justifiable commercial reason" for its being unable to supply the two orders. Supplier grants to Distributor a licence to resell the Unsold Products in these circumstances. If Supplier does not wish to repurchase the Unsold Products, then Distributor is responsible for reselling them. Supplier grants Distributor a licence to resell Unsold Products in these circumstances. The two orders in issue were made on 9 May 2006 and 5 July 2006. Both, as I have said predated the notice of termination of 13 July. Hamilton's "justifiable commercial reason" for being unable to supply is put thus. Relevantly, AMC would not have been obliged to pay for the May and July Orders until 9 October 2006 and 5 December 2006. The products would have therefore been delivered to AMC at a time when AMC's licence to distribute Hamilton products had ended. With the Distribution Agreement having ended on 13 September 2006, AMC, pursuant to clause 42.1 of the Distribution Agreement, would have been obliged to immediately return the products subject of the May and July Orders as soon as they landed in Hong Kong. It is clear that at the time that the licence ended, the products subject of the May and July Orders would have either been in transit or not paid for (triggering an obligation pursuant to Clause 42.1 on AMC to immediately return those products to Hamilton at Hamilton's cost). The scheme of cl 11.1 and cl 13.1 was such that Hamilton was obliged, "to the extent it is able" (cl 11.1) to sell to AMC all products needed for resale. The cl 13 order system was the vehicle for AMC to express its needs. While cl 13.1 envisaged that for an order to bind the Distributor, it needed to be accepted by Hamilton, it specified the two circumstances in which Hamilton could refuse to accept an order. The first reflected the qualification in cl 11.1: an order could be refused if Hamilton was unable for any reason to supply the Products ordered. The second was if AMC's trading account for Products previously supplied was not current. The exceptions, it should be noted justified a refusal " to accept an order", not a refusal " to supply on an order accepted". This produced the somewhat unusual consequence that inability to supply after an order had been accepted or the trading account becoming not current after acceptance, would not relieve Hamilton of its supply obligation. Such consequences, though, seem to be consistent with the scheme of ordered planning for the future through binding commitments, and forecasts of supplies and orders that the Distribution Agreement instantiated: see not only cll 13.1, but also cl 12 and cl 13.2. While an actual acceptance of an order was envisaged (so binding AMC), the clause obliged Hamilton to accept orders save in the excepted circumstances. The sub-clause did not specify by when the acceptance had to be notified. However, consistent with the object of regularity and predictability which clearly informed cl 13, I am satisfied that cl 13.1 would, properly construed, contain an implied obligation to give such notice of acceptance as was reasonable in the circumstances. Turning to the cl 13.1.1 exception of being "unable (for any reason) to supply", does Hamilton's "justifiable commercial reason" (founded on its construction of cl 42) satisfy the sub-clauses requirement? Not, I think, to the extent Hamilton proposes. Clause 42 had two quite distinct modes of operation when the Licence ended. The first, in cl 42.1, dealt with Products in transit or delivered for which Hamilton had not been paid. AMC was obliged "immediately" and at Hamilton's cost, to return such Products to Hamilton or its nominee. This at least countenanced the possibility that payment may in fact have been made for such Products in which case it would be the second mode of operation which governed how the parties were to act. Though subcl 42.1 dealt expressly with the return of goods "in transit or delivered" for which the Supplier had not been paid, it did not deal with goods ordered, but not shipped or paid for at the time the Licence ended. The clear contemplation of the provision in the context of the Agreement was that on termination of the licence there was no obligation to ship such goods at all, hence no need to make provision for them --- unless, of course, they had been paid for in advance. Given that cl 13.1 required orders to be made 4 months before date of shipment, but that cl 41.1.6 provided for the Licence to end only at the expiration of 60 days written notice, there was always the possibility that orders could have been made in the roughly two month period prior to the giving of notice of termination. Subclause 42.1 clearly envisaged both that Product shipped in respect of such orders could be in transit or delivered but not paid for and that such Product was so shipped after the giving of the notice. In other words, the giving of the notice did not of itself terminate the Suppliers' obligation to supply even though the contingencies stipulated in cl 42.1 were foreseeable in a given instance at the time of notice. I would interpolate that such evidence as there is of shipments from Adelaide to Hong Kong suggest a voyage time of about two weeks. The second mode of operation of cl 42 was premised upon AMC having paid for, but having unsold, Products on its hands. How the subclauses worked in such a case turned, for present purposes, on whether the Agreement was terminated under cl 41.1.6 by Hamilton or by AMC. What this did was to give the party who did not give the notice of termination an election which was designed in each instance to suit that party's own advantage. In the present case, cl 42.2 gave AMC the options of reselling the unsold Products to Hamilton at cost, or of selling the unsold Products to third parties. Importantly, while cl 16 stipulated by when payment "must" be made for Products received (ie within 30 days of receipt), it did not preclude any earlier payment. If a Distributor chose to pre-pay for Products ordered, it would have had the above election. In a given case, where the Distributor was involved in the orderly winding up of a part of its business consequent upon termination by the Supplier, it may well have been in its interests to have Products for sale after termination of the Licence to facilitate that process with its customers. The 9 May 2006 was for delivery in September 2006, the expected date of its arrival in Hong Kong being before 15 September 2006. The 5 July order was for delivery in November with the expected date of arrival being before 15 November. Neither order was prepaid. On 13 July 2006 the notice of termination of the Distribution Agreement was given. He also indicated he regarded Hamilton as being responsible for AMC being unable to sell a certain quantity of product in the Philippines. He considered Hamilton should have a duty to purchase the product and indicated: "Their cost can just be off-set by the AU$35,091 in your [invoice] EXP1768. " I note in passing that a separate claim is made by Hamilton in this proceeding in respect of that invoice. In particular, Hamilton has no obligation after the termination of the distribution agreement to supply any products to Australian Medic-Care. However, if it would assist AMC in the current situation, Hamilton might consider trying to supply the products ordered in May and July 2006, subject to availability of raw materials, etc and subject to payment by AMC in advance. If you would like Hamilton to consider this option, you must treat it as a matter of urgency and advise us accordingly. To prevent the interruption of the supply of Hamilton products so that we have time to consider the remedy imposed on AMC due to the Termination on Hamilton's side I accept your offer to supply goods to AMC for the orders made in May and July 2006. I shall send the money for the goods by Letter of Credit or Telegraphic Transfer before the goods are delivered to Hong Kong. I agree to pay Hamilton the amount on the invoice EXP/1768 forty-five days after 22 June 2006, the date the goods arrived at HK. He reiterated what he had said but also provided a list of products and quantities which "we could make reasonable endeavours to supply". If Hamilton does not receive those payments in full by those dates, the quantities of products that can be supplied will be further reduced. Of course, Hamilton will not supply any of those products unless full payment of A$35,091.12 for EXP1768 is received by the due date of 6 August 2006. It is fair to say that they were substantially the same in their listings, save for a product Hamilton no longer made (Dr Keung was aware of this) and for a batch of Rubesal 50g. Neither Dr Lam on 27 July nor Dr Keung on 31 July 2006 responded specifically to Dr Pritchard's offer which was reiterated on 28 July. In his 31 July email Dr Keung did, though, raise the issue of returning unsold Hamilton products for refund (presumably under cl 42) and for off-setting EXP1768 against this. On 2 August 2006 in an email to Mr Blake, Dr Keung acknowledged AMC had previously offered to pay in advance for the May and July orders. before the manufacture of the goods. I find that deviated too much from the Agreement and refused to order the goods and off-set EXP/1768 with the stock to be returned to Hamilton. AMC, it would appear, was taking returns of stock at its direction from sub-distributors and retailers. On 3 August Mr Pritchard sent a facsimile to AMC indicating Hamilton's understanding of its cl 42 obligation. On 7 August Mr Pritchard advised Dr Keung that AMC's payment of A$35,091.12 for EXP1768 had not been paid. It was due on 6 August. On 25 August AMC forwarded an invoice to Hamilton to offset EXP1768. Hamilton did not accept the invoice. Given the view I take of the proper construction of cll 11.1, 13.1 and 42.1, it may have been necessary to differentiate between the May and July orders. The latter order was for delivery in November, with an expected arrival before 15 November 2006. The Distribution Agreement terminated on 13 September 2006 and, consistent with my interpretation of cl 41.1, any obligation Hamilton had to make a future supply to AMC in respect of an outstanding order would have been discharged on and from that date, Dr Keung not having prepaid for that order as he indicated at one time that he would. Hamilton in its written submissions (at [515] and [516.2]) accepts that the Products subject to the July order would have been in transit on 13 September. If such was the case --- I am unaware of any evidence to this effect --- then Hamilton's liability for not supplying falls to be determined on the same basis as for the May order. I would add that, but for that acceptance I would, on the available evidence on shipping times, have been likely to have inferred to the contrary. However I will not now differentiate between the two orders for cl 42.1 purposes. It is clear that on 20 July 2006 Hamilton had decided to, and communicated to AMC, its refusal to supply the September and November orders. Could that refusal be brought within the "unable (for any reason) to supply" exception of cl 13.1.1? The May order could well have been delivered by 13 September (depending on shipping availability) and it may or may not have been paid for by that date, thus providing Dr Keung with the election of cl 42.2 --- although I consider it unlikely that Dr Keung would have rushed to payment. Nonetheless, each such order, if despatched by Hamilton, would have fallen within the express provisions of cl 42 one way or another. It was the function of that clause, and not of cl 13.1.1 to determine what the parties' responsibilities were in respect of goods in transit or delivered and whether paid for or not. That was the chosen means of the Distribution Agreement. It may have resulted in Hamilton needlessly incurring cost, but the term itself was what Hamilton required of AMC. Hamilton was able to, but was seemingly unwilling to, supply. That was not sufficient to attract the cl 13.1.1 exception. Turning to the cl 13.1.2 exception, it authorises the refusal to accept an order if the Distributor's trading account with the supplier for products previously received is not current. What it does not do is authorise the refusal to supply on an accepted order. As I earlier indicated cl 13.1 when construed in light of cl 11.1 obliged Hamilton to accept orders subject to the two specified exceptions. As I also indicated, while orders required positive acceptance, cl 13.1 contained an implied obligation to give such notice of acceptance as was reasonable in the circumstances. Each of Dr Keung's orders contained the underlined requirement: "Please return by same fax if order cannot be fulfilled. " It was not open to Dr Keung unilaterally so to dictate to Hamilton when it was to notify its acceptance or refusal of an order. Nonetheless Hamilton freedom was not unconstrained and, consistent with the implied obligation I have noted, it would have been reasonable to have expected relatively prompt notification of acceptance or refusal. In the case of the May order, I simply note that I consider such notification was not given. Be that as it may the refusal to supply and the reason for it were communicated on 20 July, misguidedly as I have indicated. While it was a week earlier that Dr Keung first began to raise the issue of the "off-set" for the invoice EXP1768, default on that invoice did not occur until 6 August 2006. The cl 13.1.2 exception, no less than the cl 13.1.1 exception, requires a decision to be taken prior to the acceptance or refusal of the order in question. It cannot be held dangling over the distributor's head until the last moment against the contingency that its trading account may cease to be current. It is for this reason that it is tied to a refusal to accept the order, not to a refusal to supply on an order. The clause cannot be so construed so as to allow an after occurring lack of currency in a trading account to be used either to feed a prior refusal or to reverse a prior acceptance. This would be quite inconsistent with the scheme of ordered planning established in the Distribution Agreement. Nonetheless, such is what Hamilton has sought to do in its submissions. I conclude, then, that Hamilton's failure to supply on the May and July orders was in breach of cl 11.1. This, though, is not the end of the matter and for two reasons. This seemingly explains why damages for the loss said to have been suffered in consequence of the breaches was calculated on the basis of loss of profits on the sales of the Products: see Second Report P V Jorgensen [14.4]. This loss is put at HK$1,550,414. What this all overlooks is the possibility that the Distribution Agreement was validly terminated on 13 September. Assuming the orders were met both would have been subject to the provisions of cl 42 of the Distribution Agreement. Neither party has addressed this eventuality. Ordinarily, I would have invited the parties to provide further submissions on this matter. However, given the course of this litigation and that I am satisfied for other reasons that only nominal damages should be awarded for the breaches of the Distribution Agreement, I do not intend taking this course. I would also note that, if cl 42.1 would have been the operative provision, in the circumstance the damages for the breaches would have been nominal in any event. AMC could have accepted that offer and mitigated the loss and damages that it now has allegedly suffered by reason of the so called failure to supply. AMC instead chose to reject Hamilton's offer. I agree with this submission. The four matters I would emphasise are, first, that Hamilton had lawfully given notice to terminate the Distribution Agreement; secondly, its refusal to supply was a breach of cl 11.1 (which Dr Keung accepted), albeit the deliveries in question were only to be made in September and October: see Furmston (ed), The Law of Contract , 8.103 (3 rd ed, 2007); thirdly, the parties' rights and obligations arising out of those deliveries (if they had been made) would have been governed by cl 42 of the Distribution Agreement; and fourthly, Hamilton had made an alternative offer of supply which AMC had rejected. While an innocent claimant is under no positive duty to take action to mitigate losses resulting from another's breach of contract, that party may not recover damages for that breach in respect of losses which it might reasonably have been expected to avoid: see generally Furmston (ed), at 8.96-8.103; Cheshire and Fifoot's Law of Contract , [23.41]-[23.44] (9 th Aust ed, 2008); Carter on Contract , 41-340 ff. The onus of proof is upon the party in breach to show that the claimant ought reasonably to have taken certain mitigating steps: Wenkart v Pitman (1998) 46 NSWLR 502. The claimant is not bound to take all possible steps to mitigate its loss, only those which are reasonable: Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38 ; (1998) 192 CLR 603 at [134] . As noted in Furmston (ed) at 8.100-8.101, many of the reported cases which have considered whether the claimant has acted reasonably to reduce its loss have involved the refusal of offers made by the party in breach. While it will be regarded as unreasonable to require a claimant to take steps which are likely to injure its commercial reputation: James Finlay & Co Ltd v NV Kwik Hoo Tong Handel Maatschappij [1929] 1 KB 400 ; Metal Fabrications (Vic) Pty Ltd v Kelcey [1986] V R 507 ; in commercial contracts, as Scrutton LJ commented in Payzu Ltd v Saunders [1919] 2 KB 581 at 589, "it is generally reasonable to accept an offer from the party in default. However, it is always a question of fact. " In judging what is reasonable in relation to such offers in a commercial matter, the claimant can be expected to view the matter dispassionately without "indulgence in far-fetched resentment": Payzu , at 586. In this matter the supply offered by Mr Pritchard was substantially similar to what AMC had required in the May and July orders. The payment arrangements were quite different to what was the parties' usual course of business and to what cl 16 of the Distribution Agreement required. Because the Agreement had been effectively terminated on 13 September, if AMC was to obtain the benefit of the orders, it would in all likelihood have had to pre-paid for both orders because of cl 42 of the Agreement. Dr Keung was prepared to prepay before delivery when he mistakenly considered Mr Pritchard was offering to supply on the two orders. He resiled from this objecting that the terms proposed deviated too much from the Agreement, the efficacy of the notice of termination of which he would not accept. If he did wish "to prevent the interruption of the supply of Hamilton Products" he was given a reasonable opportunity. His rejection of the offer which would have averted the loss he alleges he suffered from Hamilton's failure to supply on the two orders, was unreasonable in the circumstances. AMC failed to mitigate its loss (assuming that under cl 42 it could have sold the Products had they been delivered). AMC is entitled to nominal damages of $10 for each of Hamilton's two breaches of its obligation to supply. 6. Those representations, which allegedly related to cl 41.1.6 and cl 8.1 of the Distribution Agreement were pleaded by AMC to constitute two separate species of conduct contravening s 52 of the Trade Practices Act and s 56 of the Fair Trading Act . Having made the above findings in relation to the representations, I reject both of the claims made. B. I will then consider AMC's claims against Hamilton for infringement of copyright arising from its allegedly unauthorised use of what is described as the "Hong Kong packaging" (ie in Chinese characters) of Hamilton's products which packaging included (inter alia) the above two trademarks. By way of preface I should note that up until final written submissions the case had been prosecuted by Hamilton on the basis that AMC, as Hamilton's fiduciary, held the two trademarks as constructive trustee for it, the marks having been obtained by it in breach of its fiduciary duty to Hamilton. The constructive trust claim --- and with it, seemingly, the allegation of breach of fiduciary duty --- were abandoned in Hamilton's written submissions. I say "seemingly" in relation to the fiduciary claim because it was scarcely addressed in submissions yet it is anything but non-contentious in the propositions it asserts: see Hospital Products Ltd ; Rickel v Schwinn Bicycle Co 192 Cal Reptr 732 (1983); Glover, Commercial Equity: Fiduciary Relationships , 3.48-3.51 (1995); and for the causes of contention in this area of the law see my "Fiduciary Principle" in Youdan (ed), Equity, Fiduciaries and Trusts , 1 (1989); see also Gibson Motorsport Merchandise Pty Ltd v Forbes [2006] FCAFC 44 ; (2006) 149 FCR 569 at [11] - [16] . I will return to this in the context of AMC's copyright ownership claim. That the fiduciary claim was made in the first place highlights an aspect of this matter I noted at the outset and which will become more apparent in the evidence below. While the 1999 Distribution Agreement characterised the parties' relationship as that of supplier and distributor, there was more to it than that. In reality as it evolved it can properly be said to have been one of co-venturers seeking to develop markets for Hamilton's products in the Chinese reading communities of Hong Kong, Taiwan and China and they contributed accordingly. Dr Keung's contributions were his language skills, medical knowledge, local knowledge and marketing abilities. As will be seen, their contract, which in critical respects ordained their rights and responsibilities, did not reflect this. While cl 31.1 gave AMC an unrestricted use of the Trademarks for the purposes of the agreement during its term, cl 31.2 provided that the agreement did not confer on AMC any goodwill or interest in the products or the trademarks. Finally, cl 21.1 required (a) all therapeutic claims included in advertising or promotion of Hamilton's products have Hamilton's prior approval in writing; and (b) AMC warrant that all such claims "made in languages other than English ... be identical to the approved therapeutic claims". As mentioned in the "General Chronology", the Chinese characters used in the Fuyunhon and Tuotoning trademarks did not, and designedly did not, have any linguistic, phonetic or transliterative relationship with the words "Urederm" and "Rubesal" respectively. The pleading's elaboration and particularisation of the misleading and deceptive conduct run over eight pages. The essence of Hamilton's complaint is set out below: see "Consideration". In its written submissions Hamilton sought to make additional and unpleaded allegations of s 52 contraventions, these being AMC's failures to advise Hamilton (a) of its application for registration of the Fuyunhon trademark in Hong Kong; and (b) of its true intentions as to ownership of intellectual property in the Hong Kong packaging prior to execution of the Distribution Agreement. The conduct informing these allegations was the subject of extensive cross-examination, demonstrably for reasons of credit as the respondent's written submissions amply show: see Respondent Submissions, "Section 2.1 --- Veracity of Dr Keung --- Evidentiary Use of Lies", pp 18-32. While counsel for Hamilton contends that the factual allegations made against Dr Keung have, in aggregate, been pleaded at various places in its defence, it is the case that no cause of action as such was founded upon them in the pleading. AMC objects to this being done at this stage, the more so because there has been no opportunity to cross-examine Mr Blake on purported reliance on the non-disclosure. Moreover, it is said, the claim is statute barred. The problem, in my view, is compounded by Hamilton seeking apparently to use its pleaded, but abandoned, constructive trust case as part of the matrix of matters which it says justifies their claim that this cause of action is sufficiently pleaded: see Transcript 1965 ll 15-18; 1966 ll 40-41 (both cl 34.1.3 and cl 34.5 were abandoned in its written submission although, in response to a request from me subsequent to the hearing for clarification of its concession, it requested that the reference in its written submissions to its abandonment of cl 34.5 be deleted). To allow this matter to be raised in this manner and at this stage would be unfair to AMC. I will not entertain it. In any event, as will be seen for reasons I give below, I am satisfied that this claim would fail in any event. The burden of its injunction that a corporation shall not in trade or commerce, engage in conduct that is misleading or deceptive, is not in dispute between the parties. Suffice it for me to say the following. First , conduct is misleading or deceptive if, in the circumstances, it induces or is capable of inducing error: see generally Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572 ; (2000) 104 FCR 564 at [63] . Secondly , the omission to do a thing is a species of conduct such that silence can in particular circumstances constitute or be part of misleading or deceptive conduct: Demagogue Pty Ltd v Ramensky [1992] FCA 557 ; (1992) 39 FCR 31 at 32 and 40. Fourthly , the state of mind of the contravenor is immaterial unless the conduct in question involved a statement about its state of mind. It is sufficient that, tested objectively, the conduct in question was misleading or deceptive or was likely to mislead or deceive: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180 ; (1984) 2 FCR 82 at 88. Fifthly , where, as here, the alleged misleading or deceptive conduct was that of one party to a business relationship and in the course of it and that conduct is the subject of complaint by the other, the complainant must establish a causal link between the impugned conduct and the loss or damage suffered by that conduct: cf TP Act s 87. They led to a meeting in Adelaide with Mr Blake and Mr Lock on 29 March 1990 at which the first Letter of Appointment was signed. The minutes of that meeting are in evidence. Dr Keung to arrange artwork. Product box to be same style as UREDERM with Chinese artwork to be developed by Medic-Care, if deemed necessary. I am satisfied that, while he can recall the fact of it, he has no reliable independent memory of what transpired at it. His affidavit is a reconstruction from the minutes, albeit one interpreted in a fashion favourable to Hamilton's case. Dr Keung's affidavit evidence of the meeting was that: During the meeting on 29 March 1990 either Mr Blake or Mr Lock (I cannot now remember which) said words to me to the effect, "Why is Urederm so popular in Hong Kong? Why are there so many sales? " To this I replied with words to the effect, "I am using a new brand name, 'FUYUNHON," on the labels on the packaging and in advertising for Urederm. It means 'moisture your skin to become healthy. ' It is a very pleasing phrase to Chinese speakers and it suggests superior quality and specific indications. " I explained to Mr Blake and Mr Lock about the new uses I advocated for 10% urea cream, such as for Housewife dermatitis, winter itching and cracking of the skin. In reply to this, Mr Lock said to me words to the effect, "We'll just leave it to you. This advertising incorporated the Fuyunhon Trade Mark and the Tuotoning Trade Mark, both of which I pointed out to Mr Blake and Mr Lock. In response to this, one of Mr Blake or Mr Lock repeated, "We'll just leave the Chinese names to you. " Casebook 17-18 is a letter from Mr Lock to Dr Choi dated 10 April 1990 in which Mr Lock confirms that he had seen AMC's advertising at this meeting. " Dr Keung's evidence in cross-examination had its difficult aspects due in part to his being obstructive to the point of counter-suggestiveness and, on occasion, of his evidence being colourable. Were they just in Chinese?---At first, it's purely Chinese, yes. And what did they say?---Housewife dermatitis, winter itch in the age, and winter chafing, because these are the laymen terms, you know. And the Chinese on the stickers was a literal translation of each of those conditions that you've just described to his Honour; yes?---It's the Chinese translation of the layman terms: Tr 657. 1990 to 19 August 2002 --- at no time did you tell Hamilton that you regarded the Chinese characters "[Fuyunhon]" as being a brand name or a trademark, do you agree or disagree with that?---I disagree with that, because on the first day, you know, when I met Hamilton's people on 29 March to explain to them about the surge in sales, you know, they --- we are --- I am bombarded by a lot of questions, you know, about the sales, and how can --- you know, 10 per cent urea can suddenly become some prominent. I am bound to explain everything, including the name of the trade --- of Fuyunhon meaning, including the indications I put on the box in English and Chinese, and how I advertise --- actually I have explained to them I --- at first, when I advertise in the newspaper, I just explain housewife dermatitis, winter itching and winter chapping on the newspaper without mentioning any name. And after a couple of such advertising, I then introduce the product on our advertisement. And I explain fully, you know, because, you know, any pharmaceutical firm, upon receiving such big sales in a short time, they usually ask a lot of questions, and it is the practice, you know, why such a product become prominent suddenly, from zero to about 40,000 tubes, you know, in four months, you know. It doesn't needs for me to say anything. I must have been asked a lot of questions about this, you know, by a pharmaceutical firm. I explained fully about the mark. I explained fully about everything related to the surge in sales: TR 672-673. Though I do not accept the reliability of Mr Blake's recall of the 29 March meeting, I do accept the substance of the following aspects of his evidence even though it may well involve some conflation of what he learned across the period 1990-1992. Those indications which I've - - -?---On the Australian pack? The terms used on the Australian pack were terms used because it was listed as a pharmaceutical benefit item so it was sold as --- primarily sold at that time as a --- on a doctor's prescription. It was listed on the PBS. He pointed to the Chinese characters and used the word Tuotoniing, didn't he?---I can't recollect that but I wouldn't deny that he would have but it wouldn't have meant anything to us, it was a Chinese word. He told you that it means, "take away pain, marvellous and effective thing"?---I can remember the "take away pain", which is very consistent to what the products' action is. Descriptive of its use?---Descriptive of its use, yes. Dr Keung didn't say that he would arrange the Chinese version of the product indications in a literal translation from English to Chinese, did he?---No, because I think prior to that we had a agreed with putting --- with him using the other indications --- the more consumer orientated indications which made sense because he was putting the product through retail pharmacy rather than the Australian pack which was a pharmaceutical benefit item going through on prescription. I had understood from what you had said before that because you were going to consumer orientation and product indications rather than pharmaceutical benefits language Dr Keung was in effect being invited to change the words?---I think he suggested --- in discussion he suggested a change which we didn't oppose when that took place. In other words, we agreed that it was appropriate words to use for a consumer market. Relative to this meeting, before or after?---It could have been after and it could have been --- it could have been some time after. Mr Blake, you left the meeting on 29 March 1990 with an understanding of what Dr Keung was going to do?---In terms of generating a bilingual pack? It wasn't something that was unusual. In your letter dated 20 th May 1992, you set out a different wording under "Indications" compared to the "Indications" contained on our current product box --- of which a copy is sent herewith for your comparison. While the difference in the wording is only slight, I think you will agree that it would be better if the wording on the product box and the sachet were the same, preferably as currently shown on the product boxes which are now being printed with the bar code. With reference to the Chinese text we have to rely on you as we have no way of checking if it is correct and that no litigious statements are made. I gave them a negative reply without even informing Hamilton ... Although we refer to him as "distributor" this is really a misnomer because he uses J.C. Woo & Co to do the distribution. Previously shown in bold letters on the pack has now been deleted and replaced with the distributors name, and the words "manufactured by" are to be added in the line preceding the Hamilton Laboratories details. This is OK by us as long as it is understood that Hamilton retains the right to the trade name UREDERM. To do so would allow that brand or mark (owned by a third party) to be associated with quality Hamilton products and, therefore, build goodwill in that name (rather than in the name of Hamilton's products). There is no sensible commercial reason why I would allow this to occur. You knew that the name which sounds like Fuyunhon or Tuyotoniing were being used as a brand name before June of 1999. You agreed with me before, didn't you?---Yes, on Hamilton products. Thank you. Can you now recall when you first became aware of that? Just tell me if you can't?---I'm sorry, I can't recall. While acknowledging he read this, he attempted to explain away its significance by saying that he wasn't sure that Dr Ovcharenko "had interpreted it correctly". Mr Blake also acknowledged that Mr Koerner had told him some time before 1999 --- and I infer this was probably in the early 1990's --- that Hamilton products in Hong Kong were known by their Chinese, not English, names. Sporadic exchanges similar to the above occurred over the next two and more years. The only five matters I need mention are, first, Hamilton was informed that the "Chinese name of Urederm" could not be used in Taiwan as it was monopolised by a brand of ointment; secondly, in AMC's correspondence with Hamilton there are occasional references to the "reputation of Urederm", "the brand name of Urederm", etc.; thirdly, in distributorship agreements with two of Mr Chung's HMC companies (HMC Canada and HMC Hong Kong) AMC described the intellectual property rights relating to the products etc as being AMC's (in the case of the Canadian company) and Hamilton's (in the Hong Kong case); fourthly, a theme in all of the correspondence was the need for the Chinese and English translations of product descriptions to match for the purposes of certification under the Australian Therapeutic Goods Administration scheme; and, fifthly, with the advent of Dr Ovcharenko in 1998 correspondence between AMC and Hamilton took on a much more formal tone and became increasingly voluminous. There are two further matters to which it is necessary to refer. The first relates to the negotiation of the Distribution Agreement; the second, to AMC's registration of the two Chinese character marks in Hong Kong. In his meetings with Mr Chung of HMC prior to the 1-2 March meeting with Dr Keung, Dr Ovcharenko clearly acquired a detailed understanding of AMC's business and some at least of its practices. Or as he put it, "confidential information concerning the commercial channels and chain politics of [AMC]. For present purposes it is sufficient to refer to cl 23 and cl 31.1 and 31.2 in their final form and, to avoid confusion, I will not refer to their numbering in earlier drafts. Clause 23 for all practical purposes remained unaltered from the version of the agreement sent to Dr Keung on 23 March 1999; cl 31 was altered significantly, as has been seen already, by the deletion of the then 31.1.3 and the substitution of a new subclause. As is apparent on the face of the clause, the words give Schedule 3 uncommon importance in the scheme of the Distribution Agreement. Dr Keung was quick to appreciate the significance of this as his comment (below) on cl 23 in the 16 July 1999 draft version revealed. The 23 March 1999 version received by Dr Keung is in evidence. It has on it handwritten notations made by him, he thought, around the end of March. Above cl 23.1 he wrote "Chinese name", below cl 23.2, "Chinese company name". As noted in the "General Chronology", in January 1997 AMC changed its Chinese name to, in Chinese characters, "Australian Fuyunhon Pharmaceutical Co Ltd". There was considerable marking around cl 31. As noted when considering the Contract claims, Dr Keung had considerable concern in not having any entitlement to compensation at the end of the licence for benefits to Hamilton from AMC's activities. That concern was evident in much of the handwritten notation on cl 31 and resulted ultimately in the new cl 31.1.3 being agreed. For present purposes I would note that written above cl 31.1 were the words "after this agreement is signed, trademarks of Chinese name for other products". In the margin beside cl 31 Dr Keung wrote "middle of the play, rules are set". He explained that "play" meant "game". Have to have a big discussion with Hamilton first which marks are ours and what do you mean by "their marks" and what goodwill and the goodwill belong to the 1 July 1999, the good year after 1 July 1999 we have to all clarify that and because, by 1 July 1999, AMC has gained a lot of goodwill. We have to clarify these points. He went on to comment that AMC was unwilling to meet, so he instructed Dr Ovcharenko to send a further marked up version of the agreement to Dr Keung containing Hamilton's comments in response to his 7 June comments. Mr Blake's explanation in cross-examination on his "concern" and on Dr Keung's "unwillingness" was, to say the least, unconvincing. That marked up version was an attachment to an email of 29 June 1999. In the interim, on 11 June, Hamilton instructed its patent attorneys to obtain a trademark in Hong Kong both for the English and the Chinese name ("Tuotoning") of Rubesal. As to the Chinese name, the attorneys were provided with AMC's Chinese characters for this purpose. An application for registration of the Tuotoning mark was lodged in Hong Kong on 26 June 1999. It is Mr Blake's evidence that Hamilton intended as well to register the Chinese character name for Fuyunhon. The Tuotoning application was unsuccessful, the Examiner indicating that mark was directly descriptive of the goods in question. This rejection occurred on 10 December 1999, but apparently was not conveyed to Dr Ovcharenko until 1 March 2000. I simply note that Mr Blake did not inform Dr Keung of the application or of its outcome. Dr Ovcharenko's covering email to Dr Keung in response to his 7 June comments is curious. It indicated that several changes had been made to the draft agreement "in accordance to your remarks for you to confirm as requested". The response to cl 31 related only to cl 31.3 (the no compensation clause). It said: "We cannot agree to change this. ) In fact the Chinese names on most of the products of Hamilton are our company name ever since we start trading with Hamilton. We acknowledge that all the trademarks in Schedule 3 are the intellectual property of Hamilton and will not make use of them in case Medic-care ceases to be the representative of Hamilton. It now made no reference to the Chinese tradenames and dealt directly with the compensation issue. As with cl 23.3, this comment was followed by Hamilton's 29 June comment on cl 31.3: "We cannot agree to change this. " Having received no response to his comments, Dr Keung asked Dr Cheng of AMC to follow up the matter with Dr Ovcharenko on 28 July 1999. A reply from Dr Ovcharenko was received the same day. It noted (inter alia) that the Distribution Agreement was with Mr Blake and he (Mr Cheng) would be contacted shortly. Now occurred a sequence of events that allegedly have considerable importance in this matter in relation both to Dr Keung's credit and to the Chinese trademarks. On 29 July 1999 Dr Ovcharenko sent an email to Dr Keung. The one was described as "Email 29.07.09 Dr Keung.doc", the other was the Distribution Agreement. It is Dr Ovcharenko's evidence that the 29 July letter referred to in the email also was signed by him and posted to AMC. Dr Keung's affidavit evidence is that the Distribution Agreement was the only attachment to the email sent to him. He also said he first saw a copy of the 29 July letter in August 2006. It was provided to him by his solicitors and it was unsigned. His evidence about receipt of the email was that he was in China at the time and that he opened the version of the Distribution Agreement in his hotel's business centre. He returned to Hong Kong on about 5 August. The 29 July letter was substantially composed by Dr Ovcharenko for comment by Mr Blake. As sent it was to be signed by Dr Ovcharenko (and it reads as such). In its final form the letter, which is curiously oblique, stated, insofar as presently relevant: Rules and regulations on the Chinese Trade Name. In both cases the trade name of the pharmaceutical product is considered the property of Janssen-Cilag. While studying the Hong Kong pharmaceutical market, I have discovered that the majority of sellers in pharmacies do not know the English name of Rubesal, and I suspect it is unknown to the majority of buyers. Therefore, if say, Australian MedicCare were to sell the Chinese tradename Rubesal to some company X, then our distributor's agreement would not be infringed, as Australian MedicCare would have sold only its intellectual property, which is not discussed in the Distributor's agreement (and not the actual pharmaceutical). Hence the Distributor's rights are protected here. (Emphasis added. Dr Keung's evidence on the letter itself was that since it was so "striking ... the content, if I've seen it I must have read it at least a few times ... and then replied to Hamilton ... I won't just remain silent. " These responses, I would interpolate, are quite consistent with the behaviour demonstrated by Dr Keung from the advent of Dr Ovcharenko. I would comment in passing that the paragraph of the 29 July letter which I have highlighted probably provides the explanation for Hamilton's covert attempt to obtain trademark registration in Hong Kong of the Chinese character name for Tuotoning which was used on the Rubesal packaging. The Distribution Agreement sent by Dr Ovcharenko on 29 July set out cl 23 in its final form without making any comment and without including cl 23.3 from Dr Keung's 16 July draft to Hamilton. The proposed cl 31.3 in turn was no longer of any present relevance. Dr Keung's evidence of his response to the draft was that he was not necessarily intending a cl 23.3 because cl 23 was concerned with the English marks; as long as Schedule 3 remained unchanged, there was no deadlock between AMC and Hamilton. The agreement related only to the English trademarks. He claimed that the cl 23.3 was automatically formatted as it was by his word processing system. I am asked by Hamilton to reject all of this as a deliberate lie and to find that the cl 23.3 was in fact intended to be a clause in the Distribution Agreement. To complete the matter of contract negotiation insofar as presently relevant, Dr Keung sent an email to Dr Ovcharenko on 11 August 1999 which said that there should be "no problem for us to sign your final version of the Distribution Agreement". It was likewise in the negotiation period that AMC sought to, and finally did, secure registration of the Fuyonhon mark, albeit it after it inserted the Chinese characters for "Australian" before the word mark. It subsequently registered the Chinese characters for "Australian Tuotoning". Dr Keung's evidence is that in June 1999 he instructed his accountant, Simon Lui, to make an application for registration of the Fuyunhon trademark. However, in AMC's reply it had been pleaded that the instruction had been given to "AMC's trademark attorneys". Dr Keung's evidence in explanation of this discrepancy was unconvincing but, contrary to Hamilton's submission, I do not consider that it throws light on the question whether Dr Keung in fact received the 29 July letter. On 11 August the trademark application was lodged in Hong Kong. It was registered on 16 May 2000 with a priority date of 11 August 1999. He said it was coincidence that the application was lodged when it was. He had told his accountant to file it a long time ago. He did not tell Hamilton until August 2002 that he had registered the mark but this was not a deliberate delay. Hamilton should have known "it was ours" --- "It's our trademark all along. Hamilton having informed Dr Keung that it had supplied Urederm with Chinese characters to other customers, Dr Keung sent a facsimile to Mr Blake on 9 August 2002 indicating he "never dreamt" it would have so sold Urederm because AMC owned "the trade mark". Mr Blake countered that it was his understanding that the Chinese lettering on the labelling for use in Hong Kong was a translation of the English wording originally approved as part of the registration process. He added he was not aware that AMC had included any material on the products that it considered was its trade mark. I explained the meaning of our logo to Brian, Fred, Dimitri and you in a few of our meetings in the past twelve years. The fact that we have also trade-marked our name and logo in Hong Kong is outside the scope of our two companies' contractual contents. Our trade-marking effort does not negate, alter or, in any way, release us from our two companies' contracts. The correct thing for Hamilton to do is not selling to third parties any products bearing our company's legal name and logo, not in Hong Kong, not in UAE and not even in Australia. A Distributor is distributing the product of the Supplier. No trade marks or goodwill related to the products attaches to the Distributor. I am prepared to see if we can find a solution to this problem, but not under threat of legal action. However, there are several other matters I should note for the sake of completeness. First, as noted in the "General Chronology", Albert Chung of HMC reopened discussions with Hamilton with a view to replacing AMC as its Hong Kong distributor. A marketing plan HMC prepared and which was discussed with Hamilton in January 2003 acknowledged (i) the importance that AMC's Chinese Trade name had in marking out "the importance of the therapeutic effect" of Urederm, and in helping to create its popularity; (ii) that trade name was AMC's; and that if HMC was to take over the distribution of Hamilton's products, a new Chinese trade name would be needed. During the discussions with HMC, Mr Blake acknowledged there was an issue with AMC and the trademark. As the minutes recorded him saying: "Australian Medic-Care is taking control of our brand. " Secondly, consequent upon the emergence of the parallel importation issue and Dr Keung's allegations against Hamilton, the dimensions of Dr Keung's claims to intellectual property rights associated with the distributorship became apparent. However, Hamilton should not sell any products bearing this logo and my copyright to any third parties unless prior approval has been obtained from AMC and the quantities delivered to them as well as their destination reported to AMC. Hamilton will be held responsible to safeguard that parallel importation cannot exist. In cross-examination he said that at each instance "the communication" was oral although that is hardly the sense in which the term is used in each email. While the statements made in these emails may well be untrue, I do not consider they have any bearing on the question to be determined by me. Nonetheless, I do think they bespeak, albeit in an improper way, the grievance felt by Dr Keung about Hamilton's claims to the marks. The representations were made orally by Dr Keung on behalf of AMC during meetings with Hamilton representatives and in the course of telephone conversations between 1990 and 1995. The fact of those meetings is common ground. (ii) The applicant expressly represented to Hamilton that Fuyunhon was simply "the Chinese name of Urederm ... because it is better for Mr Lock to understand". On the applicant's present case, that assertion is incorrect. That representation was repeated consistently. (iii) Dr Keung represented to Hamilton that the Chinese language translations were literal translations of Hamilton's English language product names and product descriptions. AMC expressly or by its conduct represented to Hamilton that the Chinese words incorporated in the Chinese language artwork were a direct Chinese language translation of the English words displayed on Hamilton's products. (iv) Dr Keung must have understood from his knowledge of the therapeutic goods scheme and other matters that Hamilton required him to perform a direct Chinese translation of the English language Hamilton product names and product descriptions when preparing the Chinese language artwork. (v) Dr Keung was aware that Hamilton was exposed to product liability claims in respect of its products, and deduced that it carried product liability insurance. Because Hamilton had this exposure, it expressly reserved the right to approve all artwork and statements made on the artwork which was applied to its products. This reservation of rights was inconsistent with an assertion of rights in the artwork on the part of the applicant. (vi) The Court can infer that, in reliance on AMC's conduct, Hamilton used the Chinese language translations, believing them to be literal translations of Hamilton's English language product names and product descriptions on the packaging of Hamilton's products sold to AMC pursuant to the Distribution Agreement. The Court can, in addition, infer that Hamilton permitted the applicant to put (and assisted the applicant in putting) the Chinese language trade names on its products not knowing that the applicant intended to assert, or was entitled to assert, proprietary rights in those names. Finally, the Court can infer that Hamilton relied, and reasonably relied, on AMC to perform a literal Chinese language translation of Hamilton's English language product names and product descriptions and to otherwise deal with Hamilton's intellectual property on behalf of Hamilton strictly for purposes authorized by Hamilton (pleaded at paragraph 17.5.2 of the Further Amended Defence). (vii) The applicant must have appreciated between 1990 and March 2000 that Hamilton asserted, or believed that it was entitled to, ownership of the Chinese language translations of Hamilton's English language product names and product descriptions. The applicant should have disclosed its true intentions to Hamilton no later than 9 March 2000. (viii) The representations induced, and were calculated to induce, certain conduct on the part of Hamilton. Specifically, they were intended to induce Hamilton to give its permission to the addition of Chinese language characters, and the Chinese language product indications, on Hamilton packaging and on Hamilton products, before they left Hamilton's premises in Australia. (ix) Hamilton was misled and deceived. Hamilton clearly was not aware of the applicant's true intentions, as they have now emerged. Hamilton authorised AMC to perform the Chinese language translation on the strict understanding that AMC would perform a literal Chinese translation of the English language product name and product description for each product. By way of preface, I should indicate that, as AMC has claimed both ownership of the Chinese character marks and copyright in the Hong Kong packaging, Hamilton's s 52 case makes allegations of contravening conduct in relation to both of these matters. The relief it seeks in relation to its cross-claim under s 87 of the TP Act relates only to the trademarks. For this reason my consideration of Hamilton's claim will focus primarily on the allegation of misleading or deceptive conduct in relation to the marks. AMC's copyright claim in relation to the packaging and Hamilton's defence to it will be considered separately below. My own view of Hamilton's s 52 case can be stated relatively shortly. That case requires the finding of facts which I consider mischaracterise significant aspects of the context, dealings and exchanges of Dr Keung and Mr Blake and other Hamilton officers; it necessitates the drawing of inferences which I consider to be inappropriate or unavailable in the circumstances; and it is founded upon an all but blanket rejection of Dr Keung's evidence for reasons of credit. While I accept, that objection properly can be taken to particular aspects of Dr Keung's evidence in this matter, my criticisms of him do not warrant, and the character of the totality of his evidence neither permits nor justifies, the general rejection of his evidence (save where it has compelling independent corroboration). Dr Keung may, on occasion, have been less than truthful. He was not invariably and systematically so. In relation to the trademark aspect of this proceeding in particular, I have in the main accepted his evidence. The 29 March 1990 meeting of Dr Keung with Mr Blake and Mr Lock in Adelaide is of critical significance to a proper understanding of the "trademark" issue. But that meeting itself needs to be put into context. Over the two years which preceded it, Dr Keung had established there were the makings of a market for Urederm in Hong Kong; had achieved significant sales of the product; had experimented with Chinese character brand names for Urederm and had settled upon the Fuyunhon name; had developed simplified, Chinese character, product indications which were put on Hamilton's products with stickers; and had, from early 1990, engaged in advertising and other promotional activities for Urederm: see "General Chronology" [36]-[46]. Throughout this period he was in no formal relationship with Hamilton, other than that of an occasional purchaser for resale. It was against that background that in early 1990 Dr Keung wished to explore the possibility of a long term relationship with Hamilton and this led to the 29 March meeting. I am satisfied that, in presently crucial respects, the events at that meeting were such as described by Dr Keung in his evidence. The meeting itself was one at which Dr Keung had every incentive to cast himself in a favourable light as an innovative marketer who had an ability to use Chinese characters to sell products. He was given the opportunity to do so. I find he was questioned about his success in selling Hamilton products and the bases of it. I equally am satisfied he gave a fulsome account by way of response. This included an explanation both of his use of the Fuyunhon name and of its meaning; the use of the simplified Chinese character product indications which were attached with stickers to Hamilton's products; and of his advertising materials, copies of which were provided at the meeting. Mr Blake's evidence in cross-examination tends to confirm aspects of this as did Mr Lock's 10 April 1990 letter to Dr Choi. Further, I consider that the possibility that Dr Keung would have engaged in what can only be described as elaborate deception of Mr Blake and Mr Lock at this stage, is quite remote. I equally am satisfied that Mr Blake was aware of, and happily acquiesced in, Dr Keung's development of "more consumer orientated indications" and that, having been told its meaning, he did not demur in any way to the use of the Fuyunhon character on Hamilton products. I infer that Mr Blake was more than willing to embrace the opportunity Dr Keung and his methods presented to Hamilton. It is unlikely that Mr Blake at that time considered what might be the practical consequence of this over time. It was well understood at the meeting that Dr Keung's distributorship was to be directed at the Chinese reading community and that that necessitated the use of Chinese characters on Hamilton's products and packaging. What did not occur at that meeting or thereafter was that AMC was authorised to perform Chinese language translation on the strict understanding that it would perform a literal Chinese translation of the English language product name and product description for each product. Mr Blake and Mr Lock were made aware at the 29 March meeting both that the Fuyunhon character was not a Chinese translation of Urederm, and that the Chinese character product indications were Dr Keung's own creations. It was understood thereafter that the English language and Chinese language product indications should match in translation, but as subsequent practice more often than not indicated, it was the English language which Dr Keung matched with the Chinese and not vice versa. As with the "consumer orientated indications" discussed at the 29 March meeting, Hamilton was aware of this and both acquiesced in it and, on occasion, cooperated with Dr Keung subject to two provisos next to be noted. As the 29 March meeting minutes exemplify, Dr Keung was ordinarily expected to develop the bi-lingual "product box" and artwork for Hamilton product (see eg the facsimile of 20 May 1992 and the reply to it at [478] above) though there clearly was intended to be varying levels of cooperative participation by Hamilton in this, as the Econozole Shampoo "project" demonstrated. Nonetheless, there were two well understood constraints upon the latitude given Dr Keung. These were, first, the need for the two language versions of the product descriptions to match for the purposes of certification under the Australian Therapeutic Goods Administration scheme; and, secondly, the right Hamilton retained to approve all artwork and statements made on it because of its exposure to product liability. Both of these constraints were reflected in cl 21.1 of the Distribution Agreement. Nothing which transpired between the 29 March 1990 meeting and Dr Ovcharenko's visit to Hong Kong in March 1999 indicates any significant overt change in the respective understandings of the parties concerning the Chinese character names. Rather there is evidence which I consider is confirmatory of Dr Keung's explanations at that meeting. Mr Blake was made aware by Mr Koerner in the early 1990's that Hamilton products in Hong Kong were known by their Chinese, not English names. Mr Koerner had visited Hong Kong in 1993 and met and dined with Dr Keung on several occasions. Dr Keung's evidence, which I accept, is that he told Mr Koerner then by reference to his advertising materials the meaning of most of the characters in the Fuyunhon mark. I should also emphasise that the mark as it appeared on Hamilton products was both stylised and prominent. Mr Koerner, who was a director of Hamilton at the time and whose knowledge for present purposes was Hamilton's knowledge, was not called by Hamilton to give evidence. I would also reiterate that, contrary to what Mr Blake said in his affidavit, both he and Mr Koerner approved AMC's use of its name on the packaging of Hamilton products and the deletion of Hamilton's name on the understanding "that Hamilton retains the right to the tradename UREDERM": facsimile of 27 September 1994 from Koerner to Keung. Dr Keung on some number of occasions referred to the "Chinese name of Urederm" or, rarely, of other products (eg Stingose) in communications with Hamilton officers. Hamilton places no little reliance upon this usage. Considered in context and against the background I have described, I consider that, far from involving misleading or deceptive conduct, this usage reflected no more than an obvious device for referring to Hamilton products by reference to the Fuyunhon mark that appeared prominently on them. That association might have provided reason for pause for other reasons but, in the context of what was then a cordial, cooperative and deepening relationship, it did not do so. Given their knowledge of the true state of affairs about the meaning of Fuyunhon, none of Mr Blake, Mr Koerner or Mr Lock could have been induced into error by Dr Keung's shorthand language. It is, in consequence, unsurprising that there was no questioning in response from Hamilton when Mr Lock was informed by Dr Keung on 5 September 1993 that he had been asked by three companies that imported 10% urea cream into Hong Kong "to sell the Chinese name of Urederm to them". Even in HK this belongs to Hamilton even if you did not trademark it. We sell your products only. We have no other intention apart from increasing sales through promotion. We do not reap the effort of other people by any means. Credibility is very important to me. This email in my view is clearly referring to the trademark of this word. The comment "even if you did not trademark it" has to be understood accordingly. I should indicate as well that I attribute no material significance to the varying ways in which Dr Keung referred to the ownership of intellectual property in his sub-distributorship agreements with Dr Chung's HMC companies. The point at which the parties' relationship underwent significant change, as I earlier indicated, was when Dr Ovcharenko took over Hamilton's managing of the AMC relationship and Mr Blake's involvement in that was, seemingly, heightened. A cordial, relational contract was transformed quickly into a distrustful, formal one. I have referred on a number of occasions to the observation of Dr Ovcharenko in his Business Report to Mr Blake of late March 1999 to the effect that Hamilton's products were not well known in Hong Kong by their English names and that the "Chinese names" were totally different in pronunciation and meaning and were based on a "play-on-words" well received by the Chinese population. While the full significance of that state of affairs may not have been apparent to Dr Ovcharenko at the time of the Report --- I express no view on that --- it clearly became so when he received Dr Keung's 7 June 1999 comments on what became cl 23 and cl 31. Dr Keung's comment in parenthesis after cl 23.2 was: "(This Chinese Trade Mark & Tradename on the product box is the property of Distributor)". A substantially similar comment opened the comment on cl 31. By 11 June Hamilton had instructed its patent attorney to obtain trade marks in Hong Kong for Rubesal and for AMC's Chinese character name for Tuotoning. To put it shortly, Hamilton was trying to steal a march on AMC. It failed in that endeavour. However, the concern it now entertained found expression (albeit confusedly) in Dr Ovcharenko's email letter of 29 July 1999 to Dr Keung: see below. While Dr Keung later successfully obtained registration of marks incorporating the Tuotoning and Fuyunhon characters, it is quite clear that on 7 June he was again asserting that at least as between Hamilton and AMC those characters belonged to AMC. I would add they could properly be so described from before the first letter of appointment in 1990 and Mr Blake and Mr Lock ought reasonably have appreciated as much at the 29 March 1990 meeting. There was considerable cross-examination by both sides relating to whether what I will call the Fuyunhon and Tuotoning marks were "product names", "brand names", "trade names" or "trademarks". I have not found this to be of particular help in the matter. Whatever their precise legal status in Hong Kong prior to their registration as trademarks --- a matter on which there is no evidence before me --- there is in my view no room for doubt that they were, and as between the parties were known to be, Dr Keung's creations. As I have found, he explained their meaning to Mr Blake, Mr Koerner and Mr Lock. Mr Black and Mr Koerner were well aware that they provided the names by which Hamilton's products were promoted and known in Hong Kong and that those names were not translations of Urederm and Rubesal. They acquiesced in this state of affairs. Mr Koerner, as I have indicated, did not give evidence. If it be the case --- and I consider it likely --- that Mr Blake's knowledge and appreciation of the above matters had passed from memory and was later replaced with a quite different attitude and understanding more favourable to Hamilton's interest, this can be of no avail to Hamilton. Whatever had by 1999 (or, more probably, by some later date) induced Hamilton's alleged errors or misconceptions about the marks and the process of translation to be followed, AMC bore no responsibility for it. These conclusions, together with my findings in relation to the manner in which the English and Chinese translations of the product indications/descriptions were matched by Dr Keung are sufficient to dispose of Hamilton's pleaded claim of misleading or deceptive conduct. I consider it appropriate, though, to add the following observations given the attention that has been devoted in this matter to the negotiations leading to cl 23, to the 29 July 1999 letter; and to the lodging of a trademark registration application for Fuyunhon on behalf of AMC on 11 August 1999. Whatever their legal status in Hong Kong when Dr Keung made his 7 June 1999 comments (no trademark application had by then been made by Dr Keung), Hamilton had been put on notice of Dr Keung's claim to the Fuyunhon and Tuotoning marks. Hamilton was in no position to add these names to its Schedule 3. They were not its trademarks. Equally it had no existing contractual rights with which to counter AMC's claims. Without warning to Dr Keung, Hamilton sought to take advantage of him and of a state of affairs it had acquiesced in for over a decade. It sought registration of the Chinese character Tuotoning mark. Whether its conduct would have been actionable if it had succeeded in obtaining registration is not a matter on which I need express a view. I would note, though, that contract law's implied duty of good faith and fair dealing tends to have its greatest salience in sanctioning opportunistic behaviour in long term, relational contracts. I do not consider that the exchanges between the parties in relation to the various drafts of what became cl 23 and cl 31 of the Distribution Agreement are of particular present significance save for putting Hamilton clearly on notice of AMC's claimed entitlement to the two marks. Dr Keung's explanation may be thought unconvincing as to why his 7 June 1999 comment on cl 23 was prefaced with the numbering [23.3], the words he added, it should be noted, were in parenthesis in any event. Hamilton's later comment, "We can't agree to deleting this" etc while seemingly a response to cl 23.3 was, on analysis of the sequence of drafts, clearly related to changing cl 23.2 (which is not presently relevant). It can be disregarded. Dr Keung's 16 July 1999 comment after cl 23.2 is, in my view, revealing. ) In fact the Chinese names on most of the products of Hamilton are our company name ever since we start trading with Hamilton. We acknowledge that all the trademarks in Schedule 3 are the intellectual property of Hamilton and will not make use of them in case Medic-care ceases to be the representative of Hamilton. I should add, though, that I am not satisfied that Dr Keung actually was prepared to press the first sentence of the above quotation as a sub-clause. His evidence was that he was not necessarily intending a cl 23.2. My own view is that while he would have welcomed its inclusion, he would not object to its rejection. The third sentence contained AMC's safe haven as Dr Keung well appreciated. The 29 July 1999 email letter (which Hamilton claims was sent as an attachment with the draft Distribution Agreement of that date) is oblique and confusing. It clearly conveys a rejection of any proposed clause in the Distribution Agreement which would admit, or acknowledge AMC's ownership of "Chinese tradenames" used for Hamilton products. However, it does not expressly deny AMC's claimed entitlement to those tradenames. It refers to the agreements of international pharmaceutical companies and, inferentially, to what they provide in relation to products being sold under a new name in an importer country. However, no positive proposal is advanced in the letter for a provision which would put Hamilton in the same position as the international pharmaceutical companies to which reference is made. If a present entitlement to AMC's marks was being claimed here even absent some express provision to that effect, it was quite oblique to say the least. While studying the Hong Kong pharmaceutical market, I have discovered that the majority of sellers in pharmacies do not know the English name of Rubesal, and I suspect it is unknown to the majority of buyers. Therefore, if say, Australian MedicCare were to sell the Chinese tradename Rubesal to some company X, then our distributor's agreement would not be infringed, as Australian MedicCare would have sold only its intellectual property, which is not discussed in the Distributor's agreement (and not the actual pharmaceutical). (Emphasis added. But, contrarily, it could be read as describing the then status quo as asserted by AMC --- hence the possible significance of the first highlighted clause. Or it could be read as an assertion by Hamilton to "ownership" of the rights to the Chinese name Rubesal --- hence the second of the highlighted sentences. Of course what the email does not do is reveal Hamilton's outstanding trademark application for that very tradename. Despite what Hamilton in its submissions says the letter made clear to Dr Keung (beyond rejecting the proposed cl 23.3), the letter itself is confused and confusing and made the more so in light of Dr Keung's clear appreciation of the significance of Schedule 3 when he made his 16 July comments on cl 23.3. Dr Keung accepted there would be no cl 23.3 in the Agreement as his acquiescence in the form cl 23 took in the 29 July draft --- an acquiescence confirmed in his email to Dr Ovcharenko of 11 August 1999. That acceptance cannot be tortured into an agreement at the time that he had no rights to the Chinese marks or that Hamilton did. That was left as a matter untouched by the proposed agreement. What can be said of the email, though, is that if it had been received by Dr Keung it would, I consider, have alarmed him as to the security of his claimed entitlements to the marks. This brings me to the much agitated question of whether Dr Keung received and/or read the 29 July letter said to be an attachment to the email of that date, and the hard copy version of it said to have been posted to him. I would have to say that, despite Hamilton's submissions on this issue, I do not attribute to the email letter the significance Hamilton ascribes it --- save possibly in relation to the issue of Dr Keung's credit. Dr Keung's evidence is that he did not receive the hard copy letter. Equally, he says that while he received an email of 29 July 1999 the draft distribution agreement alone was attached to it; there was no attached letter notwithstanding, I would note, that the email listed and referred to two attachments. It is unnecessary for me to determine whether either form of the letter (or both) was in fact received by Dr Keung. If a version was received, then Dr Keung gave untrue evidence on this matter. As I earlier indicated that would not be the only instance when such occurred. I would say, though, that by this time Dr Keung's loss of confidence in Dr Ovcharenko was increasing and receipt of the email/letter would have compounded this. While I would not in any way condone his resort to untruth (if such was the case), I consider explicable his taking steps to protect and retain that which he considered belonged to AMC. Receipt of the email letter or the hard copy would have alerted Dr Keung to the vulnerability of his claim to the marks and, I consider, would probably have been the catalyst to his then applying to have the Fuyunhon character mark registered. While that action would have been a step in consolidating his position in relation to the mark, his claimed entitlement vis-à-vis Hamilton remained unchanged. Far from engaging in deceptive conduct he would, unknowingly, have been protecting AMC from Hamilton's opportunistic behaviour. If misleading or deceptive conduct was being engaged in the circumstances, it would have been by Hamilton. I would add that Hamilton submits that the 29 July letter called for an answer: "Silence in the face of it was inappropriate. " While silence may have been an uncharacteristic response from Dr Keung (assuming he received it), he was neither obliged to reply, nor as I earlier noted, could he be taken as having acquiesced in what the letter said beyond the rejection of a cl 23.3. If Hamilton engaged in self-deception because of Dr Keung's silence, he cannot be held responsible for that. In any event, Hamilton was prosecuting its own strategy to protect its own interests, a strategy which failed when its trademark registration application was refused. I earlier indicated that I would not permit Hamilton to prosecute its unpleaded s 52 claim relating to Dr Keung's non-disclosure of his application for registration of the Fuyunhon mark. Though my reasons above are skeletal, they indicate in short form why I consider that claim would have failed. I should add for the sake of completeness that, given the provenance and use made of the Chinese character marks from 1989, the present would in any event be an inappropriate one for the making of a transfer order of them to Hamilton under s 87 of the TP Act, even if Hamilton, contrary to my view, could have achieved some measure of success on its unpleaded case. I reject Hamilton's TP Act claim. (Emphasis added. For ease in exposition, I will refer to them collectively as "the AMC Packaging" although it will on occasion be necessary to differentiate between the two. Two matters should be emphasised at the outset. First the AMC packaging for any given product consisted of an exterior, usually box, component and a separate, usually tube, component. The AMC Packaging was for the most part, but was not exclusively, confined to the box component. Some tubes carried material in which copyright is claimed. Secondly, the complete packaging for products that used the AMC Packaging itself had two components. These were (i) at least some elements of the AMP Packaging and, (ii) in major part, the packaging and artwork Hamilton employed for its products. Thirdly, no copyright claim has been made in respect of the English language product indications of Rubesal, though sales of Rubesal are otherwise a subject of complaint in the other causes of action noted below. It was the copyright owner. In selling product (a) to Crafers, (b) to Pharmalines (in the United Arab Emirates) and (c) otherwise in Australia using the Hong Kong Packaging and/or the English language product indications of Urederm, Hamilton both infringed AMC's copyright ( Copyright Act 1968 (Cth), s 36(1)) and was guilty of conversion in relation to the infringing copies sold (Copyright Act, s 116). It will be necessary to deal with these separately below. These claims were for breach of contract (FASC paras 39-40), two distinct contraventions of s 52 and s 53 of the TP Act (paras 41-44; paras 45-48) and for passing off (paras 49-56). The process he employed in relation to product indications reflected that which I described when dealing with the trade mark claim above. Within the constraints that (a) the two language versions of the product indications needed to match (a TGA scheme requirement); (b) Hamilton retained the right to approve all statements made on the packaging because of its exposure to product liability; and (c) the product indications were contrived by the nature of the product manufactured by Hamilton, Dr Keung exercised the authorial freedom and responsibility to develop the "more consumer oriented indications" he was afforded at the 29 March 1990 meeting. As I have already found he had by then developed his Fuyunhon and Tuotoning marks, the meaning of the former at least being explained at that meeting. Indicative of the evolution in the product indications he inherited from Hamilton and then recast were those for Urederm. The 1992 indications reflected the conditions and the markets Dr Keung had in mind in marketing Urederm. In Hong Kong, it is a common skin problem to the great concern among the female. Before that, skin lotion seemed to be the only choice but not a right agent. It was the first urea cream to concentrate at this market niche, through the direct approach to the end users, not from the effect of doctor's prescriptions. Then came the Chinese trade name, has marked out the importance of the therapeutic effect, helped to create popularity through the media propaganda. Prior to the issue of parallel importation this seems not to have been a matter of conscious attention by the parties. It is important to emphasise Mr Blake's understanding of the copyright question. a territory subject of a distribution agreement between Hamilton and one of its distributors) or, alternatively, so long as Hamilton did not grant rights to that customer to sell the Hamilton products into an exclusive distribution territory. The assignment extended to Dr Keung's rights "to sue for all past infringements of copyright in the works and to retain all damages and costs awarded". Though the tender of the assignment was a late one, I have admitted it over Hamilton's objection. It is claimed that Dr Keung was a director of AMC and designed and created the respective works on behalf of and for the benefit of AMC and/or its predecessors. AMC, as earlier noted, was incorporated on 21 December 1990. AMC's copyright in the English language product indications for Urederm was said to subsist by virtue of their first publication in Australia. Hamilton's defence in substance reflects its defence to the trademark claim and, in particular, that AMC was only authorised to perform literal translations into Chinese characters of Hamilton's English language product name and product indications. It goes on to assert that the Chinese language artwork was a direct translation of copyright work owned by Hamilton or, else if it went beyond a literal translation it was, and "improvement or adaptation" of the "Products" for the purposes of cl 30.2 of the Distribution Agreement and so belonged to Hamilton. It admits that copyright subsists in the English language product indications for Urederm by virtue of their first publication in Australia. It generally denies AMC's claim, but proposes cascading possibilities of ownership of either or both of the Hong Kong packaging and the English language product indications. These possibilities, seen in the context of Hamilton's defence, assert, first, that Hamilton is the owner because the translations were literal translations or else were improvements for adaptations of "Products" for the purposes of cl 30.2 of the Distribution Agreement: see FAD paras 25.5, 26.2 and 31.4. Clause 30.2 provides that any improvement or adaptation of Products made or discovered by Distributor (whether or not patentable) is the property of the Supplier. "Products" in turn are defined to mean products defined in Schedule 2. That schedule identifies the various products the subject of the Distribution Agreement. Again I emphasise that the case has not been pleaded by any party on the basis that there was a joint venture in which, for some purposes at least, they agreed to advance their mutual as distinct from their several interests: cf Gibson Motorsport Merchandise at [11]-[16]. The third possibility --- ie Dr Keung is the owner: FAD para 32.4 --- is considered below: see "Consideration". Hamilton has pleaded that AMC was in a fiduciary relationship with Hamilton in virtue (a) of Dr Keung's authorisation to translate literally, his alleged representations and non-disclosures relating to the Chinese marks and literal translations and (b) of the trust and reliance placed on AMC by Hamilton and of its corresponding position of vulnerability: FAD para 17.5. Hamilton has gone on to plead that if intellectual property was created in the "Chinese Language Artwork" , AMC holds that on constructive trust for Hamilton: FAD para 28.4. I would emphasise that this claim is limited to the Chinese Language Artwork and does not extend to the English language product indications. A like claim to the trademarks was abandoned prior to final submissions. The written submissions on the above fiduciary relationship and consequential constructive trust claim are slight to the point of being perfunctory. First , subject to the question whether the Chinese language product name and product indications are simply direct translations from the English language name and indications, it appears to be conceded that the Hong Kong Packaging and English language product indications for Urederm were original artistic and/or literary works for the purposes of s 32(2) of the Copyright Act . This acceptance reflects, as I will indicate, my own view of the matter. Secondly , it is conceded that as the Hong Kong packaging was first published in Hong Kong and as Hong Kong is a member of the World Trade Organisation, the provisions of the Copyright Act apply to the Hong Kong Packaging as though it were an Australian work: see regs 4(1) of the Copyright (International Protection) Regulations 1969 (Cth); see also reg 4(3) which is also relied upon in relation to Dr Keung as a citizen of Hong Kong. Thirdly , it is also conceded that copyright subsists in the English language product indications for Urederm by virtue of their first publication in Australia: FAD para 30.7. It equally is clear in relation to the English language indications used after 1992 for Urederm, that the process of translation was from Chinese to English and not vice versa. I have referred on a number of occasions to the latitude given Dr Keung in developing "consumer orientated product indications" in Chinese characters. I am satisfied that the Chinese Language product indications were an original literary work. While they consisted essentially of sequentially listed indications in a literary form, obvious skill, judgment and some research were employed in the choices made of some number of the Chinese characters used. The language of science was supplemented with that of popular communication. The compilation had the requisite degree of "originality": see generally, Ricketson, The Law of Intellectual Property: Copyright, Designs and Confidential Information , [7.40] ff; Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465. The English language indications are far from a "slavish copy" of Hamilton's initial indications: cf Interlego AG v Croner Trading Pty Ltd [1992] FCA 624 ; (1992) 25 IPR 65 at 96-97. Dr Keung clearly was the author of what I have collectively called the AMC Packaging. It is not necessary for me to enter upon whether such works as he may have produced prior to AMC's formation in December 1990 were held on trust for a company to be formed: cf A-One Accessory Imports Pty Ltd v Off Road Imports Pty Ltd (1996) 65 FCR 478 at 491-2. I simply note there is no evidence to this effect. I likewise have no evidence of his having a contract of service with AMC after December 1990 pursuant to which the AMC Packaging was created: cf Copyright Act , s 35(6). However, I am satisfied that works presently in issue relating to packaging for Urederm were created after 1990. It is, for example, Dr Keung's evidence that the real departures in the Urederm product indications were only implemented in 1992. Importantly, I am not prepared to infer that in creating the works, Dr Keung did so as trustee for AMC. There is no documentary evidence corroborating any declaration of trust. There is, in contrast, documentary evidence prior to the October 2006 assignment of the Urederm copyright works in which Dr Keung clearly asserted his own copyright. However, Hamilton should not sell any products bearing this logo and my copyright to any third parties unless prior approval has been obtained from AMC. (Emphasis added. Subclause 30.2 of the Distribution agreement dealing with any improvement or adaptation of "Products" is of no avail to Hamilton. Construed in its context, what the subclause deemed to be the property of Hamilton was any adaptation or improvement of the particular commodities (Urederm, Rubesal, etc) that were the subjects of the Distribution Agreement. I equally am not satisfied that Hamilton is entitled to assert beneficial ownership of the AMC Packaging in consequence of any breach of fiduciary duty owed it by AMC . To analyse this matter in any depth would require a disproportionately lengthy treatment of the relevant law, the more so because the alleged fiduciary is not Dr Keung. AMC has not addressed the issue at all. Hamilton has made no cross-claim in relation to the copyright works. AMC agreed to act for Hamilton's benefit in revising the form of the packaging. It would be inequitable and against good conscience for the Dr Keung to assert ownership of the copyright against the respondent: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 ; (2001) 208 CLR 199 at [102] . Given all the surrounding circumstances, Hamilton could reasonably have expected that Dr Keung would act in Hamilton's best interests with respect to the alterations to the packaging. Hamilton placed its trust and confidence in Dr Keung: Bulun Bulun and Another v R&T Textiles Pty Ltd (1998) 86 FCR 244 at 261 per von Doussa J. In the alternative, AMC was to act only for Hamilton's and AMC's mutual advantage: Bulun Bulun and Another . It was open to Hamilton and AMC to cast their contractual relationship in a way which could, for certain purposes at least, have obliged AMC to act in Hamilton's interests alone or, distinctly, in their joint interests: cf Gibson Motorsport Merchandise at [7]-[16]. They chose to formalise their relationship as one of supplier and distributor, a type of relationship which characteristically is designed, subject to contractual limitations, to serve the several interests of the participants: see Hospital Products Ltd v United States Surgical Corporation ; Rickel v Schwinn Bicycle Co . The Distribution Agreement, and the parties conduct under in it in relation to the packaging was quite characteristic of this. Dr Keung was permitted to serve AMC's interests in selling products it acquired from Hamilton, by utilising artwork and language which he considered would facilitate the sale of those products in the area of the Agreement, so furthering AMC's own interests. Hamilton, in turn, would thereby have its own interests served to the extent that enhanced sales by AMC would be likely to lead to enhanced orders from Hamilton. While AMC was given latitude in the language so used, Hamilton in turn was able to protect its own interests in this matter. It retained for itself a right to approve all statements made on the packaging because of its exposure to product liability and it insisted that the two language versions had to match (to comply with requirements of the TGA scheme). There was nothing fiduciary in this arrangement though it doubtless required elements of trust, cooperation and reliance by the parties if it was to work effectively. But these element of themselves did not turn a non-fiduciary contractual relationship into a fiduciary and personal one outside of, and potentially inconsistent with, the contract itself: cf Gibson Motorsport Merchandise at [11]. The parties were so circumstances by their contract and in their relationship in consequence of it, that Hamilton had no entitlement reasonably to expect that AMC would act in Hamilton's interests to the exclusion of AMC's own self interest in relation to the Hong Kong Packaging or the English Language product indications for Urederm: see News Ltd v Australian Rugby Football League Ltd [1996] FCA 1256 ; (1996) 64 FCR 410 at 538-541. Finally, Dr Keung was the original owner of the copyright works. If he had remained such, AMC's copyright claim would have had no foundation. However, some at least of the copyright works (ie those relating to Urederm created between 1992 and 1999) were assigned to AMC in October 2006. In respect of these AMC can maintain its copyright claims. For ease of exposition I will hereafter call the assigned material "the Urederm Labels". These I would note contain, amongst other things, both the English language and Chinese character versions of the product indications. AMC acknowledged, though, that since 1992 it authorised Hamilton to reproduce such labels for the purpose of packaging products to be supplied to AMC. As put in its submissions, AMC claims that each unauthorised sale Hamilton made of Urederm was a publication within s 31 of the Copyright Act . The sales to Crafers, Pharmalines and "[o]ther undisclosed persons in Australia were infringements". AMC also submits that Hamilton should be ordered to discover all of its records of Urederm "incorporating the product descriptions authored by Dr Keung and sold to third parties (ie not AMC)". Hamilton's response to the breach claim for present purposes is twofold. First, the pleaded breach is of "reproduction" of the Urederm Label without the licence of AMC, ie a contravention of s 36(1) of the Act, reproduction being an exclusive right comprised in the copyright: s 31(1)(a)(i). Hamilton contends that (i) there is no evidence that Hamilton itself reproduced the Labels, though there is slight evidence from which it could be inferred it "authorised" reproductions; (ii) AMC has neither particularised nor proved that any acts of reproduction that were done without its licence, ie its "permission" or "consent": Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 20 FCR 46 at 49; and (iii) if Hamilton was authorised to reproduce the labels for the purposes of packaging products to be supplied to AMC and did this, if it later sold those products to a third party, it would not have contravened s 36(1) by reproduction without licence. Secondly, it is contended that AMC should not be permitted to amend its case in final submissions to raise a breach of s 38 of the Copyright Act arising from the unauthorised sale of products. The premise of this contention (contrary to AMC's written submission) would seem to be that such a sale would not in the circumstances have been a "publication" --- ie a first publication in Australia: see Avel Pty Ltd v Multicoin Amusements Pty Ltd [1990] HCA 58 ; (1990) 171 CLR 88 at 93 --- for the purposes of s 31(1)(a)(ii) of the Act. AMC did not respond to Hamilton's submissions on breach of copyright in any of the above respects in its oral or written reply submissions. It has not established that any sale infringed its right of "first publication": cf Avel Pty Ltd , at 93. The claim, as Hamilton correctly suggests is for a contravention of s 38(1). I am satisfied that that claim would fail in any event. It is subject to the same vice as the "reproduction" claim. As to the claim of infringement by reproduction without licence, I agree in substance with Hamilton's submissions. The parties obviously did not turn their mind in any way collectively to the question of copyright in the Urederm labels or for that matter the packaging generally. It is reasonable to infer that Hamilton proceeded wrongly on the assumption that copyright in the packaging belonged to it. Be this as it may, the parties so conducted themselves in relation to Dr Keung's copyright as resulted in Hamilton in fact having Dr Keung's licence to reproduce the AMC packaging, oblivious though they may have been to this legal characterisation of the matter. The question whether or not permission or consent has been given to reproduction is an objective one. The scope of the licence so given by Dr Keung is a matter of inference. While it is the case that no express limitations on reproduction were conveyed to Hamilton prior to Hamilton's sales to Crafers and Pharmalines, I consider it improbable that Dr Keung could reasonably be said to have consented to reproduction other than for the purposes of their relationship, ie for sale to AMC. I find accordingly. AMC has not attempted to show when the offending reproductions without permission or consent occurred. The onus in this is on it: cf Nationwide News Pty Ltd v Copyright Agency Ltd [1995] FCA 1045 ; (1995) 55 FCR 271 at 288. The limited evidence that could be said to bear on this matter, does not suggest that the product sold otherwise than to AMC was produced for the purposes of such sales. On the contrary some such sales appear to have been drawn from stock made for AMC. It has not been suggested that Hamilton increased its production so as to accommodate the need to meet its AMC sales. In the circumstances I am in no position to find that when Hamilton reproduced the Urederm labels on its packaging it did so otherwise than in accordance with Dr Keung's licence. Its later conduct in effecting sales of such product may have been an actionable wrong to AMC. It was not the wrong pleaded against Hamilton. I reject AMC's breach of copyright claim. The claim, seemingly, is in respect of allegedly infringing copies of articles incorporating the Urederm labels. For present purposes it is only necessary for me to refer to s 116(1)(a). In light of my conclusion on the infringement claim that the making of Hamilton's reproduction of the Urederm labels on the products sold otherwise than to AMC did not constitute an infringement of the copyright, the s 116 claim must fail. It would appear that the s 116 claim had, in some unexplained way, spawned a common law claim for conversion. I need not delve further into that matter. It was abandoned in oral submissions. It is appropriate in this setting to refer to observations of the Full Federal Court in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] FCAFC 70 ; (2007) 159 FCR 397 at [98] - [99] which bring out the distinction between these two species of action: There is an overlap between causes of action arising under Pt V of the Trade Practices Act and the common law tort of passing off. However, the causes of action have distinct origins and the purposes and interests that both bodies of law primarily protect are contrasting. Passing off protects a right of property in business or goodwill whereas Pt V is concerned with consumer protection. Part V is not restricted by common law principles relating to passing off and provides wider protection than passing off. Whether or not there is a requirement for some exclusive reputation as an element in the common law tort of passing off, there is no such requirement in relation to Pt V of the Trade Practices Act . The question is not whether an applicant has shown a sufficient reputation in a particular get-up or name. The question is whether the use of the particular get-up or name by an alleged wrongdoer in relation to his product is likely to mislead or deceive persons familiar with the claimant's product to believe that the two products are associated, having regard to the state of the knowledge of consumers in Australia of the claimant's product. There are two claims made of contraventions of s 52 and s 53 of the Trade Practices Act . The first is that in the supply of the Products subject to the Distribution Agreement to Crafers for sale into the Hong Kong market, constituted a representation to Crafers that Hamilton was authorised to supply those Products for that purpose. It was not so authorised and the representation was false, hence it contravened s 52 and s 53(c) of the Act. Having rejected the parallel importation claim upon which this is premised, it too must fail at least as pleaded. The second is that the supply of Products bearing the Fuyunhon and Tuotoning trademarks to Crafers and Pharmalines in Hong Kong packaging, which products were subsequently resold in Hong Kong, constituted a representation that the Products were the products of AMC or, alternatively, that Hamilton had AMC's approval for such use of the trademarks. The Products were not the products of AMC and Hamilton did not have AMC's approval. Consequently, it is said, Hamilton engaged in conduct in contravention of s 52 and s 53(a) , (aa), (c) and (d) of the Act. In relation to both claims, it is said AMC suffered loss or damages which is particularised in identical terms to the copyright infringement claim to which I earlier referred. That loss and damage was suffered in Hong Kong. Damages are sought under s 82 and s 87 of the Act. Hamilton denies making the representations alleged. In relation to both of the claims the alleged representations were made in the supply of the Products to Crafers. I emphasise this because, in the "Passing Off" claim next to be considered, the misrepresentation is pleaded to be to Crafers and to "end-users of the Products". In its reply submissions AMC sought to extend its claims to representations made by Hamiltons "to the ultimate consumers of the products in Hong Kong". Even if I were to permit this extension to be made --- which I am not --- no attempt has been made to surmount the difficulties it would raise given that the claim would now extend to engaging in misleading or deceptive conduct in Hong Kong. I need only refer, by way of example, to s 5 of the Trade Practices Act . While s 5(1) extends the provisions of Part V of the Act to (inter alia) the engaging in conduct outside Australia by bodies corporate incorporated in Australia that extension is a qualified one. Equally, given that the alleged conduct engaged in Hong Kong would not have been that of Hamilton as such, no basis has been suggested for how Hamilton could have had liability for that conduct sheeted home to it under the Trade Practices Act . Neither s 75 nor s 84 have been invoked. In any event as I have indicated, Hamilton was not in any way complicit in the parallel importation of the products into Hong Kong. At no stage did it seek to address representations of any sort to the Hong Kong public. Such were not the end users users contemplated in the sale to Crafers. I turn to the allegation that Hamilton engaged in misleading or deceptive conduct in supplying Hamilton's own products to Crafers which products were in the Hong Kong packaging or which bore (inter alia) the Fuyunhon or Tuotoning trade marks. I note in passing that the priority date in Hong Kong of the second of these was after the sales to Crafers, ie 8 October 2002. There is a short answer to the claim. The alleged representations implicit in the supply to Crafers related to what in the circumstances was conveyed by the Chinese language characters, be these the trademarks or the Hong Kong packaging. The evidence does not suggest that the dealings between the parties were other than in English. There is no evidence that the representee, Crafers, had any comprehension of the significance or proprietorship of the Chinese language characters or sought any translation of them or inferred anything from them. Given the actual dealings of Mr Lanham with Ms Chartres, it could properly be inferred, first, that the Urederm and Rubesal sold to Crafers were represented to Crafers to be manufactured by Hamilton and were Hamilton's to sell and, secondly, it was represented that the Chinese characters explained adequately what the product was to Chinese language readers. I do not consider that the circumstances of the supply conveyed any implied representation to Crafers that was likely to mislead or deceive it as to intellectual property rights in the Chinese language characters or as to Hamilton having AMC's approval to use the Hong Kong packaging or Chinese language trademarks. There is nothing in the evidence to suggest that such rights or approval were of any concern to Crafers or were the subject of any representation express or implied. Obviously the product sold to Crafers was intended for resale to a class of persons whom the Chinese language characters could address. On the findings I have made that intended class, insofar as Hamilton was concerned, was not that of Chinese language reading Hong Kong consumers. Hamilton did not supply Crafers for the purpose of resale in Hong Kong. The Product was to be resold in Australia. The intended addressees were crew and passengers on ships docking in Australian ports. There is no evidence to suggest that "a not insignificant number" of members of these classes were likely to be misled or deceived by the Chinese characters: see Hansen Beverage Co v Bickfords (Australia) Pty Ltd [2008] FCAFC 181 ; (2008) 171 FCR 579. Rather, Crafers sold the Products (seemingly directly and indirectly) to a Hong Kong importer for resale. This was without Hamilton's knowledge or consent and contrary to the understanding it had with Crafers as to resale. Hamilton bore no responsibility for the conduct thus engaged in in Hong Kong. I say this quite independently of the s 5 problem which AMC would have had if Hamilton could otherwise have been found responsible for representations made to Hong Kong consumers. I reject both of the misleading or deceptive conduct claims. Such representation was made in the course of trade. As with the preceding misleading or deceptive conduct claims, AMC's pleading of, and submissions on, this cause of action are brief to the point of being unhelpful. Hamilton's in contrast are exhaustive. Here again, AMC has not sought to engage with what has been put against it. There are a significant number of difficulties which doom this claim. I will refer to several of these. It will be necessary to refer below to other elaborations of elements of the tort. It is well accepted that the concern of the tort is to protect a claimant's trading reputation or goodwill. Importantly for present purposes, the reputation or goodwill "must extend to the geographical area in which [the alleged tortfeasor] is making the representation and to the class of purchaser to which the representation is addressed": Shanahan [20.75], Targelto Pty Ltd v Targetts Australia Pty Ltd [1993] FCA 191 ; (1993) 26 IPR 51 ; Monaco Willows Pty Ltd v Greenbax Pty Ltd (1996) 36 IPR 387 at 394; W A Gilbey Ltd v Continental Liqueurs Pty Ltd [1960] HCA 21 ; (1960) 103 CLR 406 ; on the territorial scope of goodwill and reputation see Wadlow, The Law of Passing Off , 2.30 ff (2 nd ed, 1995); ConAgra Inc v McCain Foods (Australia) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302. The representation pleaded was to Hamilton's customers and to "end users of the Products". In written submissions the representation was limited to that made to "Crafers, Pharmalines and undisclosed others in Australia ". Pharmalines can be ignored for present purposes. In its Reply, AMC has resiled from its submissions by asserting that there is no legal requirement that the relevant misrepresentation be made to persons "in the law area of the forum". Whether an applicant has developed a particular reputation is a question of fact. There is no evidence that either AMC as an entity or the Chinese language marks had any reputation at all in Australia at the relevant date let alone that a substantial number of people in Australia were aware of the Chinese language marks on the goods they distinguished: Hansen Beverage Co , at [34]-[35]. This alone would be sufficient to reject the Australian based aspect of the passing off claim. For the reasons I gave in dealing with the misleading or deceptive conduct claim, I am not satisfied that any operative misrepresentation was made to Crafers by Hamilton's misuse of the Chinese language marks. Further, no attempt has been made by AMC to make out a case of passing off by reference to those persons who, on my findings, constituted the classes of purchasers to which any representation made in the supply to Crafers was addressed, ie the passengers and crew of ships, not consumers in Hong Kong. I would note in this that it is well accepted that if a product packaged in such a way as will deceive the ultimate consumers to be addressed by the packaging, it is no defence that wholesalers or retailers with whom the deceiver deals, are not themselves deceived: see Singer Manufacturing Co v Loog (1880) 18 Ch D 395 at 412; Shanahan at [20.175]; Kerly at 15-201. As to the claim of passing off to Hong Kong consumers, consistent with what I said in the misleading or deceptive conduct claims, such misrepresentations as may have been made (I make no finding to that effect) were not the responsibility of Hamilton. The Hong Kong market was not the relevant market in which the product sold by Hamilton to Crafers was to be sold. Crafers assumed responsibility for such misrepresentation when it sold to a Hong Kong importer. As I have already indicated, AMC has no cause of action for passing off in Australia. While the respondent has raised a considerable number of, often complex, responses to AMC's claim, they have not been addressed by AMC. I do not consider it necessary to deal with the respondent's further submissions. I reject the passing off claim. Three further claims need to be considered. These relate to (i) an unpaid invoice; (ii) product registrations of Hamilton's products held in AMC's name; and (iii) an alleged breach of confidence. AMC accepts it is liable to pay the amount of the invoice ($35,091.12) and does not pursue its plea of set off. I will order that AMC pay to Hamilton the above amount. It is then asserted that it was an implied term of the Distribution Agreement that AMC was obliged to transfer the Product Registrations to Hamilton or Hamilton's nominated agent at the end of AMC's licence (subject to the Distribution Agreement) to allow Hamilton to carry on distribution of the Products in the Territory. AMC has refused so to transfer the Product Registrations. Additionally it is said AMC was Hamilton's fiduciary in applying for and holding the Product Registrations. AMC breached its fiduciary duty to Hamilton by refusing to transfer them to Hamilton or its agent and it holds the Product Registrations as constructive trustee for Hamilton. I do not intend to enlarge upon this claim for the following reasons which I foreshadowed during final submissions. Other than containing an acknowledgment by the parties that the Products have been registered under Hong Kong law in AMC's name (see cl 25), the Distribution Agreement contains no other provision dealing with the Product Registrations. Importantly, I do not have evidence before me of the provisions of the Poisons Ordinance, or of the purposes of the registration system it established: cf Evidence Act 1995 (Cth), s 174. I do not know, for example, whether the Ordinance permits the transfer of a registration and, if so, subject to what, if any, requirements. I do not know if there can be multiple registrants in respect of the same product. I do not know if a registration is, for example, something personal to the registrant or whether it could in the scheme of the Ordinance be the subject of a trust. Every country has their own specific regulatory requirements on the registrations of products. All I can say is that, without knowledge of the Ordinance and its scheme, I cannot proceed to determine whether a term such as Hamilton suggests could or should be implied into the Distribution Agreement, assuming the "entire agreement" provisions of cl 45 of that Agreement did not preclude such an implication: see Hart v MacDonald [1910] HCA 13 ; (1910) 10 CLR 417 ; Hope v RCA Photophone of Australia Pty Ltd [1937] HCA 90 ; (1937) 59 CLR 348 at 363; Etna v Arif [1999] VSCA 99 ; [1999] 2 VR 353 ; and see generally Cheshire and Fifoot , [10.7] (9 th Aust ed). Absent knowledge of the legislation, its context and purposes, I equally am in no position to determine whether there was any relevant relationship between Hamilton and AMC in relation to the Product Registrations, let alone a fiduciary one. I would also add that absent some express contractual stipulation, it is not altogether obvious to me in any event why, on termination of the Distribution Agreement, AMC ought reasonably to be expected to cooperate with Hamilton in facilitating the distribution of its products in Hong Kong by transferring its Product Registrations to a person capable of holding them under Hong Kong law. I reject this claim. They were (i) a production formula which listed the ingredients of the product and their proportions; (ii) a one page statement of the manufacturing method for Urederm; and (iii) a 6 page product specification. The purpose of this communication was to enable AMC to procure (through a subdistributor), the product registration of Urederm products in Vietnam the documents being required for that purpose. After the termination of the Distribution Agreement on 15 September 2006, Dr Keung subsequently had discussions with Roger Shahani of Sphere Healthcare Pty Ltd, a company which contract manufactured, amongst other things, healthcare creams. On 27 October Dr Keung sent to Mr Shahani an email attaching two of the three documents he had received a decade earlier from Hamilton, albeit with altered headings. These were the production formula and the manufacturing method. The purpose of his so doing was to see if Sphere could "produce the same product". A Urederm cream was subsequently produced, use having been made of the production formula in that process. Hamilton's claims in respect of those disclosures and use are made against AMC and Dr Keung personally. Two are against AMC, the one for breach of its equitable duty of confidence to Hamilton; the other, for breach of cl 28 of the Distribution Agreement. The claims against Dr Keung were for breach of confidence in his own right and in respect of his directing and procuring AMC's breach of confidence. An account of profits is sought against AMC and, I would note, Dr Keung of profits earned by them from all sales of products containing urea cream manufactured by Sphere. No claim, in the alternative, for damages has been pursued. The principles to be applied to a case such as the present are not, save in one respect, controversial. I defer mention of the matter of controversy --- that of accessorial liability of a director for a corporate breach of confidence --- until I deal with the alleged personal liability of Dr Keung. See generally, Dean, The Law of Trade Secrets and Personal Secrets (2 nd ed, 2002); Toulson and Phipps, Confidentiality (2 nd ed, 2006). The essential attribute of confidential information is what has been described as "relative secrecy": Franchi v Franchi [1967] RPC 149 , at 153; Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104 at 119. There is no single test for determining when the communication of confidential information will import an obligation of confidence. There are two tests that have been employed commonly enough in commercial settings to determine whether a duty of confidence arises by reason of the subject matter and the circumstances in which the subject matter has come into the hands of the person said to be subject to the duty. If it has, its use must be limited to that purpose. This approach has commonly been used in cases in which confidential industrial information has been disclosed (usually under contract) to a manufacturer either by way of licence for a period or so as to manufacture a product for the confider: see Saltman Engineering , at 213; Nichrotherm Electrical Co Ltd v Percy [1956] RPC 272 at 280; Ackroyds (London) Ltd at 104; Torrington Manufacturing Co Ltd v Smith & Sons (England) Ltd [1966] RPC 285. Its use extends beyond that context: see Interfirm Comparison (Australia) at 117; and Gurry "Breach of Confidence" in Finn (ed) Essays in Equity , 118 (1985); Smith Kline & French , at 96. Insofar as remedy for breach of confidence is concerned, those that are now sought in this matter are an account of profits and an order for the delivery up and/or destruction of the originals and copies of two documents in the possession of AMC and Dr Keung. It is unnecessary to comment on these remedies at this stage. I would preface my account with these comments. First, while material in two of his affidavits touch on the circumstances giving rise to the breach of confidence claim, Dr Keung did not give oral evidence in defence of it. Secondly, two affidavits of Wendell Wait, the product development chemist of Sphere at the relevant times, were read by AMC. Mr Wait gave oral evidence. There were some marked dissimilarities between his oral and written evidence. Where they have occurred I have preferred his oral evidence which I consider to be the more reliable and considered. As Dr Keung's fourth affidavit made plain (para 2), he was well aware of the purpose for which Hamilton was disclosing the documents to AMC. They were required to meet Vietnam's product registration requirements and had been requested by AMC's Vietnamese subdistributor which, in its letter of request to AMC, noted unsurprisingly that it understood the production formula and production process could be "highly confidential". When two of these documents were sent to Mr Shahani, they were forwarded to Mr Wait "for analysis, and pricing if we are able to produce it". While Mr Wait has maintained he did not receive the manufacturing method document, I am satisfied he did, but made no use of it. Mr Wait had previously begun to develop a 10% urea cream for Sphere. Within three hours of receiving the production formula he had prepared a quote for Mr Shahani. It was, he accepted, based on the production formula document. To quote he needed to know the proportions it specified. In the process of deciding whether Sphere could produce the cream, Mr Wait investigated whether the product was subject to any patent or trade mark. It was not. And he said in cross-examination that "there didn't appear to be any great intellectual property associated with that particular formulation". He also did a literature search to see if Sphere could make a commercially viable product. He made no use of the manufacturing method document: "It has no relevance to quoting a job". He said, in oral evidence, that the production formula would have been put on Sphere's database at that time and would have provided the basis for subsequent work. Mr Shahani sent a reply email to Dr Keung on 27 October 2006, indicating Sphere could do the urea cream; he had a quote; and he asked for a tube of cream and the packaging. A tube and packaging was supplied. Mr Wait then commenced laboratory trials to produce an initial batch of product. It is his evidence, which I accept, that he devised from scratch his own method of manufacture. He did not use the manufacturing method document. This was obvious from the packaging supplied. He was well aware Dr Keung wanted him "to pretty much stay" with product formulation he supplied. The only substantial change he made to Hamilton's ingredient list was to change the preservative used. While it can be inferred from Mr Wait's oral evidence that he was given a tube of Rubesal and was asked to reverse engineer it, it is unclear whether the tube of U50g Dr Keung supplied was so used. I will return below to reverse engineering. The initial batch of product produced from the trials on 24 January was found to be "totally unsatisfactory". Another trial method of manufacture was commenced with the same ingredients and on 26 February 2007, Mr Wait produced something more acceptable to himself and Dr Keung. A change to the water content specified in the production was made around this time. Further trials were held up until May 2007 to finalise details of the manufacturing method. TGA approval was sought and later Sphere, or else Tabco Pty Ltd (a related company), began producing commercial quantities of 10% urea cream for AMC. AMC sold it in Hong Kong under its Fuyunhon label in packaging combining English language and Chinese language versions of product indications etc. In March 2008 Dr Keung informed Mr Wait that he and customers had been unhappy with the finished product. Mr Wait proposed various alternatives to change the Sphere manufacturing method and formula. These alternatives included the addition of sodium chloride or sodium citrate. Ultimately, it was decided to make a lactic acid addition to buffer and soften the formula. Sphere or Tabco began to supply AMC with commercial quantities of this new product in September 2008. It is Mr Wait's evidence that, if he had not been given the production formula, but had been asked to make a 10% urea cream with similar or the same properties to Hamilton's, he could have done so. In his affidavit (at para 22) he described "properties" as including the product's "appearance, feel, smell, pH, viscosity". The 1996 production formula is no longer that used by Hamilton. Neither is the manufacturing method (the equipment having been changed in some areas). It is common ground that the ingredients listed in that formula were in the public domain. They were printed on its packaging. Confidentiality now is claimed for the proportions --- or ratios --- of the ingredients used in the formula. Mr Wait's evidence was that the ingredients in the production formula represented those of a standard cold cream or extemporaneous cream base formula which he believed would have been used for many years in many products. He indicated that ingredients were "old", well known pharmacy ingredients. He considered it likely that in creams he described as cetomacrogol creams because of their well known and reliable emulsion system, many formulations would have the same ingredients and concentrations of the same ingredients as the Hamilton formula. He indicated that that emulsion system is mentioned in the British and the United States Pharmacopeias. Those materials have very defined properties. If you mix them in a certain ratio you get a cream. If you start moving away from that ratio you no longer have a cream. If you dilute it you end up with something like a lotion. If you apply far too much wax into the system you will end up with something that is very waxy and it's almost like a balm. Or if you don't emulsify it properly the thing will fall apart. So within a construction mechanism you've got fairly predefined ratios by which those materials would have to go together. In his evidence, Mr Blake accepted that creams had five components: the active ingredient (in this instance 10% urea), an emulsifier, a thickening agent, water and waxes, and a preservative. Extremely difficult. A lot of people think that it can be done very simply, but because there are a lot of structural similarities in the long chain components --- because the Cetomacrogol is a long chain component. Now, your cetyl and your cetostearyl alcohols have got quite long carbon chains on them. It's not easy technology to reverse engineer, and I won't say you couldn't do it, but it would be very time consuming, expensive and you'd require very sophisticated equipment to actually --- to be able to totally reverse engineer. Mr Wait did not give evidence directly on reverse engineering of Hamilton products. Mr Blake also accepted that the end product of a manufacturing process could be affected by variables in manufacturing such as the equipment used, the temperatures employed, the order in which steps are taken. Is that what you're saying?---Yes. That's where a lot of time is spent, in formulating, is to getting the balances between the different ingredients. It may not have the same characteristics, but roughly it would all go through a similar type of process to produce a cream containing those ingredients at the end?---I think I had probably best answer that this way, your Honour. The Urederm is an oil-in-water emulsion, so there are standard procedures for putting together oil in water emulsions, and those guidelines are certainly followed with that product, and most oil in water emulsions would follow the same. As an alternative, we actually make a lot of sun screens that are water in oil emulsions, they are around the reverse way. The manufacturing protocols for those are quite different. He considered "standard operating procedure" was the wrong terminology to use in the pharmaceutical industry. It referred there to a routine or repetitive task. Now, focussing on Urederm as an oil in water emulsion, are there, to use his Honour's phrase, do all creams of that kind go through a similar type of process or if you like, are there general principles which affect the production of an oil in water emulsion?---Yes. There's a general process which would involve the oils and the waxes melting --- taking those to a temperature when they're liquefied. Taking your water, aqueous phase to a similar temperature, combining those two and then stirring and then mixing, so that was the sort of generic type process that I was referring to. He went on to say that there have been only minor changes to the formula and manufacturing method since that time. No evidence was given concerning the time, effort and expenditure entailed in that development process. The product was first sold in 1983. There has been no evidence put on by Hamilton to indicate that it has in place practices and procedures both in-house and in dealings with third parties, to maintain the confidentiality of information which it considers to be confidential. A letter written to Dr Keung in April 1996 by Mr Stafford was marked "Strictly Confidential". I do not consider that this suggests anything other than the author's own view of how the particular communication should be treated. I would note that Hamilton's February 1996 communication with Dr Keung enclosing the three documents of present concern made no mention at all of confidentiality. It has not been suggested any oral communication was made indicating the confidentiality of that material. If any of the information communicated to AMC in February 1996 then had that character and had retained it when AMC disclosed it to Sphere on 27 October 2006 that disclosure would have been in breach of the clause, the relevant information being information about "the Products". I have already foreshadowed my findings in relation to two of the three documents sent by Hamilton to AMC. I am satisfied that Dr Keung disclosed the manufacturing method document to Sphere in his 27 October 2006 email. That document was forwarded to Mr Wait who made no use of it either at the time of giving his quote or in conducting his trials, for the reasons he gave. I accept he probably forgot he ever received it. Accordingly while both cl 28 and the equitable duty of confidence were breached by the disclosure made, no loss (other than nominal damages for breach of contract) was suffered by it, nor was any profit made using it. As to the 6 page product specification, I am not satisfied any unauthorised disclosure or use of it was made by AMC. This leaves the production formula. Was it confidential information when disclosed by Hamilton in 1996? Was it still confidential information when disclosed by AMC in 2006? The ingredients used in the manufacture of the Urederm cream when that formula was used by Hamilton were in the public domain. They were listed on the packaging. What was not known was the ratios or proportions of the ingredients. I am satisfied that (a) there was a reasonable level of general understanding in the pharmaceutical industry about the manufacture of creams of the type used by Hamilton as the "carrier vehicle" (to use Mr Wait's term) for the active ingredient, urea; (b) information about the available ingredients was widely known; and (c) there was significant industry knowledge about reliable combinations of ingredients and the use of those combinations would ordain in some degree the appropriate ratios of the ingredients to be used in the manufacture of a product such as a 10% urea cream. This said, I equally am satisfied that there remained an area, albeit a circumscribed one, in which through experimentation and choice --- through "the application of the skill and ingenuity of the human brain": Coco , at 47 --- a product formula could be devised for the production of a 10% urea cream having distinctive, desired properties and that knowledge of that ratio would give a "head start" to use Mr Blake's description, to a person later seeking to produce a cream with such or similar properties. The same, I would add, could be said of a method of manufacture devised for a product with such an ingredient ratio, though this is not presently relevant. It could well be said, as Mr Wait did, "that there didn't appear to be any great intellectual property associated with [Hamilton's] formulation", or, to adapt Lord Denning's formulation in Seager v Copydex Ltd (No 2) [1969] 2 All ER 718 at 719, it bordered on there being "nothing very special about it". Nonetheless, tested by the indicia of confidentiality to which I earlier referred, the ingredient ratios were not, on the evidence, in the public domain in 1996, or, for that matter, in 2006; they were valuable to Hamilton when used by it and, in 2006, they were valuable to AMC who was by then a prospective competitor; the formula resulted from Hamilton's research and experimentation and, as the evidence here indicated, for another person to acquire the same information would require it to go through a like process of experimentation; and the urea cream product was not, on the evidence, easily reverse engineered. While it was suggested to Mr Blake that it could be reverse engineered in a short time --- a suggestion with which he did not agree--- AMC did not adduce positive evidence to that effect. It had the opportunity to do so. Mr Wait was its witness. While the Distribution Agreement clearly contemplated that there could be confidential information associated with the Products, what is surprising is that Hamilton appears not to have taken positive steps to preserve the secrecy of the formula in the hands of third parties to whom it was supplied. This said, it cannot properly be asserted that Hamilton so conducted itself in relation to AMC as reasonably to create the impression that it was making a fairly open invitation to AMC to make use of it: Amway Corporation v Eurway International Ltd [1974] RPC 82 at 87. This brings me to the second matter. I am satisfied the production formula was confidential information for equitable and contractual purposes, but was it imparted in circumstances importing a duty of confidence? Again I think so. Notwithstanding that there was no express reference to confidentiality when the three documents were provided to AMC in 1996 and that the documents on their face made no claim to confidentiality, I am satisfied that Dr Keung would at the time have appreciated the sensitive character of the documents and that they were being supplied to him for a particular purpose and no other and that he could only use them for that purpose. Equally, the circumstances were such that any reasonable man standing in Dr Keung's shoes in 1996 would have realised upon reasonable grounds, as his Vietnamese sub-distributor anticipated, that the information was being given to him in confidence: Coco , at 48. Whichever test is applied, the conclusion is inevitable that the production formula was received by AMC in confidence. In the event that I made such findings, AMC has conceded that (i) the information was provided to Sphere/Tabco by AMC; (ii) Mr Wait used the formula (only in part) to provide a quotation for the manufacture of a 10% urea cream; and (iii) he used the formula (only in part) as a basis for manufacturing a 10% urea cream. It is said, as well, that in the trials and production of commercial batches, there were differences in the ingredients and ratios used. My only comment on the concession is that I consider it rather underplays the use made of the formula by Mr Wait. He was at Dr Keung's insistence keeping close to the formula, though some adjustments were made before commercial quantities were produced. I do not accept AMC's submission that Sphere did no more than use the formula as a reference point for manufacturing a 10% urea cream. This brings me to the contentious subject of remedy. That sought is an account of the profit made on the sale of the Sphere manufactured products containing urea cream. Damages have been disclaimed. He wanted continuity. He wanted not only continuity in packaging, but he wanted continuity in feel, and texture, and all sorts of other things. So, your Honour, it wasn't a case where any other cream would do. It had to be a specific cream with specific texture and specific qualities. So it was he sought simply to misappropriate it. In the event he was not wholly successful and he had produced a product for which, as Mr Wait said, Sphere's manufacturing team constantly got different results leaving Dr Keung's distributors not very happy with the results. Nonetheless, the product was sold seemingly at a profit and it is the gain so made that Hamilton claims. The grant of this form of relief in breach of confidence cases is in the end a matter for the Court, notwithstanding a party's election for an account: see e.g. Seager v Copydex Ltd (No 1) [1967] RPC 349 ; see also Conveyor Co of Australia Pty Ltd v Cameron Bros Engineering Co Ltd [1973] 2 NZLR 38 at 44. An apparent reason for this is that, given the variable character of confidential information, its misuse even in a profit making activity may not realistically be able to be said to result in any profit being attributable to it, the misuse merely effecting what was in effect a saving of time and trouble: see Dean [8-320]. While Mr Wait may over time have been able to devise an acceptable production formula for Dr Keung, I do not consider the present to be a case in which it properly should be said that the only appropriate remedy in the circumstances would be damages for the saving of "time and trouble": Seager (No 1) , at 368. Dr Keung, in my view, designedly was trying to replicate a product for which he had previously established product goodwill. An account is in the circumstances an appropriate form of relief: AMC should not be "permitted to gain from [its] wrongdoing": Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 262. I am satisfied that the period for which the account should be taken ought commence when AMC began to sell products manufactured in breach of confidence. It should end when sales of those products ceased in 2008 when AMC adopted the alternative formulation incorporating lactic acid. By that point the advantage gained for its misappropriation of the formula was practically spent. It had been overtaken by Sphere's independent endeavours to produce an acceptable product. Hamilton should not be given the benefit of those endeavours. If there was some residue of advantage remaining with AMC from the misuse of the formula, it is inappropriate to attempt to make some apportionment of profits in recognition of it. To attempt that would inevitably be burdensome and unrewarding. Significantly, Hamilton has, because of the product change, abandoned its claim for a permanent injunction. While the accounting remedy is not without its known difficulties (see Dean [8.325]), I do not have material before me --- nor have I had considered submissions --- which would suggest that such might emerge here. That in any event is a matter for Hamilton. It can have obvious costs implications: cf Nokia Corporation v Liu [2009] FCAFC 138. If an account is to be taken I will direct it be before the District Registrar of the Court and I will give liberty to apply for directions in relation to the taking of the account. Hamilton also seeks an order that AMC deliver up the originals and copies of two of the three documents it "holds". No such order is sought against Sphere in respect of the two documents it received. AMC converted the hard copy versions of the documents into electronic form for sending to Sphere. I have not been addressed on the "delivery up" or "destruction" of the electronic versions. I will invite further submissions on this matter: see also Prime Creative Media Pty Ltd v Vranjkovic [2009] FCA 1030 at [17] . Insofar as concerns the claim for breaches of cl 28 of the Distribution Agreement, I am satisfied such breaches have been established. No claims for damages have been advanced. In light of the considered dictum of the Full Court of this Court in Hospitality Group Pty Ltd v Australian Rugby Union Ltd [2001] FCA 1040 ; (2001) 110 FCR 157 at [155] - [159] , I ought not entertain consideration of whether the contractual breach of confidence could itself be remedied by an account of profits: cf Attorney-General v Blake [2000] UKHL 45 ; [2001] 1 AC 268 ; and see generally Cheshire and Fifoot , [23.2] and esp fn 5 (9 th Aust ed). Turning to the claims against Dr Keung, it is asserted in the alternative that he owed a duty of confidence directly to Hamilton in virtue of the disclosure actually being made to him and breached that duty by the disclosure he made, or that he knowingly participated in AMC's breach of confidence in that he directed or procured AMC's breach and was liable therefore. I am prepared, for present purposes, to assume that Dr Keung owed a duty of confidence directly to Hamilton. He was the actual recipient of information which he had reason to know was to be kept confidential, albeit he received it for AMC which in turn owed a duty of confidence directly to Hamilton. If, for example, he used such information for his own private purposes which resulted in a gain for him or a loss to Hamilton, he would have been liable therefore at the suit of Hamilton: see Saltman Engineering Co Ltd v Campbell Engineering Co Ltd , at 213; and without the need for any circularity of action by joining AMC as a party. I need not consider AMC's liability in such a case for present purposes: cf Coulthard v South Australia [1995] SASC 4927 ; (1995) 63 SASR 531 at 535. Equally, I am prepared to assume that he would be liable to Hamilton on an accessorial liability basis for his intentional procurement of AMC's breach of confidence to Hamilton. In this I recognise that there is a significant body of discordant case law across the common law world on the question of the liability of directors who are participants in the wrongs of their company, whether that wrong be a breach of contract, a tort, or an equitable wrong: see the helpful discussion of this in relation to tortious liability in Anderson, "The theory of the corporation and its relevance to directors' tortious liability to creditors" (2004) 16 Aust Jo Corp Law 73; on the small company problem for directors, see Finn, "Opening Remarks" (1999) 27 Fed L Rev 171 at 177-180; see the discussion in Root Quality Pty Ltd v Root Control Technologies Pty Ltd [2000] FCA 980 ; (2000) 177 ALR 231 at [113] - [147] ; and see Mortimore QC Company Directors Ch 27 (2009 OUP). I have already indicated the only claim made against Dr Keung is for an account of profits. The evidence before me is that to the extent that confidential information has been misused to generate profit, that has been done by and for the benefit of AMC. If profit has been made, it was AMC's profit. No form of proprietary relief has been sought against Dr Keung or AMC in respect of the breach of confidence. There is no evidence of Dr Keung, as distinct from AMC, deriving profits which are attributable to the information misused. I can see no basis at common law or in equity for an order requiring Dr Keung to account for profit he has not made. I do not consider that Dr Keung's position in this matter can properly be analogised to that of a director of a company diverting a profit making opportunity to his own company such as would render him liable to account for profits derived by that company from the exploitation of that opportunity: cf CMS Dolphin Ltd v Simonet [2001] 2 BCLC 704 ; Premium Real Estate Ltd v Stevens [2009] 1 NZLR 148 at [89]-[91]. I will dismiss this claim. I will order that the account be taken by the District Registrar and I give liberty to apply for directions in respect of the account. While I have found AMC to be in breach of cl 28 of the Distribution Agreement no claim for damages has been made. I dismiss the claims made against Dr Keung for an account of profits. I invite further submissions on the orders for delivery up having regard to the fact that, on the evidence, the documentation containing the confidential information has been converted into an electronic form by AMC. In substance, the report was just over two pages in length and consisted of 19 answers to two sets of questions provided to Mr Wong in two letters of instruction. It traversed a range of subjects which could be described, flatteringly, as general evidence about the structure and nature of the pharmaceutical industry in Hong Kong as Asia; methods of advertising of pharmaceutical products within the industry; the effect of parallel importation; Australia's certification of pharmaceuticals etc; and sales growth rates within Hong Kong and China. The answers were in the main ex cathedra statements, often essentially factual in character. To the extent that opinions were expressed they were generally devoid of factual foundation or of any declared process of reasoning. While Mr Wong had over twenty years experience in the pharmaceutical industry primarily in the sales, marketing and production of pharmaceuticals, his curriculum vitae provides no significant basis for inferring that he was possessed of specialised knowledge based on his training, study or experience, that would qualify him to give opinion evidence on the various topics I have mentioned: see Evidence Act 1995 (Cth), s 79. On the contrary, his opinions on parallel importation, for example, and his references to it in his C.V., suggest reliance on anecdotes and speculative generalisation. Mr Wong's report was due originally in January 2008. Extensions were given and it was provided to Hamilton in April. The substance of the objections made to it --- which related to the central elements of the report and in particular to parallel importation, the 10% urea cream market and sales rates of growth --- were notified on 30 May 2008. Confronted with well taken objections to the report, AMC sought either to put on a further report to remedy the deficiencies of the present document or to have an oral report given. I ruled that I would not permit an oral report to be given. It would be inherently unfair given the agreed basis upon which the trial had been conducted in relation to expert evidence --- ie of a written expert's report that could be considered and responsed to by the opposing party. As to permitting a supplementary report to be prepared, I was not prepared to allow this given the point already reached in the trial. What would have been required was an elaboration of virtually each and every paragraph but in circumstances where I entertain considerable doubts as to Mr Wong's expertise to venture the opinions that would be necessary to rescue the report. In these circumstances, and as the report as it stood was not one upon which AMC could properly be asked to conduct a cross-examination, I ruled it inadmissible. I will give directions for the parties to bring in Agreed Minutes of Order to give effect to these reasons within 14 days of the date of publication of these reasons. If they cannot so agree, I direct the applicant to file Proposed Minutes of Order within that time. While Hamilton alone has secured orders for other than nominal pecuniary relief, I do not consider that this matter is one in which it is appropriate to make an apportionment of the costs on an issue by issue basis. While I will give the parties the opportunity to put on submissions on costs, I should indicate my present inclination is to make no order as to costs. The submissions on costs are to be filed within 14 days of the publication of these reasons. I certify that the preceding six hundred and ninety-three (693) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | long term exclusive distributorship between australian supplier and hong kong distributor parties' written agreement not adequately expressing the true character of all aspects of their relationship contract terminated by supplier allegation of repudiation by distributor. claim that contract was partially oral and partially written principles to be applied in deciding this question contract found to be written only. construction of terms dealing with extension and termination of the agreement negotiations over an extended period principles of construction of such a contract extent to which evidence of pre-contractual negotiations admissible. exclusive distributorship allegations of parallel importation into hong kong both supplier and distributor subject to a "best efforts" clause to prevent the sale of the supplier's products in hong kong by persons other than the distributor construction of "best efforts" clauses and the "standard of endeavour" required the parties' obligations found to be reciprocal and interdependent supplier found in breach of the clause by not taking all reasonable steps to prevent its product being sold into hong kong distributor also in breach for failing to notify supplier of the parallel importation failure by distributor to mitigate loss. alleged refusal to supply in accordance with the agreement offer of supply unreasonably rejected by distributor failure to mitigate nominal damages. distributor selling to chinese reading market using chinese character trade mark and chinese language product indications claims by supplier to the trade marks under s 87 of the trade practices act 1974 (cth) on account of alleged misleading or deceptive conduct by distributor claim by distributor to copyright in chinese character product indications and get up. chinese language product indications found to be original literary works claim they were or were represented to be direct translations of english language product indications rejected distributor not trustee of copyright works for supplier. breach of copyright by supplier alleged arising out of parallel importation alleged unauthorised reproductions by supplier whether reproduction authorised additional statutory conversion claim under s 116 of the copyright act 1968 rejected. sale and resale of product bearing distributor's trade mark and copyright work alleged misrepresentation calculated to deceive customers and end users claim rejected sales made in australia no evidence that distributor or chinese language marks had any reputation at all in australia. after termination distributor provided third party manufacturer with supplier's production formula and manufacturing formula similar product manufactured and sold using production formula claim for breach of confidence account of profits sought awarded for a limited period claim against director of distributor for profits rejected. contract contract contract contract contract intellectual property copyright copyright passing off breach of confidence |
That Determination applied the provisions of the Act to specified classes of persons who were not members of the Defence Forces. These persons were to be regarded if they were such members rendering continuous full-time service for the purposes of the Act. One such class were "persons who, as representatives of an approved philanthropic organisation provided welfare services to the Defence Force" (emphasis added) in specified operational areas (which included Vietnam). The Determination specified that the Australian Forces Overseas Fund" ("AFOF") was an "approved philanthropic organisation" for its purposes. 2 It is accepted by the respondent Commission that the applicant, Roy Wooding, provided welfare services to the Defence Forces in Vietnam and that his provision of that service was "coordinated" (I use this as a neutral term) by AFOF. The question the application raises is whether, on its proper construction, the term "representative" could comprehend the manner and circumstances in which he rendered his welfare services in Vietnam at AFOF's behest (again I use this as a neutral term). The Applicant, ROY WOODING, was born on 5 May 1932. (T28/72). Mr Wooding is an entertainer and musician. His curriculum vitae appears at T20/57. As part of the Concert Parties, he provided entertainment for Australian forces in Vietnam. This entertainment took the form of a number of concerts conducted throughout what was then South Vietnam. A list of the concerts is recorded at T19/55-56. Other activities are described in the statement of Ms Jenny Loftes at T37/91-93. 4. Other people who were part of the relevant Concert Parties were Johnny Mac, Susan Wills, Lorrae Desmond, Anne Wills and John Rayment. 5. The entertainment provided by the South Australian Concert Party was for the purpose of contributing to the morale and welfare of the Australian military forces in Vietnam. 6. A number of contemporaneous newspaper articles recording the Concert Parties are recorded at T44/110-117. A further article is also attached to this statement as Annexure A. 7. With the introduction of TV he made regular appearances on most of the most [sic] TV stations in Australia as a single act and was resident guitarist with the ABC Light Orchestra. Roy is now concentrating on the writing of music, production and guitar. At 37 he still claims to be the oldest rocker in the business. The parties have not been able to find a copy of the book. 9. The South Australian Concert Parties were 'arranged' and 'sponsored' by the Australian Forces Overseas Fund ('AFOF') (T44/111 & 114). A copy of a flier published for a concert to raise funds for the South Australian Concert Party is attached as Annexure B. 10. In addition to performing in the concerts, Mr Wooding was the producer and musical director of both Concert Parties. 11. The Concert Parties were assigned an escort officer. On the first tour, the officer was Major Moran. On the second tour, the officer was Major John Doyle, a member of 3 rd RAR. The Army was responsible for the itinerary, travelling, and security details of the tours. 12. There is no evidence that Mr Wooding was formally attached to the Defence Forces. 14. Mr Wooding does not recall being a 'member' of AFOF. 15. Nor does he recall undergoing an 'accreditation process' administered by the Army. As part of the preparations for the tours, he underwent some training in basic military matters, including weapons handling and firing. 16. There is no evidence that he was allocated with a service number or has a service record. He was provided with a 'military identification card', which he returned to the officer in charge of the Concert Party, Major Doyle, at the completion of the tour (T43/109). 17. At the time of the tours, Mr Wooding took unpaid leave from his position with Channel 7. He was paid the sum of $33.00 per week. This money was given to him by Army officials. He also received a military payment certificate (T34/82). The source of these funds is unknown; it may have been the Army or it may have been AFOF. Some detail is set out at T41/105. 18. Mr Wooding's name is recorded on the Nominal Roll of Vietnam Veterans (T10/29). He is described as one of the 'Persons who visited Vietnam under the auspices of the Australian Forces Overseas Fund and Entertainers' on the nominal roll website. 19. Mr Wooding was also awarded the Vietnam Logistic and Support Medal (T28/73). Details of that medal appear at T29/74-75. 20. Mr Wooding was awarded a certificate from the United States Military Assistance Command, Vietnam in respect of each of his two visits there, attesting to his contribution to the morale and welfare of the military forces in Vietnam (T48/49) [sic]. Mr Wooding was issued with General Briefing Orders upon his arrival in Vietnam for the second Concert Party. In para 9 the references to the Concert Parties being "arranged" and "sponsored" by AFOF are references to newspaper articles where these terms happen to be used. In particular where the word "sponsored" is used it would seem that the journalist who wrote the piece was referring to the fact (also reflected in para 9) that the Concert Party came from South Australia and their trip had been funded by public donation. In Annexure B (referred to in that same paragraph) a member of the Committee of AFOF, SA Division, acknowledged "the great help we have received in arranging the Concert Party to tour Vietnam". The RSL began providing Christmas parcels to members of the Australian Army serving in Vietnam in 1963. This early RSL fund was amalgamated with the (Sydney) Lord Mayor's Comfort Fund, and hence the Australian Forces Overseas Fund (AFOF) was officially established on 26 January 1966. It was tasked with coordinating a program for the provision of amenities and concert parties for troops serving in the South East Asia Region, and while initially established in NSW, it soon became a National organisation on the establishment of the RSL National Council. In those earliest years, each RSL State Branch appears to have a similarly worded AFOF Constitution (NSW dated Feb 1966 and 28 May 1968, TAS dated 18 June 1968, WA dated 28 Feb 1968), with no specific mention of FACE, except that the Objects state that 'The objects shall be the provision of comforts, equipment and entertainment for Australian Servicemen and women serving overseas or in such other areas as may be determined from time to time'. To assist in the management and coordination of the concert parties, the Minister of Defence has established The Forces Advisory Committee on Entertainment (FACE) in 1966 as a joint venture involving Defence, the RSL and the Australian Broadcasting Commission. FACE was to act as a planning Committee to organise entertainment for Australian forces in Vietnam, thus removing any direct Ministerial involvement with the music industry. It is known from our records that the Concert Parties were originally arranged by the RSL State Branches in rotation, under the guidance of the entertainment managers from within the Australian Broadcasting Commission (ABC). It is of interest that the RSL National Headquarters holds a brief signed by Major General D B Dunstan, Commander Australian Forces Vietnam, dated 23 November 1971, titled 'Canteens and Amenities in Vietnam'. This sets out arrangements for all canteen matters and the provision of amenities. b. Australian Forces Overseas Fund (AFOF) --- Part of cost of concert parties; two recreation huts at Nui Dat; AATV Club, Danang. c. RSL (Sportsmen's Appeal) --- Harold Holt Pool, Vung Tau; most of cost of Kevin Wheatley Stadium, Vung Tau. d. Public Funds --- Peter Badcoe Club, Vung Tau (contained billiard and reading rooms as amenities but otherwise housed ASCO facilities and living quarters for OC Amenities Unit); Pearson Centre, Nui Dat (contained Amenities store and tape centre but otherwise housed ASCO facilities, education centre and film Library); part of cost of concert parties from Australia. It is also clear that the parties were an official part of the Army's philanthropic program. Unfortunately, the records held in the RSL National headquarters do not provide any listings of which entertainers were accredited to each concert party and we may need to rely on State Branch records for this. These personnel completed the accreditation process administered by the Army. As part of this process, they were allocated a service number, have a service record and were issued with approved identification cards. These people were permanent representatives accredited to accompany an Australian Defence Force (ADF) sponsor unit on a full time basis. Unaccredited entertainers may have been in Vietnam at the behest of the Defence Forces and may have had assisted with logistical support for Entertainers in Vietnam (Travel, etc). However, following a review by the Department of Defence, they confirmed that they were not 'attached' to the Forces and were not under the command of the ADF. Accordingly, these entertainers do not have VEA coverage. A number of these entertainers state that the tours were financed by the AFOF and state that their pay was handed to them by the Army acting as AFOF agents. However, this is does not prove that they were employees of the Army. Many of these entertainers have Certificates of Appreciation issued by AFOF. However, this does not indicate that they were members of an approved philanthropic organisation. As we have previously advised you if Mr Wooding or Mr Milburn-Lloyd are able to provide evidence that they completed the AFOF accreditation process, such as being allocated a service number or service record, or were issued with an approved identification card, then they may have a case for being considered an accredited member of a philanthropic organisation. I was referred to a decision of Edmonds J in Iversen v Repatriation Commission [2006] FCA 942. This decision answered an appeal from a decision of Senior Member Kelly in Re Iversen & Repatriation Commission [2006] AATA 280. In her decision Senior Member Kelly rejected an argument to the effect that Mr Iversen (who also provided entertainment for troops serving in Vietnam under similar circumstances to Mr Wooding) should be treated as a full-time member of the Defence Force serving in an operational area. 9. Senior Member Kelly noted that Mr Iversen rendered courageous and valuable service in performing for the troops in Vietnam; his service was recognised through a listing in the nominal roll of Vietnam veterans and through the awarding of a Logistics Support Medal; he was a member of a group of civilian entertainers who were, in part sponsored by the AFOF and that the AFOF is an approved philanthropic organisation. She nevertheless decided that Mr Iverson was not a representative of AFOF and consequently was not covered by the Ministerial Determination. 10. The applicant, in his written submissions, contended that "representatives" as it appears in the Determination should be given a meaning that protects those who were in fact in a war zone and thereby exposed to the risks and circumstances associated with that war. It was submitted that such "factual" emphasis on the meaning of representative would accord with the beneficial nature of the Act and the Determination made under it. But such a construction goes well beyond the natural and ordinary meaning of the word "representative" as exemplified in the dictionary meanings of the word upon which the applicant himself relies. 16. In his oral submissions, the applicant articulated what is substantively, albeit not in the same terms, a similar argument, namely that if the applicant's presence in the war zone is only explicable by reference to his participation in a concert tour co-sponsored by the AFOF and the Australian Army, then he can be a representative of the former. That might be so, but such co-sponsorship will not of itself make the applicant a representative of the co-sponsor. Indeed, as the respondent submits, even if the applicant had been an "AFOF sponsored" entertainer rather than an "Army sponsored" entertainer, being sponsored by an organisation cannot be equated with being a representative of that organisation. I have carefully considered the statement of agreed facts. I have also considered a VRB decision of Milburn-Lloyd dated 30 August 2006. I have reached the view that the only way Mr Wooding could be entitled to benefits under the VE Act would be if his service in Vietnam could be considered to have been performed 'as a representative' of the AFOF. 12. Point 9 of the statement of agreed facts indicates that the concert parties were 'arranged and sponsored' by the AFOF. However, as mentioned by Justice Edmond in Iversen , such sponsorship 'cannot be equated with being a representative of that organisation'. In my view, the term 'representative' connotes an entitlement to act on behalf of another. Point 14 of the statement of agreed facts indicates that Mr Wooding does not recall being a 'member of AFOF'. On the information before me, I have not been satisfied that Mr Wooding was a representative of that organisation. In these circumstances, Mr Wooding does not fall within the ambit of the 1987 Ministerial Direction. I have not been satisfied that Mr Wooding's service, although courageous and valuable, satisfies the basic eligibility conditions for payment of a Disability Pension under the VE Act. The decision under review is affirmed. As I now understand it, the parties have agreed the question of law and that is whether or not it was open to the Tribunal to adopt a constrained interpretation of the word "representative" given the context of its use in the Ministerial Determination. 10 To put the applicant's submission shortly, it is that, having regard to the context and purpose of the Determination, the word "representative" comprehends a person who provides the relevant service under the aegis of, as an emissary of, or in association with, one of the defined philanthropic organisations. Iversen v Repatriation Commission (2006) 91 ALD 114, it is said, is distinguishable on its facts. 11 The respondent's case is that the view taken by the Tribunal, that "representative" connotes an entitlement to act on behalf of another, was one that was open to it. It could not be an error of law for it to have taken that view. Iversen , it is said, is presently relevant and highly persuasive. The respondent also emphasised the limitations of the Statement of Agreed Facts. There was simply no evidence on some number of matters. 12 There was some controversy as well as to whether it could properly be said that the Tribunal actually made findings of fact at all. I am satisfied that on a fair reading of the member's reasons, the agreed facts were the facts found. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed in Isherwood v Butler Pollnow Pty Ltd , if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent ": emphasis added. These were (i) the person provided welfare services to the Defence Force; (ii) in a prescribed operational area (here Vietnam); and (iii) as a representative of any one of six "approved philanthropic organisation[s]". 15 While all of these conditions are required to be satisfied, it is, in my view, relatively clear that the first and second of them differ in their significance and burden from the third. They provide the reason why, as a matter of policy, a person who has satisfied those conditions should be considered as having a possibly legitimate claim to be put on the same footing as members of the Defence Force rendering continuous full-time service, for the purposes of the Veterans' Entitlement Act. 16 The third condition (in the "as representative" requirement) would appear to be a channelling or control device regulating who actually will be equated with a member of the Defence Force. The relevant organisation is required to be "approved" and the presupposition is that in some manner it provides or procures the provision of welfare services to the Defence Force. The question posed by the condition is what is the nature of the connection that must exist between the actual service provider and the approved organisation before the service provider will have his or her service recognised for the purpose of the Act. 17 While the third condition controls access to the benefits of the Act, there is nothing in the beneficial policy, that appears to animate the Ministerial Determination, which would warrant a restrictive interpretation of the required connection. For reasons I give below, I consider that both the Veterans Review Board and the Tribunal have given the Determination such an interpretation, in their respective imposition of an "agency" like role on the service provider. This is best illustrated in observations of the Board in reaching its decision. The evidence before the Board is that the SACP [South Australia Concert Party] tours of Vietnam were organised, funded and sponsored by the AFOF. This included obtaining the unpaid services of Mr Wooding and others as entertainers. Although the SACP travelled and operated under the AFOF banner, there is no evidence of direct authority or any inferential manifestation of consent by the AFOF that Mr Wooding or any other member of the SACP should act on behalf of the Fund. That purpose, in my view, is to provide potential benefits to persons who relevantly provide welfare services provided those services are provided or procured by one of the approved organisations. 20 Given that the object of the Determination is to identify the classes of persons who will benefit from the Determination, it is understandable that, in form, its focus is on the relationship of the relevant person to the approved philanthropic organisation (i.e. "who, as representatives of ..."). This said, the apparent policy and purpose of the Determination is manifest in the relationship of the philanthropic organisation to the person providing the service and, especially, to its role in the provision of that service. 21 In construing the "representative" requirement of the Determination in a way that effectuates the purpose of the Determination, the correct prism through which to evaluate the relevant relationship of the service provider and the philanthropic organisation is through that of the organisation, not of the service provider. If the philanthropic activity being engaged in by the organisation extends, as in the present case, to organising, funding and sponsoring the provision of a welfare service, especially if (again, as in the present matter) the organisation relies on public subscription to help fund and facilitate its provision, no misuse of language is involved saying that those who actually provide those services are representatives of the organisation in that they represent that organisation's activities to the Defence Force beneficiaries of those services. To put the matter colloquially (as the Review Board did) 'they operate under the [organisation's] banner'. 22 In a matter such as the present, a particular performing artist could quite properly say that he or she had no entitlement to, and did not, "act on behalf of" the AFOF. Yet equally it could quite properly be said that that person was a representative of the AFOF in its provision of welfare services to the Defence Force. It is in this latter sense that the words are used in the Determination. 23 When used in many contexts "as representatives" will properly be said to be plain words bearing an agency-like connotation. The present is not such a context. For this reason they should be construed as I have indicated. That construction is reasonably open and more closely conforms to what I consider to be the intent of the Determination. 24 I am in consequence satisfied that the Tribunal erred in limiting the meaning of "representative" as it did. I equally am satisfied that, had it not so circumscribed the compass of this word in this context, it would on the evidence have had to conclude that Mr Wooding was, relevantly, a representative of AFOF given, on the evidence, the role performed by AFOF in organising, funding and sponsoring the concert party's provision of welfare services in Vietnam. 25 There is a number of additional matters to which I need to refer. First, Iverson's case. While it is distinguishable given its facts, the Tribunal's reasoning and the submissions made to the Court, I obviously do not agree with some of the very brief observations made by his Honour in that case. I do not regard it as a case which falls within the category that I ought follow as a matter of comity. 26 Secondly, in many instances one can envisage a service provider would, for the purposes of the Determination, be a "member" of the relevant philanthropic organisation and would be performing an agency-like role for that organisation. In this matter, probably as a result of Iversen , the issue of "membership" loomed large but quite unhelpfully in the Statement of Agreed Facts. It was a distraction. As far as I could ascertain from counsel, there was no evidence at all as to whether any member of the AFOF was involved in the actual provision of welfare services in operational areas. This said, evidence on that matter would not have affected the answer to the question of construction raised by the Determination. A "representative" need not necessarily be a member. I would add that there is a range of welfare services (of which those involved in the present matter are ones) which it is unlikely that members of some at least of the approved philanthropic organisations would be able to deliver effectively. 27 I will allow the appeal, set aside the decision of the Administrative Appeals Tribunal and remit the matter to the Tribunal to be heard and decided again. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | ministerial determination "representatives" of approved philanthropic organisation providing welfare services considered to be rendering continuous full-time service whether member of a sponsored defence force concert party such a "representative" construction of the term "representative" ministerial determination having legislative force under the veterans' entitlements act 1986 (cth) "representative", in context, not to be given a narrow or agency-like construction veterans' affairs statutory interpretation |
They are Lanepoint Enterprises Pty Ltd (Lanepoint) and Bowesco Pty Ltd (Bowesco). The orders are sought on the basis that each of these companies have had receivers appointed to them under company charges. Ms Karen Carey-Hazell, a director of each of the companies, has filed a motion seeking leave to intervene to defend the winding up applications in the name of the companies. She seeks that leave under s 236 and s 237 of the Corporations Act 2001 (Cth) (the Act). She contends, in any event, that she is entitled as a director to defend the proceedings in the name of the companies. For the reasons that follow, I am satisfied that Ms Carey-Hazell has standing as a director to defend the winding up proceedings in the name of each of the companies and that she does not need leave to intervene. It does not follow that she is entitled to resort to the companies' assets for the purpose of funding that opposition. There will be liberty to apply for further directions in that regard. The costs of the motion will be reserved. In each case the application was brought on the ground of insolvency by reason of the appointment of receivers and managers to the company under charges over company property. In each case reliance was placed upon the statutory presumption of insolvency under s 459C of the Act. Lanepoint has had two sets of receivers and managers appointed under different charges. John Cronin and Shaun Fraser were appointed by Suncorp-Metway Limited on 3 March 2006 under a company charge dated 2 May 2005 and a mortgage dated 28 April 2005. They entered into possession and currently control Lanepoint's property the subject of the charge and mortgage. The property charged was described as 'all the undertaking of [Lanepoint] ... relating to the development at 61 Great Eastern Highway, Western Australia and 2, 4 and 6 Armadale Road, Rivervale, Western Australia...'. The powers of the receivers were widely defined in the charge as including '... any right, power, authority, benefit or remedy of the Bank' under the charge or under legislation (see clause 18.5 read with the definition of 'Powers' in clause 1.1). Brian McMaster and Martin Madden of KordaMentha were appointed to Lanepoint as receivers and managers by Perpetual Nominees Limited on 9 March 2006 under a fixed and floating charge dated 10 May 2005. The property covered by the charge was described as 'All the chargor's interest in all of its property anywhere (real & personal & present and future) including its uncalled capital and its called but unpaid capital & all the present and future rights, property & undertaking of the chargor of whatever kind' . Messrs McMaster and Madden say they are not in possession or control of Lanepoint's property because of the prior appointment of Messrs Cronin and Fraser. The powers of a receiver appointed under the Perpetual charge are very widely defined in cl 10.3. Messrs Cronin and Fraser were appointed as receivers and managers over property of Bowesco by Suncorp-Metway on 3 April 2006. The appointment was made pursuant to a company charge and a mortgage each dated 8 October 2004. The property covered by the charge was described in the charge as '... the undertaking of the company and all of its real and personal property and assets both present and future (in both its personal capacity and as trustee) including (without limitation) all of its goodwill, book debts (present and future) and all of its unissued, unallotted or unsold shares and all its uncalled and called but unpaid capital ...'. The powers of the receivers were the same as the powers conferred on the receivers in the Suncorp-Metway charge over the property of Lanepoint. In respect of Bowesco, it should be noted that on 20 April 2006 freezing orders were made in respect of its assets pursuant to s 1323 of the Act --- Australian Securities and Investments Commission, In the Matter of Richstar Enterprises Pty Ltd (ACN 099 071 968) v Carey (No 3) [2006] FCA 433. The orders were varied on 30 June 2006. They were expressed so as to permit the Bowesco receivers to exercise their powers pursuant to their appointment by Sunway-Metcorp, including their powers under s 420 of the Act. On 11 August 2006 Ms Karen Carey-Hazell, a director of both Lanepoint and Bowesco, filed a motion in each of the proceedings seeking leave '... to take responsibility on behalf of the respondent in these proceedings'. Argument on her motion was heard on 16 August 2006 and reserved until today. They include the company itself, a creditor, a director and ASIC. An application by a director or by ASIC may only be made with the leave of the Court (s 459P(2)). The Court may give leave if satisfied that there is a prima facie case that the company is insolvent but not otherwise (s 459P(3)). Except as permitted by s 459P a person cannot apply for a company to be wound up in insolvency (s 459P(5)). Section 459C sets up presumptions to be made in certain proceedings including applications under s 459P (s 459C (1)). The presumptions also have effect for the purposes of an application for leave to make an application under s 459P (s 459C (1)(b)). In particular, s 459C(2) provides that the Court must presume that a company is insolvent if during or after the three months ending on the day when the application was made, a receiver, or receiver and manager, of property of the company was appointed under a power contained in an instrument relating to a floating charge on such property (s 459C(2)(c)). A presumption for which s 459C provides operates except so far as the contrary is proved for the purposes of the application (s 459C(3)). In order to grant the leave necessary under those provisions, the Court would need positively to be satisfied that she is acting in good faith and that it is in the best interests of the company that she be given that leave. Mr Norman Carey, the principal of the Westpoint Group, is her brother. An affidavit which she filed in opposition to the winding up applications set out what he told her about his dealings with Suncorp-Metway in connection with the appointment of the receivers. It would be necessary, in an application for leave, for Ms Carey-Hazell to put to rest any concern that she might be acting in the name of the companies at her brother's bidding and to further what might be wider interests and objectives. The issues of good faith and the best interests of the company however do not fall to be addressed on this application because, in my opinion, Ms Carey-Hazell is entitled, as a matter of law, to standing as a director to oppose the winding up application in the name of the two companies. In so doing, of course, she is bound to conduct herself as a director in accordance with the duties of care, diligence, good faith and proper use of her position imposed upon her by ss 180 , 181 and 182 of the Act. The appointment of a receiver under a charge over its property does not end the life of the company to which the receiver has been appointed. It has been said that the company in such a case is 'anaesthetised' but may be restored to 'full conscious activity when the anaesthetic is no longer applied after the debts owing to the debenture holders have been paid' --- George Barker (Transport) Ltd v Eynon [1973] 3 All ER 374 at 380 (Mocatta J). Moreover, while receivers may effectively control a company's dealings with the outside world, receivership does not change the company's internal structure --- Hawkesbury Development Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSW 782 (Street J). A valid receivership and management will ordinarily supersede, but not destroy, the company's own organs through which it conducts its affairs. The capacity of those organs to function bears a direct inverse relationship to the validity and scope of the receivership and management. I do not doubt that they are limited in nature. Given that a receiver's powers must be exercised for the purposes of the appointment and the enforcement of the security under which appointment is made, it may be doubtful whether such a situation could arise even in theory. There is no actual or apparent conflict between that non-opposition and Ms Carey-Hazell's proposed exercise, in the name of the companies, of their rights to oppose the winding up applications. The existence of the power, conferred upon the receivers by s 420 of the Act, to defend the winding up applications, does not give rise to any such conflict. Nor does the assistance provided to ASIC by the receivers in the form of the affidavits sworn by Messrs Fraser and McMaster. Their cooperation with ASIC does not of itself involve any exercise of their powers which would be compromised by Ms Carey-Hazell's defence of the winding up applications in the names of the companies. Absent Ms Carey-Hazell's participation as proposed, there is no contradictor to the winding up application. She asserts that there is a case to be made against the orders sought by ASIC. Quite apart from the question of her entitlement to bring that contention before the Court, it is in the interests of justice that as a director of the company she has an opportunity to make that case if she does so in accordance with the duties imposed upon her by the Act and not, for example, for some collateral purpose. In so doing, it should not be assumed that Ms Carey-Hazell will have any a priori entitlement to resort to the assets of the company for the purpose of funding legal representation in the winding up proceedings. I will, however, allow liberty to apply at the termination of the proceedings in that respect. In my opinion the matter need be taken no further than this. There is no need for an application for leave under s 237 of the Act. The costs of the motion in each case will be reserved. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | [2006] fca 1163 |
During this time the applicant has sourced bulk data (specifically, Valuation and Sales data known also as "QVAS data" and also referred to as "Collected Data" by the parties throughout this case) referable to real property in Queensland from the respondent, through the Department of Natural Resources and Mines ("the Department"). 4 Mr Raymond Catelan, director of the applicant, described the function of the applicant under that agreement as that of a non-exclusive data broker for the Department, whereby the applicant reformats data supplied by the Department into a commercially user-friendly format and markets the data to its customers through either online computer access or an in-house package (affidavit of Raymond David Catelan sworn 28 March 2006 paras 2-3). It is clear from Mr Catelan's evidence that real estate agents are a major customer of the applicant, although he also deposed that government instrumentalities including the Australian Tax Office are customers (Catelan affidavit paras 4-5). 5 The applicant is one of eight business organisations holding a licence from the respondent in relation to QVAS data (affidavit of Geoffrey Arthur Oakley sworn 16 January 2006). Nonetheless, I understand that the applicant is a dominant force in respect of distributing the data with something in the order of 70% of the market share in terms of the end users (submission of Mr Jackson QC TS p 7 ll 4-5). The VL Act in particular details the role of the Department, and its duties and obligations in relation to collection and maintenance of real property data. 7 The VL Act requires the chief executive of the Department to make annually a valuation of the unimproved value of all land in local government area (s 37 VL Act ). 10 Mr Geoffrey Oakley, the Principal Marketing Officer of Product Services in the Department, deposed, inter alia , that the Department made available QVAS data, which was comprised of two distinct yet related data sets (the Valuations data set and the Sales data set) (Oakley affidavit para 3). The most recent such contract is dated 1 July 2003. section 81 information, for a parcel of land, means the information in the most recent notice given under section 81 in relation to the parcel, held in electronic form by the chief executive, and capable of electronic transfer to a purchaser. valuation roll information, for a parcel of land, means the particulars included in a valuation roll about the parcel, held in electronic form by the chief executive, and capable of electronic transfer to a purchaser. It gives the chief executive a discretionary power to supply information in the form of bulk data. 2. It does not limit the persons or bodies to whom such information may be supplied. 3. The fees and charges for the supply are not those prescribed for access to single parcels but are those agreed in the contract. 4. Unlike with respect to information obtained for a single parcel under s 76(1) or s 76(5) , the contract may limit the use to which the information supplied may be put: s 77(3). 5. Section 77(3A) mandates two contractual provisions which allow the chief executive to exclude from the information supplied particulars of information, and to prohibit disclosure or limit distribution or use of such particulars if already supplied. It is clear that s 77 VL Act was inserted into the legislation to facilitate the proposed sale of bulk data by the Department to entities such as the applicant (Second Reading speech, Valuation of Land Amendment Bill , The Hon AG Eaton Minister for Land Management, Legislative Assembly, 10 March 1992, p 4019). 15 The most recent licence agreement between the applicant and the respondent is entitled "Queensland Valuations & Sales Data Licence Agreement for Value Adding between the State of Queensland and RP Data Limited, QVAS VA Licence No: 2003/007". According to its terms it commenced 1 July 2003. The expiry date of the agreement was 30 June 2005. 20 I understand that, under the current arrangement, all licensees pay the same flat fee as the applicant. Whether or not that was the policy of the Department in 1992 --- although Mr Colin Witt, Principal Marketing Officer of Product Services of the Department, one of the respondent's witnesses, believed that it was the case (TS p 222 ll 46-48 and p 223 ll 1-3) --- it was clear that views in the Department as to the use of Departmental data in direct marketing had changed considerably by 2002. Mr Wayne Fry, Director Product Services of the Department deposed that in or about October 2002 the Department announced that it would be withdrawing names and addresses from the bulk data sets to be supplied from 1 July 2003, however after receiving submissions from licensees (including the applicant) the Department determined that, rather than pursuing this course, the Department would include strict direct marketing clauses in licence agreements (affidavit of Wayne Bradley Fry sworn 24 January 2006 paras 6-8). 22 Similarly it is clear that the insertion of s 77(3A) into the VL Act by s 27 Land Legislation Amendment Act 2003 (Qld) resulted from the concerns of Parliament as to direct marketing activities using Departmental data. As custodian of land titling, my Department of Natural Resources & Mines maintains a Valuations and Sales database containing the names and addresses of more than one million Queensland property owners. Valuations and sales data is publicly available information under the Act, and any member of the community can access this information for a prescribed fee. My Department also provides this information under contract to seven licensed private sector bulk data Distributors who value-add and market property information to industries such as real estate, conveyancing, surveying and mapping, and the general community. The current contracts allow the supply of valuation roll data including the names and postal addresses of land owners to the wholesalers for on-selling to persons for real estate related usage. This is a legitimate use. However, what upsets many people is they are receiving personally-addressed letters that turn out to be thinly-disguised direct-marketing junk mail touting for real estate services. The government believes people have a right to some privacy. We are taking action to stop this practice. The current contracts with wholesale data brokers expire soon and new contracts will apply from 1 July 2003 for the supply of bulk valuation and sales data. By giving the Chief Executive of my department the power to prohibit the disclosure, or limit the distribution of, bulk valuation and sales data already supplied to bulk data distributors, it means that these distributors will no longer be permitted to allow the distribution of an owner's name and address for any direct marketing purposes. This will be achieved by inserting clauses in the new contract agreements with distributors. Any breach of these conditions will result in loss of the agreement. Furthermore the Licensor may prohibit or limit distribution of certain particulars forming part of the Licensed Data. Interestingly however in that briefing note it was noted that a number of local governments were also in the business of selling real property data, including the Gold Coast where "direct marketing from real estate agencies (was) prolific", and it was very difficult to establish whether base data originated from local government or Departmental records (exhibit 139, annexure GJR-07 to Mr Rush's affidavit). If some members of the real estate industry continue to flaunt their contractual arrangements with their data distributors, my Department will be forced to restructure the current distribution arrangements. The complete removal of ownership and addressing information is an option under consideration. The recommendation was that the Minister not approve the REIQ's proposal, and I understand this recommendation was approved by the Minister on 5 June 2004. • A Briefing Note for Approval to the Director-General of the Department approved by P Woodward in the Department dated 13 July 2004 informing the Director-General of on-going concerns by members of the public relating to the use of departmental data for direct marketing purposes by certain real estate agents, and requesting approval for a standard form letter to be sent to complainants (annexure GJR-11 to Mr Rush's affidavit). • A Briefing Note for Approval to the Minister approved by Mr Rush on 1 December 2004 seeking the Minister's approval to remove ownership and service address information from bulk data supplied to bulk data licensees from 1 July 2005 (annexure GJR-13 to Mr Rush's affidavit). I understand this recommendation was approved by the Minister on 2 December 2004. 29 In its terms, the policy states that it applies to all information items collected, stored and distributed by the department, and assists the department to meet its requirements related to Information Standard 33, a whole-of-government information standard on information access and pricing. 30 The policy recognises that the Department "is required by statute and the needs of government to acquire a wide range of information" and that "the costs to the department to acquire, maintain and manage this information are substantial". 33 The policy also contemplates that a royalty fee and/or upfront fee approved by an authorised Delegated Officer of the Department would be sought for applications involving "distribution" of information and "development" of information. 34 The policy contemplates distribution of information by "Distributor Agreements" which permit a person or organisation to distribute departmental information without change to customers and would be implemented on an organisational basis. Similarly, the policy contemplates development of departmental information by "Developer Agreements" which permit value-adding of the information and provision of value-added information and/or services to customers, and would be implemented on an organisational basis. 35 In the case of both Distributor Agreements and Developer Agreements the policy provides that a royalty fee and/or upfront fee approved by an authorised Delegated Officer of the Department will be sought. In the case of Developer Agreements, the policy provides that, unless approved by the Delegated Officer, the royalty would be 20% of the invoice price charged by the Developer to its customers, where the invoice price includes both information/data and any service offered. The two comprehensive data products would collectively replace the bulk data arrangements in place at that time. • The paper stated that the new model would result in lower upfront fees, however a royalty structure would be introduced, being 20% of the invoice price licensees charge their customers. This fee structure was consistent with the way all bulk data was now being licensed. As part of introducing a royalty component, the department would undertake annual audits. • The financial impost would not be increased by the introduction of the royalty arrangement and the record keeping requirements would be mitigated under certain circumstances. That is, licensees would be given a choice as to whether they wished to nominate to pay the maximum royalty (and therefore not be required to produce on a quarterly basis all the royalty return records as required under the proposed new licence) or they could choose to pay the royalties as they went. This would require them to produce the quarterly documentation in respect to invoicing (Fry affidavit para 22). 38 Following consultation with licensees (including the applicant) an Information Paper, also entitled "Access to valuation and sales information beyond June 2005" (WBF-10), was released on 4 April 2005, which is after this action was commenced. A key modification reflected in the revised proposal was that the pricing was clarified. The pricing for the bulk digital data was stated, including that the department would cap the level of fees payable to no more than the current licence fee (increasing by CPI each year) during the term of the licence. • The concept of a packaged data product remained unchanged from the earlier information paper. The current access fee for the data, being a CD based product, was identified as $99. • A range of searches would be available through both the service centres of the Department and online distributors of the Department. Searches identified by the paper, which were stated to have been available to online distributors for a number of years were valuation searches, sales searches and abbreviated sales searches. This application was not opposed by the respondent. The respondent had dealt with the applicant in a business relationship over a number of years in the respondent's capacity as the Department. 2. In performing its function of collecting and maintaining information relating to the address, real property description, sales, valuation and ownership (including historical information as to the names and addresses of vendors and purchasers) of real property interests in Queensland (the "Collected Data"), the respondent also on-sells that Collected Data to third parties, including end users of the data (such as, for example, members of the public), and distributors of information such as the applicant pursuant to licences granted by the respondent. 3. The applicant is in the business of, inter alia , electronically supplying data throughout Queensland using the Collected Data provided to it by the respondent and together with other data sourced by it from other sources ("the Bundled Data"). 4. At all material times there existed a market ("the Market") in Queensland for supply, by sale and purchase, of the Collected Data. 5. Alternatively at all material times there existed markets in Queensland for supply by sale and purchase of the Collected Data to distributors such as the applicant ("the Wholesale Market") and supply directly to end users ("the Retail Market"). 6. At all material times there existed various geographical markets in Queensland for the supply of services by real estate agents to property owners and prospective buyers, in connection with sales and lettings of real property ("the Real Estate Agents' Services Markets"). 7. The applicant and the respondent compete in the market for the supply to end users of the Collected Data or parts of it. 8. The respondent has a substantial degree of power in the Market, or the Wholesale Market and the Retail Market. 9. 2. The respondent denies that it carries on the business of supplying the Collected Data for reward, but rather that it supplies such information on the terms prescribed by ss 73 , 76 and 77 of the VL Act . 3. The respondent denies the existence of the Market, namely the market in Queensland for supply, by sale and purchase, of the Collected Data. The respondent does not dispute the existence of the Wholesale Market and the Retail Market. It also admits the allegation that it has a substantial degree of power in the Wholesale Market. The respondent claims that the Collected Data is also available from local governments, which have access to information concerning the sale, valuation and ownership of real property interests in Queensland pursuant to ss 1004, 1006 and 1006A Local Government Act 1993 (Qld). 6. The respondent claims that, contrary to the claims of the applicant, the respondent is constrained by the terms of ss 75B, 77 (3) and 77 (3A) VL Act as to the terms upon which licences may be granted. 7. The respondent denies that it has taken or threatens to take advantage of any market power it may have. 8. The respondent states that pursuant to cl 7 of the licence agreement between the applicant and the respondent, the respondent is not obliged to renew the agreement on the same terms. 9. The respondent denies that its proposals are made to advantage it for reasons particularised by the applicant. 11. The respondent claims that the Excluded Data will remain available to the applicant under its licence from the respondent, and that the applicant is not now and will not in the future be unable to provide Excluded Data to its customers. 42 In my view critically, in the context of s 46 TPA, the respondent claims that its purpose in proposing to exclude the Excluded Data from the bulk data available under future licences is to ensure that such information in bulk data form is not available for direct marketing purposes. (6) This section does not prevent a corporation from engaging in conduct that does not constitute a contravention of any of the following sections, namely, sections 45 , 45B, 47 , 49 and 50 , by reason that an authorization or clearance is in force or by reason of the operation of subsection 45(8A) or section 93. (7) Without in any way limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a corporation may be taken to have taken advantage of its power for a purpose referred to in subsection (1) notwithstanding that, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances. There must be a corporation or the entity must fall within the extended application of s 46 --- in particular as contemplated by s 2B. 2. There must be a market as defined by s 4E TPA. 3. The corporation or entity must have a substantial degree of power in a market. 4. The corporation or entity must take advantage of that substantial degree of power in the market. 5. The corporation or market must exercise that power for one of the prescribed purposes in s 46 (1)(a),(b) or (c). 45 The onus of proof is on the applicant to show that the impugned conduct of the respondent had the proscribed anti-competitive effect: Sodastream Limited v Electronics (Broken Hill) Pty Limited (1985) 60 ALR 427 at 430; John S Hayes and Associates Pty Limited v Kimberly-Clark Australia Pty Limited (1994) ATPR |P41-318 at 42,237, Stirling Harbour Services Pty Limited v Bunbury Port Authority [2000] FCA 1381 at [13] . Is the respondent bound by s 46 TPA? 2. What is the nature of the "market(s)" as contemplated by s 46 and s 4E? • what is the nature and scope of the relevant market(s)? Does the respondent have a substantial degree of power in any of those markets as contemplated by s 46? 4. Is the conduct of the respondent in refusing to renew the current licence held by the applicant on the same terms, in particular excluding the Excluded Data, conduct which can be characterised as the respondent taking advantage of a substantial degree of power in a relevant market? 5. If the conduct can be characterised as the respondent taking advantage of a substantial degree of power in a relevant market, was it for a proscribed purpose? 47 In deciding this matter, I propose to deal with each of these issues in turn. IS THE RESPONDENT BOUND BY SECTION 46 TPA? Nothing in the Act limits the meaning of 'business' by reference to the criteria for market definition. Businesses often operate across the boundaries of separate markets... All these considerations militate against any approach to the question of 'carrying on a business' by reference to competition in a market... The only question is: what business was [the entity] carrying on? So far as it was carrying on a business, s 46 applied to it. 51 Clearly the respondent is not a corporation. However Pt 1 TPA makes provision for the extended application of certain parts of the Act. Of particular relevance in these proceedings is s 2B TPA. (3) The protection in subsection (2) does not apply to an authority of a State or Territory. 52 Section 46 is found in Pt IV TPA. However the extended application only operates if the Crown in right of the relevant State or Territory is carrying on a business, either directly or by an authority of the State of Territory. As is clear from such cases as NT Power 219 CLR (particularly at 116) and Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 237 ALR 512 (particularly at 526-527), this condition is strictly applied. • In relation to the Retail Market, the Department only provides its data by way of individual searches as it is required to do by s 76(1) VL Act , and the fee it charges is set by the Valuation of Land Regulation 2003 (Qld). There is nothing in the nature of a business in the provision of such a service --- rather it is the discharge of a statutory obligation at a prescribed and regulated fee. • In relation to the Wholesale Market, the provision of Collected Data is the consequence of the exercise of a statutory power in s 77(1)VL Act, which is limited by s 77(1) and (3A) to being exercised by way of contract and with specific contractual terms. Further the removal of the names and addresses from the Collected Data was undertaken pursuant to a specific statutory power in s 77(3). This suggests that the Department is simply fulfilling its statutory obligations in providing the Collected Data. • In substance however, it was not a major part of the respondent's case that the respondent was not carrying on a business for the purposes of s 2B, and the respondent has proceeded on the basis that the provision would otherwise apply (TS p 385 ll 39-43). However it has received consideration by Courts to the extent that a number of principles have emerged which are of relevance in this case. "Business" in the context of s 2B is normally a "wide and general" word: Gibbs CJ in Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd [1982] HCA 23 ; (1982) 150 CLR 169 at 184, McHugh ACJ, Gummow, Callinan and Heydon JJ in NT Power 219 CLR at 116. Its meaning in the TPA is widened by s 4(1), since "business" includes "a business not carried on for profit": NT Power 219 CLR at 116. 2. The phrase "carries on a business" should be interpreted in light of the purpose of Parliament in introducing s 2B and related legislation, which was to ensure that "with state and territory application legislation, the prohibitions against anti-competitive conduct can be applied to all businesses in Australia. " (Australia, House of Representatives, Parliamentary Debates (Hansard) 30 June 1995, p 2794). 3. Subject to a statutory qualification as to not for profit businesses, in the context of the TPA, "carrying on a business" is intended to refer to activities undertaken in a commercial enterprise or as a going concern: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 at 303, Corrections Corporation of Australia Pty Ltd v Commonwealth [2000] FCA 1280 ; (2000) 104 FCR 448 at 451. 4. An act of government, whether directly or through an authority, which is merely the carrying out of the functions of government in the performance of its statutory duty, is unlikely to be characterised as "carrying on a business": Village Building Company Limited v Canberra International Airport Pty Limited (No 2) [2004] FCA 133 at [90] . So, for example, the issue of certificates by a municipal council with respect to a real property pursuant to the Environmental Planning and Assessment Act 1979 (NSW) was not "carrying on a business" ( Mid Density Development Pty Ltd v Rockdale Municipal Council (1992) 39 FCR 579), nor was operating a detention centre ( Corrections Corporation of Australia [2000] FCA 1280 ; 104 FCR 448), nor were the activities of the New South Wales Department of Agriculture in acquiring cattle in endeavours to eradicate Bovine Johne's Disease, providing compensation to farmers for cattle slaughter, and reselling the carcases to recoup some of the funds: State of New South Wales v RT & YE Falls Investments Pty Ltd [2003] NSWCA 54 ; (2003) 57 NSWLR 1. However, activities for reward which are those which could be performed by any citizen or private trader potentially constitutes "carrying on a business". Examples of this are Paramedical Services Pty Ltd v The Ambulance Service of New South Wales [1999] FCA 548 where the Ambulance Service of New South Wales supplied, for reward, ambulance services at sporting events and first aid training, and JS McMillan v Commonwealth (1997) 77 FCR 337 where the Commonwealth in its guise as AGPS provided general printing services, dispatch and distribution services, graphic design services and editorial services. 5. Mere repetitiveness is not sufficient to constitute carrying on of a business; further, although system and regularity are involved in the carrying on of the business it does not necessarily follow that one who has transactions of the same kind systematically or regularly is carrying on a business in those transactions: JS McMillan 77 FCR at 354, GEC Marconi Systems 128 FCR at 303, Sirway Asia Pacific Pty Ltd v Commonwealth of Australia [2002] FCA 1152 at [53] . 56 In my view, it is clear that the respondent is carrying on a business with respect to the supply of bulk data to licensees including the applicant. • While s 77(3A) VL Act imposes limitations on the contents of any contract entered into by the chief executive and a licensee, the limitations are minimal and do not derogate from the power of the chief executive to enter into a relevant contract, such as the licence agreements relevant in this case. • The purpose of the legislature in enacting s 77 was to facilitate the Department entering into business relationships in relation to the sale of Collected Data. The information technology now available provides a range of commercial opportunities provides a range of commercial opportunities that could not have been foreseen when the current legislation was drafted. The contractual relationship between the respondent and the applicant has existed since 1992 (licence agreement dated 11 May 1992, annexure RDC-1 to Mr Catelan's affidavit), and since then the parties have entered subsequent agreements. • The applicant is but one of eight licensees to whom the respondent has supplied the bulk data for reward since 1992. • I agree with Mr Jackson's submission that the supply of the Collected Data by the respondent under the supervision of Departmental officers with titles including "marketing officer, general manager and director of product marketing" is consistent with the conduct of a business. 57 Accordingly, while it is clear that the Collected Data is collected by the respondent pursuant to statutory obligations in the VL Act , and accordingly it could not be said that the respondent in collecting the data was carrying on a business, nonetheless it is equally clear that the sale of the Collected Data to licensees such as the applicant constitutes the carrying on of a business by the respondent. 58 Similarly, I note that the respondent supplies the value-added product "SmartMap", which is available over the counter and which, inter alia , provides information as to sales in an area on a yearly basis. Little evidence was produced to me as to the activities of the respondent in relation to its supply of SmartMap, however it appears that SmartMap is supplied on a commercial basis. From the limited information before me, it appears that the respondent is "carrying on a business" in relation to its supply of SmartMap. 59 However, the position appears quite different with respect to the supply by the respondent - to end users - of data in response to individual over the counter searches. • The supply by the respondent of s 76 data does not form any part of its business relationship with the licensees, who receive bulk data from the respondent. • Obligations of the respondent in relation to valuation of land throughout Queensland, the collection of data, the maintenance of valuation records and the supply of the data are mandated by the VL Act . As Mr Hinson SC for the respondent submitted, the Department is required by s 76(1) VL Act to supply a certified copy of the particulars of a valuation entered on a valuation roll, to a person who pays the prescribed fee. I note the prescribed fee is found in the Valuation of Land Regulation 2003 (Qld). Indeed, I note that the long title of the VL Act is "An Act to make better provision for determining the valuation of land for rating and taxing purposes, and for matters incidental thereto or consequent thereon". I accept the evidence of Mr Rush that the QVAS data is the point of truth source for sales data, that is, how much a property was sold for at a particular date (Rush affidavit para 10). In my view, the supply of data by the respondent in respect of individual searches is an act of government and carrying out of the functions of government in the performance of its statutory duty, similar to the provision of a certificate by the municipal council in Mid Density Development Pty Ltd 39 FCR 579. • In light of the foregoing, the fact that the Department would undoubtedly enter into many transactions of this nature does not mean that the Department is "carrying on a business" of supplying data in response to individual searches. • Although the respondent has submitted that local governments and the applicant can supply data in response to individual searches, in my view this does not derogate from the fact that the activities of the respondent in this regard constitute a function of government in the performance of its statutory duty rather than "carrying on a business". It would not represent the true position with respect to the conduct of the respondent to find that, because it had engaged in some commercial activities with the applicant and other licensees, its entire operation with respect to supply of valuation data to members of the public, local government authorities and others had become a "business" which it was conducting. 62 The result of this finding is that s 46 TPA applies only to conduct of the respondent in the course of its carrying on of a business of supply of bulk data. The section does not apply to conduct of the respondent carrying out its statutory function of supplying data in response to individual searches. 63 Notwithstanding this finding, I note that the respondent's case was predicated on the basis that s 46 potentially applied to all conduct of the respondent relevant to these proceedings (submission of Mr Hinson SC TS p 385 ll 30-43). Accordingly, in the interests of completeness, and in case I am in error with respect to my conclusions concerning the application of s 46 to the conduct of the respondent, I shall consider the claims of the applicant and the submissions of the parties concerning conduct of the respondent relevant to individual searches of data. IS THERE A "MARKET" AS CONTEMPLATED BY SECTION 46 AND SECTION 4E TPA? As the passage from Re Queensland Co-Operative Milling Association Ltd quoted above indicates, and as s 46(3) recognises, both the supply side and the demand side are relevant to an assessment of the market. It does not solve, but merely re-states, the problem to speak of sub-markets. There may be a wider, and a narrower, area of rivalry; but, if the narrowest area itself constitutes a market, then it is power and conduct in that area that must be examined. 67 It is not in dispute that, for the purposes of these proceedings, there exist a Wholesale Market, a Retail Market and Real Estate Agents' Services Markets. 68 The respondent however disputed the existence of a Market for the supply of Collected Data. At the hearing the applicant did not press its claim as to the existence of that Market. Accordingly, I make no findings as to para 5 in the amended statement of claim that at all material times there existed a Market in Queensland for supply (by sale and purchase) of the Collected Data. What is the nature and scope of the relevant markets? • The Wholesale Market is the market in which the Department produces and supplies QVAS data in bulk form to licensees. • The Retail Market consists of the supply of real property data to end users. Suppliers include the licensees in the Wholesale Market, the respondent and local government authorities. • They understood that the respondent had a statutory obligation to supply data in the Retail Market and is also empowered, at its discretion, to supply QVAS data in bulk form. It operates in both the Wholesale Market and in the Retail market. 70 These propositions are not in contention. • The respondent is the only supplier of the QVAS raw data in bulk form (Norling expert report para 2.1, Williams expert report para 79). • While local government authorities provide details of property ownership to members of the public, they do not provide bulk data, nor data outside the boundaries of the relevant authority. Further, local government authorities do not provide data as to property transfer (Norling expert report para 2.1, Williams expert report para 79). • The market has existed since 1992, and consists of the respondent and eight licensees (including the applicant) (Norling expert report para 2.1, Williams expert report para 81). • The geographical dimension of the market is Queensland. • There are approximately 166 retailers in this market and an indeterminate number of customers (Norling expert report para 2.2). • The eight licensees (including the applicant) create value-added products on the basis of the QVAS data, they do not redistribute the raw data to end-users (Williams expert report para 83, Oakley affidavit para 2(b)). • The geographical area of the market is Queensland. Real estate agents account for an estimated 55% of total revenues (RP Data Information Memorandum p 13, Williams expert report para 84, Norling expert report Table 2.1). Prices vary across authorities. Major users are property owners, real estate agents, valuers, mortgage brokers and developers. (Norling expert report para 2.2 and Table 2.1, Williams expert report para 79). • Total revenues earned by licensees across Australia amounted to approximately $51 million in 2006 (Williams expert report para 84). DOES THE RESPONDENT HAVE A SUBSTANTIAL DEGREE OF POWER IN ANY OF THOSE MARKETS AS CONTEMPLATED BY SECTION 46? The leading case in this context is Queensland Wire [1989] HCA 6 ; 167 CLR 177. That is to say, what are the barriers to entry? It is this factor which must be taken as the primary consideration in determining market power. See also the judgment of the Full Court of this court in Arnotts Ltd v Trade Practices Commission at FCR 336---9. But market power has aspects other than influence upon the market price. It may be manifested by practices directed at excluding competition such as exclusive dealing, tying arrangements, predatory pricing or refusal to deal... The ability to engage persistently in these practices may be as indicative of market power as the ability to influence prices. The difficulty lies not in defining the word 'substantial' but in applying the concept of a substantial degree of market power to the circumstances of each case and in identifying whether the requisite degree of market power exists. This is a relative concept. " (cf Wilcox, French and Gyles JJ in Universal Music Australia Pty Ltd v Australian Competition & Consumer Commission [2003] FCAFC 193 ; (2003) 131 FCR 529 at 564-565. • The use of the word "degree" in the expression "degree of power in a market" reflects the fact that "market power" is a relative concept. All participants in a market possess a degree of market power which may range from negligible to very great (at [41]). • The circumstances which give rise to absence of competitive constraint upon a corporation are diverse. They are not confined to size or market share in relation to competitors, or to those matters combined with technical knowledge, raw materials or capital. Other matters such as easier access to supplies or government controls on the market are relevant if they bear upon the extent to which the corporation can act without being constrained by competition (at [45]). Both the applicant and the respondent, and their respective experts, are in agreement on this point. I accept that the respondent has a substantial degree of market power in this market. It is therefore appropriate to consider the claim of the applicant that the respondent has taken advantage of that power for a purpose proscribed by s 46 TPA. The supply of individual over the counter searches appears to be the primary activity of the respondent in this market. 83 However I have already found that, in supplying over the counter information in response to individual searches, the respondent is not "carrying on a business" within the meaning of s 2B, and is thus not bound by s 46. It therefore follows that the activities of the respondent in the Retail Market, in relation to supplying over the counter information by way of responses to individual searches, as required by statute, are not subject to s 46. Accordingly, any claims by the applicant concerning such conduct of the respondent for breach of s 46 must fail. (This can be distinguished from the supply by the respondent of SmartMap, which does appear to be conduct constituting "carrying on a business". 86 A hypothetical refusal by the respondent to supply any information to retailers other than those to whom it is statutorily obliged --- namely the local government authorities --- would inevitably have a significant effect upon the functioning of the Retail Market. Indeed, Mr Jackson QC so submitted in his opening statement (TS p 7 ll 19-23). 87 Second, the applicant has not unequivocally abandoned its claim that the respondent had a substantial degree of power in this market, including with respect to information supplied by the respondent in response to statutory searches. 88 However, with respect there is little material presented before me upon which I can find that the respondent does have a substantial degree of market power in the Retail Market. The respondent points out however, that the experts do not say that the respondent has a "substantial degree of market power" in the Retail Market. This is in contrast with their agreement as the respondent's substantial degree of power in the Wholesale Market. Indeed Mr Williams gave evidence at the hearing that he was not an expert in the Retail Market (TS p 88 ll 40-42) and that he had not put his mind to whether the applicant had a substantial degree of power in the Retail Market (TS p 78 ll 3-4). • Conduct in a wholesale market which in turn affects levels of competition in a "downstream" retail market is a relatively common phenomenon, and issues relevant to this phenomenon have been considered in this court, for example, in the context of claims of alleged anti-competitive conduct in Pt XIB TPA ( Telstra Corporation Limited v Australian Competition and Consumer Commission (No 2) [2007] FCA 493) , in relation to claims for access to services under Pt IIIA TPA ( Sydney Airport Corporation Limited v Australian Competition Tribunal [2006] FCAFC 146) , and in the context of acquisitions claimed to result in a substantial lessening of competition ( Australian Gas Light Company (ACN 052 167 405) v Australian Competition & Consumer Commission (No 3) [2003] FCA 1525). However, the ability of an entity to "substantially influence patterns of competition" in a retail market because of its market power in a wholesale market, as agreed by the experts, is not, in my view, necessarily tantamount to "a substantial degree of market power" in the Retail Market or even, as submitted by the respondent, "market power" within the meaning of the s 46 TPA. • As I have already noted, the activities of the applicant and the respondent in the Retail Market are quite different, supplying different services to different customers. It is not in contention before me that there is "a" Retail Market in which both the applicant and the respondent are supplying information. However, whereas it is clear that the respondent supplies base data to members of the general public who pay the prescribed statutory fee and makes available its SmartMap product, it is also clear that the applicant offers a much greater range of sophisticated products to a different customer base, namely parties who are prepared to subscribe to the applicant's services, as distinct from any members of the public who seek information over the counter. It is also apparent from the evidence before me that the applicant does not view the respondent as a significant competitor in its area of the Retail Market (RP Data Information Memorandum Document 1 pp 14, 15; evidence of Mr Catelan TS p 57 ll 37-42). In this respect, the "market power" of the respondent in the Retail Market, viewed in light of its activities in this broad Retail Market, is not obvious. Even if the respondent had market power in its area of the Retail Market in respect of its supply of raw data to end-users, it has not been demonstrated that such market power extends throughout the entire Retail Market as was the subject of consideration by the Full Court in Singapore Airlines Limited v Tabropane Tours WA Pty Ltd (1991) 33 FCR 158. • I note the submission of Mr Hinson SC for the respondent that the evidence fell short of establishing that the respondent had any market power --- let along any substantial degree of market power --- in the Retail Market. Further, I note that, notwithstanding para 7 of the amended statement of claim, Mr Hinson SC also submitted --- and this was not contested by Mr Jackson QC at the hearing --- that the respondent did not understand the applicant's case to assert that the respondent had a substantial degree of power in the Retail Market (note TS p 370 ll 12-17). • As pointed out in Queensland Wire , the existence of market power is identifiable by reference to factors including pricing, barriers to entry, market share. However, on the basis of the evidence before me, in particular the lack of evidence on this point and the submissions of the parties, it is not possible for me to make any conclusive findings as to the market power of the respondent in the Retail Market. 90 I make this point particularly in light of the onus of proof which rests on the applicant to demonstrate that the impugned conduct breaches s 46 ( Sodastream Limited v Electronics (Broken Hill) Pty Limited (1985) 60 ALR 427 at 430; John S Hayes and Associates Pty Limited v Kimberly-Clark Australia Pty Limited (1994) ATPR |P41-318 at 42,237, Stirling Harbour [2000] FCA 1381 at [13] . Accordingly, I need make no findings in this regard. IS THE CONDUCT OF THE RESPONDENT IN REFUSING TO RENEW THE CURRENT LICENCE HELD BY THE APPLICANT ON THE SAME TERMS, IN PARTICULAR EXCLUDING THE EXCLUDED DATA, CONDUCT WHICH CAN BE CHARACTERISED AS THE RESPONDENT "TAKING ADVANTAGE" OF ITS SUBSTANTIAL DEGREE OF POWER IN THE WHOLESALE MARKET? I have already found that the respondent has a substantial degree of market power in the Wholesale Market, but have made no such findings in relation to either the Retail Market or the Real Estate Agents' Services Market, and indeed have held that to the extent that the respondent is supplying data in a retail environment in response to over the counter searches, it is not bound by s 46. 94 The notion of "taking advantage of" in s 46(1) is closely related to the proscribed purpose in the section ( Melway 205 CLR at 16-17). 97 However as was pointed by the High Court in Queensland Wire [1989] HCA 6 ; 167 CLR 177, and subsequently reiterated by the majority of the High Court in Melway 205 CLR at 17, "take advantage of" does not mean anything materially different from "use" and does not require conduct which is predatory or morally blameworthy: per Mason CJ and Wilson J at 191, Deane J at 194, Dawson J at 198, Toohey J at 212-214 (cf also the Full Court in Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 at [137] ). In terms of s 46 it does, however, entail an analysis of actions in the context of a competitive environment, and identification of a determinative approach in the entity with the substantial market power to achieve an outcome proscribed by s 46. If a firm with no substantial degree of market power would engage in certain conduct as a matter of commercial judgment, it would ordinarily follow that a firm with market power which engages in the same conduct is not taking advantage of its power. 99 I note however that the expert witnesses in para 14 of the Joint Expert Statement of Areas of Agreement and Disagreement agree that the changes in pricing structure from a fixed wholesale price to a fixed and variable wholesale price (excluding the new fee to access names and addresses which is to be incurred as these searches will need to be done directly through respondent on an individual basis) do not constitute a taking advantage of market power. I note further that at the hearing, the applicant did not press its claim with respect to proposed changes to the fee structure other than issues with respect to the fixed price of $5.70 per search for the Excluded Data, and that in closing submissions no reference was made by Counsel for the applicant as to the respondent having purportedly taken advantage of its market power in relation to this issue. 100 Accordingly, in my view, no case is made by the applicant that the respondent has taken advantage of its market power in relation to changes in pricing structure from a fixed wholesale price to a fixed and variable wholesale price (excluding the new fee to access names and addresses). 102 In essence, the applicant's case focuses on the withdrawal of the Excluded Data from the bulk data supplied by the respondent. 103 Extensive evidence has been presented by the parties as to the relevant limbs in s 46 of "taking advantage" and the relevant purpose of the respondent. As both limbs were the subject of extensive submissions and cross-examination at the hearing, I will consider each in turn. Evidence of expert witnesses - in refusing to supply the Excluded Data is the respondent "taking advantage" of its market power? 105 Mr Norling also agreed that the respondent's claimed reason for refusal to supply names and addresses in bulk form (namely, to reduce the incidence of misuse of the data for direct marketing purposes) was a rational business reason, whereas Mr Williams expressed no opinion on the basis that he was not in a position to evaluate the claimed reasons of the respondent. Mr Williams agreed with the proposition). 109 Under cross-examination by Mr Hinson SC, Mr Williams agreed that, while he could see no economic efficiency reason or other competitive reason for the respondent engaging in the conduct, similarly the respondent had not nominated such reason (TS p 86 ll 5-8). 110 Mr Williams also opined that the conduct of the Department constitutes a use of its market power because, without its market power, it is very unlikely that it could, in a commercial sense, refuse to supply the bulk names and addresses, because if there alternative suppliers of bulk names and addresses it is very likely that entities such as the applicant would go to that alternative supplier, and the threat of going to that alternative supplier would, in an effective sense, force the respondent to offer the bulk names and addresses (TS p 89 ll 2-8). Although there was some discussion throughout the hearing as to local government authorities in Queensland being a source of data, it is clear that they are not a source of Bulk Data. It is also not in contention that the reason for this monopoly is because of the statutory function of the respondent, which, as stated by Mr Rush in his affidavit, is the point of truth source for sales data. But it does not follow that because a firm in fact enjoys freedom from competitive constraint, and in fact refuses to supply a particular person, there is a relevant connection between the freedom and the refusal. Presence of competitive constraint might be compatible with a similar refusal, especially if it is done to secure business advantages which would exist in a competitive environment. 114 In my view, it is clear that the respondent was taking advantage of its market power in the Wholesale Market in its proposals to withdraw the Excluded Data from supply to the applicant and the other licensees. I form this view for the following reasons. 115 First, there is a clear connection between the substantial degree of market power of the respondent in the Wholesale Market, and the exclusion of the Excluded Data. Irrespective of the purpose motivating the respondent, which I shall consider shortly, the outcome admitted by the respondent of ensuring that no commercial entity could be in possession of bulk data including the Excluded Data was dependent upon the monopolistic position of the respondent and its withdrawal of the Excluded Data from the market. In circumstances where the respondent withdrew supply of the Excluded Data from the bulk data, there was no other source of supply. 116 Second, I am not satisfied on the evidence that, in the hypothetical workably competitive Wholesale Market where there were multiple suppliers of the Collected Data including, potentially, the Excluded Data, the respondent would have engaged in its conduct of withdrawing the Excluded Data. Clearly the circumstances of this case cannot be equated with a more conventional commercial environment where a supplier is predominantly motivated by, inter alia , profit and its position in the market. In this case the supplier is a State government department which, while undoubtedly motivated to some extent by cost and profit, is also motivated by broader policy imperatives of community interest. However, in a hypothetical environment where the Excluded Data being information identifiably sourced from the respondent could be obtained elsewhere, I am not satisfied that the respondent would have engaged in the relevant conduct, because it is clear that the outcome the respondent sought in the case at hand (namely to prevent data it collected being used for direct marketing) could not in such circumstances have been achieved. It is possible that, as a matter of principle, the respondent would nonetheless have engaged in the relevant conduct in pursuance of its policy objectives, but I am not persuaded that that would be the case. In my view, this doubt underlines the strong connection in this case between the substantial degree of market power of the respondent in the Wholesale Market, and the conduct complained of. 117 Third, I am not persuaded by the submissions of the respondent, or the evidence of Mr Norling, that the removal of names and addresses from the Bulk Data would be conduct expected to occur within a (hypothetical) competitive wholesale market because suppliers other than the respondent in such a wholesale market would be subject to the Privacy Act 1988 (Cth). To paraphrase comments of the majority in Melway 205 CLR at 22 in a similar context, the evidentiary basis for that conclusion is not entirely clear, and not everyone would agree that, as a proposition of fact, it is self-evidently correct. 118 Fourth, I do not accept as material the distinction drawn by the respondent between the facts of this case and other refusal to supply cases such as Melway [2001] HCA 13 ; 205 CLR 1 and Queensland Wire [1989] HCA 6 ; 167 CLR 177, in that in those cases there was a refusal to supply one of several acquirers of goods and services. Whether or not all licensees were being treated equally in this case is not germane to the issue of whether the respondent, for reasons of its own, was taking advantage of its market power. (Whether it is relevant to purpose is a different question, which I shall consider shortly). In, for example, a hypothetical situation where a wholesale supplier formulated a strategy of itself entering the retail market and as part of that strategy informed its customers who were retailers in that retail market of its decision to henceforth refuse supply of its products, the fact that all retailers were equally disadvantaged does not mean that the wholesale supplier has not taken advantage of its market power. 119 Finally, in my view the power used by the respondent in withdrawing the Excluded Data from supply was not regulatory power, but market power. I have already found that, although the collection of data by the respondent was pursuant to statutory obligations, the supply of Collected Data by the respondent to the applicant and the other licensees was in the course of carrying on a business by the respondent. The Full Court in that case was satisfied that the port authority had assumed the role of a market regulator. • Similarly in Plume [1997] 1019 FCA, the court was satisfied that the conduct of the Federal Airports Corporation was properly characterised as use of a regulatory power designed for the benefit of the members of the public who had occasion to use the facilities of the airport at Alice Springs. 120 The role of the port authority in Stirling Harbour [2007] FCA 1381and the Federal Airports Corporation in Plume [1997] 1019 FCA can be contrasted with the role of the respondent in its supply of Collected Data to the applicant and the other licensees, namely that of a wholesaler of information on commercial terms dictated by the respondent, in an environment where the respondent was also a supplier of data in the Retail Market. While the regulatory power of the respondent to collect data and enter licence agreements clearly assisted its commercial position in entering such agreements (cf comments of the majority in NT Power 219 CLR at 142) the conduct of the respondent in withdrawing the Excluded Data but continuing to supply other data on commercial terms was a market, rather than a regulatory, issue. IF THE CONDUCT CAN BE CHARACTERISED AS THE RESPONDENT TAKING ADVANTAGE OF ITS SUBSTANTIAL DEGREE OF POWER IN THE WHOLESALE MARKET, WAS IT FOR A PROSCRIBED PURPOSE? That this is so is demonstrated by the unambiguous terms of s 46(1) , and decisions in Australia at the highest level confirming this principle (for example Queensland Wire [1989] HCA 6 ; 167 CLR 177, Melway 205 CLR at 22). 123 In relation to identifying the "purpose" of the respondent, as illustrated by the cases listed in Miller's Annotated Trade Practices Act 28th edition para 1.46.65, the weight of authority indicates that the relevant purpose is to be identified on the basis of a subjective test rather than objectively, although purpose may be established by inference from the conduct of the respondent (s 46(7)). As Toohey J observed in Queensland Wire 167 CLR, the reference to "for the purpose of" carries with it the notion of an intent to achieve the result spoken of in each of the paragraphs in s 46(1) (at CLR 214). I note that the subjective nature of the relevant intent was also endorsed by the High Court in Boral Besser 215 CLR at 484. 124 The principle that the relevant purpose is to be determined subjectively is not in contention between the parties. Authority for this proposition derives from comments of the Full Court in General Newspapers Pty Ltd v Telstra (1993) 45 FCR 164 at 187. 126 The respondent relied on comments of Lockhart J in Dowling v Dalgety 34 FCR at 143 where his Honour said that "purpose" in s 46 "is not concerned directly with the effect of conduct, but with the purpose in the sense of motivation and reason, though, as mentioned earlier, purpose may be inferred from conduct". 129 The applicant in its amended statement of claim alleges that the respondent has engaged in conduct in contravention of s 46 TPA without reference to any particular paragraph in s 46 (1). 130 Although not specified in the amended statement of claim, it appears that the applicant is claiming that the conduct pleaded in para 10(a) of the amended statement of claim breaches s 46(1)(a) , whereas the conduct pleaded in paras 10(b), (ba) and (bb) allegedly breaches s 46(1)(c). 131 Further, it appears from the amended statement of claim that paras (ba) and (bb) are read together --- para (bb) appears, by use of the word "thereby" to refer back to the conduct pleaded in para (ba). Accordingly, I shall consider these two paragraphs together. 132 It is appropriate to consider each of the applicant's claims in turn. This is plain from the terms of the section itself, and follows, for example, from observations of McHugh ACJ, Gummow, Callinan and Heydon JJ in NT Power at 219 CLR at 114-115, 145. Accordingly, the respondent would have acted in breach of s 46(1)(a) TPA if it took advantage of its power in the Wholesale Market for the purpose of eliminating or substantially damaging the applicant in the Retail Market, if the applicant was a competitor of the respondent in that Retail Market. 134 The applicant conceded that there was no direct evidence that the respondent's purpose was to substantially damage the applicant in the Retail Market. The applicant invited the court to draw the inference that this was the purpose of the respondent, and referred in particular to the change in the products to be offered by removal of the Excluded Data, and the simultaneous change in pricing under the proposed fees structure. • The respondent is a competitor of the applicant in the Retail Market. • The removal of the Excluded Data will make the applicant's products less attractive to its existing customers in comparison to the existing offerings of the applicant. • The result of a proposed licence fee incorporating a royalty would result in a licence fee payable by the applicant to the respondent in excess of $1 million in contrast with the current flat fee, which proposal has not been adequately explained. The respondent did not produce one document evidencing the way in which the pricing for either the access fee or the royalty fee was worked up for these particular products. • The removal of the Excluded Data was allegedly precipitated by complaints concerning direct marketing activities by real estate agents, but this does not explain the basis of the particular pricing provisions. • In any event, the respondent's witnesses exaggerated the number and account of complaints concerning direct marketing activities by real estate agents, and in fact the number of complaints received was minor (a total of 139 written complaints discovered between 1997 and 2006), which would not justify substantial overhaul to contractual arrangements in place since 1992. • There is no evidence that the respondent had the purpose of substantially damaging the applicant in the Retail Market. • For s 46(1)(a) TPA to apply the applicant and the respondent must be competitors in a market, and the only market in which the applicant alleges it competes with the respondent is the Retail Market: para 6 of the amended statement of claim. • The applicant and the respondent are not competitors in the Retail Market. • In 1997 the respondent was encouraging more licensees to come into the Retail Market and reduced its fees to allow that to occur. The unchallenged evidence is that all licensees were treated equally. • Mr Fry deposed that he had told the applicant that if it did not agree to the new licence conditions and refused to enter into a licence agreement, it would not be able to receive licensed data after 30 June 2005, and deposed further that this would also apply to the other seven licensees. Was the respondent a "competitor" of the applicant in the Retail Market? 137 The word "competitor" is not defined in the TPA. Thus in order to have competition in a market, there must be substitution between one product and another and between one source of supply and another in response to changing prices or the quality of the product being supplied. If the respondent is not carrying on a business, the question immediately arises whether the respondent is capable of being a "competitor" of the applicant in the Retail Market for the purposes of s 46(1)(a), in respect of this particular conduct of the respondent. In my opinion, the obvious answer in this case is that the respondent is not --- the respondent is fulfilling a statutory function in supplying that data, and is subject to legislative control in respect of prices charged and product quality. There are, however, some elements of "competition" as between the applicant and the respondent as submitted by the applicant, particularly in relation to issues of product substitution. In the event that I am in error in relation to whether the respondent is carrying on a business in relation to its supply of data, then --- as I have done elsewhere in this judgment --- I propose to continue to consider whether, within the meaning of s 46(1)(a), the applicant is a "competitor" of the respondent in the Retail Market. 140 Further, I have also said that the evidence before me does not support a finding that the respondent has a substantial degree of power in the Retail Market. Irrespective whether the respondent has any power in the Retail Market flowing from its power in the Wholesale Market as a monopoly supplier, this does not equate to the respondent being a "competitor" of the applicant in the Retail Market. 141 To date the activities of the applicant and the respondent have been at different points on an economic continuum, with different product offerings, different levels of sophistication of products, different client bases, and apparently minimal overlap. The value-added products of the applicant appear to have little in common with such products of the respondent as SmartMap, or the raw data supplied in response to statutory searches. The applicant and the respondent have not been "rivals" in the Retail Market in the sense of being entities who strive to outdo each other (see discussion by Professor Stephen Corones Competition Law in Australia (4th ed, Lawbook Co, 2007) at 5. Nor, as the respondent submitted with reference to statements of Mr Catelan and the applicant in its Information Memorandum, does the applicant perceive the respondent as its competitor in the Retail Market. 142 Nonetheless there is commonality in the activities of the applicant and the respondent in the Retail Market in that both supply data sourced from the respondent, and it appears that the Excluded Data at present can be obtained by customers of the applicant from either the applicant or the respondent. In that sense there is presently the potential of substitution between one source of supply and another of that data as contemplated in Adamson . Although the competition appears in the present environment to be minimal, leaving aside for the moment issues arising out of s 2B TPA, I am prepared to assume that the applicant is a "competitor" of the respondent in the Retail Market. Can the purpose of eliminating or substantially damaging the applicant as a competitor in the Retail Market be inferred? In fact, the evidence demonstrates unambiguously that the purpose claimed by the respondent in engaging in the conduct the subject of complaint was in truth its purpose. This is so on any view of the meaning of the word "purpose", and regardless whether the interpretation submitted by the applicant or the respondent as to the meaning of "purpose" in s 46(1) is accepted. The object in view or sought to be achieved by the conduct of the respondent was clearly to ensure that Collected Data could not be used by anyone for the purpose of direct marketing to consumers. It was for this reason, and this reason alone, that the respondent took advantage of its substantial degree of market power in the Wholesale Market. This purpose is not a proscribed purpose within the meaning of s 46(1)(a) TPA. The respondent did not engage in the relevant conduct for the purpose of eliminating or substantially damaging the applicant as a competitor in the Retail Market. 144 I form this view for the following reasons, taking into consideration relevant submissions of the applicant in relation to this claim. 145 First, although the effect of the removal of the Excluded Data may indeed be that the applicant's products are less attractive to its existing customers in comparison to the its existing offerings, this in itself does not persuade me that the respondent's purpose in excluding the Excluded Data is to either damage or eliminate the applicant in the Retail Market. I note that the proposal of the applicant applies to all licensees --- the applicant is in no way distinguished. Impact on the business of the applicant is explicable as a potential consequence of the proposal, rather than a purpose. 146 Second, as I have already said, the clear weight of the evidence before me is that the only purpose of the respondent in implementing its proposals was to prevent the misuse of the Excluded Data for direct marketing. Earlier in this judgment I noted the clear Parliamentary intent, as reflected by the introduction of s 27 Land Legislation Amendment Act 2003 (Qld), to prevent licensees allowing the distribution of an owner's name and address for any direct marketing purposes, and the subsequent insertion of clauses to that effect in the new contractual agreements with the licensees. I have also noted the Departmental correspondence, including Briefing Notes, annexed to Mr Rush's affidavits, which support the existence of this purpose. Similarly the consistent evidence of the respondents' witnesses at the hearing was that the only purpose of the respondent was to prevent direct marketing using data originally supplied by the respondent. 147 While in some cases where an entity has used its dominant position it may, as the Privy Council said in Telecom Corporation of New Zealand Ltd [1995] 1 NZLR at 402 be hard to imagine a case in which it would have done so otherwise than for the purpose of producing an anti-competitive effect, and it will legitimate for a court to infer from the respondent's use of its dominant position that its purpose was to produce the effect in fact produced, the respondent in this case is a government department under the direction of a State government Minister which, while engaged in supply of data for revenue, is also required to take into account broader community interests. In my view it is not difficult to accept that the public interest to ensure that its data base is not misused for direct marketing purposes is what has motivated the respondent to act in this case. 148 Third, from the consistent evidence of the respondent's witnesses it could not be inferred that changes to the respondent's pricing structure were implemented for the purpose of eliminating or damaging the applicant as a competitor. The respondent's proposal was implemented in relation to all licensees, not only the applicant and in accordance with a Department wide approach. One possible explanation for this development is that the respondent was seeking to eliminate all possible competition in the Retail Market, including that posed by the applicant. However it is inconsistent with a deliberate attack on the applicant specifically as a competitor. 149 Fourth, according to evidence of Mr Witt, the current licence fees are considerably lower than they were in the late 1990s when the applicant paid $600,000 upfront plus $50,000 per month for five years for its licence (affidavit of Mr Witt para 13). The applicant currently pays $158,749 per annum in licence fees, and under the proposed new licence the applicant would pay a maximum of $158,749 comprising licence fees and a capped royalty fee (Witt affidavit para 13, Oakley affidavit para 27). The proposal of the respondent meant, at least in the foreseeable future, that the licensees would not pay more under the proposed licence than they were paying under the current arrangement (oral evidence of Mr Oakley TS p 279 ll 34-45), although clearly without receiving the Excluded Data, which is a key aspect of the applicant's complaint. 150 Fifth, the earnings from the payment of licence fees by the eight licensees --- in the order of $1 million per annum --- are tiny in comparison with the total budget of the Department. I understand from evidence of Mr Rush that the earnings of the Department from statutory sales in, for example, the 2004-2005 financial year added only approximately $0.17 million to the Department's revenue (TS p 296 ll 23-42). 151 These sums may be compared with the total Departmental budget allocation. According to evidence of Mr Rush, in terms of the departmental budget allocation drawn primarily from treasury allocations and a small amount of departmental revenue, the departmental revenue and expenditure allocations were of the order of just under $500 million in the 2003/2004 financial year, and $784 million or $787 million up until the 2006/2007 financial year (TS p 288 ll 6-10). From the respondent's perspective the revenue earned from the licensees was not substantial or indeed a major issue (evidence of Mr Witt TS p 202 ll 5-15). This supports the respondent's contention that its purpose related only to the prevention of direct marketing, not financial concerns and the elimination or damage of a competitor. 152 Sixth, the introduction of the new pricing structure was explained by Mr Fry as resulting from the introduction of the Department's Information Access and Pricing Policy on 1 March 2004, between the previous licence (commencing on 1 July 2003) and the expiry of this licence on 30 June 2005. According to Mr Fry, that access and pricing policy changed dramatically the way in which the Department would in future provide access to information from the Department (TS p 206 ll 2-20). As I noted earlier in this judgment, in the case of "Developers" (including the applicant) the Information Access and Pricing Policy contemplated payment to the Department a royalty fee and/or upfront fee approved by an authorised Delegated Officer of the Department. This is exactly what is contemplated by the proposed licensing agreement in this case. There is no suggestion that the introduction of the Information Access and Pricing Policy itself was in any way part of a plan by the respondent to eliminate or damage the applicant. I also note that the Information Paper "Access to valuation and sales information beyond June 2005" dated 14 December 2004 (annexure WBF-08 to Mr Fry's affidavit) prepared by the Department and distributed to licensees is compatible with the Information Access and Pricing Policy. 153 Finally, the respondent's witnesses were unequivocal in their evidence, both affidavit and oral, that the move to exclude the Excluded Data was a direct response to the complaints the Department had received, and the failure of provisions in the agreements between the respondent and the licensees to prevent misuse of the Excluded Data through direct marketing. The purpose of making a new proposal to withdraw names and addresses from the bulk data was as a consequence of complaints received from various individuals that their personal details had been obtained by direct marketers and they were concerned about Government information being used in inappropriate ways. 16. Numerous complaints were received by the Department both from individuals concerned about receiving direct marketing and real estate agents complaining about other real estate agents undertaking direct marketing. 17. It had been hoped that by imposing direct marketing provisions in the current licences that this would control the release of information to marketeers to be used for direct marketing. 18. It became apparent that enforcing the conditions in the licence of all licensees was going to be difficult as the Department did not have a business relationship with all control over the businesses alleged to have undertaken the direct marketing. The complaints in the exhibits were a combination of complaints from consumers and those from real estate agents who were not engaged in direct marketing. 155 The applicant submitted that of the complaints received by the respondent the majority are from real estate agents and building managers, with 37% attributable to individuals, and in view of the number of transactions in Queensland every day the number of complaints is minor. However I accept the evidence of the respondent's witnesses that there were many complaints by telephone. Further, I do not accept that, simply because a large number of complaints were from real estate agents and business managers, they were not "real" complaints as the applicant's submissions seem to imply, and I do not accept the submission of the applicant that the number of complaints received by the respondent would not justify a substantial overhaul to contractual arrangements in place since 1992. • The respondent's purpose in refusing supply of the Excluded Data is clearly to require that end users who wish to obtain that data must do so from the respondent directly, using the respondent's range of search products. Its purpose in doing so is to prevent the applicant and the other licensees from engaging in competitive conduct in supplying that information to its customers as part of the applicant's own suite of licensed data products. • The applicant objects to the admission of opinion evidence of Mr Norling as to the purpose of the respondent, primarily because the matter in issue is purpose under s 46 TPA which is a subjective purpose question, and Mr Norling's opinion evidence as to the applicant's purpose is not a matter within his expertise. • Most of the applicant's customers are real estate agents who, before listing any property for sale or lease, must take reasonable steps to identify or verify the property's ownership and its description. It is inevitable that, as a result of the proposal, the respondent's search fee income, whether by way of QVAS data searches or titles registry searches, will increase. • Although the respondent's witnesses claimed that the proposed changes were in response to privacy concerns, prevention of direct marketing by end users (specifically real estate agents) was in fact the motive not the purpose --- the purpose was to prevent the applicant from engaging in the conduct of providing the Excluded Data in its existing products to end users. The conduct sought to be deterred or prevented was competitive with the conduct of the respondent in providing names and addresses in its statutory searches. 158 Section 46(1)(c) must be read in the context of the policy objective sought to be achieved by the TPA. As pointed out by Gleeson CJ, Gummow, Hayne and Callinan JJ in Melway 205 CLR at 13). It follows that the conduct of a person which the corporation or other entity with the substantial degree of market power seeks to affect must be conduct in the nature of competition in a market. Like s 46(1)(a), the breadth of application of s 46(1)(c) is such that it does not need to be the market in which the respondent is a participant (cf Merkel J in Robert Hicks Pty Ltd (t/as Auto Fashions Australia) v Melway Publishing Pty Ltd (1998) 42 IPR 627 at 643, Toohey J in Ross Payne & Co v Western Australian Lamb Marketing Board unreported, Federal Court of Australia, 3 August 1983, Wilcox J in Pont Data Australia Pty Ltd v ASX Operations Pty Ltd (1990) 93 ALR 523 at 555). Accordingly, it is within the scope of s 46(1)(c) that a corporation or entity with a substantial degree of market power in the Wholesale Market could breach s 46(1)(c) because, inter alia , its purpose was to deter or prevent the a person from engaging in competitive conduct in the Retail Market. 159 However, notwithstanding the submissions of the applicant, I am not persuaded that the purpose of the respondent was to deter or prevent the applicant from engaging in conduct which was competitive with the conduct of the respondent when it discharged its statutory function of providing names and addresses in response to statutory searches in the Retail Market. Similarly, it cannot be said that the proposal of the respondent had the purpose of deterring or preventing the applicant from engaging in competitive conduct in the Retail Market to the benefit of other licensees --- the proposal to exclude the Excluded Data from the data supplied by the respondent was identical in respect of all licensees. So, for example, in my view the purpose of the respondent in this case was not to gain a competitive advantage in the Retail Market over the applicant in relation to the Excluded Data or to deter the applicant from discounting prices of its product to competitors of the respondent (cf Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [2003] FCAFC 149 ; (2003) 129 FCR 339 at 355-356. I form this view for the following reasons. 160 First, while I accept that, as a result of the respondent's proposal, the applicant will not be able to continue to provide services to its customers which include the Excluded Data, and that this may impact upon the business of the applicant as claimed in para 9(b) of the amended statement of claim, the applicant must demonstrate more than this effect to show that the purpose of the respondent's conduct was in breach of s 46(1)(c). As pointed out by Lee J in NT Power Generation v Power & Water Authority [2002] FCAFC 302 at [17] , although the effect of conduct may, in some circumstances, explain or reveal the purpose of the conduct, the inference may be negated by other material relevant to the issue of purpose (cf Photo-Continental Pty Ltd v Sony (Australia) Pty Ltd (1995) ATPR 41-372 at 40,122-40,123). It is the purposeful conduct of the contravening corporation that attracts the operation of s 46(1)(c): Baxter Healthcare 237 ALR at 519. 161 Second, in my view the "purpose" of the respondent, which as Toohey J observed in Queensland Wire [1989] HCA 6 ; 167 CLR 177 carries with it the notion of an intent to achieve a certain result, was to prevent the Excluded Data being used for direct marketing. The clear inference which can be drawn from the conduct of the respondent is that, despite publicly expressed concerns of the respondent concerning usage of its data for direct marketing, and although the licensees were required by the licence agreement between themselves and the respondent to ensure that end users had agreed not to use the data or data products supplied by the licensees for direct marketing, nonetheless end users (primarily some real estate agents) were engaging in direct marketing using data sourced originally from the respondent. Furthermore the Licensor may prohibit or limit distribution of certain particulars forming part of the Licensed Data. Excluded Data could still be obtained from the respondent, because the respondent was statutorily obliged to supply it. One obvious result of end users obtaining Excluded Data on the basis of individual searches is that the cost and process of so obtaining that information is a clear disincentive to direct marketing activities, which is compatible with the stated purpose of the respondent. 163 Third, the applicant made a number of claims in the amended statement of claim concerning the alleged intention of the respondent to harm the applicant. I note that these statements were allegedly made almost 10 years ago, and appear to bear little relationship to the complaint before me. Further, I note that Mr Witt was not cross-examined in relation to these statements, nor did any other person who could give direct evidence as to such an offer give evidence. I also note Mr Oakley was cross-examined in relation to a letter from Infopac received by him in 1998 (pp 278-279) however there was no substantiation that the respondent had sought to cause harm to the applicant in connection with an contractual relationship between the respondent and Infopac. I therefore give no weight to this aspect of the claim. • Similarly Mr Witt was not cross-examined concerning the allegations of the applicant with respect to Mr Edwards and Residex (amended statement of claim para 10(b)(i)(B)(II)). No evidence was given by Mr Edwards, and Mr Edwards did not appear as a witness in these proceedings. I also give no weight to this aspect of the claim. This would apply to the other seven licensees. " Mr Fry was not cross-examined with respect to this statement. o Ms Woodward gave no evidence in these proceedings. o It is clear from the evidence of Mr Fry that all licensees were being treated in the same way, and this evidence does not establish a breach of s 46 as alleged. I agree with the applicant that the evidence of Mr Norling in relation to the purpose of the respondent is not an area within his expertise. An assessment of the purpose of the respondent is an issue for the court to decide, based on the evidence before it. 165 In my view, the purpose of the respondent in engaging in the conduct complained of was not that of deterring or preventing the applicant from engaging in competitive conduct in the Retail Market. Nonetheless, as I have already found, and indeed it is not in dispute, that the terms of s 46(1)(c) are sufficiently wide to include a claimed conduct which constitutes an entity taking advantage of its power for the purpose of deterring or preventing a person who is a stranger to the litigation, from engaging in competitive conduct in a market in which no party to the litigation is a participant. 167 As I have already indicated in my judgment there is little evidence before me as to the nature of this market including little evidence from the expert witnesses. It does not appear however to be in dispute between the parties that competitive conduct of real estate agents in these markets includes direct marketing activities to clients or potential clients. The applicant alleges that the purpose of the respondent is to deter or prevent real estate agents from direct marketing to owners of real property using the Excluded Data. That is denied by the respondent, although the respondent concedes that its purpose in proposing to exclude the Excluded Data is to ensure that such information in bulk form is not available for direct marketing purposes. 2. The respondent's witnesses clearly supported the inference that the purpose was to deter or prevent real estate agents in particular. Well, what's the purpose of it then? I mean, what do you achieve by taking out that data, if they can get it anyway? --- To me, I suppose, when you talk about direct marketing, you talk about quantity. You send out - if you do marketing studies, and I have a degree in marketing - if you send out a hundred letters you get standardly about a 3 per cent response, okay. When you've got the bulk data you're getting all of Queensland at one go. You can do that sort of thin, you can send out large, large quantities of mail and live off a very small number of returns. When you've got to do it search by search by search, that's really not possible to do that sort of marketing approach. Why, because it's too expensive?--- It's too time consuming. What you could do with a large number is set up mail mergers and mail searches and you can send it out easily. It's automated. You can have machinery set up so that it prints them. You can even have the machinery set up to fold the letters and put them in the envelopes. So what you're trying to do is to stop these real estate agents from conducting the way they market?--- Having bulk mail-outs and things like that, yes. The applicant alleges that the respondent thereby has the purpose of deterring or preventing real estate agents from engaging in competitive conduct. The respondent denies that allegation also. However, the evidence supports the obvious inference that direct marketing by real estate agents is competitive conduct in the markets for their services. The respondent led no evidence to the contrary. 4. It follows that the proposal to exclude the names and addresses from Collected Data is conduct that the respondent proposes to engage in for a purpose proscribed by para 46(1)(c). 169 A number of submissions were made the respondent in relation to these claims. The respondent's proposal to withdraw the Excluded Data from the Collected Data supplied to licensees does not prevent real estate agents from engaging in direct marketing. The proposal merely prevents persons, including real estate agents, from using data collected by the Department being used for purposes other than those contemplated by ss 77(3) and (3A) VL Act . There is no deterrence on real estate agents and others direct marketing by, for example, newsletter drops, newsletters and so on. 2. Evidence of witnesses of the respondent was that the purpose of the respondent was to try and stop direct marketing using the Department's data-sets rather than stop direct marketing activities of real estate agents per se . We are saying we are trying to stop direct marketing using this data set from our Department. On the evidence there appears to be no prohibition on anyone using information obtained directly from either the respondent or a third party (for example, local government authorities) in direct marketing activities. The effect of the prohibition is that a person cannot use for direct marketing purposes information obtained through a distributor such as the applicant. 4. A distinction needs to be made between the purpose of the proposal of the respondent and the effect of it if implemented. The sole purpose of the Department is the prevention of the misuse of the Excluded Data and the protection of privacy of individuals and businesses that have provided, compulsorily, information to the respondent. The proposal, if implemented, may have the effect of preventing or deterring certain competitive conduct such as direct marketing, by closing off one source of names and addresses, but that the proposal might have that effect is irrelevant if the purpose for its implementation was not to deter or prevent competition, which is the case here. 5. This case is no different to that encountered by the Full Court in Australasian Performing Right Association Ltd v Ceridale Pty Ltd (1990) 97 ALR 497. 6. The respondent supplies a product, the QVAS database, which is compiled for purposes which do not include direct marketing. The respondent is entitled to prevent the misuse of its information for a purpose for which the information was not collected. 7. The licence agreement emphasises that data supplied may only be used for certain purposes. Indeed it would be difficult to produce such evidence --- it is clear from the terms of the 2003 Licence Agreement that the applicant is contractually obliged to ensure that its customers (including real estate agents) do not use the information for such purposes, and presumably any direct marketing activity engaged in by real estate agents who are customers of the applicant would be in breach of their own agreement with the applicant. 171 In my view the following issues are clear. 172 First, as I noted earlier in this judgment, it is not contended by the applicant that the provisions in the 2003 Licence Agreements, prohibiting misuse of Collected Data (supplied by the respondent) for direct marketing purposes, contravene s 46 TPA. The claim of the applicant that the withdrawal of Excluded Data by the respondent to ensure that Collected Data supplied by the respondent is not misused for direct marketing purposes is somewhat difficult to reconcile with the position of the applicant with respect to the provisions of the existing agreement which are intended to ensure that the data is not so misused. 173 Second, I note the complaints made to the respondent and other Departments in relation to direct marketing activities of real estate agents. Several volumes of complaints have been accepted into evidence. They included a complaint concerning a direct marketing letter from a real estate agent addressed "Dear Name Suppressed" to a post office box at Robina, which clearly referred to data of the respondent. 174 As I have already found, the purpose of the respondent in proposing to withdraw the Excluded Data from supply to the applicant and other licensees is to prevent data supplied by the respondent being used for direct marketing purposes. I accept the evidence of witnesses for the respondent, including Mr Rush and Mr Fry, on this issue. While I note the applicant's submission concerning evidence of Mr Oakley, I also note that the relevant statements of Mr Oakley were made in the course of a cross-examination concerning complaints received by the Department about the misuse of Collected Data, and consider his comments should be read in that light. 175 Third, while in the absence of evidence to the contrary I accept that the most likely persons affected in their direct marketing activities by the withdrawal of the Excluded Data would be real estate agents, I accept the respondent's submission that this is an effect rather than the purpose of the respondent's conduct. I also consider that principles articulated by the Full Court in Ceridale 97 ALR 497 are relevant here. 176 In Ceridale 97 ALR 497, the Australasian Performing Right Association Ltd ("APRA") owned copyright of public performances in nearly all current popular copyright music, and the respondents were all persons associated with premises within which the subject works had been performed without the licence of APRA. APRA would grant, inter alia , licences in respect of premises to play recorded music, the use of a background music system, and live performances with respect to works over which APRA held copyright. The respondents were persons associated with premises within which works over which APRA held copyright had been performed. The licence held by the first respondent was terminated by APRA on account of non-payment of outstanding licence fees. Further dispute between the parties led to APRA filing a notice of motion seeking summary judgment with injunctive relief. In relation to s 46 , his Honour said that APRA had the monopoly control over the market concerning the supply of the performing rights of music played to patrons in nightclubs and discotheques, and the refusal to grant a customer such as the defendants a licence which would enable the customer to obtain that commodity was plainly an exercise of market power (at 508-509). His Honour also found that it was no answer to a complaint of a contravention of s 46 that the corporation was only taking advantage of a legal right (at 509) and in this case the proper characterisation of APRA's actions was that it was taking advantage of its powers in the market to prevent the defendants from engaging in competitive conduct in another market simply in order to collect a disputed debt (at 509). The trial judge refused to grant an injunction, the object and effect of which was to force a business to pay a debt which was subject to a genuine dispute. 177 Wilcox, Spender and Pincus JJ allowed the appeal of APRA. It would seem that, in practical terms, it would be impossible for a nightclub or discotheque to survive without using music of the appellant. Accordingly, APRA is a corporation to which section 46 applies. But we are unable to agree that, upon the facts of this case, APRA has been guilty of any of the proscribed acts. The only suggested conduct was a contravention of para (c), that is that APRA had denied licences 'for the purpose of deterring or preventing a person from engaging in competitive conduct in that or any other market'; the relevant 'person' being each of the respondents and the relevant 'other market' being the nightclub or discotheque market. We agree that the granting of an injunction might have the effect of preventing the respondents from competing in those markets. But there is no basis for saying that this was APRA's purpose. APRA had nothing to gain by putting the respondents out of business. On the contrary, it was in the interests of APRA to maximise the number of users of its material, so long as they paid licence fees. APRA's purpose was merely to prevent unauthorised use of its material and the integrity of its licensing system . The evidence is overwhelming that the purpose of the respondent was to prevent misuse of its database, in circumstances where legislatively supported contractual provisions in the licence agreements appear not to have been successful in preventing that misuse. Indeed, in my view it is fair to say that as a general proposition, provided they did not misuse Departmental data, the respondent had nothing to gain by deterring or preventing the participants in the Real Estate Agents' Services Markets from engaging in competitive conduct in those markets. 179 Fourth, irrespective whether during the 1990s the Department may have had no qualms concerning its database being used for direct marketing purposes by real estate agents as claimed by Mr Catelan (TS p 46 ll 44-46) and conceded by Mr Witt (TS p 222 ll 46-48 and p 223 ll 1-3), it appears that by October 2002 the Department was concerned about misuse of the data for direct marketing as a general proposition (for example, evidence of Mr Fry TS p 195 ll 13-14). This concern is reflected in the enactment of s 77(3A) VL Act , introduced into the VL Act in May 2003, which specifically required the inclusion in any contract for the supply of information a provision allowing the chief executive of the respondent to exclude particulars of valuation roll information if satisfied, on reasonable grounds, that inclusion of the particulars may result in the particulars being inappropriately disclosed or used. The clear purpose in the conduct of the respondent has been to ensure that the respondent's database should not be misused, by anyone . While real estate agents may be the most affected group, in my view this does not mean that the purpose of the respondent is to deter real estate agents engaging in competitive conduct in the relevant market. 181 Although the respondent clearly has a substantial degree of power in the Wholesale Market, and it did take advantage of that power, in my view it did not take advantage of that power for purposes proscribed by s 46(1) TPA. 182 Accordingly, the claim of the applicant fails, and is dismissed with costs. The application filed 18 March 2005 is dismissed. 2. The applicant pay the respondent's costs of and incidental to the application, to be taxed if not otherwise agreed. | section 46 trade practices act 1974 (cth) respondent state collects and maintains valuations and sales data for real property in queensland respondent supplies bulk valuations and sales data for real property in queensland to the applicant pursuant to a licence agreement whether respondent has engaged in or proposes to engage in conduct for a proscribed purpose in breach of section 46 act because of the terms on which the respondent proposes to renew its licence agreement with the applicant respondent proposing to exclude certain information from the data provided respondent claims purpose of removal of data is to prevent direct marketing using respondent's data whether respondent state is bound by section 46 meaning of "carrying on a business" application of act to state nature of the "market" as contemplated by section 46 and section 4e act existence of a market for the supply of the collected data or, alternatively, a wholesale market and a retail market for the collected data and real estate agents' services markets nature and scope of the relevant market(s) market power does the respondent have a substantial degree of power in any of those markets as contemplated by section 46 taking advantage of substantial degree of power in a market is the conduct of the respondent in refusing to renew the current licence held by the applicant on the same terms, in particular excluding the excluded data, conduct which can be characterised as the respondent taking advantage of a substantial degree of power in the wholesale market purpose of respondent in excluding relevant information from data whether for a purpose alleged by the applicant in contravention of section 46 whether conduct for the purpose of eliminating or substantially damaging the applicant in the retail market whether conduct for the purpose of deterring or preventing the applicant from engaging in competitive conduct in the retail market whether conduct for purpose of deterring or preventing real estate agents from engaging in competitive conduct in the real estate agents services markets trade practices trade practices |
A draft of the subpoena was provided to the Court. Although not obliged to do so, Telstra provided a copy of the draft subpoena to the respondents' solicitors. The respondents contend that the Court should not grant leave for the subpoena to be issued on the grounds that the subpoena calls for production of a very wide range of documents, is unnecessarily broad and vague and, further, that the subpoena is otherwise oppressive and an abuse of process. 2 I reject the respondents' contentions and will grant Telstra leave to issue the draft subpoena directed to a named officer of the ACC in the form of Exhibit "NJH-2" to the affidavit of Natalie Hickey sworn 11 June 2008. It is well established that a subpoena must be issued for a legitimate forensic purpose: NSW Commissioner of Police v Tuxford [2002] NSWCA 139 at [20] . A subpoena will be refused unless the documents sought to be produced "on their face, have some potential relevance to the issues in dispute between the parties": Dunstan v Human Rights and Equal Opportunity Commission [2004] FCA 1137 at [29] . Subpoenas may be issued to non-parties provided that they specify with reasonable particularity the documents which are required to be produced: P Dawson Nominees Pty Ltd v Multiplex Pty Ltd (2007) 64 ACSR 53 at [24]. I was told that Telstra obtained a copy of the Ross Affidavit by searching the Brisbane registry of the District Court of Queensland. The Ross Affidavit disclosed that the ACC was then conducting a joint investigation with the Australian Taxation Office codenamed "Operation Wickenby" and it was sworn in support of restraining orders against property owned by the First, Third, Fourth and Fifth Respondents. In particular, the Ross Affidavit set out in some detail the nature of documents which the ACC had accessed which were relevant to the joint investigation. The Ross Affidavit also disclosed the source of the documents and, so far as was relevant, what the documents disclosed. 5 On reading the Ross Affidavit and after speaking to an officer at the ACC, on 9 April 2008, Telstra's solicitors wrote to the ACC providing some background about these proceedings and foreshadowing a possible request for documents from the ACC ("the Request Letter"). Paragraph 2.4 of the Request Letter not only identified particular types of documents but also particular subject matters that were sought. In order to progress this matter the ACC would appreciate if you could issue a subpoena to [the ACC]. Upon the receipt of the subpoena the ACC will produce the documents subject to any applicable public interest immunity considerations. The ACC is open to any practical arrangements designed to cause the least inconvenience as to the inspection and production of the documents. Briefly stated, the requested documents are documents evidencing: (1) how the first respondent's data listings were prepared; (2) the first respondent's awareness, if any, of complaints by Telstra; (3) copying by the first respondent of Telstra's listings or headings; (4) the first respondent's intention or decision to dilute Telstra's brand identity by use of particular sales techniques or similar trade indicia; (5) consumer confusion as to whether the first respondent is related to, associated with, or approved by Telstra. The subpoena also closes with a catch-all request for "[c]opies of all other documents which may be relevant to the Telstra / Sensis proceedings as referred to in the ACC Letter [in [7] above]. I agree. The first and third categories seek evidence of copying, which is relevant to the trade mark, copyright, and passing off causes. The second and fourth categories are designed to elicit evidence of intent, which would provide further support for each of those causes of action. Finally, the evidence of consumer confusion is obviously relevant to passing off, trade mark, and the misleading or deceptive conduct allegations. 10 The respondents nevertheless submitted that leave should be denied because the proposed subpoena "calls for production of a very wide range of documents and is unnecessarily broad, vague and far too wide in scope. " They object that there are no date limitations; that the documents regarding copying may prove to be irrelevant if the respondents end up making concessions regarding how the data was compiled; that the subpoena effectively amounts to a second go at discovery in absence of any basis for the assertion that the respondents failed to make adequate discovery; that some documents may go to quantum which is not yet in issue; that some documents may be privileged; that the subpoena is premature because the pleadings have not yet closed; and that the scope of the subpoena is such that both the parties and the ACC will likely incur significant costs in relation to the subpoena. For the following reasons and despite those objections, I consider that the applicants should be granted leave to issue the subpoena. 11 It is not necessary to consider the respondents' objections category-by-category. That is because the catch-call category effectively subsumes the prior categories and more or less states: "Give us all the documents that you, the ACC, have previously identified as relevant. " If the ACC produces all the documents in this category, it will necessarily have satisfied the previous categories, which, as noted, are the same categories identified in par 2.4 of the Request Letter. Accordingly, the application for leave to issue the subpoena as currently drafted must stand or fall on the validity of the catch-all category. 12 Ordinarily, that sort of request contained in the catch-all would be set aside, given the well-settled rule that the court will not ask a stranger to the proceedings "to go to trouble and perhaps to expense in ransacking his records and endeavouring to form a judgment as to whether any of his papers throw light on a dispute which is to be litigated upon issues of which he is presumably ignorant. " P Dawson (2007) 64 ACSR 53 at [24]. 13 However, the applicants submit that the form of the subpoena is, in this case, justified by the prior correspondence with the ACC. I accept this submission. The applicants are not asking the ACC to incur the costs of ransacking their records at cost. The 1 May 2008 letter from the ACC states that the records have already been searched. Similarly, the applicants are not asking the ACC to form a judgment about matters which the ACC is ignorant; the judgment has already been formed. Moreover, public investigatory bodies like the ACC which have previously conducted or are conducting an investigation and collected documents in the course of such investigation stand in a different position to a non-party such as a bank or business that simply happens to have acquired or generated potentially relevant documents in the ordinary course of business but has no special reason to know of any litigation or relevance of its records to that litigation. Such records as the ACC has can be, and usually are, clearly and separately identifiable and identified as documents obtained in the course of a particular investigation. P Dawson (2007) 64 ACSR 53 at [25]. 14 Secondly, the ACC is not presumably ignorant of the dispute in light of the prior correspondence. Thirdly, it is not being asked to form a judgment as to potential relevance of documents; it is simply being asked to produce documents as to which it has already formed a judgment regarding relevance (ie the documents referred to in the 1 May letter). Because it appears from the correspondence that the ACC has already reviewed and identified the relevant documents, I consider that the documents are identified with "reasonable particularity": Commissioner for Railways v Small (1938) SR (NSW) 564 at 573. Indeed, the ACC does not appear to make any complaint regarding undue burden or oppression. 15 In addition, the submission that a court will not issue a subpoena as a substitute for discovery is not apposite. First, the authorities to that effect relate to the issue of subpoenas to a party to the litigation, not a non-party such as the ACC: P Dawson (2007) 64 ACSR 53 at [24]. Secondly, "discovery" in this context is a term of art, as was explained by Heerey J in P Dawson (2007) 64 ACSR 53 at [24]. It means only that a court will not ask a person to ransack their records without clear instructions as to what is being sought. Again, as I have explained, that is not the case here. The ACC has already identified the documents; the subpoena is simply a formality requested by the ACC as condition precedent to their handing over the documents. 16 In short, I consider that where a non-party (particularly a public investigatory agency) has: (1) confirmed to a party that it has searched for and identified potentially relevant documents; (2) indicated in writing that it has no objection to producing those identified documents provided a formal subpoena is issued; and (3) the court is satisfied identified documents in fact appear to be potentially relevant, there is in general no obstacle to the court exercising its discretion in the interests of justice to issue a subpoena for the production of those documents. 17 With respect to the remainder of the respondents' objections, I note: (1) that some of the documents requested may not be relevant in the end does not matter - the standard is potential, not actual, relevance; and (2) that the pleadings have not yet closed does not matter because there is no limit on the time at which the court can issue a subpoena: Hughes v Western Australian Cricket Association (Inc) (1986) 66 ALR 541 at 543-44. The problem of potential costs to the respondents in dealing with documents generated by the subpoena can and will be addressed in two ways. First, under the ordinary rule, costs follow the event, so that if the respondents prevail in the proceedings they will have the costs incurred in relation to this subpoena as part of those costs. Secondly, if the respondents, after seeing the response to the subpoena, are of the view that it has led to costs thrown away or other waste, their remedy is to make application for a separate costs order. If the [applicants], after leave is granted and the subpoena is answered, decide[s] to seek to bring any documents from that yield to the Court, then the Court will need to be addressed on any issue that might prejudice the [respondents]. Calder v Commissioner of Taxation [2004] FCA 1770 at [11] . To the extent that the subpoena yields documents said to be problematic for one reason or another, those problems can be dealt with in due course. 19 For the foregoing reasons, leave to issue the subpoena will be granted. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | leave to issue potential relevance to present proceedings whether oppressively wide, vague, or an abuse of process where documents already identified in prior correspondence leave granted subpoenas |
That decision was upheld on appeal by the Administrative Appeals Tribunal ("the Tribunal"). Mr Culley brings an appeal on questions of law from the Tribunal's decision. The delegate's decision (and that of the Tribunal) was made under s 206F of the Corporations Act 2001 (Cth) ("the Act"). The form of the notice required for the purposes of s 206F(1)(b)(i) is prescribed by Regulation 1.0.3(1) of the Corporations Regulations 2001 (Cth) ("the Regulations") and appears in Schedule 2 of the Regulations as form number 5249. B.M.C. B.M. Access to documents which are identified as "confidential" may be given subject to strict conditions of confidentiality. The particulars disclosed that two of the companies owed substantial sums to the Australian Taxation Office, including goods and services taxes and payroll deductions, made on behalf of employees who were required to pay tax on a PAYG basis. Attachment "B" contained a list of documents. These included the s 533 reports for each of the four companies referred to in the notice. There was also a reference to a certified company extract dated 26 September 2006 relating to a fifth company, Austbloom Pty Ltd ("Austbloom"). Mr Culley made written submissions and appeared before the delegate. Having considered Mr Culley's submissions the delegate determined that Mr Culley should be disqualified from managing corporations for a period of two years from 14 February 2007. Mr Culley appealed to the Tribunal. His right to do so was conferred by s 1317B of the Act. By s 43(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") the Tribunal, on the appeal, was able to exercise all of the powers and discretions conferred by the Act on the delegate. The Tribunal affirmed the delegate's decision. The Tribunal heard the appeal on 21 and 22 January 2008. It made its decision and provided its reasons on 8 July 2008. It noted that ASIC's show cause notice had referred to four companies in which Mr Culley had been a director. It noted that, prior to the hearing, ASIC had advised Mr Culley and the Tribunal that, at the hearing, it proposed also to rely on Mr Culley's involvement as sole director of Austbloom which had been subject to a report under s 533 of the Act on 20 November 2006. Mr Culley objected to any evidence being considered which related to the affairs of Austbloom. This objection was overruled by the Tribunal. Mr Culley was well aware that the position regarding Austbloom would be put to the Tribunal at the hearing by raising this issue in its statement of facts and contentions served on Mr Culley nearly five months prior to the hearing and he was given a full opportunity to be heard in relation to Austbloom at the hearing. In any event s 206F allows the Tribunal to have regard to any other matters considered appropriate in considering his disqualification once he has passed the initial barrier of being an officer of two or more corporations relevant to the operation of that section. In substance, Mr Culley sought to excuse himself from any responsibility for the five companies being wound up on the ground that, in each case, the company's indebtedness arose from circumstances beyond his control. The Tribunal then directed particular attention to the fact that three of the companies owed a total of $1,092,000 to the Australian Taxation Office. This debt included considerable sums of unpaid tax instalments deducted from employees' salaries, goods and services taxes and income tax. The debt had accumulated since, at least, 1999. In this Court over the last 20 years at least, Judges have been extremely reluctant to grant adjournments in winding up proceedings where it appears that there is a claim for outstanding group tax because the group tax is part of the employees' wages which have been withheld to be paid to the tax office on behalf of the employees. They are, for all intents and purposes, trust moneys which do not belong to the company. If the company directors use these monies for trading purposes, it shows a complete lack of appreciation of this situation and a serious lack of commercial morality. It was noted that Mr Culley appeared to be of the view that the unpaid tax was not significant in relation to the total of his 27 year career and taxes paid. It is particularly relevant that, in the case of Austbloom, Mr Culley arranged to pay out local creditors to retain their goodwill for a successor company while leaving $121,350 owing in taxes. These matters were collected in a single paragraph. The terms in which the Tribunal expressed itself were the subject of criticism during argument and it is, therefore, necessary to set the paragraph out in full. The Tribunal used abbreviated titles for the companies. Oriental Experience Pty Ltd was referred to as "Oriental". Construction Resources Pty Ltd was referred to as "Resources". B.M.C. Special Projects Pty Ltd was referred to as "Special Projects". B. M. Culley & Associates Pty Ltd was referred as "Associates". It will be convenient to adopt these abbreviations for the purposes of these reasons. While Mr Culley may argue that the reason for the insolvency of each company were (sic) beyond his control it is not clear that appropriate action was taken in a timely manner. Mr Culley's evidence was that his primary business had been construction development. However, it would appear that the insolvencies of Resources, Special Projects and Associates resulted from these companies moving away from construction management and becoming head contractors and part owner of developments. In all cases including Oriental and Austbloom it would appear that the companies had inadequate capital to deal with losses. In Oriental and Austbloom there are clear inferences from the liquidators that these (sic) had been a failure in management and record keeping. Section 44(1) provides for appeals to this Court "on a question of law" from any decision of the Tribunal: see TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation [1988] FCA 119 ; (1988) 82 ALR 175 at 178; Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321 at 324-5. Mr Culley's further amended notice of appeal identified six questions of law. Some are related to others such that they can be dealt with together. He conceded, however, that the decision of the Full Court in Murdaca v Australian Securities and Investments Commission (2009) 258 ALR 223 bound me to conclude that the first question should be answered "no" and that the second question did not arise. The concession was properly made. The Full Court held (at 250) that a delegate of ASIC could rely on material not appearing in the notice to show cause for the purpose of determining whether or not to disqualify a director provided that it accorded the director natural justice. Specifically the Full Court held (at [127]) that "... we do not agree that ASIC must refer to and address in the show cause notice all matters upon which it might rely in support of disqualification and we do not agree that ASIC is confined to such matters as are contained in the show cause notice when it comes to consider disqualification. " On the hearing of an appeal the Tribunal stands in the shoes of the original decision maker: see Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85 ; (1980) 44 FLR 41 at 46-7. When doing so it can exercise all of the powers and discretions conferred upon the original decision maker: see s 43 of the AAT Act. As the High Court held in Shi v Migration Agent Registration Authority [2008] HCA 31 ; (2008) 235 CLR 286 , the Tribunal is not required, in the absence of any express contrary statutory prescription, to confine its attention to the material which was before the primary decision maker. As Kirby J said (at 303), the Tribunal is able to exercise its powers "with the benefit of any new, fresh, additional or different material. " There is nothing in s 1317B of the Act (or any other provision of the Act) which would require the Tribunal to make its determination on the same material that was before the delegate. The Tribunal was, therefore, entitled, as it did, to have regard to the evidence relating to Austbloom and Mr Culley's role as a director of that company. For practical purposes the related grounds were abandoned. Again, counsel's concession was properly made. The Tribunal's findings in relation to the failure, over a long period, of the companies, over which Mr Culley exercised control, to pay large sums, which had been deducted from employees' wages, to the Australian Taxation Office, would, without more, have supported the Tribunal's decision. Counsel submitted that these obligations arose from a gloss which Woodward J, in Ansett Transport Industries (Operations) Pty Ltd v Wraith [1983] FCA 179 ; (1983) 48 ALR 500 at 507, placed on the differently worded s 13(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"). In submitting that the Tribunal had failed to satisfy the obligations imposed on it by s 43(2B), counsel drew attention to the following matters: As a result, so it was submitted, Mr Culley was confronted with statements by the Tribunal which reflected badly on his business acumen and integrity, but was left to guess at the evidentiary basis for this criticism. Because of this he could not defend his good name. In my view, the Tribunal has not been shown to have failed to meet its obligations under s 43(2B). The Tribunal was not required to record or summarise all of the evidence which it had heard. The evidence comprehended by s 43(2B) was the evidence on which the Tribunal's findings on material questions of fact were based. It is clear that the Tribunal placed considerable weight on the failure of companies controlled by Mr Culley to meet their obligations to the Australian Taxation Office and the breach of trust which was involved in using moneys, which had been deducted for taxation purposes, for business expenses. The evidence on which the Tribunal relied in relation to these matters is clearly set out in its reasons. There is reason to doubt that paragraph 14 contains specific findings. The purpose served by the paragraph is not entirely clear. It may have been intended to do no more than point to matters which cast doubt on the correctness of Mr Culley's assertion that the various insolvencies occurred as a result of matters beyond his control. Phrases such as "it is not clear", "it would appear" and "there are clear inferences" do not suggest that definite findings of fact on these matters were made. Certainly, there is no express finding that the insolvencies did not come about for reasons which were beyond Mr Culley's control. In any event, and notwithstanding the absence of express cross-referencing to other parts of the reasons, at least some of the matters referred to in paragraph 14 can, on a fair reading of the reasons as a whole, be seen to relate to evidence earlier recorded. Thus, the statement that "it is not clear that appropriate action was taken in a timely manner" can be understood to refer to the failure by some of the companies to take timely corrective action to satisfy their obligations to the Australian Taxation Office. The statement that "it would appear that the insolvencies of Resources, Special Projects and Associates resulted from these companies moving away from construction management and becoming head contractors and part owner of developments" can be traced back to evidence to this effect which was given by Mr Culley and summarised earlier in the Tribunal's reasons. The position in relation to the "clear inferences from the liquidators that there had been a failure of management and record keeping" is less satisfactory. While there was documentary evidence before the Tribunal which would have supported a finding by the Tribunal that such failures had occurred, that evidence is not referred to in the Tribunal's reasons. It may, however, be doubted that any finding was made by the Tribunal on these matters. Even if it had been established that the Tribunal had not complied with the requirements of s 43(2B) this would not have constituted a reviewable error of law which would justify the setting aside of the Tribunal's decision: see Repatriation Commission v O'Brien [1985] HCA 10 ; (1985) 155 CLR 422 at 445-6 (per Brennan J); Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at 379 (per Kirby J); and see also Comcare v Lees (1997) 151 ALR 647 at 656-9 (per Finkelstein J). Counsel for Mr Culley accepted that this was the legal position. Question 4 should be answered: "no". ASIC does not submit that this failure prevents Mr Culley from raising these questions on appeal. No does it submit that it is prejudiced in the conduct of its case in this Court by reason of Mr Culley's failure to raise it before the Tribunal. The parties are agreed that the answer to Question 5 must, having regard to authority, be: "yes". There is, however, a dispute as to whether, in the circumstances, the delay was unreasonable. The factual foundation for Mr Culley's complaint about delay is not contentious. Special Projects was wound up on 29 November 2001. A liquidator's report under s 533 was provided to ASIC on 30 July 2002. A second liquidator's report was provided on 31 July 2006. Associates was wound up on 20 December 2001. The liquidator's report was provided to ASIC on 7 April 2005. A second liquidator's report was provided on 26 September 2006. Resources was wound up on 18 February 2002. The liquidator's report was provided on 23 October 2002. A second liquidator's report was provided on 24 August 2006. Oriental was wound up on 27 October 2004. The liquidator's report was provided on 23 December 2004. A second liquidator's report was provided on 25 May 2005. Austbloom was wound up on 23 August 2006. The liquidator's report was provided on 20 November 2006. As already noted, the show cause notice under s 206F was sent to Mr Culley in October 2006. The relevant chronology reads: In Murdaca at 245, the Full Court identified the two preconditions which must be satisfied before ASIC may exercise its powers under s 206F of the Act. These conditions, prescribed by s 206F(1)(a) are that, within seven years immediately before ASIC gives a notice to show cause: Both parties agreed that these preconditions (or trigger points) had been met, in the present case, on 23 October 2002. On that day ASIC received a report under s 533(1) of the Act from the liquidator appointed to Resources. The report was dated 21 October 2002. The two relevant companies for the purposes of s 206F(1)(a) were Resources and Special Projects. Both parties referred to the decision of Heerey J in Kardas v Australian Securities Commission (1998) 29 ACSR 304. In that case his Honour was concerned with the construction and application of s 600 of the Corporations Law , the predecessor of s 206F. The applicant had brought proceedings under the ADJR Act to challenge a disqualification decision. One of the grounds was that the Commission had failed to comply with an implied obligation that it exercise its power within a reasonable time. His Honour there held that a delay of almost two years between service of a show cause notice and a decision to prohibit would be too long. I am satisfied that the s 600 power is subject to such a requirement. A person potentially the object of that power should not be kept in an indefinite state of uncertainty. More importantly, since the purpose of a s 600 disqualification is prophylactic rather than punitive, there should be as little delay as possible in taking steps to protect the public. The affairs of companies vary greatly in their complexity. But the commission does not, as it were, start from scratch. It will, ex hypothesi, have the benefit of a liquidator's report and no doubt the liquidator would usually be willing and able to provide further information and explanation on request. In the present case the Tribunal had found that Resources, Special Projects and Associates were related companies. Resources was solely an employer of labour. Special Projects had been formed to act as a head contractor on two projects, one of which failed. Associates acted as construction manager under contract with a developer for a fee. Associates was the principal company in the group. As a result, it was argued, it would have been premature for ASIC to issue a show cause notice under s 206F before it had received the liquidator's report on Associates. That did not occur until 7 April 2005. Accordingly, it was contended, ASIC's compliance with the reasonable celerity requirement should be assessed as if the last triggering event had occurred on 7 April 2005. The time between then and the issuing of the disqualification notice was one year and 10 months. This delay was not, so it was submitted, to be regarded as unreasonable. No explanation was given for the delay of three years and five months between the winding up of Associates and the provision of the liquidator's report. There is no evidence of any relevant action being taken by ASIC between its receipt of the liquidator's report on Associates in April 2005 and July 2006. On 12 July 2006 ASIC wrote to the liquidators of Special Projects and Resources seeking further information about those companies. On the following day a similar request was directed to the liquidator of Associates. The avowed purpose of these requests for further information was to assist ASIC in determining whether to take action against Mr Culley under s 206F. The liquidators responded to these requests. The last of these responses was received by ASIC on 28 September 2006. The reason for the 15 month delay between the receipt of the liquidator's report on Associates and the despatch of requests for further information is unexplained. The s 206F "trigger" had been pulled on 23 October 2002. The liquidator of Resources had specifically alerted ASIC, in his report, to the legal reality that resort to s 206F had become available. The report also alerted ASIC to the fact that Associates had been wound up and was in liquidation. There is no evidence that ASIC took any steps between October 2002 and April 2005 to ascertain why Associates' liquidator had not provided a report under s 533 of the Act. Once the liquidator's report eventually arrived, ASIC did nothing until July 2006 to pursue the issue of whether Mr Culley should be disqualified from being a company director. Four years and four months elapsed between the date on which ASIC received the report of the liquidator appointed to Resources and the issuing of a disqualification notice. In my view this delay was plainly unreasonable having regard to the public interest served by s 206F and the personal interests of Mr Culley. Insofar as I can judge from the documents to which I was referred, and which were before the Tribunal, ASIC simply did not accord Mr Culley's case any priority. I am left with the impression that, by reason of pressure of work or some other cause, the question of whether or not to seek the disqualification of Mr Culley was allowed to lie dormant until 2006 when interest in it was revived. Whatever the reason, ASIC, in my opinion, failed to comply with its implied obligation to exercise its powers under s 206F within a reasonable time. Having regard to the unexplained delay of 15 months between ASIC's receipt of the liquidator's report on Associates and its attempts to obtain further relevant information, I would have come to the same conclusion had I been persuaded (which I have not) that ASIC was justified in waiting passively for the liquidator's report on Associates. Question 6 should be answered: "yes". The period of Mr Culley's disqualification expired in February 2009. The disqualification decision was made by the delegate and affirmed by the Tribunal. As presently advised I can see no practical purpose to be served by an order setting aside the Tribunal's decision. Nor can I discern any useful purpose to be served by remitting the matter for further hearing and determination by the Tribunal. As is evident from these reasons it is my view that the Tribunal committed no reviewable legal error in the course of dealing with the appeal as presented to it. Mr Culley has had but limited success in his appeal to this Court and then only on a point which was not agitated before the Tribunal. This may also have implications for any costs order which may be sought. The parties should, within seven days, file and serve minutes of any orders which they propose should be made. If there is agreement a joint minute should be filed. If not, separate minutes should be filed and served. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | appeal from a decision of the administrative appeals tribunal where tribunal reviewed the decision of an asic delegate under s 206f of the corporations act 2001 (cth) to disqualify a person from being the director of a company for two years whether the tribunal's decision contained an error of law whether the delay in asic's investigation into a series of companies was unreasonable administrative law |
Perindopril has been sold in Australia by Servier under the brand name "Coversyl" since 1992 as an erbumine salt. That formulation was listed on the Pharmaceutical Benefits Scheme ('PBS'). It has recently been replaced as an arginine salt sold under the same name, Coversyl. Perindopril has the effect of lowering blood pressure by blocking the activity of angiotensin-converting enzyme ('ACE') in the plasma and at the tissue level. Coversyl is currently ranked in fifth position by value of sales in the Australian market for all pharmaceuticals and first in the sub-category for plain ACE inhibitors. 2 The applicant ('GenRx') distributes a generic form of the perindopril erbumine salt. Its formulation is included in the Australian Register of Therapeutic Goods and its perindopril products have been "a"-flagged on the PBS against the new Coversyl arginine salt. This means that a doctor may exercise his or her discretion to prescribe a GenRx perindopril product in substitute for Coversyl. It seeks an interlocutory injunction to restrain Servier from so advertising and promoting Coversyl pending the determination of the proceedings. 4 The first subject of complaint by GenRx is an advertisement published in the Medical Observer Weekly on 8 December 2006 ('the advertisement'). The advertisement is directed to doctors. A second advertisement ('the banner advertisement') is no longer an issue in this application for interlocutory relief, as Servier has given an undertaking not to publish it pending the determination of the proceedings. 5 The Medical Observer is a weekly medical trade publication for Australian general practitioners and allied health professionals and has a circulation of around 23,000 nationally. Similar advertisements have been published in other professional magazines. The advertisement has been in one or more editions of different magazines in the period between January to March 2007. GenRx seeks orders prohibiting further publication of the advertisement. 6 The second ground of complaint is with respect to a stamp that Servier has distributed to doctors. Approximately 10,000 of these stamps are in existence, of which about 3,000 have been distributed. GenRx became aware of prescriptions bearing the impression of the stamp on 12 February 2007. A letter of demand was sent on 13 February 2007. The stamp is to be used on prescriptions in addition to, or in substitution for, the box on the standard form prescription and bears the words "Brand substitution not permitted for Coversyl". There is a box for the initials of the prescribing doctor. Servier has undertaken not to distribute further stamps pending the determination of the proceedings. GenRx seeks orders to recall those stamps distributed to date. 7 The market for perindopril in Australia is worth about $71.6 million annually. GenRx, as the first company to market generic perindopril, has obtained and wishes to retain its market share. A reduction in that market share, if pharmacists or patients understand that for some reason generic substitution of Coversyl is not permitted, will result in damage to GenRx. That damage is difficult to quantify. It would extend beyond the loss of the product prescribed in the single prescription if the pharmacist or patient formed the view that there was a clinical or regulatory reason not to substitute GenRx products for Coversyl. Servier's evidence is that, if it loses 10% of its sales of Coversyl as a result of patients switching to GenRx products, it stands to lose approximately $7.2 million in revenue a year. Losses so incurred, if sufficient, could impede Servier's contribution to research and development in Australia and investment generally. 8 Both GenRx and Servier are prohibited from advertising prescription pharmaceuticals to the public and so cannot clarify any misconception that might arise on the part of patients. 9 The High Court considered the principles applicable to the grant of an interlocutory injunction in Australian Broadcasting Corporation v O'Neill [2006] HCA 46 ; (2006) 229 ALR 457. This depends on the nature of the rights and the practical consequences likely to flow from the orders sought ( O'Neill at [65] --- [72] per Gummow and Hayne JJ). It is in this context that the formulation "serious question to be tried" has effect when the Court asks whether an applicant has shown that there is a serious question to be tried as to the applicant's entitlement to relief, that the applicant is likely to suffer injury for which damages will not be an adequate remedy and has shown that the balance of convenience favours the granting of an injunction ( O'Neill at [19] per Gleeson CJ and Crennan J). In considering the balance of convenience, the Court may take into account whichever course appears to carry the lower risk of injustice if the injunction is granted to a party who fails to establish its right at trial or in failing to grant an injunction to a party who succeeds at trial ( Bradto Pty Ltd v State of Victoria [2006] V ConvR 54-722 at [35]). • Doctors are routinely the subject of advertising from pharmaceutical firms. • Coversyl is one of the most prescribed drugs in Australia. • Coversyl had been on the Australian market for about 14 years. • The green colour of the advertisement is in the same colour as the Coversyl packaging. • The advertisement refers to the trade name Coversyl and the fact that the name is registered as a trade mark. • Three of the four matters referred to under the heading "there is no substitute for" are matters not directly associated with Coversyl but with the company that sells Coversyl. • The fourth matter, "improved stability" with the elucidator '[c] ompared to perindopril erbumine ' is directly associated with Coversyl. • The reader is exhorted to "tick the box" for "brand substitution not permitted". • There is a reference to Servier Laboratories (Australia) Pty Ltd, the second respondent, but it is questionable whether it would be noticed by the casual observer. It is also not presently in dispute that a doctor reading the advertisement would be familiar with his or her ability to indicate on a prescription that there was not to be brand substitution of the product the subject of that prescription where the trade name was used by the doctor. The standard form of Medicare Australia prescription and stationery used in conjunction with most computer-based prescribing software contain a box with the accompanying words "brand substitution not permitted". If that box is ticked, the dispensing pharmacist is not permitted to substitute a generic product. 14 There is evidence that some doctors feel strongly about the three matters referred to that are associated with Servier. GenRx accepts that it is permissible to persuade doctors that brand substitution should not occur --- that is, to exhort them to "tick the box" which appears on prescriptions. Its complaint is that that method of persuasion cannot be misleading or deceptive. 15 The aspect of the advertisements on which GenRx relies has, during the hearing of the application, been somewhat refined. As crystallised in its written submissions, GenRx now relies primarily upon the reference to "improved stability" as a comparative claim about Coversyl and generic substitutes, rather than about Servier. GenRx submits that the suggestion is of some improvement, benefit or superior product performance of Coversyl over the generic substitutes. The implication said to arise is that substitution is not permitted because of this benefit or product superiority and that the advertisement as a whole is misleading. GenRx submits that, although the evidence is to the effect that improved stability is not an advantage and does not result in superior product performance, doctors may be misled by the implication that it is an advantage. 16 Servier submits that the representation is true. GenRx does not accept that the representation is true. That is not a matter for determination at this stage. 17 Servier submits that a doctor would take the advertisement as a whole to indicate that the makers of Coversyl are urging him or her to exercise the discretion not to permit substitution of Coversyl for, inter alia, reasons of improved stability. This gives rise to the question of the importance of stability to the doctor. 18 I accept that there is a serious question in the O'Neill sense. 19 There is little evidence on the number of advertisements presently "in the pipeline" or the difficulties faced by Servier if it were ordered not to place further advertisements asserting improved stability. I conclude that no serious inconvenience or injustice would be suffered if no further advertisements referring to stability were to be placed until further order. 20 It is therefore appropriate that Servier be prohibited from placing any further advertisements containing the reference to "improved stability" until further order. 22 GenRx does not object to the use of a stamp of general application that does not specify Coversyl. GenRx submits that this stamp, which specifically mentions Coversyl, conveys an impermissible suggestion or representation to other doctors, pharmacists and patients that brand substitution is not permitted for a reason different from the doctor's clinical choice; that is, that brand substitution is not permitted by virtue of the legal restrictions imposed by the normal regulatory system. 23 A second generic company is to market a generic form of Coversyl in the same form as the GenRx product: the erbumine salt form, being the previous form of the Servier product. While that company has been licensed by Servier to sell the product, it will also be affected by doctors affixing the stamp to prescriptions. 24 To explain the need for the stamp, Servier draws attention to the fact that Coversyl may often be prescribed on a single prescription form together with other products and the doctor may wish only to state that substitution of Coversyl should not be made. It submits that, rather than write a separate prescription or appropriately endorse the standard form of box by, for example, ticking it and adding ' for Coversyl ' the doctor may simply not bother. The pharmacist is then free to make the substitution with a generic product and Servier loses the profit on that sale. 25 Servier submits that the purpose of the stamp is to assist a doctor to make a clear and visible statement to the pharmacist that brand substitution is not permitted for Coversyl specifically. Servier says that the stamp enables a doctor to indicate that brand substitution is not permitted for Coversyl in circumstances where other medications are prescribed and brand substitution for those medications (but not Coversyl) is permitted. The stamp is also said to avoid a situation where a tick is placed in the relevant (standard form) box and is overlooked by the pharmacist. 26 There is no evidence of the proportion or quantification of these asserted facts. 27 GenRx submits that another doctor, a pharmacist or a patient, upon seeing the stamp, may conclude that there is some particular issue with the substitutability of other perindopril products. While Servier submits that this is unlikely, there is no evidence that stamps, naming the product, are distributed by other innovator drug companies to assist doctors to specify that generic substitution is not permitted. 28 If the use of the stamp is legitimately to encourage doctors to ensure that there is no substitution for Coversyl where they would not otherwise do so, the loss of market share and profit to Servier would also be difficult to quantify. If the stamp does make the representations alleged, GenRx not only suffers loss of the sale of the product the subject of the prescription but also the consequences of a belief as to the suitability of its generic perindopril by pharmacists who will decide whether to offer substitution of perindopril in cases where the doctor has not specified no substitution and by patients who may be long term users of perindopril. This may result in loss of sales that cannot be determined or quantified. 29 There is a serious question to be tried with respect to the representations conveyed by the stamp. Servier has already taken steps to ensure that no further stamps are distributed. That leaves for consideration whether Servier should be ordered to recall the distributed stamps pending the determination of the proceedings. 30 If the stamp is recalled pending the determination of these proceedings, there is nothing to prevent doctors specifying that there be no substitution of Coversyl in the time honoured way of ticking the box on the standard form or, where there are to be multiple products prescribed, writing a separate script for Coversyl or endorsing the ticked box as applicable only to Coversyl. There is no evidence that a doctor wishing to prevent substitution would not do so without the stamp. The evidence suggests that some doctors feel sufficiently strongly about brand substitution generally, or with respect to Servier as the company which markets Coversyl, that they will tick the standard box preventing substitution with or without the stamp. There is also evidence of other possible reasons relating to potential patient confusion that may affect a doctor's decision to permit substitution. Doctors may specify that brand substitution is not permitted to avoid the risk of patients, who may be familiar with the particular package, tablet appearance or dose and may be elderly or cognitively impaired, from being confused upon substitution of the branded product for a generic. On this basis, Servier would suffer no loss or a reduced loss of sales. 31 Servier points to the risk that pharmacists will not notice the box that has been ticked on the standard form prescription to prohibit brand substitution. There is no clear evidence that this does occur or the extent of such occurrence. Servier also suggests that doctors may forget to "tick the box" without the stamp. There is no present evidence of the extent of such likelihood or of the likelihood that possession of the stamp will make a difference and remind the doctor. I am therefore unable to assess and take into account the effect of such failure on the part of the pharmacist or doctor on the loss of sales or effect on patients in the time before trial. 32 Both GenRx and Servier allege damage to reputation. 33 Servier submits that its reputation would suffer if it were required to inform doctors that it had or might have engaged in inappropriate conduct. This can be mitigated by careful explanation of the circumstances of that requirement. It is also concerned that doctors may migrate to prescribing GenRx perindopril or other ACE inhibitors, which trend may not be reversible. 34 Servier submits that recall would be tantamount to final relief and that no redistribution could ever put right the harm to it caused by the confusion to doctors created by the recall. Such confusion would extend to doctors who have not received the stamp and may extend to confusion as to their entitlement to exercise their discretion to prevent substitution for Coversyl. This would "flow on" to confuse those patients for whom substitution would be inappropriate, including for reasons of patient confusion. Servier emphasises that there is no public safety issue mandating recall. GenRx submits that its reputation is damaged if an impression is conveyed that it or its product are "not above-board". This impression is said to be conveyed every time the stamp is used. 35 Neither party supported the sending of a letter to doctors who possess the stamp asking them not to use it pending the determination of the proceedings. Both parties observe that a letter may not be received by the doctor or be considered by a busy practitioner. GenRx submits that the only way to ensure that use of the stamp ceases until further order is to order a recall of the stamps. 36 The stamps are presently in the hands of doctors. If they are not being used, no damage is occasioned. No more doctors will receive them. If they are being used, any confusion on the part of the pharmacists seeing those stamped prescriptions and patients of those doctors or misleading of those persons will, for the most part, have already occurred. If GenRx is successful at trial, it will be affected by the continuation of the conduct in terms of confusion and loss of sales. GenRx can mitigate some of the confusion in its contact with pharmacists. It cannot affect the approach of patients or the impact of the use of the stamp, in contrast to the standard form of indicating that there be no substitution, on its sales. The latter will be minimised for both parties by an early hearing date. 37 If Servier is ordered to recall the stamps and then is successful in the proceedings it will have the opportunity to reissue the stamps. It is reasonable to assume that, on the reissue, it could explain the circumstances but both parties seem to accept that a covering letter may not be read by the doctor. This would mean that any confusion on the part of the doctor as to his or her ability to prevent substitution of Coversyl may not be avoided. Such confusion engendered by the recall, itself with perhaps a covering letter, may extend to a mistaken belief that there is a reason for not restricting substitution of Coversyl. 38 GenRx relies on what it describes as Servier's ' sophisticated systems for product recalls as required by regulation '. Servier asserts, however, that its sales representatives do not ordinarily keep records of their distribution of the stamps. It submits that a recall would likely require contact with all of the approximately 20,000 general practitioners in Australia by the Servier sale team. This reinforces Servier's concern that the recall of the stamps may be perceived as affecting the prescription of the product itself and the company's reputation. 39 On balance, the burden of the recall in a manner to ensure its success and the numbers of people involved, as well as the possible loss to Servier from confusion if Servier is subsequently successful outweighs the potential damage to GenRx if those stamps that have been distributed remain with the doctors pending the hearing. The Medical Observer is a weekly publication. GenRx became aware of the advertisement in mid-January 2007. 41 Servier submits that GenRx has delayed unduly in seeking these orders. GenRx was first aware of the advertisements in mid-January and of the stamp on 12 February 2007. As I have noted, a letter of demand was sent in respect of the stamp on 13 February 2007 but the notice of motion seeking interlocutory relief was not filed until 9 March 2007. 42 On 14 February 2007, GenRx commenced these proceedings by filing an application, inter alia, to revoke a patent in the name of the first respondent. On 23 February 2007, GenRx wrote to Servier's solicitors seeking undertakings in respect of the stamp and the advertisements. At the same time it served a notice of motion seeking to amend the application and statement of claim to plead contraventions of the Act by reason of the misleading nature of the stamp and advertisements. As I have noted, the present application for interlocutory relief was commenced on 9 March 2007. 43 While there appears to have been delay in the filing of this application, in view of the complexity of the various proceedings involving the parties, such delay as occurred does not preclude the relief sought. The parties have agreed to an expedited timetable and an early hearing. I note the undertakings already given with respect to the banner advertisement and any further distribution of the stamps. It is appropriate to make an order that Servier be restrained from placing further advertisements which make reference to the "improved stability" of the Coversyl product until further order. It is not appropriate to order a recall of the stamps already distributed. 45 There is a question as to the security for the undertaking as to damages. I will direct that the parties submit proposed orders to give effect to these reasons, including orders with respect to the undertaking as to damages. 46 GenRx submits that, as it succeeded in obtaining undertakings during the course of the proceedings with respect to the banner advertisement and further distribution of the stamp, it should have its costs of the interlocutory application. The undertakings were only proffered during the hearing. GenRx has been successful in large part but not successful in pressing for recall of the stamps. It is appropriate that Servier pay 80% of GenRx's costs of the application. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | misleading and deceptive conduct interlocutory injunction advertisement and stamp with statement that brand substitution not permitted serious question to be tried as to whether representation in advertisement of "improved stability" is misleading serious question to be tried as to whether a stamp specifying no substitution of a specific product is misleading burden of recalling stamps outweighs potential damage to the applicant advertisement restrained no order as to recall trade practices |
2 The applicant filed an application for an order nisi in the High Court of Australia on 4 June 2003 requesting the respondents to show cause why constitutional writs should not be issued in respect of the decision of the Tribunal. The applicant supported his application for an order nisi by an affidavit of Mr Sam Issa, solicitor for the applicant, sworn on 21 May 2003. 3 The application was remitted to this Court pursuant to orders made by Gaudron J following the delivery of judgment in Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 190 ALR 601. 4 By letter dated 12 November 2004, the District Registrar of this Court notified the applicant that the Court proposed to consider whether there was an arguable case on the basis of the written material that the applicant had given to the Court and without any oral hearing. The applicant was invited to file written submissions on the question of whether the Court should make an order nisi . On 7 December 2004, the applicant filed an amended application under the Judiciary Act 1903 (Cth), however, he has not filed any written submissions. 5 I propose to deal with this application on the papers. He claims a well-founded fear of persecution if returned to Lebanon. The basis for this claim is the applicant's statement that his truck was used to support General Michel Aoun against the Syrian and Lebanese authorities. 7 The applicant did not attend the hearing before the Tribunal. Therefore, in making a determination, the Tribunal had before it only the information contained in the written material, comprising the files of the Department and the Tribunal relating to the application and information that the Tribunal had obtained from independent sources about matters referred to in the application. The applicant's claims were set out in written submissions to the Department and written submissions to the Tribunal. 8 In its reasons for decision at pages 4-5, the Tribunal notes that the applicant has only made bare claims about some kind of involvement with supporters of General Aoun and the use of his truck. The Tribunal notes that the applicant has not provided details of the history of his involvement, what has happened to him as a result of any alleged persecution, what his family or domestic circumstances are and whether any threats are ongoing. The Tribunal says that in order to be satisfied that the applicant has a well-founded fear of persecution for a Convention reason, it requires details of the actual persons whom he claims will harm him, why they would do so in the future and the nature of the harm he claims to fear. The Tribunal says that it also needs further information concerning the viability of the applicant's relocation within Lebanon. 9 On the basis of the lack of detail in the written evidence, the Tribunal said that it was in a position where it was unable to establish the relevant facts. Accordingly, the Tribunal was not satisfied that the applicant has fears of returning to his country, whether these are well-founded and whether they are based on a Convention reason. The applicant says that if the Tribunal had put to him in writing the information on which it relied to make its decision, he would have provided a written response. The applicant does not give any particulars in the amended application of precisely what information the Tribunal failed to put to him. 11 By letter dated 21 January 1999, the Tribunal wrote to the applicant advising that it had considered all the papers relating to the application but was unable to make a favourable decision on that information alone. The applicant was advised that he was entitled to come to a hearing of the Tribunal to give oral evidence in support of his claims. The applicant advised the Tribunal that he wanted to give oral evidence and, on 4 February 1999, the Tribunal wrote to the applicant advising that the hearing would be held on 20 April 1999. This letter advised the applicant that if he did not attend the hearing and a postponement was not granted, the Tribunal would assume that he no longer wanted to come to the hearing and that a decision could then be made without further notice to him. The applicant did not attend the hearing before the Tribunal or contact the Tribunal to explain his failure to attend. 14 Subsection 424A(3)(b) provides that s 424A does not apply to information "that the applicant gave for the purposes of the application". In Minister for Immigration and Multicultural Affairs v Al Shamry [2001] FCA 919 ; (2001) 110 FCR 27, a Full Court held that information to which ss 424A(3)(b) refers is information given by an applicant to the Tribunal for the purpose of the application for review and not to information given on the original application for a protection visa. 15 The reference to "information" in s 424A does not encompass a failure to mention a matter to the Tribunal. An observation that an applicant failed to refer to a particular matter may constitute no more than an aspect of the Tribunal's reasoning concerning a deficiency in his evidence. 16 In its decision, the Tribunal, in effect, states that the applicant has provided little detail in support of his claims and then goes on to identify a number of aspects of the applicant's claims in regards to which the Tribunal required further information. In the absence of this information, the Tribunal said that it was in a position where it was unable to establish the relevant facts. According to the above authorities, the Tribunal's reference to the lack of detail in the applicant's written evidence and the examples that it provides of the deficiencies are not "information" that are required to be given to the applicant for comment under s 424A. 17 A further ground of review is outlined in the applicant's application to the High Court for an order nisi . The applicant claims that the Tribunal misled him into believing that it had looked at all the papers relevant to his application, including the Part B documents, when in fact it had not done so and therefore he was denied an opportunity to bring the documents that favoured his application to the attention of the Tribunal. The applicant says in the application that particulars of the relevant documents will be supplied to the Court. However, this has not been done. The supporting affidavit of Mr Sam Issa filed on 4 June 2003 merely asserts that the justification for the order nisi is that the impugned decision is manifestly invalid and the Applicant's life is demonstrably at risk. These assertions have not been made good. 18 This claim in form may be prima facie capable of attracting relief under the second limb of the Muin ratio decidendi, that is, that the applicant was misled into thinking that favourable country information had been considered by the Tribunal when in fact it had not. However, the material contained in the draft order nisi and the affidavit in support merely amounts to a pleading or assertion of the right to relief. There are no particulars or evidence of facts that would support the grant of the relief claimed. None of the country information is identified. For orders requiring the respondent to show cause why final relief should not be granted, the applicant must provide material showing that there is at least an arguable case for the grant of the final relief claimed. 19 On the material before me, the applicant has not made out an arguable case that the Tribunal committed jurisdictional error. The application for an order nisi should therefore be 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. | ministerial delegate refused protection visa to applicant decision affirmed by refugee review tribunal application for order nisi s 424a of the migration act 1958 (cth) claim that refugee review tribunal did not have before it, and did not consider, the part b documents referred to by the delegate migration |
Mr Vu lodged a return in the year ended 30 June 2000 disclosing a taxable income of $6,500. The Commissioner issued an amended assessment in respect of that return. Subject to some modifications made by the Administrative Appeals Tribunal ("the Tribunal") on review, those various assessments are the subject of this proceeding. For reasons I later give, I have ordered that the application be dismissed. 2 The assessments were based primarily on bank deposits in Australia held variously in the names of Mr Vu, Mrs Duy and in their joint names. (I use the term "bank deposits" as a compendious description of the various forms of deposit made in this matter. ) These deposits in the income years in question (which amounted in aggregate to A$2.7 million ) were treated as income of which 50 per cent was attributed to each of Mr Vu and his wife. The total tax assessed payable by the couple was in the order of A$1.9 million. 3 Both filed notices of objection to the assessments, each's notices in respect of each income year being in relatively similar terms. 4 A Deputy Commissioner of Taxation disallowed all of the objections in full. The bank deposits were considered to be linked to businesses operated by the two taxpayers, it being noted in the Deputy Commissioner's conclusions that "Mr [Vu] was assessed on 50% of the income generated by the businesses he was involved with, with his wife". 5 Only Mr Vu sought review of the decision by the Tribunal under s 14ZZ of the Taxation Administration Act 1953 (Cth) ("the Administration Act "). Two are of particular importance for present purposes. Both are contained in s 14ZZK of that Act. The first is that, unless the Tribunal orders otherwise, an applicant is limited to the grounds stated in the taxation objection to which the decision relates. The significance of this limitation is that the objection circumscribes the issue or issues raised by the applicant which the Tribunal is required to determine. This contrasts with the usual case of Tribunal review where the Tribunal stands in the shoes of the person whose decision is in question, hearing the matter de novo and reaching its own conclusion on the material before it as to what is the correct or preferable decision. The difference between the forms of text review, as will be seen, can become accentuated when, as in this matter, an attack is made upon the adequacy of the Tribunal's reasons for decision: for the ordinary case of review see e.g. Hill v Repatriation Commission (2005) 218 ALR 251 at [105]. 7 The second limitation on an objection decision review is that the applicant bears the burden of proving, if the decision is an assessment, that the assessment is excessive: s 14ZZK(b)(i) of the Administration Act . This onus is of some significance in this proceeding. 8 The parties are in broad agreement as to the manner in which the discharge or non-discharge of the onus can affect a Tribunal's determination of the issues before it. To discharge the burden of proving that the assessment is excessive the taxpayer in McCormack (a s 26(a) case) was required to prove affirmatively on the balance of probabilities that the property was not acquired for the purpose of profit making by sale. His Honour said that the burden may be discharged by drawing inferences from the evidence, but he rejected (at CLR 303) the argument that a taxpayer can succeed simply because there is no evidence from which it can be concluded that the relevant purpose of profit making existed; since this would mean that the burden of proving the existence of that purpose lies on the FCT. That would, his Honour said, be to invert the onus of proof. Section 190(b), I would note, was the precursor of s 14ZZK(b). 9 The only additional matter of principle to which I need refer concerning the onus of proof is that in a Tribunal review of an assessment it is not necessary for the Commissioner to seek to establish that the applicant's assessable income was or was at least a particular figure. The Commissioner's failure to establish a positive case, if that is what he sought to do, leaves the Tribunal in no different position than it would have been in if the Commissioner had not sought at all to advance a positive case. The primary cases put were that the money deposited in bank accounts during the relevant tax years represented capital and/or income of Mrs Duy derived by her in Vietnam prior to becoming a resident of Australia. Mrs Duy stated that she and Mr Vu subsequently carried US$550,000 and A$1,268,000 into Australia in cash in fourteen trips made by one or other of them: Reasons at [4], [10]. Only two small amounts allegedly so carried ($20,605 and $17,000) were declared to Australian Customs: Reasons at [10]. A further sum of A$513,999 was transferred from Vietnam through a Sydney-based company. I would note in passing that the Tribunal found (with considerable reservation) that this last sum was not income but represented funds of Mrs Duy prior to her arrival in Australia: Reasons at [31] and [32]. 11 The Tribunal accepted that Mrs Duy may well have earned income in a range of activities in which she said she engaged in Vietnam and which on the evidence of Mrs Duy and her witnesses indicated earnings of over US$2,000,000. However, the Tribunal was not satisfied that those activities necessarily resulted in her having available to her in 1996 the equivalent of almost A$2 million. 12 The Tribunal accepted that Mrs Duy did have substantial funds in Vietnamese banks but the evidence of activities in those accounts in 1996-1997 (excluding sums withdrawn before she met Mr Vu) only accounted for the $513,999 transferred to Australia by the Sydney-based company. When coupled with the reservation and lack of satisfactory evidence in relation to the alleged cash funds held by her and, later her brother in Vietnam in August 1996, I am unable to accept that such alleged cash brought to Australia was a source of the funds in Australia particularly as there was no correlation in any respect between the alleged dates of bringing in cash and deposits in bank accounts. There are clear difficulties in accepting all of the evidence of Mr A. He was somewhat vague as to his activities since 1996 and it is difficult to accept that, apparently, he did nothing in that year other than prepare for the purchase of a retail business for $300,000 in February 1997. After only one month in that business he then, apparently, did nothing until 2000 when he acquired the tobacco retailing business. On his evidence he had no money and no paid employment for much of the four years in dispute and relied on funds from the lady who later became his wife. It is difficult to accept that he knew nothing of a company in which he was shown to be director and shareholder between 1995 and 2002, nor knew of the other named director and shareholder. Mr A was somewhat vague, also, on the source of alleged bundle of Australian bank notes brought by him from Vietnam to Australia and both the reason and method of carrying such sums in cash. When asked, he maintained that he had not discussed their respective evidence with his wife notwithstanding the almost identical wording of their statements and his presence in the hearing room during her evidence. I am unable to accept that his evidence should be accepted as being completely truthful. To accept the applicant's contentions completely requires me to accept on the oral evidence of the applicant and some friends that, prior to coming to Australia, Mrs B earned and accumulated in excess of AU$2,700,000 between the ages of 20 and 26, left her high profile and successful career to join a penniless, unemployed and married man in Australia, someone was able to assemble bundles of $100,000 in Australian $100 notes in Vietnam on many occasions, cash in lots of up to 2000 bank notes were carried from Vietnam to Australia undetected, very large sums of cash were held in Australia for considerable periods of time and neither applicant generated any income from activities in Australia over four years other than $6500 of personal income by Mr A in 2000. Without some supporting evidence it is difficult to accept this evidence of the applicants. There was no independent expert evidence which may have supported a contention that Mrs B was able to earn the levels of income suggested from her alleged activities in Vietnam and that amounts of currency at the quantities alleged were available in Vietnam and able to be carried to Australia. It was submitted for the applicant that there was no other suggested or possible source of the funds deposited or lost in gambling in Australia. However, it is clear from the legislation and the decision of the Courts that there is no requirement for the respondent to advance a positive case as to the likely source and amounts of income. It is sufficient if, contrary to that in Ma's case (supra), the taxpayers are unable to demonstrate a reasonable explanation of any appearance of the possession of assets. Such is the position here for the major part of the funds acquired by the applicants. To that extent it allowed the objections so reducing the taxable incomes of Mr Vu and Mrs Duy. 16 There is one additional aspect of the Tribunal's decision to which I should refer. Included in the calculation of the applicants' undeclared income were amounts reported by a casino as net gambling losses to the applicants. The total amount so included in the relevant tax years was $284,543 which was allocated as to 50 percent to each applicant. That is that if Mr Vu was to be found to be assessable in respect of 50 percent of the monies in his wife's account there had to be a positive reason for so finding and for not inferring or presuming those monies were hers alone given Mrs Duy was the legal owner of the account. No reason was given by the Tribunal for its finding. On the facts found by the Tribunal, the funds in Mrs Duy's accounts should have been treated as belonging to her, the funds in Mr Vu's account should been treated as belonging to him, and the funds and the joint account should have been treated as belonging to Mr Vu and Mrs Duy in equal shares. 21 As I understand the "bank accounts" submission it is said that once the Tribunal rejected Mr Vu's and Mrs Duy's evidence on the provenance of the money in Mrs Duy's accounts and concluded that it could not be satisfied that it came from Vietnam, the evidence was, simply, that Mrs Duy had bank accounts in her name. In these circumstances the Tribunal should have inferred or presumed the moneys were hers (the second ground of appeal). If the Tribunal had a reason for not so inferring or presuming and for finding as it did, it did not state its reason in its decisions. This omission was in relation to a material question of fact: s 43(2B) , AAT Act and as such involved an error of law (the first ground of appeal). On such an error see e.g. Casarotto v Australian Postal Commission (1989) 86 ALR 399 at 402-403. 22 These grounds of appeal can be answered shortly. The objection decision to be reviewed by the Tribunal was that all of the moneys in the bank accounts were the joint income of Mr Vu and Mrs Duy for the relevant tax years. The grounds of objection taken to the assessment of present relevance were, insofar as Mr Vu was concerned, (i) that the moneys in the accounts were brought from Vietnam; were capital and/or income derived by him when a non-resident of Australia; or were funds given to him by his own and his spouse's family; and (ii) the moneys did not represent assessable income and were not assessable to the taxpayer. 23 These, considered in context, are quite circumscribed grounds of objection. The Tribunal considered "their basic thrust" as relating to the alleged prior earning of funds by Mrs Duy in Vietnam and their later transfer by cash to, and then deposit in banks in, Australia. It would appear that Mr Vu's contentions before the Tribunal were limited to providing particular explanations as to the sources of the money in question which were ascribed primarily to his wife's money in Vietnam. 24 The case put seems to have been that the various sources of the moneys were such as to not represent assessable income. So considered, the second presently relevant ground of objection, when considered in light of the way the applicant put his case to the Tribunal, was simply a generalised restatement of the substance of the first. 25 Neither ground of objection, I might add, seems squarely to raise the issues ventilated in the present application: cf s 14ZZK(b) of the Administration Act . However, I do not consider it necessary to enter upon that point --- it has been taken by the respondent Commissioner --- because I am satisfied that the grounds of appeal are misconceived in any event. 26 Put shortly, the premise of the assessment was that the moneys held in various accounts (whether in the name of Mr Vu, Mrs Duy or both of them) represented the joint income of both of them. Mr Vu's case, as I have noted, was directed at identifying the sources of those moneys in a way which, if accepted by the Tribunal, would result in their being found not to represent assessable income of either himself or Mrs Duy. That case was only partially accepted with the consequence being that Mr Vu thereby failed in the main to show his assessments were excessive. For the most part the assessment withstood the objections he raised because he had not discharged the onus of proof he bore in the case he put. Significantly his grounds of objection did not put in issue directly or at all any question of whether or not he was in business with his wife and whether for that reason they had common sources of income. These, in consequence, were not matters that the Tribunal needed to address if it did not accept the particular case put by Mr Vu. Both grounds of this application should be dismissed for this reason alone. 27 I would, though, make the following additional comment. The applicant's characterisation of the resultant state of the evidence, the Tribunal having not accepted his and Mrs Vu's account of the provenance of the moneys in the deposits, is inaccurate. The matter put in issue by Mr Vu and his wife was not the identity of the holder of bank accounts but the alleged particular source of the deposits in those accounts, i.e. transfers of Mrs Duy's monies from Vietnam. That positive case failed. Its failure, though, did not authorise or require the Tribunal to infer or to presume that the monies deposited were Mrs Duy's. The Tribunal had not accepted that the moneys had the provenance both Mr Vu and Mrs Duy advanced. The Tribunal's reasons betray an understandable scepticism concerning the actions and statements of the couple. In this setting, where positive proof of the provenance of the moneys in the account was necessary, if Mr Vu was to show his assessments were excessive, there could be no possible place for a presumption such as is now advanced. Equally, in light of the Tribunal's reasoning and finding, the inference proposed could not properly be said to be the most probable and reasonable deduction from the established facts: cf Holloway v McFeeters [1956] HCA 25 ; (1956) 94 CLR 470 at 477. The applicant's failure to discharge the burden cast on him was not an advantage to him. Rather it left unestablished what was needed to be established if he was to succeed before the Tribunal. No process of inference could overcome that disadvantage. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | appeal from objection decision commissioner issued default assessments for income years of taxpayer and his wife assessments based on bank deposits held separately and in joint names income attributed 50 per cent to each taxpayer notices of objection filed assessments challenged on basis that funds were brought to australia from vietnam objections disallowed on basis that funds were linked to joint businesses administrative appeals tribunal review of objection decision sought by one applicant only tribunal did not accept that most of the bank deposits came from vietnam whether administrative appeals tribunal erred in failing to give reasons for treating money as joint funds whether tribunal erred in failing to take into account the identity of the bank account limitations on the tribunal when reviewing an decision under the taxation administration act 1953 (cth) whether grounds of objection wide enough to include issues on appeal to federal court onus of proof taxation administrative law |
The RRT affirmed a decision of a delegate of the Minister not to grant the appellant a protection visa. 2 The appellant claimed to be a citizen of Sri Lanka and also claimed to have a well-founded fear of persecution on the ground of his political opinion and his race. The RRT accepted that the appellant is a citizen of Sri Lanka and that he is a Tamil speaking Muslim businessman who lived in Colombo for many years to 2003. 3 The appellant's claimed fear of persecution on political grounds was based upon his evidence that he was an active supporter of the ruling People's Alliance, a political party in Sri Lanka, which the Tribunal noted was mainly comprised of a party known as the Sri Lankan Freedom Party. He also said that he was a key ally of a former Transport Minister. He claimed that the former Transport Minister and other people had been intimidating him and that he and his family had been assaulted and intimidated. The RRT had difficulty in accepting the appellant's account of his claims as credible. It considered that his evidence was vague and inconsistent and rejected them on that basis. 5 However, the RRT went on to say that in any event there were other reasons for finding that the appellant did not have a well-founded fear of persecution on the grounds which were claimed. In particular, the RRT concluded that even if the appellant's account was true, he was not of adverse interest to the Sri Lankan authorities when he left Sri Lanka on 1 July 2003. The RRT observed in particular that it was satisfied that the appellant would not become politically active again in Sri Lanka because the wishes of his family and his conscience would not allow him to do so. 6 The RRT did not accept the appellant's claimed fear of harm for reasons of his race. It was not satisfied that this gave rise to a well-founded fear of persecution. It relied on independent country information to find that, although there had been reports of clashes between Muslims and Tamils, these clashes did not take place in Colombo where the appellant had lived and worked for many years. 7 The RRT concluded its reasons by stating that, even if the appellant were to become politically active on his return to Sri Lanka, independent country information showed a diversity of opinion about the peace process which was then in train. The Tribunal found that independent country information did not suggest that Muslims, especially those resident in Colombo, would be targeted by the political parties or the persons referred to by the appellant in his claims. The Federal Magistrate went on to describe what he called the "cascading series" of further grounds and reasons for the RRT's alternative bases. 9 The learned Federal Magistrate considered that there was one error in the RRT's reasons, namely that the appellant would not become politically active because of his family's wishes and because of his conscience. 10 The Federal Magistrate considered that this may well have been what he called a mistake of a jurisdictional fact because of a decision of Tamberlin J in NBCY v Minister for Immigration (2004) 83 ALD 518. The Federal Magistrate did not apparently consider that this was an error of the kind referred to by the High Court in Appellant S395/2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 71 ; (2003) 216 CLR 473. 11 In any event, the learned Federal Magistrate went on to point out that the finding was an unnecessary one because the Tribunal had already come to the view that the appellant's claims should be rejected on credibility grounds. The Federal Magistrate observed that the RRT had independent grounds for believing that there was no well-founded fear of persecution if the appellant should return to Sri Lanka. Accordingly the Federal Magistrate did not consider that the RRT fell into jurisdictional error. One of them is reliance upon the decision of the High Court in Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 190 ALR 601. However, there is no substance in this ground of appeal because as a Full Court observed in NADR of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 293 ; (2002) 124 FCR 465 at [24] ---[28], the decision in Muin turns upon the question of whether the necessary factual basis is established. There was no such factual basis in the present case nor was there any admission of the necessary factual underpinnings that occurred in the High Court in Muin . 13 The other grounds of appeal are not particularised, but the appellant expanded upon them in written submissions. The appellant relies upon the decision of the High Court in SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162. The appellant submits that the effect of this decision is that the RRT, having made up its mind to dismiss the application, was required to provide that information to the appellant in order to comply with the provisions of s 424A of the Migration Act 1958 (Cth). I do not consider that this ground of appeal is made out. 14 The decision of a Full Court in VAF v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 206 ALR 471 at [24] in the joint judgment of Finn and Stone JJ contains a useful summary of the meaning of the term "information" in s 424A(1). It is plain that the appellant does not point to any information of the kind set out in the joint judgment. The effect of the appellant's submission is that the RRT was bound to provide him with an opportunity to comment upon its subjective thought processes before arriving at a decision. That is contrary to well established authority; see VAF at [24(iii)]. See also the decision in Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576. 15 The remaining submissions in the written submissions of the appellant do not give rise to any ground of jurisdictional error on the part of the RRT, nor do they point to any error on the part of the Federal Magistrate. The effect of the submissions is to seek merits review. Whist the appellant refers to a number of well-known authorities on the question of jurisdictional error; the submissions merely refer to those authorities without engaging with the reasons why the application failed in the RRT. 16 The appellant appeared before me this morning in person. He was assisted by a Tamil interpreter. He did not add to his written submissions save to say that he was not satisfied with the decisions below and that he is unable to go back to Sri Lanka. Accordingly, the order I will make is that the appeal be dismissed with costs. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson J. | no point of principle migration |
That respondent is the second respondent, Marjory Pty Limited ('Marjory'). I understand the applicant is likely to discontinue its action against the other respondents. 2 The action concerns shoes that bear the applicant's trademark. There was evidence before Finkelstein J that the shoes are counterfeit. That evidence came in an affidavit made by Larry Bendo Anastacio, an employee of a company associated with the applicant. Mr Anastacio set out his experience in detecting counterfeit 'Vans' products and gave detailed reasons why, in his opinion, the subject shoes are counterfeit. 3 There was no evidence contradicting Mr Anastacio's opinion. However, the third respondent, Michael Wagner, who was concerned, at least at one stage, with the management of Marjory, said the shoes were purchased from a business in Hong Kong, Warner Shop Limited ('Warner'), which he believed to be authorised to sell Vans footwear. Mr Wagner said he believed the goods were 'genuine footwear made by or under the authority of the Applicant'. 4 There was also some evidence of a hearsay nature, but admitted by his Honour, that a paralegal, employed by the respondents' solicitors, telephoned Warner in Hong Kong and was told that, for the past two years or so, Warner had been selling Vans products which were purchased from Joint Power International Limited ('Joint Power'), an authorised Vans dealer. The paralegal then rang Joint Power. She was told that Joint Power was an authorised distributor of Vans products, and that Warner Shop was one of the clients to whom it supplied Vans products. 5 As was submitted by Mr D Shavin QC, who appeared with Ms M Barker on behalf of the applicant for leave, this evidence does not provide a defence to the claim. However, it shows a provenance of the shoes that is consistent with the possibility that they are not counterfeit. Of course, it would be possible for an authorised dealer also to sell counterfeit goods. There is no material to say whether this happened in the present case. The point made by Mr B Fitzpatrick, counsel for Marjory, is that this is a matter requiring investigation. 6 In reasons for judgment delivered on 3 February 2006, Finkelstein J mentioned the recently enacted s 31A of the Federal Court of Australia Act 1976 (Cth). Typically, such evidence involves a person familiar with the particular applicant's products inspecting the subject goods and offering an opinion that they are counterfeit, for reasons then expressed. It was put to me that this case raises an important question of principle: whether the Court should continue to apply the approach taken in those cases. 8 It is important to remember that every application for summary judgment must be determined on its own merits and according to the facts of the particular case. No two cases are factually identical; although, no doubt, it was correct for Mr Shavin to say that solicitors who regularly act for trademark owners tend to file similar affidavits in each case. 9 Finkelstein J was unhappy about the decisiveness of the evidence put before him. He did not say Mr Anastacio's evidence should be rejected. At para 20 of his judgment, Finkelstein J expressly said he did not doubt that Mr Anastacio believes the goods he inspected were counterfeit. I think this is a matter that should be investigated at a trial rather than relying on the applicant's untested evidence, especially in a situation where there is some possibility that the goods are not counterfeit. There is much to be said for the principle that a party, against whom proceedings are taken, is entitled to its/his/her day in court to test that evidence. The principles in force before the enactment of s 31A would, I think, have required the rejection of a summary judgment application in this case. It is sufficient for me to refer to authorities such as Dey v Victorian Railways Commissioners [1949] HCA 1 ; (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125. 11 The strength of the application for leave to appeal is, in my view, the recent enactment of s 31A. There is a real question as to the effect of the formula, 'the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding'. It can rarely be said there is no prospect of a party successfully defending a proceeding. There is almost always a possibility that the case of the party bearing the onus of proof will break down at trial. If s 31A is to be construed so as to exclude summary judgment where there is only this possibility, then, as Mr Shavin says, it is difficult to see the point of its enactment. If that view is correct, there is a firm basis for believing that Finkelstein J may have overlooked the significance of the new section. 13 In fairness to his Honour, I repeat that he did mention s 31A. He set out its terms. However, he seems not to have put to himself the statutory question: whether he was satisfied that Marjory has no reasonable prospect of successfully defending the proceeding. Had he asked himself that question, he would have been able to answer it in the negative only by saying there was a possibility that the applicant's case would break down. Such an answer would then have raised the question whether that it is now enough. 14 My mind has fluctuated in relation to the fate of this application. As a general principle, judges should not give leave to appeal in relation to a pre-trial ruling by a docket judge on a matter of practice and procedure. His Honour has made directions designed to facilitate a trial in April. Particularly in the case of a trial that is expected to be short (as in this case), it is usually preferable to bring on the trial, rather than to have appeals about summary judgement and strike out applications. Moreover, if leave to appeal is granted, it will be necessary, in order to avoid the trial coming on before the appeal, for there to be a stay of the trial. Judges should not lightly interfere with the orderly handling of another judge's docket. It should not be enough that the judge hearing the leave application feels doubt about the wisdom or legal correctness of the docket judge's order. There ought to be something more. In this case, there is something more. I have been persuaded, not only that there is sufficient doubt about the application of s 31A , in his Honour's approach, for me to conclude that it is at least fairly arguable that he fell into legal error, but also that the case has some general significance. There is a real question as to whether (and if so how) the new section affects the approach previously taken by judges of the Court. So far as I am aware, this would be the first occasion on which a Full Court would have had the opportunity of considering that matter. Given the number of applications for summary judgment made in this Court, it seems desirable that there be early consideration of the section at a Full Court level. Accordingly, I have decided to accede to the application and grant leave to appeal. 15 It follows that I should also order that the directions given by Finkelstein J on 17 February 2006 be stayed, pending determination of the appeal or earlier order of a judge. The appropriate order in regard to the costs of this application is that they be costs in the appeal. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. | application for leave to appeal against decision of docket judge refusing an application to enter summary judgment in favour of applicant no prima facie defence shown on the evidence whether summary judgment ought to be refused where a respondent merely seeks to put applicant to proof of its case significance of recent enactment of s 31a of federal court of australia act effect of the formula 'no reasonable prospect of successfully defending the proceeding' application for leave to appeal granted. practice and procedure |
Before dealing with them I should say a word or two about the topic. Discovery has several purposes in civil litigation. Although litigation is adversarial the principal object of discovery is to enable the judge to resolve contested issues with a full, or near full, understanding of the true facts. Discovery has several subsidiary purposes: it removes the risk of surprise at the trial; it narrows and clarifies the issues in dispute; it encourages the early settlement of litigation. On the other hand, discovery has the potential to cause harm. Information obtained on discovery may, if it is used for purposes unrelated to the suit, result in damage to a party's reputation or commercial interests. There is a rule, often but wrongly attributed to Harman v Secretary of State for the Home Department [1983] AC 280, that a party is not entitled to use information obtained on discovery for a purpose other than that of the action. Breach of the rule is a contempt of court. Sometimes the protection provided by the rule is inadequate. Then the party is entitled to additional protection. 2 The first issue, here, is whether the respondents are entitled to special protection for some of their discovered documents. The relevant circumstances are these. The applicant (a United States corporation) and the respondents (respectively a Canadian university and a Canadian corporation) are in competition. They compete in the design for manufacturing purposes of medical devices. One such device is a stent for the delivery of paclitaxel, a drug that is used in the treatment of peripheral artery disease. The device is sold around the world. 3 The respondents are the proprietors in Australia of patents for a stent the validity of which are being challenged in this action by the applicant. The applicant has a stent that it wishes to sell in Australia which the respondents say will infringe one or other of their patents. There is a cross-claim dealing with that claim. The action has some way to go before it is ready for trial. But there has been discovery. Each side claims that many of its discovered documents are confidential and that they would suffer serious harm if the contents were made known to the other side. The respective claims for confidentiality are not challenged. Indeed, the parties have put in place a regime to ensure that access to sensitive information is restricted to a select group of people (mostly lawyers and experts) each of whom has given an undertaking not to divulge what they learn, especially to their respective clients. 4 Now, the applicant seeks to have included in the group to whom the respondents' confidential documents can be disclosed its "associate general counsel for litigation" Ms Vinitskaya. Ms Vinitskaya is qualified in the United States to practise in law and is a patent attorney. She joined the applicant in October 2006. She describes her role as being one of "co-ordinating patent litigation involving [the applicant] in five countries, Australia, Ireland, the United Kingdom, United States and the Netherlands". 5 Ms Vinitskaya's role in the Australian litigation is to instruct the applicant's external legal advisers in the United States who in turn instruct the applicant's Australian lawyers. Ms Vinitskaya said that "it is very important to the conduct of the [Australian] proceeding that I have access to all documents that have been discovered on a confidential basis so that I can be properly involved in determining strategy and making decisions on behalf of [the applicant]. At the present time, it is extremely impractical because I cannot be involved in any discussions about nor review those documents. In the United States a reference to "competitive decision-making" by in-house counsel means making company decisions that affect contracts, marketing, employment, pricing, product design, or "any or all of the client's decisions ... made in light of similar or corresponding information about a competitor. " U.S. Steel Corp v United States 730 F2d 1465, 1468 (Fed Cir, 1984). The concept was developed in applications for protective orders restricting access to confidential trade information produced during discovery. 7 When deciding whether or not to make a protective order to protect trade secrets United States courts strike a balance between, on the one hand, the need for full and open discovery and, on the other, the need to protect parties from a misuse of trade secrets by competitors. Striking the right balance will present difficulties in the case of in-house counsel. 8 In-house counsel are not automatically denied access to an opponent's confidential information: R R Donnelley & Sons Co v Quark Inc 2007 US Dist Lexis 424. But if in-house counsel is involved in "competitive decision-making" a protective order is often made. It has been said that involvement in competitive decision-making is the "crucial" or "decisive" or determinative factor in denying in-house counsel access to confidential information: Brown Bag Software v Symantec Corp (1960 F.2d 1465, 1470 (9 th Cir, 1992)); Glaxo Inc v Genpharm Pharmaceuticals Inc 796 F.Supp 872, 874 (ED NC, 1992); Carpenter Technology Corp v Armco Inc 132 FRD 24, 27 (ED Pa, 1991). 9 The position under Anglo-Australian law is similar. In England the leading case is Warner-Lambert Co v Glaxo Laboratories Ltd [1975] RPC 354. This was a patent infringement action. The question that arose was the extent to which the defendant was required to disclose its trade secrets to representatives of the plaintiff, a US corporation that happened to be one of its main competitors. The trade secrets had been disclosed to plaintiff's counsel, solicitor, patent attorney and an expert on undertakings not to use the information except for the purposes of the action. The plaintiff sought disclosure to its chief executive, general counsel, patent counsel and an Italian scientist employed by a subsidiary company. The judge allowed disclosure on certain conditions to the chief executive and general counsel but not to the others. Both sides appealed. Buckley LJ delivered the leading judgment in the Court of Appeal. He said ([1975] RPC at 356) the case presented "a balance or conflict of expedients". On one side, the plaintiff was entitled to protection against infringements of its patents. On the other, the defendant was entitled to have its secrets protected. The question for the court then was how could justice be done and, at the same time, effect be given to the rights of each party to the greatest possible extent. Buckley LJ decided that the chief executive should have access to the trade secrets, notwithstanding the risk involved. He reasoned ([1975] RPC at 360-361) that the plaintiff's agents "are not authorised to make any major decisions on the company's behalf, such as, for instance, a decision whether to continue or abandon the action. Such a decision should be made by the company, not by its legal advisers, and still less by its scientific advisers. " Buckley LJ considered that disclosure should not be made to anyone else, including to the General Counsel. As regards counsel, he considered ([1975] RPC at 361) that the legal issues in question were issues of English law and that the plaintiff had English legal advisors of "the highest calibre". By contrast, the plaintiff's General Counsel and patent counsel in the United States were not qualified experts in the field of United Kingdom patent law. 10 I should also refer to Roussel Uclaf Imperial Chemical Industries plc [1990] RPC 45 a case which followed Warner-Lambert Co v Glaxo Laboratories Ltd. The question there was whether trade secrets should be disclosed to two patent attorneys employed by the plaintiff. Both worked in the plaintiff's Paris office and were responsible for both the litigation in England and parallel litigation in France. The patent attorneys were permitted access to the confidential information but on terms that the plaintiff undertook that the attorneys "should not be concerned in any way with the French proceedings" and that the plaintiff would "pay to the defendants any sum that the court shall decide the defendants may have suffered by any wrongful disclosure of the secret process". The first condition was imposed to "minimise the chance that the confidential information [would] be used in [the French] litigation". The second condition was imposed because of the difficulty faced by the defendants in obtaining satisfactory compensation in the French courts if the confidential information was leaked. 11 The leading Australian case is Mobil Oil Australia Ltd v Guina Developments Pty Ltd (1995) 33 IPR 82. Roads Corporation, sometimes known as VicRoads, a statutory corporation, had called for expressions of interest for the development of a service centre. Mobil was the successful tenderer. Guina Developments sued VicRoads for a declaration that its choice of Mobil was invalid. The parties were required to make discovery. VicRoads objected to the production of documents that disclosed trade secrets (rates of return) that had been provided to it by Mobil, which was then joined to the action to protect its interests. The judge ordered the documents be disclosed. Mobil successfully appealed. The judgment of the Court of Appeal was delivered by Hayne JA (as he then was). He said first (33 IPR at 87) that merely because documents contained confidential information that did not ordinarily constitute a sufficient reason to deny inspection. In most cases in his opinion the rule that the information could not be used except for the purposes of the litigation was a sufficient measure of protection. But Hayne JA said that disclosure of confidential information to a trade rival fell into a different category. The reason was that "Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten. " (33 IPR at 87). There was also the problem that the party whose information has been disclosed will likely never know when and how the information has been used. Hayne JA went on to say (33 IPR at 88) that the problem facing the court was "one of balancing the needs of a party to the litigation and the legitimate concern of a trade rival to retain secrecy of commercially sensitive information". That would justify distinguishing between a party and its advisers making it permissible, in an appropriate case, to deny inspection to a party but not to its lawyers and experts. He said (33 IPR at 89) that it was not possible to frame a rule that covered all cases but "each case will fall for determination, according to its own facts. In particular the nature and the content of the disputed documents is a matter that will usually, if not invariably, be of great importance in forming a conclusion and, if that is so, it will be appropriate for the judge to inspect the documents concerned. The risk is two-fold. First, it involves the unconscious use of confidential information. That is to say, information which once in a person's possession cannot be distinguished from other information in the person's possession. The other kind of inadvertent use is when it is impossible to ignore the confidential information once it is known. That is the kind of inadvertent disclosure, I think, Hayne JA had in mind in Mobil . 13 There is another risk to guard against in the case of disclosure of extremely potent information to in-house counsel, although the risk is not confined to in-house counsel. Providing confidential information to in-house counsel could produce a conflict between his duty of loyalty to his principal and his duty to keep the confidential information to himself. This could place in-house counsel in a position of great difficulty. Proper advice may not be forthcoming. Counsel's hands may be tied in the further conduct of the litigation. It may make it impossible to avoid unwitting disclosure in a prolonged working relationship. These are all dangers that, in some cases, need to be fended against. 14 Returning to the case at hand, it has not been possible for me to do more than examine a few of the respondents' confidential documents. The case was conducted on the basis that this would be sufficient for me to arrive at a decision. My examination of the documents satisfies me that some parts are confidential. What is not clear is how the information might be used by the applicant to disadvantage the respondents. For present purposes, however, I propose to act on the basis that this is a real possibility. 15 Nevertheless, to the extent it is possible to predict what may occur in the future, I do not think there is an unacceptable risk of inadvertent disclosure in the case of Ms Vinitskaya. For one thing she is an attorney of relatively long standing and is well aware of her obligations as regards discovery. More importantly, having regard to her involvement in the applicant's intellectual property enforcement and international litigation, it is unlikely that she will have occasion to use information to further the applicant's commercial interests. This is not to deny that Ms Vinitskava could make indirect use of confidential information in litigation between the parties that is taking place outside Australia. I rate the risk as slight, but an order can be designed to avoid the risk altogether. Nothing needs be done as regards foreign litigation run in a common law country because if the information is relevant it will be discovered. But, in civil law jurisdictions discovery is not readily available. It would therefore be appropriate to require as a condition of disclosure to Ms Vinitskaya, that the applicant (Ms Vinitskaya is not amenable to the Court's jurisdiction) undertakes first that Ms Vinitskaya will not be in any way concerned in proceedings between the applicant and any respondent in a non-common law country and, secondly, that the applicant will pay to the respondents any sum the court decides is proper compensation for any wrongful disclosure by Ms Vinitskaya of the confidential information. 16 The second issue concerns a notice to produce that has been served by the respondents. To understand the purpose of such a notice it is necessary to refer to what became known as the best evidence rule. The earliest statement of the best evidence rule is by Holt CJ in Ford v Hopkins (1701) 90 ER 964. He said "[T]he best proof that the nature of the thing will afford is only required". It soon became the single most important rule in the law of evidence. This did not prevent its abolition in federal courts and tribunals by s 51 of the Evidence Act 1995 (Cth). 17 The best evidence of the contents of a document is the original document. A party, though, was not always in the position of being able to produce the original of a document. If the original was in the possession of the opposite party, that party could be served with a notice to produce and if the original was not produced, secondary evidence of its contents could be given: Morgan v Babcock & Wilcox Ltd [1929] HCA 25 ; (1929) 43 CLR 163. If the first party still wanted the original the proper course was to serve a subpoena duces tecum . By the rules of the Federal Court (O 33 r 12) a notice to produce has been given a two fold function. First, if the notice was not answered it permitted the party serving it to give secondary evidence of the contents of a document. Second, it served the same function as a subpoena duces tecum requiring production of the original document. 18 The respondents served the notice to produce to obtain production of documents said to be discoverable, but which the applicant has not discovered. This is not a legitimate use of a notice to produce. In Commissioner for Railways v Small (1938) 38 SR (NSW) 564, 574 Jordan CJ said: "[I]t is not legitimate to use a writ of subpoena duces tecum as a substitute for an application for discovery of documents, or as an alternative to an application for further and better discovery. " See also Australian Competition & Consumer Commission v Shell Co of Australia Ltd (1999) 161 ALR 686, 695-696. It is equally illegitimate to use a notice to produce for that purpose. 19 Perhaps anticipating that the notice was open to attack as an abuse of process, the respondents invited me to treat the notice as a convenient vehicle to consider whether the applicant should be required to make further discovery or to make particular discovery. There is, however, no basis for requiring the applicant to do either. 20 The respondents have already made such an application in respect of the documents sought by the notice to produce. I dealt with the application by requiring the applicant to make particular discovery of documents relating to research, development and experimental work leading to a workable prototype of the CoStar stent. That produced an affidavit by Mr Litvack, the Chief Executive Officer of the applicant, who deposed that the applicant had no documents relating to the issue raised in the relevant parts of the particulars of invalidity. I will not go behind the affidavit. I will therefore direct that the applicant need not comply with the notice to produce. 21 Finally, as regards the costs of this application, as each side has had a measure of success, it is appropriate to let them lie where they fall. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | discovery confidential documents inspection by in-house counsel of trade rival principles to be applied restrictions imposed notice to produce seeking better discovery abuse of process practice and procedure |
It is common ground that prior to March 2009 the shareholders were Alhumbra Holdings Pty Limited, ACN 098 637 837, and Yohme Group Pty Limited, ACN 095 745 609. Alhumbra Holdings Pty Limited would appear to be a company controlled by a Lyndal Wayman, and the Yohme Group Pty Limited would appear to be a company controlled by Shay Dana Whitton. As it transpires Mrs Wayman's husband, Christopher Charles Wayman, was a director of the first defendant between 24 January 2003 and 31 March 2004, at least according to an Australian Securities & Investments Commission Historical Company Extract as at 9 December 2009. Mr Wayman was also the secretary of the first defendant and apparently held that office from 24 January 2003 until 8 December 2009. According to the same Australian Securities & Investments Commission Historical Company Extract for the first defendant, Mr Jason John Whitton, the husband of Shay Dana Whitton, was a director of the first defendant from 24 January 2003. The same Extract suggests, although it is disputed, that Mr Whitton ceased to be a director of the first defendant on 8 December 2009. The Historical Company Extract, as at 9 December 2009, shows the current members as being the fourth defendant, Robsan Investment Holdings Pty Limited, ACN 113 994 728 as the holder of one share and the fifth defendant, Queensland Resource Investments Pty Limited, ACN 116 937 538 as the holder of one share. The Extract shows that there were two issued shares. It also shows that the first plaintiff was a former member. The evidence presently before the Court is plainly the best that the parties were able to put on in the available time, since these proceedings were instituted by the filing of an Originating Process on 10 December 2009. It is clear from an affidavit of Mr Whitton, sworn 16 December 2009, that he had business dealings with the sixth defendant, Lisanne Marie Sanders, the seventh defendant, Adrian Brennock and the second defendant, Ryan Shiels. In his affidavit Mr Whitton referred to an interconnection between the Yohme Group Pty Limited, which he described as 'a company controlled by my wife', and a company called Source Finance Pty Limited, now known as SGR Finance Pty Limited ('Source Finance'). He deposed to Ms Sanders having formerly been a director of Source Finance. He referred to Mr Shiels as being presently the director and secretary of Source Finance. In paragraph 14 of his affidavit Mr Whitton deposed to the fact that, 'With the onset of the global financial crisis, the business [which I understand to be a reference to the business of the first defendant], and various other business ventures in which I had an interest, suffered significant losses. ' He then said that the developments that occurred brought about a need for Ms Sanders and himself to 'separate our financial interests. ' He deposed that: 'Accordingly, we engaged in communication with the objective of separating our respective financial interests. ' The evidence presently before the Court includes an undated transfer of one share in the first defendant from Yohme Group Pty Limited to Robsan Investment Holdings Pty Limited, the fourth defendant. The transfer on behalf of Yohme Group Pty Limited appears to be signed by Mrs Whitton as the sole director of Yohme Group Pty Limited. The form of transfer appears to be signed by Ms Sanders as the sole director of Robsan Investment Holdings Pty Limited. Whilst I have indicated that that transfer of shares was undated, in its terms it appears to have been prepared with a view to its execution on a day in March 2009. The evidence also includes another copy of what appears to be the very same transfer, but on this occasion the copy which is in evidence suggests that the date 30th was inserted into the form of transfer prior to the reference to 'March 2009'. The original of the transfer has not been made available to enable matters such as ink colours and so on to be carefully examined. The evidence also includes a form of transfer of one share in the first defendant from Alhumbra Holdings Pty Limited to Queensland Resource Investments Pty Limited, the fifth defendant. That transfer appears to have been executed by Mrs Wayman as the sole director of Alhumbra Holdings Pty Limited and by the seventh defendant, Adrian Brennock, as the sole director of Queensland Resource Investments Pty Limited. The evidence also includes another form of share transfer which bears the typed date 1 April 2009, under which Yohme Group Pty Limited purports to transfer one share in the first defendant to the first plaintiff Billy-Budd Investments Pty Limited, ATF the Billy-Budd Investments Trust. That transfer appears to have been signed by Mrs Whitton on behalf of Yohme Group Pty Limited and by a Mr Sam Billy-Budd Saggers on behalf of Billy-Budd Investments Pty Limited. As it transpires, the sole director and shareholder of Billy-Budd Investments Pty Limited is Mr Sam Billy-Budd Saggers. To the extent necessary, the Plaintiff be granted leave pursuant to section 236 of the Corporations Act 2001 to commence and maintain these proceedings on behalf of the First Defendant. Pursuant to an application made ore tenus on the afternoon of 16 December 2009 at about 4:35pm an order was made, at the request of the then plaintiff, that Jason John Whitton be added as a second plaintiff. Such an order was made without any opposition from the second, fourth, fifth, sixth and seventh defendants. No explanation as to how the execution of the inconsistent transfers of shares in the first defendant came about has been provided by Mrs Whitton or Mrs Wayman. Whilst in or around mid March 2009, my and Mr. Wayman's respective wives, as controllers of our respective family trust companies, Yohme and Alhumbra Investments Pty Limited, executed a form of share transfer in favour of the Fourth Defendant and Fifth Defendant, with the intention that the asset would be removed and thereby preserved, the share transfers remained undated, with no ultimate agreement to effect registration. No board meeting of [the first defendant] was ever held to give effect to any [such] transfer. The evidence for the plaintiffs includes a record of decision apparently signed by Mr Whitton, as a director of the first defendant, on 27 March 2009 at 1:00pm. That resolution purported to approve the transfer of shares from Alhumbra Holdings Pty Limited and Yohme Group Pty Limited to Billy-Budd Investments Pty Limited. It will be appreciated that the purported resolution of the sole director was purportedly given some five days before the transfers to which the resolution related were executed, if indeed they were executed on the date shown in the share transfers, namely, 1 April 2009. On 7 April 2009 a 'Change to company details' document was lodged with the Australian Securities & Investments Commission in relation to the first defendant. That document recorded that the plaintiff, Billy-Budd Investments Pty Limited had become the holder of two shares in the first defendant on 1 April 2009 and that Alhumbra Holdings Pty Limited and Yohme Group Pty Limited had ceased to hold their respective shares (one each) on the same date. The Change to company details form was certified by Mr Whitton. As it transpires, a document No. 7E2592555 was lodged with the Australian Securities & Investments Commission by electronic lodgement at about 5:35pm on 8 December 2009. That document was said to have been certified by Mr Shiels on 8 December 2009. It recorded that the members of the first defendant had become Robsan Investment Holdings Pty Limited and Queensland Resource Investments Pty Limited, with the effective date in each case of 8 December 2009. The evidence presently before the Court also includes a minute of a purported 'Circulating Resolution' of the members of the first defendant dated 7 December 2009. The resolution was signed by Mr Brennock as the sole director of Queensland Resource Investment Pty Limited and Ms Sanders, as the sole director of Robsan Investment Holdings Pty Limited. By the circulating resolution the claimed shareholders of the first defendant purported to remove Mr Whitton as a director and Mr Wayman as the secretary. The resolution also purported to appoint Mr Ryan Sheils (sic) as Director and Secretary of the first defendant. A further minute of a meeting of members of the first defendant, said to have taken place on 7 December 2009, purported to note the passage of the Circulating Resolution dated 7 December 2009, which had been apparently circulated, signed and was attached. A further document, No. 025135351, would appear to have been lodged with the Australian Securities & Investments Commission on 8 December 2009. That document was apparently signed by Mr Shiels. By it, he purported to inform the Australian Securities & Investments Commission that Mr Wayman had been removed as secretary of the first defendant on 8 December 2009, that Mr Whitton had been removed as a director on 8 December 2009 and that he had been appointed as a director on a date which appears to be 6 December 2009, but may be 8 December 2009. It will be obvious that this document does not sit comfortably with the circulating resolution said to have been signed by people entitled to sign it on behalf of the corporate shareholders on 7 December 2009. The document lodged with the Australian Securities & Investments Commission on 8 December 2009 also purported to record the changes in the membership of the first defendant, which were said to have occurred on 30 March 2009, whereby Yohme Group Pty Limited and Alhumbra Holdings Pty Limited ceased to be shareholders and Robsan Investment Holdings Pty Limited and Queensland Resource Investments Pty Limited were said to become shareholders. No evidence has been placed before the Court as to whether or not the first defendant has a constitution. No subpoenas have been issued or notices to produce served calling for the production of the first defendant's statutory records, which were held by Hall Chadwick, Chartered Accountants, and apparently handed over to a representative of Robsan Investment Holdings Pty Limited and Queensland Resource Investments Pty Limited on 9 April 2009. Ms Sanders swore to the fact that the corporate documents were so handed over to the representative, Kym Corfield, with the consent of Mr Whitton. There is no evidence which conflicts with that evidence. In the Originating Process the first prayer for relief that was sought was a declaration that Mr Whitton is and has at all times remained the sole director of the first defendant after 1 April 2009. The second prayer for relief was that the first plaintiff is the sole member of all of the issued share capital of the first [defendant]. One infers that orders will be sought for the rectification of the share register in the event that, upon its production, it reveals that the shareholders in the first defendant are the fourth and fifth defendants rather than the first plaintiff (see s 175 of the Corporations Act 2001 (Cth) ('the Corporations Act ')). It does not seem to me appropriate, in the circumstances of this case, as recounted above, that an order be made pursuant to ss 236 - 7 of the Corporations Act granting leave to the first plaintiff to bring proceedings on behalf of the first defendant as sought in paragraph 3 of the Interlocutory Process. It would appear that the first plaintiff would answer the description of being a 'person aggrieved' within the meaning of s 175(1) of the Corporations Act in respect of the removal of its name from the register of members. As indicated above, the Australian Securities & Investments Commission Historical Company Extract of 9 December 2009 revealed that the first plaintiff was a 'former member' of the first defendant, although it does not appear to have been a party to any transfer of shares to the persons now said to be members of the first defendant. It would also seem to me open to Mr Whitton, who has been added as a plaintiff, to seek relief in respect of his purported removal from office as a director of the first defendant by the purported circulating resolution of 7 December 2009 of Queensland Resource Investments Pty Limited and Robsan Investment Holdings Pty Limited. In the circumstances I decline to make any order as sought in paragraph 3 of the Interlocutory Process. In relation to the prayer seeking interlocutory injunctive relief against the second, fourth, fifth, sixth and seventh defendants, it is apparent that when the matter was previously before the Court, a suggestion was advanced to the effect that a substantial amount of money standing to the credit of a bank account in the name of the first defendant had been removed from that account. That suggestion is no longer pressed by the plaintiffs. The evidence filed on behalf of the defendants mentioned includes a copy of a bank statement showing that as at 10 December 2009 there was $91,952.45 standing to the credit of an account in the name of the first defendant with Westpac Banking Corporation. On the face of the bank statement covering the period 30 November to 10 December 2009, there would not appear to have been any irregular transactions. Whilst the question of injunctive relief is dealt with in s 1324 of the Corporations Act it seems to me that equitable principles continue to have application. In order to secure an interlocutory injunction a plaintiff must show, firstly, that there is a serious question to be tried, or that the plaintiff has made out a prima facie case in the sense that if the evidence remains as it is, there is a probability that at the trial of the action the plaintiff will be held entitled to relief; secondly, that he or she will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and, thirdly, that the balance of convenience favours the grant of an injunction (per Mason ACJ in Castlemaine Tooheys Limited v South Australia [1986] HCA 58 ; (1986) 161 CLR 148 at 153, cited with approval by Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Limited [2001] HCA 63 ; (2001) 208 CLR 199 ('Lenah Game Meats')). The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant could suffer if an injunction were granted. A plaintiff seeking an interlocutory injunction must be able to show sufficient colour of right to the final relief , in aid of which interlocutory relief is sought (per Gleeson CJ in Lenah Game Meats at [11]) The word 'probability' does not lead necessarily to the conclusion that, for an interlocutory injunction, the plaintiff must show a better than even chance of success (per Mahoney JA, with whose reasons for judgment Glass and Samuels JJA agreed, in Shercliff v Engadine Acceptance Corporation Pty Limited (1978) 1 NSWLR 729 at 736). The degree of likelihood of success to be demonstrated is that which the Court thinks sufficient, in the particular case, to warrant consideration of where the balance of convenience lies (per McLelland J as his Honour then was, in Appleton Papers Inc v Tomasetti Paper Pty Ltd (1983) 3 NSWLR 208 ('Appleton Papers') at 214). In considering the question of 'balance of convenience' the relative apparent strength of each party's case may be a relevant matter (per McLelland J in Appleton Papers at 215). In my opinion the plaintiffs have not made out a prima facie case in the sense that if the evidence remains as it is, there is a probability that at the trial of the action the plaintiffs would be entitled to relief. Whilst there are undoubtedly questions to be tried, I am not satisfied that, on the evidence presently before the Court, there is a serious question to be tried. Plainly, those purporting to serve the first defendant as officers prior to the final resolution of these proceedings, will proceed with great caution lest they be held to account for action purportedly taken within authority, which may later prove to be completely unauthorised. That said, and given that the value of the shares, whether transferred to the plaintiff or to the other interests, namely Robsan Investment Holdings Pty Limited and Queensland Resource Investments Pty Limited was only one dollar per share, I do not consider that irreparable injury would be done, for which damages would not be an adequate compensation unless an injunction was granted. In my opinion, the balance of convenience does not favour the granting of any injunctive relief at this stage. It should not be presumed that this decision, on the evidence which the plaintiffs have been able to marshal at this stage, will bring finality to the situation between now and the date when the Court is able to deliver judgment on a final hearing of the matter. It may be that further inquiry will reveal facts and matters which would tip the balance in the plaintiffs' favour so far as the prayers for interlocutory relief are concerned. However, on the evidence presently before the Court it would, in my opinion, be inappropriate to grant interlocutory relief. 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. | multiple share transfers executed in favour of different transferees whether interlocutory relief should be granted injunction |
Its principal business is the sale of broadcast airtime to advertisers, per medium of commercial radio broadcasting services, at some 50 locations around Australia. The second applicant AusCoast Broadcasting Pty Limited ('AusCoast') is a wholly owned subsidiary of WAL and has been since February 2002, when WAL acquired the total AusCoast shareholding. AusCoast holds a Medium Frequency Narrowband Area Service ('MF NAS') radiocommunications apparatus licence issued under s 100(1) of the Radiocommunications Act 1992 (Cth) ('the Act'), being licence number 1130030 (the '1620 licence'). Broadly speaking, it is in the nature of a transmitter licence , in contrast to a receiver licence , those being the two types of apparatus licence available under s 97 of the Act. In turn, there are several types of transmitter licences provided for by the Act, the 1620 licence being described by the applicants as 'a broadcasting license type'. That legislation does not fall for scrutiny in the present case. The broadcasting services of the Broadcaster are presently transmitted in the Brisbane area by AusCoast under the auspices of the 1620 licence. For convenience, and in line with the applicants' written submissions, those services transmitted in the Brisbane area are hereafter referred to as 'the broadcasting service'. An independent engineering report prepared for WAL by THL Australia Pty Ltd, said by the applicants to be one of Asia Pacific's leading broadcast engineering groups, was to the effect that the 1620 licence provides a signal of 'superior listening quality' to 1,150,065 persons in the Brisbane area, and of so-called 'acceptable listening quality' to a further 882,596 persons in the Brisbane area. 3 The statutory scheme for licensing the use of spectrum under the Act has been administered by the respondent Australian Communications and Media Authority ('the Authority' or 'ACMA'), and its precursor the Australian Communications Authority, since 1 July 1997. Prior to that time, the administration of licensing was undertaken by the Spectrum Management Agency. Nothing turns however on those changes in identity of the administering authority. The statutory scheme contains provisions, in addition to the issue of apparatus licences, in relation to the duration of apparatus licences (s 103), the general conditions of apparatus licences (s 107), additional conditions of apparatus licences (s 108), changes to conditions of apparatus licences (s 111), the making of guidelines that the Authority is to apply in exercising its powers under sections 107, 108 and 111 (s 112), the suspension or cancellation of apparatus licences (ss 126 and 128 ), the renewal of apparatus licences (s 130) , and the transfer of apparatus licences (ss 131AA and 131AB). 4 One of the conditions of the 1620 licence, apparently imposed from the time of its first issue, is that the location of the transmitter be 170 Kingsley Terrace, Manly, being a suburb of Brisbane; that site was referred to in the course of the proceedings as the 'condition site'. That condition was imposed pursuant to s 107(1)(g) of the Act. Other conditions relate to various technical aspects of the radiocommunications transmission authorised by the licence. In spite of that condition, transmission of the broadcasting service has never occurred in any physically operative sense from that site at Manly, that is, from the condition site, at least for the reason that the condition site is located within an established residential area. The broadcasting service is presently transmitted from a different location in the Brisbane area, being 320 Fleming Road, Tingalpa, which is 5.7 kilometres distant from the condition site. That site at Tingalpa is sometimes referred to in the parties' submissions as the 'current site', in contrast to the 'condition site' at Manly. The effect of the purported decision of the respondent Authority, the subject of the present review application, which was made on 30 June 2005 and affirmed on 18 August 2005, is that AusCoast is not officially authorised to transmit the broadcasting service, or any other radiocommunications service, from the current site, without breaching the locational condition of the 1620 licence referrable to Manly. That prohibition, if enforced, would apparently mean that the broadcasting service of the Broadcaster must cease to be transmitted in the Brisbane metropolitan area. So much would occasion substantial loss and damage, both directly and indirectly, as the applicants understandably emphasised. 5 As I have already indicated, there is not, nor has there ever been, any radiocommunications transmitter located at the condition site at Manly, that site being located within a residential area of Brisbane and itself comprising residential premises. When application was originally made by AusCoast for the 1620 licence, it appears that the condition site at Manly was used by AusCoast as the nominal location site for the 1620 licence because of an inability of AusCoast to identify a suitable location elsewhere for transmission of its broadcasting service to Brisbane, pending proper planning for transmission of radio communications under that licence. The adoption of that course of purported expediency was said by Mr Thompson, the chief executive officer of WAL, to accord with the then practice of administrative convenience in operation at that time in respect of applications for and adoption of transmitter licences. As I have foreshadowed, that practice was said to allow an applicant for a MF NAS apparatus licence to identify a convenient address for the transmission site referrable to the applicant's licence, pending completion of comprehensive planning for transmission of radiocommunications under the licence. In fact an application appears to have been made by AusCoast for the change of the transmission site from Manly to another site in the Brisbane locality as far back as 12 November 1996, it being doubtless considered that it would be highly unlikely that the necessary town planning approval could ever be obtained to operate the 1620 licence from within the Manly residential area, owing to the environmental implications that might have ensued to an area of land so zoned. A precedent for that practice was identified by the applicants as the MF NAS apparatus licence for Hobart, which was listed nominally by reference to the site of the Hobart Fire Station, even though such location could not constitute a radiocommunications site in any operational physical sense for radio interference reasons. 6 On 29 August 2003, the Minister for Communications, Information Technology and the Arts (the 'Minister') issued Australian Communication Authority Direction (MF NAS Transmitter Licences) Direction No. 1 of 2003, the practical effect of which was contended by the applicants to be that the holders of MF NAS apparatus licences, such as AusCoast, would not be permitted to transmit a commercial radio broadcasting service under a licence of that designation, unless the service was provided by 29 August 2004 (ie within one year later). 7 AusCoast commenced transmission of the subject broadcasting service on 5 November 2003 from the current site at 320 Fleming Street, Tingalpa, in alleged satisfaction of the Minister's direction. It appears that the transmission of the subject broadcasting service of AusCoast has thereafter continued unabated from the Tingalpa site, and there further appears to have been no complaint communicated to any of the parties to the proceedings, including the Authority, as to AusCoast's transmission of its broadcasting service from the Tingalpa site having caused any interference to any other radiocommunication transmission. 8 It was the applicants' further case that the current site is an established radiocommunications transmission site, and that its utilisation by AusCoast for that purpose has complied with all relevant town planning, local government and environmental laws, whereas the condition site remains as I have already indicated within a residential area, in relation to which it is highly unlikely any corresponding requisite approvals could ever be obtained in relation thereto; for one matter, there is a block of residential units standing in the immediate vicinity of the Manly transmission site. It was therefore that on 6 August 2004, AusCoast applied to the then relevant authority to change the site condition of the 1620 licence from its nominal location in Manly to its operative broadcasting site at Tingalpa. In the course of the communications which ensued, the Authority alleged that the broadcasting service being provided, in effect under the auspices of the 1620 licence, was being operated in breach of licence conditions, by virtue of transmission occurring from a site otherwise than that stated in the condition to the licence. 9 On receipt of that application of 6 August 2004, the Authority responded by fax of 16 August 2004 to the effect that any such variation of the site condition in respect of the 1620 licence was not acceptable, for the reason that it '... would put the station closer to an adjacent [channel] service on 1611kHz at Tingalpa and less than 30km from an adjacent channel service on 1629kHz at Mango Hill ... [and the transmission site] would be closer to a co-channel service at Toowoomba. ' Of course there existed a degree of artificiality in relation to the expression '... place the transmitter closer...', the placement of the transmitter apparatus being already physically located at Tingalpa, and having never been physically located at Manly. 10 I should perhaps incorporate reference to further terminologies, practices and policies appearing in the evidence. A 'co-channel service' is another service broadcasting at the same frequency whereas an 'adjacent channel service' would be one broadcasting at either of the two frequencies each side of the subject apparatus licence, namely 1611 kHz and 1629 kHz in the present circumstances. The use of the expression 'closer' by the Authority's officer in the fax of 16 August 2005 is a reference to the application of the so-called '30/160 rule' which rule is enumerated in two policy documents of the Authority. The first document is a 'Business Operating Procedure' entitled 'Licensing Narrowband Area Service stations' ('NAS BOP') and the second document is a 'policy information paper' entitled 'Apparatus Licensing --- Narrowband Area Service stations' ('NAS PIP'). In effect, those policies stipulate a minimum separation distance between MF NAS transmitters on co-channel frequencies of 160 kilometres and for adjacent channels of 30 kilometres. Since in the past the enforcement of those minimum separation distances has not always been strict on the part of the Authority (or its predecessors), it has also formulated the 'make it better rule', whereby suggested variations in site location that do not satisfy the '30/160 rule', but which are an improvement on the status quo in terms of the distances between transmission services, may be approved. 11 Subsequently by letter dated 5 October 2004 a further Authority communication informed WAL inter alia that its application dated 6 August 2004 to relocate the 1620 licence had 'not been finalised' because '... the site co-ordinates that you provided do not meet, or improve, co-channel separation distances'. Interestingly in the light of the Authority's present submissions, the author of the letter then went on to request 'within one month of today, additional site co-ordinates information and/or details of how [WAL] propose to regularise the operation of [the 1620 licence]', and said that 'this correspondence is to be taken as a request for additional information for the purposes of s 286 of the Act. ' That requested information was apparently provided to the Authority by WAL in a letter dated 27 October 2004. By letter of 15 November 2004, the Authority acknowledged WAL's ongoing efforts to resolve its site difficulties, but indicated nevertheless that the broadcasting service was operating 'in breach of licence conditions'. No express mention was apparently made in that correspondence of 15 November 2004 to WAL's 'application...to relocate [the 1620 licence]', as that application was described in the Authority's earlier letter of 5 October 2004. 12 Two file notes authored by respective officers of the Authority evidence telephone discussions apparently undertaken by those same officers of the Authority with Mr Thompson of WAL in late 2004. In both of those file notes, the Authority's officers claim to have impressed upon Mr Thompson that the Authority 'had already considered the matter [of the variation of the site condition on the 1620 licence]' and had 'arrived at its current position'. On the second occasion Mr Thompson was apparently invited to make another request in writing, which he duly did by letter dated 13 December 2004. That letter sought both the relocation of the 1620 licence to the Tingalpa site but also the revocation of MF NAS apparatus licence number 1402943 ('the 1611 licence'), which had as its site condition a location also in Tingalpa some 7.5 kilometres away from AusCoast's current transmission site. 13 At this point of the narrative of material circumstances, I would revert back in time to 27 February 1996, being some five months after the issue originally of the 1620 licence to AusCoast. At that time in 1996, so the applicants pointed out, the 1611 licence was registered in the name of Queensland Hospital Radio Association. The site of the 1611 licence shown in records maintained by the Authority is presently recorded as Bracken Ridge Reservoir. Until January 2005, the 1611 licence, that being of course to be distinguished from the applicants' 1620 licence, had a different site location, recorded as being in Tingalpa. However by about the commencement of 2005, a change to the present 1611 licence site at Bracken Ridge Reservoir was approved by the Authority. The Bracken Ridge Reservoir site is 21063 kilometres distant from the condition site at Manly, and 18.291 kilometres distant from the current site at Tingalpa. Yet the 1611 licence is inoperative and has never operated, so the applicants maintained. Those circumstances were raised by the applicants by way of apparent exemplification of at least the alleged elasticity of administration and operation of the Act relevantly to the nomination of site locations of licensees for convenience until an appropriate transmitter site can be found. The fact that the 1611 licence had issued some five months after the 1620 licence was said to be explanatory of the request made by WAL to the Authority for the revocation of the 1611 licence. That request, and the events occasioning it, are not of course directly relevant to the present proceedings, but provides potentially relevant background to the principal case of the applicants to be presented, in the event that the applicants are successful in the present interlocutory dispute. 14 Further discussions and communications have ensued between WAL and the Authority concerning the possibility of AusCoast continuing to transmit from Tingalpa, in circumstances which nevertheless were described on behalf of the Authority as already involving breach of licence conditions, though pending resolution of what an officer of the Authority described as AusCoast's attempts to acquire another licence located at Tingalpa. By letter dated 23 December 2004, the Authority purported to 'reiterate its advice to [WAL] of 26 August 2004 that [the Tingalpa site] is unsuitable because it does not meet co-channel or adjacent channel re-use distances for a number of services...'. Next followed a description of the respective services which were said by the Authority to render the request for variation of the site location to involve breach of the Authority's policy on technical requirements. There followed on 14 February 2005 a written request from WAL's solicitors to the Authority to make a decision under s 111 of the Act concerning a condition of the 1620 licence, being that the site of that licence be changed from Manly to Tingalpa. In this way, the only "decision" contemplated by the section is one that will some way change the licence conditions. If there is no change to the licence conditions, then for section 111 purposes, no decision has been made. It follows from this that it is only where the [Authority] decides to impose, revoke or vary conditions that a review can be sought under the Act. It is that issue which is addressed by these reasons for judgment. WAL also sought from the Authority a statement of its reasons for decision pursuant to s 13 of the ADJR Act. Both of those requests were refused by the Authority in correspondence of 18 August 2005. [The Authority] has not exercised its power under section 111 to impose, revoke or vary licence conditions. There is therefore no decision under the Act for [the Authority] to reconsider under section 285 of the Act. The [ADJR Act] applies to decisions made under an enactment. As there has not been any such decision, this request for a statement of reasons is refused. The applicants' apprehension is that the practical effect of the decisions of the Authority under review is that their present broadcasting service under the auspices of the 1620 licence must cease to be provided to the Brisbane area, there being apparently no other means by which the applicants could cause their subject broadcasting service to be transmitted to the numbers of persons in that area presently reached. The implications of any such outcome are apparently considered to be as damaging as they are far reaching to the applicants. 18 The applicants' case was that the maintenance of the status quo in relation to the 1620 licence, is vital to WAL's business involving the sale of broadcast airtime to advertisers, and further that the metropolitan area of Brisbane, as the capital city of Queensland, is a vital part of WAL's radio network. The provision of the subject broadcasting service under the 1620 licence is a key source of the advertising revenue of WAL. That is because when allocating advertising to radio networks, advertising agencies place significant weight on the ability of a network to reach audiences in the three major Eastern seaboard capital cities of Brisbane, Sydney and Melbourne. Accordingly if WAL is unable to continue to provide a radio network which covers each of those cities, it will be seriously disadvantaged financially when competing in the national radio market, being a market presently embracing at least those three capital cities. It was asserted that WAL's reputation as a reliable provider of national commercial radio would therefore also be greatly damaged, with a consequentially adverse impact on all remaining markets in which it presently operates, and therefore on its revenues, share price and returns to shareholders. 19 The Authority's decision primarily the subject of the present application for review, as I have foreshadowed, was communicated to the applicants by letter dated 30 June 2005, being a decision by the Authority not to vary a condition of the 1620 licence by providing that instead of the site of transmission remaining nominally at 170 Kingsley Terrace, Manly, the current site of actual transmission at 320 Fleming Road, Tingalpa be authorised. That nominated site relocation was not entertained because it was said not to meet the Authority's policy relating to separation distances between transmitters. That refusal of site relocation decision, according to the applicants, was made pursuant to s 111 of the Act; however the Authority did not so characterise the same, and hence the Authority did not issue a s 287 notice. 20 Included within the challenge of that decision of 30 June 2005, and hence the subject further of the present administrative review proceedings, are also what the applicants term the Authority's subsequent decisions, each made on 18 August 2005, being not to reconsider its first decision pursuant to s 285(g) of the Act, and also to refuse WAL's request for a statement of reasons for that first decision pursuant to s 13 of the ADJR Act. The Authority adopted the position that no decision the subject of challenge had been made by it under an enactment, notwithstanding, as the applicants would insist, that a decision of the Authority exercising the discretion conferred by s 111 of the Act would constitute such a decision. The amended notice of objection to competency went on to state '[i]n the alternative if the court determines that it has jurisdiction there is no proper basis upon which to grant relief to the applicant[s]'. The Authority described this as its 'related alternative motion'. 26 As I have foreshadowed, in support of its objection to competency, in relation to the operation of the ADJR Act in the present circumstances outlined by the applicants, the Authority characterised its decision of 30 June 2005 adversely to the applicants, not as a decision to refuse to change the subject site condition for the 1620 licence of the applicants, but rather as a prior decision to decline to consider whether or not the site condition may be varied at all. It was largely upon that footing that the Authority contended that the initial or prior decision of 30 June 2005 was not a decision made under an enactment, even though a decision involving the exercise of the discretion conferred by s 111 of the Act would seemingly constitute such a decision. The applicants rejoined to the effect that even if that purported distinction was to be taken at face value, the very notion that any such so-called initial or prior decision did not constitute a decision made under the Act immediately encounters forensic and conceptual difficulties. The Authority also submitted that the lawfulness of such initial or prior decision was not a ' matter ... arising under any laws made by the Parliament ...' (see s 39B(1A) of the Judiciary Act ), since it was made under a non-legislative policy, being the subject of the NAS PIP and NAS BOP policy documents referred to above. 27 The meaning and implications of the statutory notion of 'decision', where used in the ADJR Act, was comprehensively explained by the High Court in Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321. It was emphasised by Mason CJ at 335 (with whose reasons Brennan J agreed, as did Deane J other than in relation to a particular matter not here material) that such meaning must be determined by reference to the text, scope and purpose of the legislation, and further that the remedial nature of the ADJR Act indicates that no narrow view is to be taken of the notion of 'decision' in that statutory context. Moreover his Honour pointed out at 336 that the concept of 'a reviewable decision is a decision which a statute requires or authorises, rather than merely a step taken in the course of reasoning on the way to the making of the ultimate decision', and further that 'the examples of a decision listed in the extended definition contained in s 3(2) [of the ADJR Act] are also indicative of a decision having the character or quality of finality, [being] an outcome reflecting something in the nature of a determination of an application, inquiry or dispute ...'. Section 3(3) of the ADJR Act, which extends the statutory definition of 'decision' to '... the making of a report or recommendation before a decision is made in the exercise of a power ', was said by his Honour to operate to '... qualif[y] the characteristic of finality'. Moreover the Chief Justice explained that '... acts done preparatory to the making of a "decision" are not to be regarded as constituting "decisions" for, if they were, there would be little, if any, point in providing for judicial review of "conduct" as well as of a "decision". 29 The applicants focused those explanations and expositions of the Chief Justice upon s 111 of the Act, which refers to power conferred upon the Authority inter alia to revoke or vary any condition of a licence which it may have previously imposed, and submitted that so much did not mean that a refusal to exercise any such positive power on the part of the Authority did not constitute a decision made under s 111. It was pointed out in that regard, in my opinion rightly, that there are many statutes in which the decision-making power is expressed only in terms of a positive discretion, without express reference to the power to make a decision of a negative character, yet in such cases it is necessarily implicit that a negative decision would also be made under that provision. Otherwise, so it was further emphasised by the present applicants, paras (a), (b) and (g) of s 3(2) of the ADJR Act would be otiose. The Secretary had then notified the appellant Association and advised that on the evidence available, 'nothing would warrant my acting to stop the trials'. The sponsor [of the trial] would clearly be a person aggrieved and would in my view be entitled to such a review of the decision under the ADJR Act. Why should the position be different if the Secretary reaches the opposite conclusion, as he did in this case ... Nevertheless it sought to distinguish Right to Life on the basis that in the circumstances of that case, as opposed to the present case, the decision-maker had purported to consider 'the full gamut...of all the relevant issues'. The Authority's contention was that its officer in this instance had in effect 'terminated the request [made by WAL for a variation in the site condition of the 1620 licence] at the first hurdle', without considering all of the issues that the Authority would normally take into account in assessing a variation. I am not persuaded that such contention of the Authority is sound, and that there is in any event any viable difference between the circumstances relevantly in Right to Life and those here prevailing. In both instances the decision-maker received a request for a decision to be made to a certain effect, and in both instances there was no provision made under the relevant legislation for such requests to be made by formal application. Moreover in both cases, detailed reasons for that request were given by the entity in favour of the decision it sought to be made. Most importantly for the outcome of this objection to competency, it was put by the applicants that the refusal of the Authority to make a decision in the terms requested by WAL had the practical effect of constituting an ultimate or operative decision, and hence one which bore the character of finality. The Authority's objection to the Court's competency to review the second decision rested however on its objection to competency of review of the first decision, and was therefore said by the applicants to encounter the same or similar difficulties which I have already described in relation to the first decision. The applicants contended that '[t]he plain words of para 285(g) [of the Act] also tell against the [Authority]'. 34 The opening words to s 285, which I have of course already extracted, but nevertheless merit further emphasis, are that ' [a]n application may be made to [the Authority] for reconsideration of any of the following decisions ', the notion of reconsideration being of wide import. Moreover the ensuing language of sub-paragraph (g) includes the word concerning , which was also said by the applicants to be of wide import, such that there could be no contextual reason to construe s 285(g) narrowly. Hence the applicants contended on that basis that the Authority's decision not to vary the site condition at the centre of the disputation was clearly a decision concerning the conditions of the 1620 licence, that licence being of course an apparatus licence . 35 It was submitted by the applicants moreover that the wording of s 285(g) of the Act should be compared with other sub-paragraphs of s 285. I was referred again to s 285(f) which explicitly refers to the inclusion of conditions in an apparatus licence under paragraph 107(1)(g) ...' . So much was said by the applicants 'clearly' to exclude review of a negative decision, that is to say, a decision not to includ[e] the operation of any conditions in an apparatus licence under s 107(1)(g), which statutory expression is used in marked contrast to what appears in s 285(g), which was described by the applicants as covering 'both positive and negative decisions' by reason of its use in particular of the broad notion of concerning . 36 It was further submitted by the applicants that if s 285(g) of the Act was intended to be limited to decisions to give a notice under s 111, the Legislature would have used an expression such as that used in s 285(qa), namely decisions giving a notice . The point was said moreover to be made even more starkly when other sections of the Act are considered, such as s 118, which by para (a) of subs (1) thereof refers to 'a notice under section 111 relating to changes in licence conditions ...'. The applicants submitted that it would have been a simple matter for the draftsperson to have used that expression in s 285(g) of the Act, had so much been the legislative intention, and further that the difference in expression provided an indication that para 285(g) has a wider operation than the phrase used in s 118(1)(a) of the Act. There is considerable force in those submissions of the applicants upon the statutory texts. Instead s 111 of the Act reposed in the Authority a discretionary power to unilaterally vary or revoke conditions of apparatus licences, and s 111 did not provide for a means whereby a licensee could move the Authority to exercise its power under that provision. The Act was said by the Authority to draw 'a clear distinction' between 'powers in respect of which an application may be made and is necessary and those where no provision is made for an application from an interested person'. Where any such application procedure is invoked, it was acknowledged by the Authority that it '... is under a duty to consider the application and indeed, must do so within a prescribed timeframe'. Bearing in mind the location of s 286 within Part 5.6 of the Act, the meaning of ' application...for such a decision ' in s 286 must be read as a reference to an application to the Authority for a reconsideration under s 285, and not as a reference generally to any decision of the Authority under the Act for which application can be made. In any event, the absence of any such express 'application procedures' under the Act for the making by the Authority of decisions under s 111 was said by the Authority to imply that it lacked a duty to consider any request or application purportedly made by a licensee under s 111. I observe that the Authority did not draw the Court's attention to any species of decision under the Act for which an application procedure exists other than to applications for reconsideration of the decisions listed in s 285. 39 The Authority next contended that where no application procedure is provided for, as was said to be the case with decisions made under s 111, the Authority may have a discretionary power that can be exercised, such as its power to vary conditions under s 111, but that the Authority would be under no duty to exercise that power, or even to consider whether or not to exercise that power. Reference was made to two Full Federal Court authorities relating to the operation of the Migration Act 1958 (Cth) (' Migration Act '), as exemplifications of what was said to be a general principle that the mere existence of a discretionary power does not carry with it a duty to exercise the power, or even to consider whether or not to exercise the same. 40 It is convenient to consider immediately whether either of those authorities do exemplify or otherwise lend support to that contention of the Authority. WAGJ v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 227 was concerned with the operation of s 427(1)(d) of the Migration Act , which provided that the Refugee Review Tribunal ('RRT') '... may require the Secretary to arrange for the making of any investigation ... that the Tribunal thinks necessary with respect to the review . ' The Full Court in WAGJ (Heerey, RD Nicholson and Mansfield JJ) held that s 427(1)(d) did not impose a duty upon the RRT to consider whether to exercise that power to order an investigation, their Honours placing emphasis upon such statutory words may and Tribunal thinks necessary . I would observe that the Court in WAGJ did not purport to lay down any general principle or rule, their Honours' decision apparently being predicated on the above emphasised words in s 427(1)(d) , and the prevailing legislative context. The issue arising relevantly in the second of those decisions relied upon by the Authority, being WAJQ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 79 , was not concerned with any particular provision of the Migration Act at all, the appellant in that litigation contending that the Tribunal had erred by failing to enquire into the veracity of certain documents and correspondence provided by the appellant in support of his application for a protection visa. It is not apparent that the appellant in WAJQ formulated his case by reference to the operation of s 427(1)(d) of that legislation. The Full Court cited WAGJ as authority for the wider proposition that there is no duty on the RRT to make inquiries, the failure to carry out whereof would give rise to judicial review. 41 I am unable to obtain sufficient assistance from resort to authorities arising in the context of the Migration Act , which has its own terms and conditions for administrative review far removed from those contained in the ADJR Act. Leaving aside contextual statutory differences, WAGJ and WAJQ do not purport to lay down any principle of general application to the effect that the existence of a discretionary power does not impute a duty to consider whether or not to exercise it. Nor was either of WAGJ or WAJQ concerned with the meaning of ' decision ... made ... under an enactment ', as that expression appears in the ADJR Act, or otherwise. 42 It was the Authority's further contention that its officers paid due regard to policy formulated by the Authority concerning the location of MF NAS transmitters, and took the view, as they were said by the Authority to be entitled to do, that the proposed relocation advanced by the applicants did not meet the policy requirements apparent in the so-called '30/160 rule', or the 'make it a better rule' apparent in the NAS PIP policy, and that as a consequence, it was decided by the Authority that the applicants' proposal should not be further entertained. The circumstances of the present case were said by the Authority in that context to be 'broadly analogous' to those considered in a joint judgment of a Full Federal Court (comprising Black CJ, Kiefel and Emmett JJ) in Bedlington v Chong (1998) 87 FCR 75, which was concerned with the operation of ss 48A and 48B of the Migration Act . The Authority relied upon Bedlington for the proposition that it is open to a decision-maker, who is under no duty to consider exercising a discretionary power, to draft a policy which identifies the types of cases in which the exercise of that discretion might be exercised. 43 Again I am unable to obtain sufficient assistance from resort to authorities involving the application and operation of the Migration Act , which in the case of Bedlington explicitly stipulated that ' the Minister does not have a duty to consider whether to exercise the [power] ... in any ... circumstances '. The Full Court emphasised at 78 of its reasons for judgment that the particular language of subsection 48B(6) was the sole basis for their decision that the Minister was under no duty in any circumstances to exercise the relevant power under s 48B(1). The critical issue arising was whether the Departmental Secretary was under a duty to bring the application made for the exercise of the power under s 48B(1) to the Minister's attention in order that the Minister could personally determine whether or not to exercise that power. Their Honours held that the use of policy guidelines by the Secretary as the basis for refusing to bring the application to the Minister's attention, where such guidelines were specifically intended to identify those cases in which the Minister might consider the exercise of his or her power was valid. I have considerable difficulty in discerning the availability of assistance from that further authority, given that it relevantly involved a power that the provision required be exercised personally by the Minister, and concerned only the proposition that the Minister had no statutory obligation to make a decision, and again did not occur in an ADJR Act context. Moreover there is no express provision in the Act (ie the legislation the subject of the present proceedings) to the effect that the Authority need not make any relevant decision. All that discourse put forward by the Authority here in relation to migration cases, in any event, ultimately still begs the question as to whether a decision not to make a decision in a particular context nevertheless constitutes a decision ... made... under an enactment within s 5 of the ADJR Act. Taken to their logical conclusion, the Authority's submissions appear moreover to run contrary to the warning issued by Gummow J in Right to Life , which I have extracted above, to the effect that limiting the scope of the ADJR Act to decisions in respect of which there was a duty, performance of which might be required by a writ of mandamus would be contrary to the scheme of the ADJR Act. In that latter regard, I would refer again to the text of s 3(2) of the ADJR Act earlier extracted. 44 In further support of the contention that a decision by an officer to the effect that a request does not fall within an established policy as to which decisions will or will not be entertained, is not a decision...made...under an enactment , the Authority referred me to two additional decisions of this Court. The first was Brownsville Nominees Pty Ltd v Commissioner of Taxation (1988) 19 FCR 169, where Northrop J held that the Commissioner's refusal to issue an amended assessment under s 170 of the Income Tax Assessment Act 1936 (Cth) was not subject to review under s 7 of the ADJR Act. Section 7(1) of the ADJR Act provides for the making of applications for review of the failure of a decision-maker to make a decision where, inter alia , that decision-maker has a duty to make a decision to which [the ADJR Act] applies . Northrop J held at 173 of his reasons for judgment that s 170 did not impose any duty on the Commissioner to make an amended assessment of income tax upon the request of a taxpayer, and thus the application for review of the Commissioner's refusal to issue the amended assessment was not competent. Brownsville Nominees did not involve the situation of a successful challenge to an assessment of tax by the Australian Tax Office made by a taxpayer, whether formally or informally. The Authority contended nevertheless that there was no practical difference between that situation and the present, the Authority simply deciding here not to consider the request for a variation at all. Brownsville is not authority for that proposition...His Honour's decision was based squarely upon the duties imposed upon the Commissioner under the Assessment Act. In the first place, as has been noted, the definition of "decision" in s 3(1) of the ADJR Act is not confined to those cases where a duty to make a decision is imposed, although such decisions are also picked up...'. 46 A further authority referred to by counsel for the Authority in the course of argument was Carter v Minister for Aboriginal Affairs [2005] FCA 667. In that case, Ryan J held, inter alia , that the Minister's refusal to exercise his power under s 21D(2) of the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth) to make a temporary declaration of preservation was not a decision for the purposes of s 3(1) of the ADJR Act. The Minister had informed the applicants in writing that he would 'consider' their request for a determination on his own motion, but later told the applicants that he would not do so pending the resolution of another proceeding before this Court involving the same artefacts. His Honour found that the Minister's decision was a decision to decline to determine[e]...on his own motion and was thus made 'preparatory' to the making of a decision to determine to make a temporary declaration. Alternatively, his Honour characterised the decision declining to so determine[e] as 'a conclusion reached as a step on the way to an ultimate decision', which is not reviewable, for that reason also, thereby referring to dicta to like effect at 337 of Mason CJ's reasons for judgment in Bond . 49 The applicants submitted, in my opinion correctly, that the particular statutory framework addressed in Carter featured a 'staged process of decision-making' whereby before making the ultimate decision of imposing a temporary declaration of preservation , the Minister may make a decision to proceed with such a determination on his or her own motion, such a decision being clearly 'a step along the way'. By contrast the present legislation (ie the Radiocommunications Act ) features no such stepped or staged decision-making, the power to make the ultimate or operative decision being conferred in its terms by s 111 and relevantly, s 111(1)(c). On that basis at least, Carter is distinguishable from the present case. 50 The Authority submitted next that a similar conclusion to that which it advocated here was reached by an application of the principles stated by the High Court in Griffith University v Tang [2005] HCA 7 ; (2005) 213 ALR 724. The issue there arising was whether the decision of a university to exclude a candidate for a doctorate of philosophy on account of academic misconduct was made under an enactment. A decision will only be "made... under an enactment" if both these criteria are met. It should be emphasised that this construction of the statutory definition does not require the relevant decision to affect or alter existing rights or obligations, and it will be sufficient that the enactment requires or authorises decisions from which new rights or obligations arise. Similarly, it is not necessary that the relevantly affected legal rights owe their existence to the enactment in question. Affection of rights or obligations derived from the general law or statute will suffice. Even if that analysis of the Authority be correct in terms of the present circumstances of either one or both of the applicants, notwithstanding implications flowing historically from their enjoyment of transmission from the Tingalpa site, it is an analysis which in any event appears to fall short of the foregoing dicta in Griffith University that '... it will be sufficient that the enactment requires or authorises decisions from which new rights or obligations arise'. I would add that counsel for the Authority conceded during the hearing that Griffith University would be of no assistance to him if I were to find that the Authority had in fact exercised its power under s 111 , as opposed to merely declining to do so. At least the Authority's communications with the applicants in 2004 point to the former of those propositions as being the case, as do the Authority's file notes of the same year, as is I think sufficiently apparent from what I have earlier extracted therefrom. The Authority did not elaborate on that latter submission. However it is clear that it was predicated on the Authority's construction of its decision that was contended by the applicants to be 'highly technical' and 'prefer[ring] form over substance, contrary to the remedial character of the ADJR Act'. In essence, as I have foreshadowed already, the respondent Authority contended that the 'decision' was nothing more than the refusal of its own officers to consider whether to exercise the Authority's power under s 111 of the Act, that determination having been made by the relevant officers by reference to the policies of the Authority encapsulated in NAS PIP and NAS BOP. 52 The Authority accepted that '... this Court has jurisdiction under s 39B(1A)(c) of the Judiciary Act to determine whether the [Authority] was under a duty to consider the applicants' request to vary [AusCoast's] licence condition', but asserted that '[n]onetheless, if this Court accepts that the [Authority] was not under such a duty (and remains free from such a duty), the Court would be unable to make an order in the nature of mandamus'. Absent such an order, so the Authority further submitted, there was no proper basis for any of the relief sought by the applicants', thereby citing Re Minister for Immigration and Multicultural and Indigenous Affairs; ex parte Applicants S134/2002 (2003) 211 CLR 411 at [44]-[48] (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ) and at [98]-[100] (Gaudron and Kirby JJ), in each such instance containing observations relating to the operation of s 417(1) of the Migration Act , whereby the Minister is empowered to substitute for the RRT's decision a decision more favourable to an applicant for relief, if ' ... the Minister thinks it is in the public interest to do so '. Once again I have difficulty in identifying any sufficiency of assistance of authority from a context involving quite different legislation; indeed s 417(7) of the Migration Act at least then explicitly stipulated that ' [t]he Minister does not have a duty to consider whether to exercise the power under subsection (1) in respect of any decision, whether he or she is requested to do so by the applicant or by any other person, or in any other circumstances. ' In any event, as the applicants rightly pointed out, whether or not mandamus might be available against the Authority in relation to the operation of s 111 of the Act, relief pursuant to s 39B(1A) of the Judiciary Act for declaratory relief was sought by the applicants' amended application which Jacobson J accepted for filing in Court on 25 August 2005. I have of course earlier referred to the applicants' case for relief being framed on that basis by way of additional or alternative relief to that afforded by the ADJR Act. 53 As to what the Authority referred to as its 'related alternative motion', the Authority contended that since AusCoast is currently broadcasting from premises which are not the premises specified on the conditions of its licence, such conduct was unlawful and improper. Accordingly, in case the Court was otherwise minded to entertain a grant of relief following a substantive hearing, it was submitted that relief should be refused as a matter of discretion; since the applicants here seek to protect and validate unlawful and improper conduct, and thereby attract the operation of the maxim of equity 'he who comes into equity must come with clean hands', discussed in R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane's Equity Doctrines & Remedies , (4 th ed) at [3-110]. The relief presently sought by the applicants is however in the nature of administrative and not equitable relief, the applicants having not purportedly founded any case on equitable estoppel. In any event I am of course presently concerned with the Authority's notice of objection to competency. The relevance of any such matters so raised by the Authority is limited to the Court's determination of final relief, should the Authority's objection to competency fail wholly or in part. There would then be an argument about whether a reviewable error was made in that legislative context. There would also be a discretionary issue too. 58 It will have been appreciated from observations that I have made in the course of my outline of these reasons for judgment that I would reject the contention of the Authority that its decision-making of 30 June 2005 merely constituted a withholding from consideration of a request of either or both of the applicants to change the site condition of the 1620 licence, whether pursuant to an exercise of a discretionary function or power generally or at large on the Authority's part, or otherwise, and in particular whether by way of exercise of a discretionary power conferred under s 111 of the Act, or otherwise. The applicants, or at least WAL on behalf of both of them, in substance and in reality, applied unambiguously to the Authority on 6 August 2004 to change the site condition for the subject apparatus licence being a change which the Authority was empowered to implement pursuant to s 111 of the Act. A statutory decision-maker does not avoid the operation of the review provisions of the ADJR Act by purporting to create, whether explicitly or implicitly, a standpoint or position involving a decliner of entry upon statutory decision-making, or for that matter of consideration of decision-making unless the statutory scheme for decision-making so provides (cf Carter ). So much however is in reality the position or standpoint which the Authority has seemingly endeavoured to adopt and maintain. 59 Thus by way of reflection of the dictum I have cited from Bond , the communications of the Authority as evidenced from the outset by its faxed response of 16 August 2004 to the applicants' application of 6 August 2004 and thereafter, inclusive of its critical communication to WAL of 30 June 1995, the Authority indicated to the applicants the position which it had adopted or taken as inherently and essentially indicative of decision-making on its part, the same having for instance the 'character or quality of finality', and constituting and involving 'an outcome reflecting something in the nature of a determination of an application' within the scope of that dictum of Mason CJ in Bond I have earlier cited. That communication of the Authority constituted or involved a decision 'at least in a practical sense, of the issue of fact falling for consideration'. It was 'a substantive determination' as opposed to a 'procedural determination', to adopt the Chief Justice's further dictum in Bond . 60 Moreover by way of reflection of dicta I have cited from Right to Life , and in particular from that of Lockhart J at 62, I would characterise the Authority's conduct culminating in its faxed response of 30 June 2005 as similarly indicative of a conclusion having been reached by the Authority in or to the effect of the first decision postulated in the applicants' amended application filed in Court on 25 August 2005. The Authority made thereby a decision under s 111 not to effect a variation to one of the conditions it had imposed on the 1620 licence pursuant to s 107(1)(g) of the Act, namely the condition stipulating the transmission site. The Authority's communication of 30 June 2005 constituted or involved moreover the very opposite or antithesis of the decision which the applicants had been seeking from the Authority, commencing from WAL's application of 6 August 2004 made to the Authority, being a decision the implications and consequences whereof clearly and in substance affected rights and obligations of the applicants concerning the 1620 licence. 61 It follows in my opinion that the Authority's objection to competency must fail, at least for the reason that such objection is founded on the erroneous proposition that no decision has been relevantly made under an enactment, pursuant to s 3(1) of the ADJR Act. Whilst that conclusion renders unnecessary any conclusion to be reached as to whether a matter relevantly arose under any law made by the Parliament for the purpose of the operation of s 39B(1A) of the Judiciary Act , I am unable to identify any viable basis in favour of a negative response to that latter proposition of the applicants as well. It is moreover not accurate for the Authority to contend that its refusal was a decision made pursuant to a policy as opposed to an enactment, any resemblance here to the factual situation prevailing in Bedlington being merely chimerical, for the reasons that I have indicated above. 62 It follows from my foregoing conclusions that the Authority's refusal to vary the 1620 licence site condition involves a matter arising under a law made by Parliament of the Commonwealth, the legislative authority to make that decision being conferred by s 111 of the Act. Accordingly I would further find that the purported ground of objection pleaded by the Authority in the alternative, namely that '... there is no proper basis upon which to grant relief to the applicant', must also fail, owing to the availability at least of declaratory relief to the applicants for the reasons I have earlier explained. 63 Accordingly the application for review of the first decision sought by the applicants' amended application filed in Court on 25 August 2005 must proceed to a final hearing. 64 It follows moreover, in the light of all of my foregoing findings, that the further applications to review the Authority's decision of 18 August 2005 not to reconsider its prior principal decision of 30 June 2005, and also the Authority's yet further decision made at the same time to refuse WAL's request for a statement of reasons in respect of the first decision, must also proceed to a final hearing, the first decision not being one excluded from the operation of s 13 of the ADJR Act. 65 I should add for completeness that the further concluding contention raised by the Authority in any event to the effect that since AusCoast presently broadcasts from premises at Tingalpa which are not the premises specified in the conditions of the 1620 licence, being conduct asserted by the Authority to be 'unlawful and improper', the Court should as a matter of discretion refuse that relief. That subject must be a question for another day, and is irrelevant to the issue of competency per se for the reasons I have already indicated. Doubtless on that further occasion, the applicants would seek to pursue in more detail the circumstances and implications of the conduct of the Authority relating to the variation of the site condition on the 1611 licence to the Bracken Ridge Reservoir transmission site, being a conceivable issue apparently to be raised by the applicants from which I would necessarily withhold from further comment at this interlocutory stage of the proceedings. Whether that subject is in any event a matter for legitimate consideration in the context of the administrative relief sought by the applicants would be a matter for submission at that further hearing. 66 The Authority having failed on what has been analogous to a demurrer to the applicants' cause of action, I see no good reason in principle why the applicants should not have the benefit of an award of costs in their favour of and incidental to the present application. 67 The proceedings will be stood over to a date to be fixed by agreement by the parties, or by the Court in the event that no agreement is reached, for the purpose or making such declarations and orders as may be appropriate to give effect to these reasons for judgment. | applicants held radiocommunications apparatus licence for purposes of radio broadcast broadcast activity undertaken from location other than transmission site specified in condition of the licence request to authority to vary that licence condition to accord with reality as to location of broadcast authority refused to vary licence condition authority refused to reconsider and to give reasons for that refusal application for review of those alleged decisions objection to competency of application for review whether refusals constituted decisions made under an enactment administrative law |
2 The requirements for the grant of the search order set out in Order 25B rule 3 require that the applicant show that it has a strong prima facie case on an accrued cause of action. 3 I am satisfied on the level of ex parte relief that there is a strong prima facie case on an accrued cause of action in relation to what appeared to be counterfeited goods or goods that breach copyright, being gambling machines, their artwork and associated computer software which appear to have been sold to parties in Peru by at least the first respondent, such transactions involving the second respondent in 2002. There is an explanation in the material as to why this has not been discovered which it is unnecessary to recount. 4 There is material which links the named respondents, though not in a conclusive way in terms of breach of copyright, to various parties who have been found to have breached the same species of copyright in the past in the manufacture and sale of gaming machines, copyright of which is owned by the applicant. 5 I am satisfied, at this level of analysis, that it is likely that the applicant will be able to show its copyright in relation to its gaming machines and the associated aspects of them. 6 There is an issue that may be ventilated in due course as to the necessity for the search to be closely related to the accrued cause of action. I think the better reading of O 25B, and not having had the assistance of opposing counsel, is the one put to me by Mr Cobden that the flexibility and amplitude of O 25B r 3 would be undermined if one read the search order as limited to the precise cause of action known. 7 Very often a wide number of apparent breaches are evident in these sorts of cases. It is not, however, the practice that I am aware of either in this Court, in this country or overseas in like jurisdictions, to limit the terms of the order to searching for and seizing only documents or material directly related to the precise causes of action known. Such a course would tend to make the utility of this procedure doubtful. It is not a procedure lightly to be invoked. Nevertheless, if appropriate foundation is laid for it, it should not be so framed as to make its utilisation overly complex and technical. 8 In those circumstances, I am prepared to make the orders sought with the limitation that one finds on the search in the definition of "Listed Things" in Schedule A. Appropriate provision according to the practice note has been made for independent solicitors and an independent computer expert. I have varied the usual practice note form to allow some participation by employees of the applicant in circumstances of close supervision by the independent solicitor and the computer expert. 9 I have also granted an interlocutory injunction in terms of paragraph 28 of the order up to and including 4.30 pm on the return date. Given the matters that have been proved, I accept Mr Cobden's submissions that this is appropriate. 10 The return date will be 5 July 2006, and the matter will be listed before Rares J, the Duty Judge on that day, at 9.30 am. 11 I have already made an order to the extent that it is appropriate and necessary to Auscript, to take all steps practicable to have the transcript of discussion of counsel this afternoon and my short reasons available by 9 am on Monday, 3 July 2006 so that they can be served. 12 I permit and direct Auscript to release the transcript of the judgment before settling in final form by myself in chambers. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. | search order order 25b federal court rules practice note 24 whether strong prima facie case on accrued cause of action practice and procedure |
The applicant lodged an application in this Court on 17 September 2007 alleging he was unlawfully dismissed because he was a member and delegate of the National Union of Workers of Australia (NUW). He alleged his dismissal contravened s 792 of the Workplace Relations Act 1996 (Cth) (the WR Act). An allegation was also made that he was dismissed for engaging in protected industrial action. Dismissal for this reason is prohibited by s 448 of the WR Act. 2 The applicant sought interim relief under s 838 of the WR Act and s 23 of the Federal Court of Australia Act 1976 (Cth). The application for interim relief was heard on 26 September 2007. On 27 September 2007, I ordered that the applicant be reinstated to the position he formerly held with the respondent until further order or until determination of these proceedings: Rojas v Esselte Australia Pty Ltd [2007] FCA 1506. The applicant has made an application under s 807 of the WR Act alleging contravention of s 792 of the WR Act. The applicant alleges that the termination of his employment on 12 September 2007 was done for a prohibited reason, or for reasons that included a prohibited reason, within the meaning of s 793(1)(a) of the WR Act , namely, that he was a member of and a delegate of an industrial organisation. 6 It is important to note the provisions of s 809(1) of the WR Act, which creates a presumption in favour of the applicant in proceedings of this type. If it fails to do so, then it is to be assumed that the decision to dismiss was for, or partly was for, the reasons alleged. It was not in contest that the applicant was both a member and a delegate of the NUW at the time of his dismissal. I now turn to consider the evidence. The following represents findings of fact although, where appropriate, I indicate where there were conflicting accounts of material events. 9 The applicant has been an employee of the respondent for over 16 years, having commenced employment in about 1991. In about 1998 he became a delegate of the NUW. He was employed as a storeman and packer at the Minto warehouse of the respondent. The 2005 Agreement was apparently approved under Part 6 of the Industrial Relations Act 1996 (NSW). The parties to the agreement were the respondent, Esselte Australia Pty Ltd, and the NUW (NSW Branch). 11 Negotiations for an agreement to replace the 2005 Agreement commenced in 2006 and continued into 2007. On 9 March 2006, the NUW served a written log of claims on the respondent demanding, amongst other things, a 28% wage increase for a three year agreement and that it be a full and comprehensive agreement. Between March and the end of April 2006 there were approximately five meetings involving Mr Mark Cochrane (who was an organiser of the NUW) and representatives of the respondent. The attitude of the respondent was initially to negotiate with the NUW but with the objective of achieving what the respondent perceived to be a "modern" collective agreement. It is it tolerably clear that this meant, at the very least, a less prescriptive and more flexible agreement, if not an agreement that diluted or diminished existing terms and conditions of employment. 12 In late May 2006, the NUW took steps to initiate a bargaining period under the WR Act. The significance of the initiation of a bargaining period is that once a bargaining period is initiated, union members are permitted to take "protected industrial action" for the purpose of supporting or advancing claims made in respect of a workplace agreement (see generally Part 9 of the WR Act). At about the same time, I infer, the respondent commenced the process of adopting an alternative strategy. That is, it commenced offering Australian Workplace Agreements (AWAs) to its employees as an alternative to negotiating a collective agreement. An AWA is an individual statutory employment contract. This occurred at a time when the respondent believed that negotiations for a new collective agreement involving the NUW were unlikely to bear fruit. It is relatively clear from the evidence as a whole that the NUW was strongly if not vehemently opposed to its members being employed under AWAs. 13 On or about 19 May 2006, Mr Justin Reidy sent the applicant a letter concerning the way in which discussion by warehouse employees about AWAs would be managed. Mr Reidy was the respondent's Warehouse Distribution Manager at the Minto site. Having regard to the contents of this letter, I infer that the respondent had, by that time, offered its employees the option of employment under an AWA. The situation changed in March 2007 when Mr Barry Starr sent, on 22 March 2007, a letter to the respondent's warehouse employees declaring that the respondent had advised the NUW that it believed it was unlikely agreement would be reached and it would be offering all employees AWAs. By then three new employees had been employed on AWAs. Mr Starr was employed by the respondent as Regional Controller, Pacific Rim, and was also a director of the respondent. It was Mr Starr who ultimately made the decision to terminate the applicant's employment. By choosing to remain under the expired State Agreement, you have been prevented from receiving pay increases. We also include an Information Memorandum from the Office of the Employment Advocate, for your consideration. That is if you accept the Australian Workplace Agreement on the terms which are offered, a sign-on bonus payment will be made to you of $250 less applicable taxes. This will be paid in the first full pay period after your Australian Workplace Agreement is made. This offer will be withdrawn on 31st of March 2007. A financial incentive was being offered to achieve this result. 15 At about this time, representatives of the Department of Employment and Workplace Relations (DEWR) undertook an investigation concerning processes attending the offer of AWAs being made by the respondent to its workforce. This investigation followed a request made on behalf of the respondent. The applicant gave evidence that in the three months before the employees took the industrial action that commenced on 18 June 2007, he was accused by Mr Reidy on a few occasions of misleading NUW members about the benefits of a union collective agreement versus the proposed AWAs. Although Mr Reidy denied having those conversations in an affidavit of 11 December 2007, his oral evidence was simply that he could not recall these conversations. I accept the applicant's evidence. That this occurred is consistent with the respondent's then intention to pursue AWAs and abandon negotiations for a collective agreement. On behalf of the respondent, Mr Reidy was concerned to ensure that the offer of AWAs would not be subverted or frustrated by the NUW and by the applicant as its on-site representative. It is also consistent with the tenor of the letter of 19 May 2006 (referred to at para [13] above) and the respondent's request to DEWR to investigate processes attending the offer of the AWAs, which, I infer, was intended to reveal whether duress was being applied or other unlawful conduct undertaken to prevent take up of AWAs. 16 On 17 May 2007, a secret ballot of NUW members employed by the respondent was held in relation to the taking of protected industrial action. It is to be recalled that almost a year earlier, notice had been given by the NUW of the initiation of a bargaining period. The NUW members voted in favour of industrial action taking place and commencing on 18 June 2007. 18 As a general observation, the industrial action that commenced on 18 June 2007 escalated into a bitter and protracted dispute that lasted for some months. I infer positions became entrenched and, from the respondent's perspective, the dispute was not simply between it and its employees. Third parties became involved who either actually inflamed, or at least were perceived to inflame, the dispute. The dispute gained notoriety in the media. I have no doubt that the intensity of the dispute led Mr Starr and Mr Reidy to an entrenched and highly critical view of the NUW, those associated with the NUW and the trade union movement more generally. 19 Later that day picketers outside the Minto site prevented a number of trucks from entering the Minto site. Mr Reidy, during the course of the day, attempted to contact NUW officials to stop the attempts to prevent traffic entering and leaving the Minto site. Mr Reidy also had discussions with representatives of the Office of Workplace Services in relation to this issue. The Office was a Commonwealth agency empowered to investigate and prosecute breaches of Commonwealth industrial law. Mr VK Sharma, an employee of the respondent who was returning to work after a period of leave and was unaware that the strike was occurring, was approached by the applicant as he attempted to enter the Minto site in his car. There was an exchange between them. VJ, don't go. Mr Sharma Why not? We're open. The applicant We're on strike Why are you going to work? VJ, if you want to go, go. Go and lick the boss's arse. You don't think of us and our kid s. Mr Sharma You can't talk to me like that. You need to learn how to talk to people first. Following the incident, Mr Sharma entered the Minto site. Sometime after starting work that day, Mr Sharma reported to Mr Reidy the comments the applicant had made. Mr Sharma felt upset and intimidated as a result of the applicant's conduct. The applicant apologised to Mr Sharma about this incident sometime in early 2008. Although Mr Simmonds was an employee of the respondent, he was not involved in the industrial action. He was a comparatively new employee and was employed on an AWA. Mr Simmonds alleged there were a number of signs blocking the entrance to the Minto site, and as he attempted to drive around the signs to enter the site, the applicant ran towards him, and said something along the lines of " Mick, you are a fucking cunt ". He is stopping everybody and everyone from coming into the Site. I shouldn't have to come to work and put up with this. Mr Simmonds did so. The document is in evidence but not as proof of the truth of its contents. Mr Reidy prepared a typed version, which, at his request, Mr Simmonds signed. Again this document is in evidence but not as proof of the truth of its contents. 22 The applicant has persistently denied making the statement to Mr Simmonds. Both adhered to their account when giving evidence at the hearing. I will discuss their conflicting accounts later in those reasons. The applicant did not accept the letter and it was placed at his feet. You hold a responsible role within your union at the site being the delegate. It would be my expectation that you would behave in a more responsible and considerate way. The purpose of this letter is to provide you with an opportunity to respond to these allegations. Once you have had an opportunity to respond to the allegations, a decision will be made with respect to your ongoing employment. On a number of occasions on Monday 18 June 2007, you stood across the driveway of the site preventing the access of vehicles to the site. On Monday 18 June 2007, you were involved in a number of attempts to intimidate and mislead employees of Esselte in relation to the industrial action. Earlier this morning, 19 June 2007, you stopped an employee by the name of Michael Simmonds in his motor vehicle at approximately 6:10 am. Also on the morning of 19 June 2007, you stopped another employee of Esselte at the driveway. You are now invited to a meeting at a time suitable to you on Wednesday 20 June 2007. Alternatively, you may wish to provide a written response. 24 Several things should be noted about this letter. The first is that it drew attention to the applicant's position as delegate and fairly clearly indicates the view that, as delegate, the applicant ought to maintain a particular standard of conduct. The second is that the clear import of the letter is that Mr Reidy believed (as would have Mr Starr, given his role in approving the letter) that the applicant had done four things that constituted serious and wilful misconduct that might justify his dismissal. The third is that the applicant was being invited to respond reasonably promptly and on the basis that once he did " a decision will be made with respect to [his] ongoing employment ". What was being suggested was that after (and presumably depending on) his response, a decision would then be made whether to dismiss him. Mr Starr had read a draft and authorised it being sent. The letter noted the attempts to hand him the earlier letter on 19 June 2007 and that Mr Reidy had arranged for a copy of that letter to be sent to the applicant's home address. The letter then stated " [s]ervice was effected on the afternoon of 19 June 2007 ". The letter went on to state its purpose, namely to provide the applicant with " a final opportunity to raise any matter relevant to the allegations contained in [Mr Reidy's] letter of 19 June 2007 ". The letter also stated that " if you choose not to respond to this letter, a decision will be made with respect to your ongoing employment without any further correspondence ". 1t is alleged that you, in association with Mr Cochrane of the National Union of Workers, travelled to my home address of Almond Street, Wilton at various times on Wednesday 20 June 2007. In particular, we have reason to believe that at various times on this date a motor vehicle matching the description of your motor vehicle was observed in the vicinity of my house. It would also appear that Mr Cochrane`s motor vehicle and Mr Cochrane were observed in the same vicinity. On the same day, various houses in my street had placed in their letterboxes a document titled "How Well Do You Know Your Neighbor (sic)". It also makes reference to a Mr Justin Ready (sic). It would appear that part of the text of this document has been lifted from ACTU press releases. In the circumstances, I believe that you were either directly or indirectly involved in the preparation of the document and its distribution in the vicinity of my home on Wednesday 20 June 2007. This form of intimidation against your manager is in my view misconduct. Accordingly, I would appreciate a response in writing to this letter prior to 4.00 pm on Friday 20 June 2007. The first is that it was said to provide the applicant with an opportunity to respond to the allegations. The reference to the "service" of the letter of 19 June 2007, together with the stated purpose in the penultimate paragraph, indicate that Mr Reidy and Mr Starr were contemplating a situation where the applicant would be dismissed within a very short time frame unless he provided satisfactory responses to the allegations. Mr Rojas denies that he prevented vehicles from accessing the site in question on Monday, 18 June 2007. At the time, Mr Rojas was engaged in peaceful picketing which is his right. It is noted that you do not identify the vehicles, the subject of your allegation. At no stage on Monday, 18 June 2007, did Mr Rojas attempt to intimidate or mislead employees of Esselte in relation to industrial action. It is noted that you do not identify the employees the subject of your allegation. In any event, it is difficult to understand how such an allegation could constitute serious and wilful misconduct. Mr Rojas denies stopping Mr Michael Simmonds in his motor vehicle at approximately 6:10am on 19 June 2007. In particular, Mr Rojas denies saying to Mr Simmonds the words that you have attributed to him. There is no foundation for his allegation whatsoever. Mr Rojas again denies stopping Mr V.J. Sharma on the morning of 19 June 2007 as you allege. Mr Rojas denies saying the words to Mr Sharma that you have attributed to him. Again, there is no foundation for this allegation whatsoever. At no stage on Wednesday, 20 June 2007 was Mr Rojas in the vicinity of Almond Street, Wilton, let alone the suburb of Wilton. For the best part of that day, Mr Rojas was in attendance at a Union delegates' meeting at Auburn. The writer is well aware of Mr Rojas' attendance at the meeting and the length of time that he was present. Therefore, there has been no intimidation on behalf of Mr Rojas towards you. Mr Rojas could not have participated in the activity that you allege as he was not in Wilton on the day in question. It is indeed a serious allegation that you make and the Union is currently seeking its own legal advice with respect to your allegation. We remind you that any attempt by you to re-publish your allegation would in itself be defamatory and swift action will be taken in those circumstances. 28 Mr Starr provided an explanation, in his oral evidence, for the respondent not acting in the manner that the letters of 19 and 21 June 2007 clearly indicated it would. The explanation contained several elements. The first was that the applicant had not attended a meeting, although at one point in his evidence Mr Starr said the applicant had refused to attend a meeting and, at another point, that the applicant had failed to attend a meeting. The second, linked to the first, was that there would have been a denial of procedural fairness if the applicant had not been given the opportunity to respond. The third, again linked to the first, was that acting without the applicant's input would have seriously inflamed the industrial situation. 29 I do not accept this evidence. The letters were clear. It is true that the letters indicated that an opportunity would be given to the applicant to respond to the allegations. However, it is equally true that the plain import of the letters was that the respondent (through Mr Reidy and Mr Starr) was prepared to act promptly if no response, or an inadequate response, was forthcoming and the response would be to dismiss the applicant. It is, in my opinion, disingenuous to suggest that the applicant failed or refused to attend a meeting. No meeting was organised as a direct result of the correspondence and no attempts were made to organise one apart from the correspondence. In my opinion, Mr Reidy and Mr Starr made what was probably a tactical decision based on legal advice not to pursue at that stage the allegations and the threat to dismiss the applicant for what was said to be serious and wilful misconduct. 31 Notwithstanding the terms of the 9 July 2007 open letter, the evidence of both Mr Starr and Mr Reidy was that neither received any complaints from employees of the respondent regarding the conduct of other employees of the respondent during the course of the strike, other than those relating to the applicant. However, the evidence of both Mr Reidy and Mr Starr was they had received complaints concerning the conduct of people who were not employees of the respondent during the course of the industrial action. Further, when questioned about the receipt of complaints in relation to these people, Mr Reidy's evidence was that he did not ask the makers of such complaints to detail their complaints in writing. 32 In the context of considering this document, it is necessary to refer to an e-mail sent by the respondent's solicitors a few weeks earlier. At 11:44am on 18 June 2007, a solicitor acting for the respondent sent an e-mail to the NUW. The e-mail noted that there was industrial action at the respondent's Minto site. Also in cross-examination, Mr Reidy acknowledged that he had seen employees involved in this activity and conceded that he would have been able to identify most of them. 33 In these proceedings, the applicant has advanced a hypothesis that the applicant was singled out in circumstances where other employees of the respondent engaged in conduct of the type referred to in the letters of 19 and 21 June 2007, and this was known to Mr Reidy and Mr Starr who took no action against them. In response, and presumably because of s 809, the respondent has assumed the evidentiary burden of proving that this is not so. Both the 9 July 2007 open letter and the earlier e-mail are couched in terms that suggest it was the belief of Mr Starr and Mr Reidy that it was not only the applicant who engaged in conduct said to be serious and wilful misconduct. 34 Ultimately I am not satisfied, on the balance of probabilities, that either, firstly, other employees of the respondent did not engage in conduct of the type founding the allegations against the applicant in the two letters that were given to him or, secondly, that Mr Reidy could not have readily identified who they were, communicated this to Mr Starr and acted against them in the same way they did against the applicant. It is no response to say, as was suggested in some evidence led by the respondent, that the applicant was the only person against whom specific complaints were made. The conduct said in the two letters to be serious and wilful misconduct did not assume that character because specific complaints were made. The conduct itself was either serious and wilful misconduct, or it was not. Mr Reidy deposed to the fact that there was an influx of over 100 individuals, none of whom appeared to be employees of the respondent. Mr Reidy also gave evidence that during the course of the day attempts were made to prevent vehicles from entering and exiting the site. We respect that decision. The same individuals must, however, bear some responsibility for allowing their union to create and maintain the unacceptable and threatening situation that occurred on Wednesday. If it is the case that the National Union of Workers and John Robertson from Unions NSW (or the striking workers) know the identity of members of the "fringe socialist group" then they should give us their names and addresses so that we can commence our legal claim against them and whatever organisation they purport to represent. These are not faceless, nameless individuals. They were present at the invitation of the National Union of Workers and some wore vests and caps with the NUW logo. Matters have clearly got out of control on the picket line. People have been hurt. People feel intimidated and this is not the kind of workplace that we want. Having people standing on the edge of a busy road stopping traffic at a whim is clearly unsafe and an occupational health and safety risk. We have no interest in being debated on national television as occurred this morning. The striking workers clearly have no interest in continuing to lose pay. Contrary to some misleading media they are not being asked to sign an AWA . We have not offered them an AWA since their rejection of the document last year . They have chosen to remain on the union collective agreement and this decision is respected. We offered a collective agreement on the same terms of the AWA and they rejected the offer. Accordingly, I would ask that if the striking workers return today or Monday, you should all welcome them back to work and accept that the events of the last 5 weeks have been regrettable from both sides. The statement is patently untrue. When the picket line was allegedly invaded by what the NUW described as the socialist fringe group, all credibility was lost and the public, in our view realised that this was the unacceptable face of the trade union movement. Since then this dispute has been a non-event for the NUW. To the extent that we are required by law to deal with the NUW in the future, we will. However, we will always remember what the NUW has done to Esselte and we do not see them as a partner in our business now or in the future. Based upon the position adopted by the NUW on Friday, the chances of us ever reaching agreement on a union collective agreement is extremely remote. I am satisfied that this reflected the attitude that had been adopted by Mr Starr, and therefore the respondent, in relation to the involvement of the NUW in representing its members employed by the respondent. Mr Starr had, by this time, been exposed for almost a month and a half to a sustained and highly disruptive industrial campaign by the NUW. The applicant gave evidence that he took a photo of Mr Simmonds' car as it approached the picket, and that when Mr Simmonds saw this, Mr Simmonds got out of the car. According to the applicant, the following was said. Mr Simmonds You fucking cunt. Wait until you come inside and you will be bashed --- especially you (looking at the applicant). The applicant If you want to bash me Michael, bash me here. Mr Cochrane, who was also present, is alleged to have said to Mr Simmonds " Hey, what are you doing? " with Mr Simmonds responding " [f]uck off ". The applicant's evidence was that he subsequently contacted Macquarie Fields police in relation to the incident. Mr Cochrane, called by the applicant, could not recall the incident. 38 Mr Simmonds' account of the incident is different. Mr Simmonds said that as he approached the Minto site in his car, there were approximately 30 people standing across the driveway preventing his access to the site. Mr Simmonds said he approached the line of people in his car, stopped his car and was approached by Mr Cochrane. You are to find another job. Mr Simmonds No. I'm going to work. I want to fight you. You are a scab and a real big hero. Mr Simmonds Don't threaten me. The applicant It's not a threat, it's a promise. 39 It is appropriate to address, at this point, the differing accounts of the applicant and Mr Simmonds in relation to both this event and what may have occurred on the morning of 19 June 2007. On Mr Simmonds' account, both involved an act of aggression on the part of the applicant involving offensive and abusive language. The second incident involved the applicant seeking to fight Mr Simmonds. There is, in my opinion, a slight unreality about this version of events. The language attributed to the applicant was out of character. It was much coarser and more offensive than the language the applicant admitted directing to Mr Sharma. The applicant was obviously materially older than Mr Simmonds and did not appear to have Mr Simmonds' physicality as I observed them both. Mr Simmonds appeared fit, and the applicant not. It is not readily apparent to me that the applicant would challenge Mr Simmonds to a fight. That said, there is evidence from both Mr Simmonds and Mr Reidy that Mr Simmonds reported the second incident to Mr Reidy. He obviously did so in relation to the first incident, having regard to the written and typed note in evidence. 40 Again, the respondent has assumed the evidentiary burden of proving that the events relied upon in dismissing the applicant actually occurred. Again I am not satisfied, on the balance of probabilities, that the events occurred as Mr Simmonds alleged. Upon his return to work on 5 September 2007, the applicant received a letter inviting him to attend a meeting on 10 September 2007 in relation to the misconduct allegations. You were then stood down on full pay. Mr Starr, in his discussions with the Union on 4 September 2007, arranged a meeting for Monday 10 September 2007 at the office in Minto. At the meeting you will have the opportunity to raise any matter relevant to the allegations and the possibility of the termination of your services. 43 There are competing accounts about what actually occurred at the meeting, although it appears to be common ground that the applicant admitted that the exchange with Mr Sharma on 19 June 2007 occurred more or less in the way described by Mr Sharma. Moreover, the evidence was the applicant was prepared to offer Mr Sharma an apology, although Mr Starr did not think it appropriate to tell Mr Sharma of the applicant's preparedness to apologise. This should not be a dismissible offence. I don't use language like that. Mr Starr I admit that is out of character for you, David. Both employees came to the office and made complaints. Both employees were visibly upse t ...". 45 The issue of the "second Simmonds incident" was also raised at the meeting. It is not clear as to exactly how the issue was raised, although it appears to be uncontroversial that the applicant raised his account of events regarding the second Simmonds incident. Mr Starr If there was an incident with Michael why are you only raising it now and not previously? The fact that Mr Starr did not do so is unsurprising, given Mr Reidy's evidence that he was of the view that the respondent had already formed the view the applicant had conducted himself in the manner alleged by Mr Simmonds in relation to the second Simmonds incident. The authorities on s 298V (and predecessor provisions) are therefore relevant to the construction of s 809 of the WR Act. The reversal of the onus in respect of proof of the reasons for the conduct is a recognition that "the circumstances by reason of which an employer may take action against an employee are, of necessity, peculiarly with the knowledge of the employer". Section 298V of the Act does not, in my view, allow the applicant to circumvent that finding. Rather it is to be construed as an aid to proof of the intent or reason of the respondent which motivated, or formed part of the motivation for, the respondent's conduct. It may fairly be presumed that the section is intended to alleviate the difficulties of proof by one party of the state of mind or motivation of another. The impact of s 298V, in my view, is simply to alleviate the evidentiary difficulty facing the applicant of providing proof of the intent or reason which motivated, or formed part of the motivation for, the respondent's conduct following the absence of the employee from work. Rather, on the assumption that the applicant is able to prove the fact of membership or delegateship of an industrial organisation, the burden is cast on the respondent to prove that his membership or delegateship of an industrial organisation did not form part of the reason for the termination of his employment. 51 The respondent's task is to displace the legislative presumption that it has acted for a reason that contravenes the WR Act, and I am satisfied that, having regard to all the evidence, the respondent has been unable to discharge the onus cast upon it by s 809 of the WR Act. 52 Mr Starr gave evidence that the reason he terminated the services of the applicant was because he engaged in misconduct by threatening Mr Sharma and Mr Simmonds. He gave evidence that he had no regard to the reasons identified in the amended application. However, I approach this evidence with some circumspection. Firstly, I do not think Mr Starr has been entirely truthful in his evidence. Perhaps his recollection and account of his actions has been coloured by what was probably, for him, an extremely tense and possibly harrowing experience as a senior manager, being exposed to sustained industrial action that escalated quickly and seriously. I consider that, up to a point, his evidence was tailored, perhaps unconsciously, to support and avoid damaging the respondent's case. For example, comparatively early in his cross-examination, he was taken through the history of negotiations with the NUW and the decision of the respondent to offer AWAs. At that point, Mr Starr resisted the proposition that when the respondent formed the view that it wished to pursue individual contracts, it was doing so because it wished to have new employment arrangements that precluded the involvement of the third party. Later in cross-examination, it was put to him that by 6 August 2007 (when he issued the memorandum referred to at [36] above) or thereabouts, he had formed a view that he wanted to reduce or remove union influence from the site. His response then was that this decision had been made when the company decided to adopt AWAs given that AWAs did not involve the union as a third party. I have little doubt that this later answer reflected the true position. The attitude Mr Starr adopted early in the cross-examination was, in my opinion, to avoid making a concession that then he believed might damage the respondent's case. 53 Secondly a number of factors, in addition to matters referred to already, emerging from the events leading up to and surrounding the dismissal, collectively raise a real issue in my mind about whether the dismissal of the applicant was for the stated purpose. Some of these factors, in isolation, might be thought to be of insufficient moment to raise doubts about the stated reason. However together, they do. 54 One factor is the quite focused way Mr Reidy and Mr Starr went about investigating, documenting and responding to the allegations made against the applicant in the first 48 hours or thereabouts of the industrial action, particularly when they made no attempt to investigate the conduct of other of the respondent's employees. 55 Another factor is that having adopted the position that the applicant had engaged in conduct that might warrant his dismissal and having clearly intimated that whether he would be dismissed would be addressed promptly, no steps were taken to bring the matter to a head until September 2007. 56 Another factor is the way in which Mr Reidy and Mr Starr were selective about the misconduct on which they ultimately focused when deciding to dismiss the applicant, notwithstanding earlier intimations that the applicant had engaged, as they believed, in a range of conduct that was said to be misconduct and raised questions about the applicant's continued employment. The identification of the reasons in the letter of termination have an air of artificiality about them. 57 Yet another factor was the way the termination was effected. Mr Starr gave evidence that he wished to afford the applicant natural justice. However, the actual approach he adopted, together with Mr Reidy following the meeting of 10 September 2007 was, in my opinion, more consistent with them wishing to establish grounds to dismiss the applicant than approaching with an open mind (or at least not with an entirely closed mind) the question of whether the applicant was guilty of misconduct warranting dismissal. By the time the meeting had concluded, the position was that the applicant had, in substance, admitted making the comments to Mr Sharma about which Mr Sharma had complained but had offered to apologise. Communicating the apology was thought by Mr Starr and Mr Reidy to be irrelevant. 58 The fact that the applicant's admission concerning Mr Sharma had been made should have, in my opinion, more clearly focused the attention of Mr Starr and Mr Reidy on whether the account of Mr Simmonds, which was still disputed by the applicant, was true, particularly in circumstances where the language alleged to have been used by the applicant was acknowledged by Mr Starr to be out of character. This fact alone should, in my opinion, have raised significant doubts about whether Mr Simmonds' account was correct, particularly given it was denied by the applicant. However, the further investigation simply involved, on Mr Simmonds' account, Mr Reidy ringing him (from an office in which Mr Starr was present). Mr Starr's evidence was that he rang on his mobile phone, which is consistent with Mr Reidy's evidence. However, who made the telephone call does not particularly matter. What is important is that Mr Simmonds, who was ill at home, was asked by Mr Starr whether he stood by his version. Mr Starr listened to him repeat his version and then asked him whether he would he be prepared to go to court. I infer the reference was made to "going to court" because Mr Starr was concerned to ensure that the decision to dismiss could be defended if challenged in litigation. In my opinion, Mr Starr, by the time he commenced this conversation with Mr Simmonds, had made up his mind to reject the applicant's denial or at least was indifferent to where the truth lay, and was more concerned to ensure that the respondent could defend the decision to dismiss the applicant that would be communicated to the applicant shortly thereafter. 59 Another factor is the manifest convenience, from Mr Starr's perspective, of getting rid of the union delegate who had been at the forefront of union resistance to the preferred employment model the respondent wished to adopt (the employment of employees on AWAs without the need for third-party involvement from the NUW) and who also had been actively involved in what had proved to be a bitter and protracted industrial dispute. 60 The respondent has not provided an "an explanation of the real reason for dismissal [of the applicant] consistent with the absence of delegateship or membership as a reason": Seymour v Saint-Gobain Abrasives Pty Ltd [2006] FCA 1452 at [29] per Buchanan J. The respondent has not displaced the presumption created by s 809 of the WR Act. Accordingly, I am satisfied that the respondent dismissed the applicant at least for a reason that included a prohibited reason (if not solely for that reason), namely that he was a delegate of the NUW. However I should indicate, in addition, that the evidence establishes (apart from the presumption) that a reason why the respondent dismissed the applicant was that he was a delegate. In my opinion, an inference can readily be drawn that part of the reason the respondent dismissed the applicant was that he was the NUW delegate at the Minto site. 61 It is unnecessary to consider other aspects of the applicant's case (dismissal because he was a member of the NUW and had engaged in protected industrial action) that were advanced but faintly and fairly clearly as a subsidiary aspect of the case overall. This leads to the question of remedies. It was also common ground, as I apprehend it, that if such an order is made the respondent should be ordered to pay the applicant back pay in the sum of either $1832.21 (the applicant's figure) or $1792.72 (the respondent's figure). There was no real evidence supporting these figures. I will order the lesser amount but in the expectation that if it is wrong it will be made up by the respondent. I do not consider it is necessary to make an order, as sought by the applicant, that the respondent be restrained from engaging in further conduct of the same character. The WR Act does that: see Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2007) 161 FCR 513 for a discussion on analogous circumstances. 63 I now turn to the issue of whether it is appropriate under s 807 of the WR Act to impose a pecuniary penalty on the respondent for its breach of s 792 of the WR Act. (2) The maximum pecuniary penalty under paragraph (1)(a) is 300 penalty units if the defendant is a body corporate and otherwise 60 penalty units. However, I consider that this is a case where a penalty should be imposed. The conduct was not innocent or inadvertent. The question then arises, in what amount. The Court is simply directed to consider what is appropriate in all the circumstances of the case. Moreover, as the Full Court noted in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170 at [60] , while general guidance as to the appropriate penalty may be obtained through an analysis of comparable cases, it remains necessary for the Court to give careful consideration to the circumstances of the case before it (see also Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 ; (2008) 165 FCR 560 at [12] per Gray J). 66 I have concluded that, in the circumstances, a mid-range penalty should be imposed. No evidence was led to indicate that the respondent had engaged in similar conduct in the past. It is of some significance, in my opinion, that the decision to terminate the applicant was made against a background where the decision maker, Mr Starr, and the person with whom he was then consulting, Mr Reidy, had experienced, over a sustained period, an intense industrial campaign that appears to have got entirely out of hand. This is likely to have affected their judgment and sense of balance. Against that, however, has to be weighed the fact that the industrial campaign was in response to the respondent's attempts to negotiate a "modern" agreement and then propose employment on AWAs to its employees. While it was lawful for it to do so, those making decisions for the respondent could not have assumed that this approach would go unchallenged by the workforce it might affect. 67 In addition, imposing a penalty will provide deterrence, both general and specific: Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170 at [37] ; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 ; (2008) 165 FCR 560 at [88] --- [90]. The maximum penalty is $33,000. I consider that, in this case, an appropriate penalty is $12,000. 68 The question that then arises is whether the penalty should be paid to the NUW, as the applicant submited it should. The respondent submitted that it opposed that course (and any penalty should be paid to the applicant and the balance (if any) to the Commonwealth), although the only submission made as to why this was so was to the effect that a penalty should not be imposed or ordered to be paid to an organisation bringing penalty proceedings or supporting an individual who has brought them as a means of wholly or partly reimbursing the organisation for its legal costs. There is Full Court authority, Victoria University of Technology v Australian Education Union (1999) 91 IR 96 where it was said that it would be wrong to be influenced by a concern to reimburse an applicant organisation for costs incurred in prosecuting an application when determining whether a penalty should be imposed and if so, in what amount. Doubtless this is correct. However, once a decision has been made to impose a penalty and the amount of the penalty determined by application of accepted principles, I see no reason why it cannot be ordered to be paid to an organisation who has brought or supported the proceedings even if there is a real prospect it will be used to defray in whole or in part the legal costs of the organisation. It is true that the WR Act effectively prohibits the ordering of costs, or put slightly differently, substantially curtails the power to order costs in proceedings brought under that Act. Equally, however, the WR Act confers an express power to order that a penalty be paid to someone other than the Commonwealth, a power which the Act does not expressly qualify or constrain. 69 I have earlier expressed the view that this may well be a power conferred to encourage individuals who, in an earlier times might have been described as common informers, to sue for breach of statutes: Shanka v Employment National (Administration) Pty Ltd (No 2) [2001] FCA 1623 ; (2001) 114 FCR 379 and also see the discussion of Finkelstein J in CPSU v Telstra Corporation Ltd (2001) 108 IR 228 at 232. It is a distinct power and, in my view, it is strongly arguable that it should be viewed as a power which should not be treated as impliedly constrained by the limitations imposed on a power to award costs: see generally Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom [2006] HCA 50 ; (2006) 228 CLR 566. If a person or organisation successfully brings penalty proceedings, then I see no reason why an order cannot be made that the penalty be paid to that person or organisation without regard to whether the penalty might be used to defray legal costs. The use to which the penalty is put would be a matter for that person or organisation. But it is unnecessary for me to consider this question further as I do not propose to order that the penalty be paid to the NUW who, it is conceded by the respondent, has met the costs of these proceedings. I propose to order that the penalty be paid to the Commonwealth Consolidated Revenue Fund. I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | termination of employment of applicant applicant participated in industrial action applicant delegate of industrial organisation whether applicant's employment was terminated for a proscribed reason whether respondent has discharged the reverse onus imposed in unlawful termination matters whether respondent has provided an explanation of the real reason for termination of applicant's employment appropriate remedy in the circumstances whether a civil penalty should be imposed appropriate recipient of any penalty imposed industrial law |
His produce is sold into both the domestic and overseas markets. In the 2003/2004 season, Australian Farmlink Pty Ltd, an exporter of South Australian produce, sold TVO cherries to a business in Hong Kong (eleven shipments) and to a company in Singapore (ten shipments). The return TVO received from Farmlink on the sale of its cherries was, in aggregate, about one third of what Mr Hannaford claims were the agreed sale prices. The primary reasons allegedly assigned for the greatly diminished returns were price reductions because of quality defects apparent in most of the consignments of the cherries on arrival in Singapore and Hong Kong. These reductions were called "purchase discounts" in Farmlink's documentation and "credits" in TVO's. 2 Neither the Singaporean buyer, Freshmart Singapore Pte Ltd, nor the Hong Kong business, Wing Cheong Laan (whose principal was named Mak), is a party to this proceeding. The second and third respondents, Choon Kiat Koh and Bruce Plummer, are directors of Farmlink. The fourth respondent, Heather Churchill, was at all relevant times Farmlink's export manager. 3 The fundamental issues arising in this proceeding relate to the nature and the terms of the relationship between TVO and Farmlink in the sale of TVO's cherries: was it that of seller and purchaser, or was it one of principal and agent? And whichever was the case, what were the terms of the sale or of the agency? Surprisingly perhaps, the parties' agreement, such as it was, was an oral one. 4 It is fair to say that the respondents' defence drifted far from that upon which the case was originally pleaded and conducted. After the close of oral submissions I was asked to entertain a further amendment to the defence to accommodate issues that had been brought into focus in final submissions. As I will later indicate, I refuse to allow the amendment sought. 5 The oral character of the contract(s) apart, two further factors have complicated the resolution of this matter. The first is the real uncertainty as to the legal context in which the question of characterisation of the parties' relationship is to be addressed. If the matter is properly to be regarded as one of sale and resale, the vendor-purchaser relationship between TVO and Farmlink would be subject to the Sale of Goods Act 1895 (SA) and the resale relationship between Farmlink and Freshmart, but not Mak, probably to the Sale of Goods (Vienna Convention) Act 1986 (SA). This latter matter, though, has not been addressed by the parties and has not been the subject of evidence to the extent that it might raise questions as to the law of Singapore and Hong Kong respectively: see United Nations Convention on Contracts for the International Sale of Goods , Art 1 ("CISG"). Singapore has ratified the CISG and it is in force in that country. Though the CISG was in force in China, but not in Hong Kong, at the time of the "hand over" to China, China has apparently not taken the necessary steps to have the CISG apply to Hong Kong. The Cour de Cassation in France has, in consequence, recently concluded that the CISG was not applicable to Hong Kong: see Telecommunications Products Case , Cour de Cassation, 2 April 2008; and see generally Schroeter UG, "The Status of Hong Kong and Macao under the United Nations Convention on Contracts for the International Sale of Goods" (2004) 16 Pace International Law Review 307. If, on the other hand, the relationship of TVO and Farmlink is that of principal and agent, TVO's relationship with Freshmart, but not with Mak, was subject probably to the provisions of the Sale of Goods (Vienna Convention) Act . I mention this for the following reason. The CISG, but not the domestic Sale of Goods Act , has a developed regime for a buyer (i) to notify a seller of lack of conformity with the quality required by the contract: see CISG Arts 35, 39 and 44 and see Schlechtriem and Schwenzer (eds), Commentary on the UN Convention on International Sale of Goods at 411 ff and 460 ff (2 nd English ed, 2005); and (ii) to effect a price reduction for non-conformity: CISG Art 50 and Schlechtriem and Schwenger at 596 ff. I note this because both Farmlink and Mak effected price reductions. The evidence on whether they were negotiated or not is controversial. 6 The second complicating factor relates to those price reductions. It is clear from the evidence that, at presently relevant times, quality problems of varying severity were prevalent in both the domestic and overseas sales of cherries generally and that, in respect of overseas sales, exporters routinely passed on price reductions to Australian suppliers in response to this phenomenon. The evidence both of TVO's dealings with other exporters, and of its dealings with Farmlink since the 2000/2001 cherry season, illustrate this practice. The significance, if any, of it in the characterisation of the parties' relationship and in the terms of it has been vigorously debated before me. 7 I have in the event concluded that Farmlink was not TVO's agent. It was a purchaser for resale. The individual purchases in respect of each consignment to Singapore and Hong Kong were for agreed prices. Because quality defects were a recurrent concern and because Freshmart and Mak effected price reductions (whether or not, at least in Freshmart's case, in reliance upon Art 50 of the CISG), the individual sales by TVO took place in a context in which reductions in the "purchase price" payable by Freshmart and Mak were to be anticipated in some degree for quality defects. I am not satisfied, though, that in passing on price reductions Farmlink had any contractual right so to do. Formally it may have had rights against TVO under the Sale of Goods Act (eg s 14 and s 52) for which it may have been entitled to claim damages for breach of warranty in respect of particular individual contracts or to set off such a breach in diminution or extinction of the price. 8 Mr Hannaford's routine acceptance of reductions (at least those said to be made for quality reasons) in the purchase price owing to him was, in my view, a reasonable and sensible business response to a recurrent phenomenon in an ongoing business relationship in a market for perishables. Such "mutual accommodation" may, or may not, over time evidence a contract variation. In the present case as pleaded it did not. Mr Hannaford was not obliged to accept whatever price reduction Farmlink had accepted from, or perhaps even agreed with, Freshmart and Mak. He retained his right to renegotiate his contract with Farmlink and was entitled to insist that price reductions ascribed to quality defects were reasonable and legitimate, ie were in fact made for reasons of quality and were ones for which he bore the responsibility. Mr Hannaford is, apparently, the biggest cherry grower in South Australia. He commenced his own business in 1985 and registered the business name Torrens Valley Orchards several years later. During the 2003/2004 cherry season he owned --- and he still owns --- three orchards in the Adelaide Hills. After an early dealing with Mr Plummer in the late 1980s, he recommenced dealings with Mr Plummer and Ms Churchill in the mid-nineties about which time, or perhaps a little later, he commenced supplying them with cherries. 10 (ii) Heather Churchill. Ms Churchill has been involved in the export industry since the mid to late 1980s. She moved to South Australia in 1993 and took up a position as export coordinator with an apple exporter, South Australian Horticultural Export Co. While working in that position she met Mr Plummer who, in 1999, offered her a position with Australian Farmlink Pty Ltd, a new business which he was involved in starting up. As export manager, her responsibilities were to find market sales for produce, to arrange for its export and delivery and to discharge all the associated accounting and administrative functions. She was responsible to the directors of Farmlink. The overseas markets with which she had dealings included Singapore, Malaysia, Thailand, Taiwan, Hong Kong, the UK and some Pacific islands. Her evidence was that although Farmlink dealt with a variety of products for export, during the cherry season she concentrated 100 per cent on cherries. Ms Churchill remained the export manager of Farmlink until 2006. 11 (iii) Australian Farmlink Pty Ltd and its directors. The company's business was the supply of export services both to Mr Plummer's organisation and to other local growers of fruit and vegetables. Its two directors were Mr Plummer and Mr Choon Kiat (Peter) Koh. 12 Mr Plummer was also a director of Plummer's Border Valley Orchards Pty Ltd, a grower, packer and marketer of apples, some cherries and some stone fruit. PBVO was one of Farmlink's suppliers. Many of the export shipments from TVO were initially delivered to the PBVO packing shed. Ms Churchill's office was in the PBVO administrative building. It was her evidence that it was normally Mr Plummer's brother who dealt with the cherry side of PBVO's business. 13 Mr Koh, the other of Farmlink's two directors, is also a co-director and shareholder of Freshmart. Ms Churchill variously described him as "controller", "manager" and "principal" of Freshmart. Freshmart was one of Farmlink's buyers, and is based in Singapore. Mr Koh personally dealt with Ms Churchill on its behalf in relation to its purchase of cherries. It is Ms Churchill's evidence that, in his capacity as a director of Farmlink, Mr Koh never supplied instructions to her as an employee of Farmlink. 14 (iv) Mak. Mr Pin Jam Mak, known as Mak, was another of Farmlink's buyers who traded under the business name Wing Cheong Laan and was based in Hong Kong. Ms Churchill's evidence was that she had known him for ten years, and that he had a track record with her that was impeccable. Specifically, she indicated that she had been dealing with Mak at least since 1999 and probably since 1995. 15 There was contrary evidence as to Mak's character given by a TVO witness, Jonathan Freeman, who was the sole director of a company conducting an aquaculture and agriculture export business and who said he had a long standing involvement in the export of food products (including cherries) to the Chinese market. Such question as there is about Mak's character, I need not resolve. This said, his actual conduct and/or his likely conduct in the circumstances bear directly both on some of my findings and on issues of proof. Picking normally commences in early December and usually runs for about five weeks. Cherries need to be picked quickly once they mature. Once picked, they immediately start to die, hence the industry emphasis on trying to preserve their quality and life for as long as possible through a process of refrigeration called the "cool chain" (see below) which aims to keep cherries at a constant temperature (between 0 deg. and 1deg.C) from when they reach the packing shed at an orchard until they are delivered to market. Any break in the cool chain can have a significant adverse affect on the quality of the cherries. Properly handled and stored, the commercial life of a picked cherry can be extended up to eight weeks. 17 Like all perishables, the quality of cherries is affected by a variety of factors. Extended periods of rainfall can cause cherries to crack. Rain equally causes them to swell and if this occurs just prior to picking they become more susceptible to bruising during the picking and packing process. A range of other environmental factors can affect quality: birds, winds, temperatures, soils, fungi, etc. Equally, cherries require careful handling. As Mr Hannaford put it: "they are extremely delicate ... to handling conditions ... They have to be ... picked carefully, handled carefully, transported carefully all the way through the process. And they can differ in size. The evidence in this matter is that, at the relevant times, the markets generally preferred big, firm, sweet cherries with green stalks. As noted above, the purpose of the cool chain is to reduce and maintain the temperature of cherries to as close to zero as possible until they are consumed. This prolongs the life of the fruit by retarding the natural senescing process. Any significant break in the cool chain will have some effect on the life and/or quality of the cherry. 20 The "chain" begins soon after the cherries are picked. They are transported unrefrigerated to the packing shed where they are quickly placed into a 'hydro-cooler' --- a machine which pumps cooled water through the bins of cherries for up to 10 minutes. This process removes much of the initial field heat. From there, the cherries are moved either temporarily into a receiving cool room, or directly into the packing chain. In the packing chain, the cherries are cleaned, "singulated" (a process in which clumps of cherries are broken up), sanitised, protected by fungicide, sorted and packed. Cooled water is used during most steps of this process, and the cherries are put through a hydro-cooler for a second time. The packing shed itself is both insulated and air-conditioned. The cherries are subsequently returned to a different cool room for storage before delivery. 21 In the export context, the cool chain differs depending on whether the cherries are being sea-freighted or air-freighted to their destination. 22 Where the cherries are air-freighted, they are loaded into refrigerated trucks for transport to the airport. The truck refrigeration units operate on engine power while in motion, but otherwise on mains power --- they are re-connected to mains power on arrival. At the airport, the cherries are unloaded into cool rooms for temporary storage. These are removed from the cool rooms about 45 minutes prior to departure and left un-refrigerated on the tarmac. Dr Brown, an expert witness called by Farmlink, noted that it was the bane of trying to transport perishables by air to get air companies to ensure that containers are kept in cool rooms, particularly during brief transit stops. The evidence was that the cherries are not refrigerated whilst in the air, although air pressure and temperature is controlled. 23 Where the cherries are to be sea-freighted, they are loaded into refrigerated trucks for transport to PBVO. At PBVO, the pallets are again cooled using an enforced blower system, and then loaded into sea shipping containers. The containers are cooled prior to loading, although to prevent condensation are generally off power during the actual loading. The refrigeration units on the containers also are not capable of being powered by the trucks during transport, although power is re-established immediately upon arrival at the port. Dr Brown gave evidence that a short disconnection from a cooling system, such as would occur transporting cherries from the Adelaide Hills to Port Adelaide, was not normally significant, appropriate insulation and the large thermal mass involved preventing any significant increase in temperature. 24 The evidence on how the cool chain is maintained subsequent to delivery to the overseas buyer is dependent on the processes of the buyer in question. Nonetheless, it was not contested that its maintenance after delivery was significant to the ultimate quality of the cherries when sold. That agreement, when enlivened by Farmlink's individual packing orders to TVO, constituted Farmlink a purchaser of TVO's cherries at the agreed price. Eleven such orders were filled for shipment to Hong Kong; and ten for Singapore. There was a large shortfall in the amounts Farmlink actually remitted to TVO relative to the agreed prices for these shipments. TVO's primary claim is for the amount of the shortfall, plus damages for loss of the use of the money and interest. 26 The contract's term as to price is also pleaded in alternative ways (ie approximately the agreed price or at reasonable prices) which it is unnecessary to set out here in detail. 27 Alternatively, TVO has contended that Farmlink was a del credere agent for the purposes of the marketing and sale of cherries in Hong Kong and Singapore, with Farmlink warranting that TVO would receive the agreed prices. Indemnification is sought in respect of this warranty which is alleged to be an implied term of the agency. 28 Distinctly, TVO alleges that Farmlink, if an agent, breached its contractual duties as agent. The Further Amended Statement of Claim instances (i) non-disclosure of material information relating to the operation of the agency and in particular the state of the Hong Kong and Singapore markets at the time of its orders for cherries from TVO; (ii) failure to exercise reasonable care and skill in performing the agency particularly in relating to securing the agreed prices or approximately those prices; and (iii) failing to provide material advice to TVO or misleading TVO in a number of specified matters relating to the sales into the Hong Kong and Singapore markets. 29 The alleged failures to advise and instances of misleading are in turn pleaded to misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) and of s 56 of the Fair Trading Act 1987 (SA). 30 In the Amended Defence and Cross-Claim which was operative during the conduct of the hearing, Farmlink denied there was an agreement for the sale of cherries to it such as propounded by TVO. (iv) Farmlink (through Churchill) would contact TVO and advise what type and quality of cherry it required and TVO would advise what price they were willing to sell the cherries for. Once TVO advised of the supply price of the different quality cherries, Farmlink would then add onto that supply price the export costs, plus Farmlink's margin (which was approximately 65 cents per kilo) ('Selling Price'). Farmlink would then offer this Selling Price to the Hong Kong and Singapore markets and the buyers of those markets would either reject or accept that Selling Price. If that Selling Price was accepted, it remained static unless it was altered by the factors as set out at (ii) above. 31 It should be noted in passing that the respondents' defence expressly acknowledged that TVO was not made aware of the selling price of the cherries in Hong Kong or Singapore, nor was it aware of the margin received by Farmlink. This information was said to be "commercially sensitive". 32 The respondents denied the terms of the oral contract pleaded by TVO. Notably, para 6 of the FAD denied that Farmlink was, in law, a purchaser of TVO's cherries to it at the prices pleaded by TVO. 33 Further the respondents denied Farmlink was a del credere agent as pleaded by TVO or an agent on the terms pleaded by TVO. Nonetheless, its case has been conducted on the basis that it nonetheless was an agent for sale. 34 Farmlink in turn cross-claimed against TVO for damages for its failure to supply cherries that met Farmlink's specifications in breach of its agreement with Farmlink and/or of s 14 of the Sale of Goods Act . As I will later indicate, this claim was not pursued before me. Distinctly, Farmlink claimed indemnification as an agent for its export and transport costs in effecting overseas sales. Farmlink's case later took a new turn outside the pleadings. This needs some explanation as it is the subject of a ruling below. In its Summary of Facts, Issues and Contentions filed before the hearing, Farmlink referred at length to a course of dealing between itself and TVO from 1999/2000 to 2003/2004 and, in particular, to what was said to be TVO's acceptance of purchase discounts for quality. It asserted its relationship with TVO was an agency for sale at a negotiated conditional price. Even if there was an agreement for sale of goods by TVO to Farmlink sufficiently certain to be enforceable, then the decisive point is that it was a condition and had been agreed and/or established by the course of dealing between the parties that the price paid to TVO would be the conditional price less any "purchase discounts" applied by the overseas buyers and passed back to TVO by Farmlink. The respondents' counsel provided the applicant's counsel with written final submissions almost at the end of the applicant's final address. It was then that the issue of "course of dealing" came fully to the fore. The contention was now squarely put that, as terms of a contract may be implied from a past course of dealings, the dealings of the parties prior to 2003/2004 required close consideration. In particular Farmlink applied purchase discounts in every season from 1999/2000. These, it is said, were acquiesced in by TVO. The course of dealing generally was then relied upon to indicate both the relationship of the parties and the terms of their agreement. 37 In oral submissions counsel for the respondents, while accepting that they may not have pleaded the matter "in as many words", contended that, even if Farmlink was a purchaser from TVO, the price payable was as determined by the course of dealings over the previous four seasons. He then referred to para 27 of the Summary of Facts, Issues and Contentions to which I referred above. MR BROHIER: Yes, your Honour. We say that we have run the case on the pleaded defence, and the pleaded defence is that there was a term in the contract that --- an oral term, that Farmlink could only give an estimate of price because it was dependent on prices; could obtain a specific market is affected by demand in the market, etcetera; and then, in paragraph 8.2 and 10.2, that the reason there was non-payment was because a lack of quality. That's the case we have always met, and if there is an attempt to say that regardless of quality the issue is what price they got so that in effect it was a carte blanche agreement, we say that's not open, and we have made it clear in our whole submissions that we have based it on the pleadings. 38 It is fair to say that the term said to emerge from the course of dealing relating to purchase discounts evolved during the respondents' final oral submissions: see eg Transcript 890, line 23 --- 892, line 11; as did its relationship to the oral contract that had been pleaded: see Transcript 895, lines 4-9. If your Honour is minded to give some leeway to deal with a course of conduct case, it can only be on the basis of the evidence which, as we have submitted, the only course of conduct can be that, where there were proper quality claims, properly justified, then a price discount is factored in. By that, we mean that it can't be the case that any alleged quality claim has to result in a discount. It can only be that the course of dealing shows that --- I withdraw that. We will only --- we say the only amendment that could be allowed is to allow a plea that the course of dealing shows that where there are quality claims, which then are justified, the reduction flows. The proposition that is put to your Honour is that, if you like, the amendment that is sought is that price is dependent on whatever the overseas buyer wants to pay according to his whim and fancy at the time. If that is the proposition, we say your Honour should reject any attempt to amend the pleadings to plead that, not on the basis of prejudice, but on the basis that it doesn't sit with the evidence, and your Honour can consider the evidence and, in our submission, you'll come to this position, that it's simply not supported. Counsel did point to the prejudice TVO would suffer if a more qualified version of the implied term was advanced allowing for Farmlink to act unilaterally in accepting price discounts. I accept that such would be the case. 40 At the close of oral submissions, counsel for the respondents asked that Mr Hannaford be permitted to re-open his case to give such evidence as he might wish to avert any prejudice arising from the course of dealing case that he was seeking to put. It was clear that the term he now wished to propose involved some retreat from what appeared to have been advanced previously: see Transcript 912, lines 25-45. I refused to countenance re-opening of the case --- it had already been adjourned part heard for a lengthy period --- but I did ask counsel for the respondents to provide a draft of the term proposed for the purpose of determining whether any amendment to their defence might be permitted in the circumstances. 41 As subsequently proposed, the term was adapted to the contingencies both of a sale and purchase and of an agency for sale. In each case the term was in substance the same. 42 The applicant has opposed my allowing this amendment (and its agency for sale counterpart: para 13.9) to be made. That opposition is based essentially on (i) the inconsistency between the proposed term and the evidence in relation to the purpose of the parties' transactions; (ii) both the lack of support from Ms Churchill for it and the fact that the term was not put to Mr Hannaford; and (iii) the focus that had been placed on quality as the alleged actual reason for discounts. 43 I am quite conscious of the foundation that both a prior course of dealing between parties and practices and usages thereby established between them can provide (a) for the drawing of inferences as to the actual terms on which the parties have contracted and (b) for the imputation of implied terms in their contract: for the difference between inference and imputation, see Hawkins v Clayton [1988] HCA 15 ; (1988) 164 CLR 539 at 570-571 and 573. This is evidenced both in the provisions of international instruments such as the CISG Art 9: see Schlechtriem and Schwenzer at 141 ff; see also Unidroit Principles of International Commercial Contracts 2004 , Arts 1.9 and 5.1.2; and in the domestic laws of common law countries: see eg Uniform Commercial Code , SS1-303; Restatement of Contracts , Second , SS223; Farnsworth on Contracts , SS7.13 (3 rd ed, 2004); Furmston (ed), The Law of Contract at [3.18] (2 nd ed, 2003); Cheshire and Fifoot, Law of Contract at [10.18] and [10.29] (9 th Aust ed, 2008). I equally accept that it may well have been the case, as I will later suggest, that some at least of the terms upon which TVO and Farmlink actually intended to contract in the 2003/2004 season were to be inferred from their prior course of dealings. But that is not the question on which I must rule. 44 The amendment sought to be made at such a late stage is not one which I consider should be permitted. It is yet another variant on the term initially proposed --- the variation seemingly being a response to accommodate questioning during final submissions. It is of such a character that it ought to have been the subject of evidence both of Ms Churchill and of Mr Hannaford. It raises quite a spectrum of different issues to those raised by what had been pleaded by the respondents. And it embodies an exception the provenance of which relates only to evidence in the 2003/2004 season and not to "past dealings". It is simply far too late in the day to permit this amendment to be made, the more so because I consider the proposal itself to be uncertain in scope and ambiguous in content. 45 I will in any event later suggest both that the term itself attributes a character and a consequence to past dealings which I do not consider is reasonably suggested by them and that important aspects of Ms Churchill's decisions in 2003/2004 in relation to purchase discounts had no reflection at all in the prior course of dealing. Unsurprisingly, courts have emphasised that decided cases are for the most part of limited assistance given the quite fact (and agreement) specific nature of the inquiry to be made: see eg Fraser-Ramsay (New Zealand) Ltd v De Renzy (1912) 32 NZLR 553 at 575; see generally, Dal Pont, Law of Agency at [2.3] (2 nd ed, 2008); the more so when, as in the present matter, the contract in question (whether of agency or sale) is an oral one: cf Mercantile International Group plc v Chuan Soon Huat Industrial Group Ltd [2002] EWCA Civ 288 at [30] - [31] . 47 Before identifying those factors which have been found to be of varying significance as indicators of, variously, agency or sale, it is appropriate, first, to refer generally to a number of relatively uncontroversial propositions of agency law. In so doing, I repeat for convenience in part what I said in South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 at [131] ff. (1) Those definitions of agency that take the principal and agent relationship itself as their particular focus: contrast International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co [1958] HCA 16 ; (1958) 100 CLR 644 at 652; emphasise that that relationship "can only be established by the consent of the principal and the agent": Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130 at 1137; see, for example, Bowstead & Reynolds at [1-001]; Restatement of Agency, Third , SS1.01; 3 Am Jur 2d, "Agency", SS15. (2) The consents so given need not necessarily be to a relationship that the parties understand, or even accept, to be that of principal and agent: Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552 at 587. It is sufficient if "they have agreed to what amounts in law to such a relationship": Garnac Grain Co Inc at 1137; Nichols v Arthur Murray Inc 56 Cal Rptr 728 (1967) at 730-731; Restatement of Agency, Second, SS1 comment. (3) Though there is no uniformly agreed definition of agency: see the discussion in Fisher, Agency Law at 8-11 (2000); the two whose authoritative character has resulted in their wide citation are those of the Restatement of Agency, Third, SS1.01 and of Bowstead & Reynolds at [1-001] (the latter being based upon the Restatement provision). This "representative" characteristic must be able to be discerned in the factual relation of the parties: Colonial Mutual Life Assurance Society Ltd v The Producers and Citizens Co-operative Assurance Co of Australia Ltd [1931] HCA 53 ; (1931) 46 CLR 41 at 48-50. (4) Though the characteristic of "control" is accentuated in the Restatement's definition: see comment f to SS1.01; its significance is far more muted in Anglo-Australian law: see South Sydney District Rugby League Football Club at [136]. Nevertheless, if the principal gives up all control of his supposed agent the relationship is only doubtfully one of agency. 49 Judges have, on occasion, used a test stated at the level of generality of SS14J to determine whether a particular relationship (ordinarily manifest in a written agreement) is one of agency or of sale. Characteristically, though, a more finely tuned and contextual focus on particular "indications" is employed especially where, as in the present matter, the parties' relationship is not recorded in a written agreement. I use the description "contextual" for this reason. The indications for the most part are not necessarily determinative and acquire their actual significance from the particular context in which they appear. 50 For present purposes I would note the following. 51 (i) As an agent for sale ordinarily acts on behalf of its principal: but cf in relation to a broker selling in its own name: Bailey & Co Ltd v Balholm Securities Ltd [1973] 2 Lloyd's Rep 404 at 408; Jackson Securities Ltd v Cheesman (1986) 4 NSWLR 484 at 489-490; is it apparent from the facts that the seller has actually conferred on the intermediary an authority to negotiate and/or to sell on the seller's behalf thus bringing into existence direct contracts between the seller and the third party buyer: Mercantile International Group plc at [30]-[34]? 52 (ii) Often interlocking factors of some significance are (a) by whom is the sale price to the third party set? and (b) how is the intermediary remunerated/rewarded for the sale to the third party? If the intermediary is remunerated by commission pre-arranged with the seller this will ordinarily indicate an agency relationship: eg Weiner v Harris [1910] 1 KB 285; although in exceptional circumstances a buyer for resale may be paid what is described, or is misdescribed, as a commission: eg Gannow Engineering Co Ltd v Richardson [1930] NZLR 361 ; Jackson v Royal Bank of Scotland [2000] EWCA Civ 203 at [17] - [18] . In the absence of fully informed consent, it would be a breach of fiduciary duty for an agent to profit on the sale of its principal's property by, for example, marking up the principal's stipulated sale price and retaining the difference. That an intermediary so acts may itself be indicative that the parties relationship was that of seller and buyer for resale and not agency for sale: Ex parte White; In re Nevill (1870) LR 6 Ch App 397. Nonetheless, a principal may agree to an agent deriving its remuneration from a mark-up on the price the principal stipulates it is to receive from the sale: eg Ex parte Bright; In re Smith (1879) 10 Ch D 566. In Mercantile International Group plc in circumstances in which the agreements between the parties pointed unambiguously to an agency relationship, it was held that that conclusion was unaffected by the circumstances that the principal knew that the intermediary charged more to purchasers than it confirmed to the principal; the principal did not mind nor care to know the detail of the matter, but was satisfied to get the price it stipulated; and the principal was content that the intermediary should keep for itself an undefined margin, it obtaining no remuneration by way of commission or otherwise from the principal: at [5] and [36]. 53 (iii) It may be apparent from the circumstances and context of the supplier's and intermediary's dealing, that, on sales to a third party buyer it was reasonably to be expected that the intermediary was to answer to that buyer for the quality of the goods sold: cf International Harvester Co ; Bowstead & Reynolds at [1-032]. 54 (iv) Two duties stemming from a finding of agency are that the agent (a) must keep its principal's property separate from its own; and (b) must keep an accurate account of all transactions entered into on its principal's behalf: see generally Bowstead & Reynolds at [6-088] ff; Dal Pont, Ch 13. It has been suggested on occasion that these consequences may be indicative of an agency (at least if they have been expressly or impliedly agreed by the parties): cf Benjamin's Sale of Goods at [1-049] (7 th ed, 2006). For present purposes I merely note those agency obligations. I will make further reference to them after having outlined how Farmlink actually dealt with TVO in relation to the proceeds of sale received from the Singaporean and Hong Kong buyers and in relation to keeping accounts of the sales made by Farmlink. 55 There are two final matters to which I should refer. First, while the relationships of agency and sale are mutually exclusive, it is not uncommon for an intermediary to be the agent of its seller-principal but to be a principal vis-à-vis a third party on the sale to it: see eg Bailey & Co Ltd v Balholm Securities Ltd at 408; Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676. As will be seen, the respondents seek to draw some comfort from this. 56 Secondly, neither TVO nor the respondents have sought to advance and rely upon known practices and usages in the cherry sale and/or exporting market which might illuminate in any way the complexion properly to be given to their relationship or its incidents: see CISG, Art 9(2); Unidroit Principles of International Commercial Contracts 2004, Art 1.9(2); Uniform Commercial Code , SS1-303 ("usage of trade"). It was only to be expected that their respective recalls might be inaccurate and be likely to be affected by reconstruction from contemporary documentation to which they each later had access. I am satisfied that the evidence of both of these witnesses was affected in these ways and to some degree self-servingly. 58 If Mr Hannaford's recall of some matters was indistinct or erroneous, especially as to matters of timing, Ms Churchill's was on occasion wholly questionable. I am satisfied that she convinced herself on some number of occasions that what she would have done/said etc was what she did/said etc. She was warned about this. I am satisfied her use of "I would have" was not simply a speech habit. 59 I have concluded that on some matters of importance Ms Churchill's evidence ought not be accepted unless corroborated by documentary evidence. She was often evasive and combative in answering questions. Some passages of her evidence were transparently self-serving or underwent adaptation as the case evolved. I have little confidence in much of her evidence on contested matters. Nonetheless, they provide relevant contextual material and for that reason I refer to them, albeit sketchily, and primarily in relation to the "application" of purchase discounts by Farmlink and to the manner in which accounts were settled. 61 The 1999/2000 season was the first in which TVO dealt with Farmlink in relation to cherries. Mr Hannaford said in evidence that he could not remember specifically taking up the topic of purchase discounts with Ms Churchill at the beginning of their business relationship but that at some stage they certainly did discuss discounts and how they work and how they apply and why. He reiterated that at pre-season and post-season meetings with Farmlink and its growers discounts were discussed from time to time "and we talk about why and how and what the problems were and what we can do to avoid them ... if it is related to the growing of the cherries and packing". There are quite often some issues, some problems. Maybe it is our fault. Maybe some cherries snuck through the system and so there are, from time to time there are some issues, either fair or unfair, that can result in some discounts, yes. He understood that overseas buyers demand quality and they will reject cherries or seek a discount if the quality is not there. 63 In the 1999/2000 season, discounts were applied to four of twenty-four orders amounting $14,670.10 leaving a payment by Farmlink to TVO of $362,935.62 on an expected return of $377,605.72. The accounts for this season were settled on about 9 February and it was only then that Farmlink delivered the completed "purchase orders" (see below) showing the purchase discounts applied. 64 In the 2000/2001 season the purchase discounts applied to TVO sales ($251,131.78) amounted to about half the expected return and related to nine of twenty-one orders. Two container shipments, one to Singapore, the other to Hong Kong, accounted for about $185,000.00 of the total discount. TVO's benefit from the insurance recovery on the container losses was $119,864.74, payment being made after August 2001. The evidence on the policies effected by Farmlink has been left in a less than satisfactory state. While TVO benefited ultimately from the insurance payout, I am satisfied it was neither the insured nor a beneficiary under the contract. The evidence, such as it is, suggests the insurance was effected in Farmlink's name with the interests of the Singaporean and Hong Kong buyers noted on the policies. The further significance of the insurance claims for present purposes is that Farmlink indicated to Mr Hannaford that thereafter insurance was not available for cherry consignments it made abroad. 65 In the 2001/2002 season on Farmlink's figures, TVO's expected return was $177,790.00 and purchase discounts of $15,795.90 were applied to six of eleven consignments. In this season TVO dealt with a number of exporters all of whom passed back purchase discounts to it. So, for example, Jayfresh (Mr Freeman's company) provided TVO a return of $310,135.20 after purchase discounts of $21,909.80. I note in passing that both Mr Hannaford and Mr Freeman indicated that Jayfresh approached discounts "a little bit differently". The final accounting for Farmlink was done in March 2002. Mr Hannaford indicated he received some progressive part payments through this season but generally he received the outstanding purchase orders in a bunch after the end of the season on the final accounting. 66 The 2002/2003 season, for present purposes, was relatively similar to the preceding year: TVO's return was, on Farmlink's figures, $138,381.50 after purchase discounts amounting to $19,543.00 were applied to nine of seventeen consignments. Jayfresh, in its dealings with TVO, applied discounts which in aggregate were in similar proportions to returns as were Farmlink's. As in previous years, the purchase discounts were probably communicated to Mr Hannaford at the end of season settlement. Mr Hannaford accepted in cross-examination that, by this season, whenever the question of purchase discounts came up, Ms Churchill's standard reply was that they had been applied because the cherries had been partially rejected on quality grounds. Nonetheless, it is convenient to refer, first, to the relatively standard documentation generated in respect of the consignments not only for such illumination as it provides as to the TVO-Farmlink-overseas buyer relationships, but also because the documentation provides terms of reference in the factual narrative which follows. 68 The document that initiated an export consignment was Farmlink's "Export Packing Order" which was sent to TVO. It is agreed between the parties that, if the relationship between TVO and Farmlink was that of sale and purchase, such delivery was an unconditional appropriation such that property passed to Farmlink: see Sale of Goods Act , s 18 rule 5(1) ; Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd [1987] HCA 30 ; (1987) 163 CLR 236 ; Carlos Federspiel & Co SA v Charles Twigg & Co Ltd [1957] 1 Lloyd's Rep 240. When making a delivery TVO usually faxed what it called a "dispatch docket" to Farmlink. This handwritten document, which made no reference to price, was for present purposes the only document of significance generated by TVO for delivery to Farmlink in any season. 71 The airway bill for a consignment, or the bills of lading for sea shipments, were all in the name of Farmlink which was invoiced for, and paid, freight. Farmlink invoiced its overseas buyer for the fruit at prices fixed by it. TVO was not copied that invoice. I will later make reference to Farmlink's Cherry Shipping Strategy Plan for its projected prices to overseas buyers for that season. The prices so fixed differed from those agreed between TVO and Farmlink as TVO's "agreed" or "firm" sale price and they were not communicated to TVO. The only reference to TVO in the invoice was as part of the "Description of Goods", for example, "TVO STELLA CHERRIES x 18 --- 500 gm". Payment by the buyer was required to be made to a general bank account of Farmlink which, on the evidence, was used for its general trading activities. 72 When Farmlink paid TVO for a purchase it did so by reference to a document entitled "Purchase" and referred to in evidence as a "purchase order". That document, directed to TVO, referred to a specific order; it described Farmlink (at its address) as the party TVO was to "Ship To"; it identified under headings the quantity, description and price of the cherries particularised in the order and the percentage "discount"; and it specified what, in the event, was the sale price and that it had been paid. This document was entered into Farmlink's computer after receipt of TVO's dispatch docket (which described the number of cartons and the varieties of cherries), as was the sale price which Ms Churchill described as "the expected price return" to TVO. Such discounts as were applied were entered ordinarily prior to settlement with TVO. 73 I would note in passing that the freight invoices, copies of the airway bill or the bills of lading and the invoices to overseas buyers were not sent by Farmlink to TVO. 74 To anticipate matters, the applicant's contention is that the above documentation clearly indicated that each transaction involved a sale by TVO to Farmlink with a re-sale to the overseas buyer. Farmlink, in contrast, contends that the documentation is consistent with its having acted as an agent for sale vis-à-vis TVO and as a seller vis-à-vis the overseas buyers, hence its reliance upon Romalpa at 690. Apart from having a wrap-up of the previous season, the agenda referred, amongst other matters, to crop expectations, ie volume, size, quality and timing, to export market potential and to packaging requirements. The agenda did not refer to price --- unsurprisingly in my view given that the meeting was almost two months in advance of when exporting might be expected to commence and about a month before picking. It is Ms Churchill's evidence that price probably was not discussed at that meeting: "Not that early, no". I would note that the Cherry Export Marketing Strategy she faxed to TVO on 2 December 2003 made no mention of price and, in a fax to Freshmart of the same date suggesting an export "Program for Singapore", she gave only indicative prices as it was "too early for the real prices". 76 At some time, though, it is clear that the growers told Ms Churchill what prices per kilo they wanted for cherries (categorised by size), such that there was, according to Ms Churchill, an understanding between not just Farmlink and TVO, but all the growers that "this was the sort of price they would want to go out to the market to return, and that's what they expected". It is equally clear that she calculated her own export strategy referred to below on the basis of those prices. Those prices were (i) $7.00/kg for 24-26mm fruit; (ii) $9.00/kg for 26-28mm fruit; (iii) $11.00/kg for 28mm fruit; and (iv) there was about a $1.00 premium on 500gm punnets. Farmlink and TVO later agreed several changes to these prices as actual consignments were made. It also is alleged that Farmlink made unauthorised changes on occasion, ie changes not negotiated with TVO. 77 While Mr Hannaford could not recall when prices were discussed, he said it would have occurred at some stage: "We had to have some basis on which to have a meaningful business relationship, not only with Farmlink but with all our buyers". The prices referred to above were those he had in mind at the time. 78 At some time before Farmlink actually started shipping cherries, Ms Churchill prepared for Farmlink's own use the "Cherry Shipping Marketing Plan --- 2004". That document set out in tabular form projected consignments by air and sea for the weeks commencing 22 December 2003 and ending 19 January 2004; the names and volumes of cherries to be supplied by named sellers; and the cherry prices. 80 Farmlink's sale prices to overseas buyers were set by it without reference to Mr Hannaford; they were never revealed to him; and Ms Churchill said she would have refused to tell him the margin Farmlink received "because it was commercially sensitive". I would note that this evidence is reflected in paras 5.1.5-5.1.6 of the Further Amended Defence. 81 There are three further matters concerning price to which I should refer. Demand in the market at the time of supply. Was that ever discussed between you and Ms Churchill?---We quite often discussed market-related issues. But did you discuss the issue of price being dependant on the demand of the market at the other end?---No. No, we were selling in our own market and it was not related to specific variation in markets overseas, it was what was happening in Australia. So is the answer to that question - - - ?---No. No. Did you discuss that the price that Farmlink would give you would be dependant on the price of other cherries of equal quality in the Hong Kong and Singapore markets at the time?---No, definitely not. Did you discuss that the price that they would give you would be dependant on the quality of the cherries being sold?---No. And that the price that they would give you would be dependant on the stability or instability of the markets?---No. Despite what is pleaded in FAD para 5.1.3 (which is reflected in the above questions), Ms Churchill's evidence did not controvert Mr Hannaford's. 82 Secondly, Mr Freeman gave evidence that his company, Jayfresh, contracted with suppliers on the basis of an agreed price, fixed after inspection of the consignment at the airport or port of dispatch. Prior to that the parties determined an estimated or indicative price. Earlier he gave evidence, seemingly of industry practice, that producer and exporter fix the price at which the producer is selling. Save in one respect to which I will refer below, I should indicate I have not found Mr Freeman's evidence of particular help. Jayfresh's business practices as described by Mr Freeman differ significantly from those of Farmlink and I am not satisfied that his practices have been shown satisfactorily to be the industry's practices in South Australia. Aspects of what he had to say about re-negotiation of agreed prices for quality and market issues are, nonetheless, noteworthy. I make that point very strongly. It is often --- not sometimes --- it is often subject to a buyer wishing to re-negotiate based on quality and based on market. Okay?---Yes. If they do re-negotiate, they do that with you, do they?---Yes. And then you go back to the buyer? [The reference to "buyer" appears to be mistaken and that "supplier" was intended: see Affidavit para 26.3.]---Yes. And work out, do you, what is going to be the final price?---It depends. As I think I made quite clear in my affidavit, if it is of a relatively modest adjustment, or something that I feel would be acceptable to that particular producer --- in the case we are talking about here, Tony Hannaford at TVO --- but I deal with many producers, and you have different relationships with different producers. If I felt comfortable that the modification was (a), deserved, and (b) consistent with my relationship with that particular producer I may well accept it straight up. But if it is any major issue --- and I would state that anything over 5 per cent is a major issue --- then it requires further investigation, further discussion before any acceptance. Can I make clear at this point the fixed prices, the fixed price at this point. It is not arbitrary that you accept any discount. It is not arbitrary that you accept any discount. It is my role to ensure that any discounts, any modifications to the price are carried out correctly, fairly and in timely fashion. Though cross-examined at length on the difficulties in re-negotiating back-to-back contracts, his evidence remained that, subject to his relationship with a particular producer, he had to secure agreement to the variation of two contracts. They have an obligation to share in that particular loss and not pass on their loss down the chain. Distinctly, he indicated that he had been told by Mr Hannaford the prices he had agreed with Farmlink (they were as I noted earlier). Mr Freeman considered that the price was higher than what he knew he could get for TVO cherries. He could not compete with Farmlink's prices. So, so far as you were concerned, those prices were firm prices?---At that point in time, at the point of export, yes. And any changes to those prices had to be by negotiation?---Yes. And that negotiation had to include the grower?---Yes. And because it was by negotiation, the grower had the right to say that he wouldn't agree to a change in price?---Yes. 84 She went on, though, to qualify this by differentiating between "price" and "quality". 85 Again to anticipate my conclusion, I am satisfied that prior to the first consignment TVO and Farmlink agreed the prices at which TVO would sell its cherries. These were firm prices which could be re-negotiated. They were not simply indicative or "expected" prices. I will later explain my reason for this conclusion in that it involves rejecting the contention that the prospect of purchase discounts necessarily made agreed prices "expected" ones. I have already foreshadowed my conclusion that the TVO-Farmlink relationship in respect of the individual consignments was that of seller and purchaser. As to Ms Churchill's assertion that she did not have to re-negotiate discounts for quality issues, this relates to the terms of the contract. As I will later indicate, I am not satisfied that such a term reflected the implied intention of the parties. I should add, even if I had concluded that the parties relationship was that of principal and agent, I would similarly have concluded that the agreed price was the return Ms Churchill was authorised to obtain for TVO and that she was not authorised to bind TVO to quality discounts if TVO did not consent to them. 3. 87 Farmlink had produced probably in 1999 a document entitled CHERRY PACKAGING REQUIREMENTS. It is unnecessary to reproduce it here. It specified how differing weights were to be packaged for export whether by air or by sea, how the cartons were to be labelled and what exceptions applied when exporting to Hong Kong. Ms Churchill's evidence is that she distributed it to the suppliers including Mr Hannaford in and after the 1999 season and that in 1999 she had a discussion with Mr Hannaford about it. She distinctly remembered delivering the Requirements form to him in the 2003/2004 season at his premises sometime in December "prior to the start of cherries". On a subsequent visit to his premises she saw the document pinned on a little notice board in his office. 88 For his part, Mr Hannaford's evidence-in-chief was that he did not recall receiving the Requirements form and could not recall it specifically, although he accepted that a copy of it may have been pinned to his noticeboard. He reiterated this evidence in cross-examination. 89 It is unnecessary for me to further consider the evidence concerning the document. Though pleaded by Farmlink as supplying a term of the parties' contract, I do not consider that it was likely to have been intended to have had contractual effect. There is no evidence to suggest that it was provided in circumstances indicating such was the case or that, over the ensuing years, adherence to it was insisted upon and monitored. There is equally no evidence that TVO did, or did not, pack in accordance with the Requirements form. The form was, probably, an instructive guide to Farmlink's suppliers. This conclusion seems to me to be the more likely given my finding on the Pre-Shipment Inspection Form. 90 The Inspection Form was a detailed document requiring the sampling and testing of cherries to be shipped for defects and quality characteristics. It was to be signed by a quality officer after testing at the supplier's packing shed. 91 Ms Churchill's evidence is that she "certainly" gave copies to Mr Hannaford in the 2003/2004 season and pointed out to him that the form differed from previous years now that there was an instrument called a penetrometer that could measure the firmness of cherries. She said Mr Hannaford asked her if she could get him one but she was unsure whether she could get him one for use in that season. 92 For his part, Mr Hannaford agreed he was given the form at the beginning of the business relationship in 1999. He thought he was given only one copy. He did not recall, and thought it very unlikely, that he was later given other forms: "we never referred to it specifically again". He had no recollection of it being suggested he should have a penetrometer. While he thought he probably should have one, he did not know anyone "even at this point" who actually had one. And you shipped a total of 21 shipments in the 2003/2004 year?---Yes. And you never asked for a pre-shipment inspection report?---Not for each particular order, no, but when those pre-shipment inspection forms are issued, they're issued on the basis that they are an in-house record of inspection and, if possible, I would like a faxed copy of those to Australian Farmlink for each order; that was my wish-list. If they were too busy or couldn't do it or whatever I did not insist. And in the 2003/2004 year you never once, after the shipments started, ask for those forms?---In all the dealings I've had with Torrens Valley Orchards I've never once received any of those forms. And you never once asked for those forms in the 2003/2004 year?---At the start of every season I asked all the growers suppling [sic] export cherries to use these as a guideline to ensure that their cherries would meet our buyers' specifications and it's up to them to comply with those wishes but I don't force them to do it. My question is that, from the time the shipments started on 19 December, you didn't once ask for those forms?---I asked for those forms before the shipment starts. I have indicated what my expectations are. But just listen to my question?---Yes. From the 19 December, when the shipment started from TVO?---Yes. You didn't once ask for those forms?---I did not ask for them to be delivered to me, no. And it wasn't, in your understanding, any part of the contractual requirements between yourself and TVO that those forms would be completed?---It was my expectation in their best interests for them to use those forms to please pack to Farmlink specifications. But if they chose not to that was none of your business?---It was for their own benefit. But if they chose not to, then you went along with that?---If they chose not to it would be to their own disadvantage. 4. Three rain recording stations in the area of TVO's three orchards recorded, respectively, 36.2mm, 22.2mm and 25.6mm of rain over the three day period 20 to 22 December. Mr Hannaford agreed that this was a significant amount of rain at a critical time, ie harvest time. 95 I will return to this matter when considering quality issues later in these reasons. While it will be necessary to refer in a little detail to some number of the individual orders, the schedule is provided as an overview of the season's consignments. 97 Mr Hannaford's evidence is that the pre-Christmas Australian market was very strong particularly in Western Australia which could only be supplied from South Australia. He was receiving very high prices in Perth that could not be obtained in the export market. He recognised, though, that once the local market was sated in the pre-Christmas rush he would need Ms Churchill post-Christmas when domestic sales were weaker. 98 The first export packing order TVO received that it filled was 4014 of 19 December 2003. The consignment was delivered to PBVO on 23 December and air freighted to Singapore. It was uneventful. The expected return of $21,892.50 was realised. No purchase discount was applied. Two further consignments to Singapore were despatched, one that day and another the day after (orders 4015 and 4016 respectively). Again no discounts were applied. I note in passing that an order 4013 was sent to TVO for delivery to Singapore but appears on the evidence to have been subsumed into order 4014. The order number was later re-used for a Hong Kong consignment. 99 The first discount in an order for Singapore was applied to order 4018. This order was made on 24 December 2003 and the air freighted consignment arrived in Singapore on 27 December. A discount of $3,162.50 was applied to an expected return of $21,664.00. A "Credit Note" which Farmlink sent to Freshmart --- not to TVO --- stated that the reason for the discount was "Price Reduction". Do you do that on the basis of information received from somebody?---Yes, I would be contacted by the buyer and advised of the issues, I guess, that a price reduction was required. And that's as usual and as in previous seasons?---As standard, yes. 100 In cross-examination Ms Churchill gave evidence which I do not accept that she agreed the reduction "after negotiating with ... Mr Hannaford": "It is part of my process, if there's a change in prices to negotiate with the buyers and also with the suppliers. " Ms Churchill did not refer to her so "negotiating" in her evidence-in-chief. Neither was Mr Hannaford cross-examined about it. 101 It is worthy of note in passing that FAD para 10.3 ascribes all Singaporean price discounts to "the quality of the cherries" but that the proposed further amendment to the FAD which I refused to allow: see [35] ff; sought to imply a term allowing Farmlink a capacity to accept discounts sought on the ground of price changes in the market after obtaining TVO's prior consent thereto. MR HOILE: Yes. HIS HONOUR: Are there instances of renegotiation of price unrelated to quality? MR HOILE: No, I accept what my learned friend has said in two respects. First, that it is the first time identifiably that price discount as opposed to any other, as a quality related issue, has been identified, that, with respect, is correct, and I accept also the submissions that have been made by my friend to the effect that Ms Churchill's evidence as she volunteered it under cross examination, that that had been as a result of a --- first of all a communication from Singapore and then a negotiation and then agreement with Mr Hannaford. I accept that that was not lead from her in chief and I accept that that was not suggested to Mr Hannaford. So an appropriate basis for your Honour to proceed would be on the acceptance of those concessions. 103 Ms Churchill commenced communications with Mak in Hong Kong on 19 December 2003. She indicated that because of local high prices, it would be difficult to negotiate until after Christmas. In an email to Ms Churchill of the same day Mak expressed interest in a consignment by ship. He also requested her to advise if she could cover up reference to Australia and port of origin on the carton: ie "DO NO PRINT 'Produce of Australia' on the ctn". Ms Churchill said this request was a standard one from Hong Kong buyers: "if they ... choose to send product to China, they don't like to have a reference to where it come from". I will refer later to the illegal cross-border trade into China and to Ms Churchill's reluctant and quite unconvincing evidence of her knowledge of Mak's participation in that trade. 104 To reiterate what I have earlier said, there was significant rain in the area of TVO's three orchards in the period 20 to 22 December. 105 On 24 December Ms Churchill offered Mak the first delivery by air on 28 December 2003. He responded requesting delivery on that day and that she "[p]lease pick the best quality, it must be hard firm, bright red (not dark red), no pitch on skin surface". The reborn order 4013 was placed with TVO on 27 December. The only instruction given on the order under the heading "Variety" was "good, firm, sweet Vans". The expected return of $42,735.00 was realised, no price discount being applied. 106 On 27 December a further order (4019) for air freight to Singapore was sent to TVO. The comment on the order included "Please make sure fruit is good. Market getting grumbly" and " Van --- No Stella please ". A price discount of $1,275.00 was applied to an expected return of $20,145.00. Ms Churchill gave evidence-in-chief concerning the order form itself which related to a conversation she claimed to have had with Mr Hannaford concerning quality problems with Stella. Mr Hannaford denied any such conversation with Ms Churchill or that he attributed softness in cherries he had sent to them having been badly affected by rain. For my own part I am not satisfied that this alleged conversation occurred. It is more probable that it was a self-serving reconstruction at best which was prompted by the order form itself. 107 A major segment of the evidence on consignments related to the cherries sent by sea to Hong Kong for order 4017. The expected return was $116,540.00. A purchase discount of that amount was applied. This consignment needs to be dealt with at length. On 29 December a further exchange of emails occurred. Ms Churchill said she had checked for suitable fruit but the varieties available were "not sea freight quality for shipping today" in her opinion. She mentioned a delay in shipping with arrival in Hong Kong on 18 January 2004. Mak accepted an arrival date of 18 January but preferred 12 January. Ms Churchill then replied she would assess the next varieties for suitability over the next couple of days. I would have looked at the line, said, yes, that has potential, but I certainly didn't see anybody write, this is Farmlink cherries on that box. ... So you don't independently assess whether cherries are ready for airfreight or able to be --- I'll withdraw that. You don't --- you won't independently assess whether cherries are of quality to be air freighted?---I do not inspect packed product that has been consolidated for specific orders. And you don't independently assess whether certain cherries are suitable for sea freight?---I visit my packers and growers of cherries almost every day. I look at plenty of cherries that come in. I check them out and make judgment calls whether, "Yeah, that one looks all right, that one looks all right," but I do not inspect packed fruit. In the 2003/2004 year, the year we're talking about?---Yes. Between say 27 and 30 December?---Yes. You didn't go to Hannaford's and inspect any cherries, did you?---I would have gone to Hannaford's many times. Between that period you didn't go and inspect any cherries?---I would have probably, at least, once or twice, attended his shed. She then went on to accept that she had been to TVO's fruit block nine to sixteen times in the 2003/2004 season and her purpose was to assess the potential of the fruit coming in to be exported. 110 Order 4017 was placed with TVO on 30 December. It was for 16,000kg of fruit which was picked between 27 December and 31 December. It was packed between 30 December and 2 January 2004 and was delivered to PBVO on 2 January 2004. On arrival at Plummers it was stored in PBVO's cool room. No evidence was led as to the temperature in that room. On 2 January the cherries were transported by unrefrigerated truck to Port Adelaide. They remained there for two days (in a refrigerated state) before being loaded on 4 January 2004. 111 Prior to the container being sealed at PBVO, two temperature recorders (Ryan Recorders) were inserted in the container. The printout of their recording for the period is in evidence. There is a disagreement as to how, temporally, the printout is to be read. I am in no position to resolve this, but proceed on the basis that the ship in question arrived in Hong Kong on 19 January 2004 and the container was opened on that day. There is also some uncertainty as to whether the vent on the container which was set open at 10 cbm (an unexplained term) was adjusted during shipment. It was set at less than 10% when inspected on arrival. I am unable to resolve this uncertainty on the evidence but note that the applicant contends that the onus is on Farmlink to show the "cool chain" was maintained during shipment. 112 Apparently because of a request made on Mak's behalf, Thomas Kwan, the managing director of Marinasia Ltd and a marine cargo surveyor, attended the opening of the container to survey and report on the condition of the load of cherries. His report (Marinasia I), which appears to have been prepared eleven days later from notes, is in evidence. It indicated that the container before the opening was sealed with its original seal and it was opened in his presence. Of the two Ryan Recorders in the container, that located at the front of it recorded that the temperature was maintained at 2deg.C for the first 7 days and then gradually dropped to 0deg.C from the 11 th day throughout the rest of the voyage. The recorder at the rear of the container showed a gradual drop from 2.5deg.C to 1deg.C then it varied between 1deg.C and 2deg.C throughout the rest of the voyage. 113 The report indicated that a considerable number of cartons of varied varieties and sizes were drawn at random from various pallets and were opened for inspection. About 70 to 75% of the fresh cherries bore dimples, pitting, scars and/or bruising damage. About 5-10% of the fresh berries had deteriorated and were rotting. Also present were a mixture of scarred, dimpled and deteriorated cherries, which, with the mould and progressive decay, render them unfit for human consumption. Overall, the entire load of fresh cherries had a poor appearance and was of inferior quality and condition. This would greatly affect the selling price while attempting to dispose of the product in the wholesale market. 114 I should note immediately that I am not satisfied of Mr Kwan's expertise to comment on the selling price of the cherries: he said in cross-examination that his opinion was "common sense". 115 Attached to the report was a sequence of photographs, mostly of cherries in open boxes. Apart from revealing some level of defects in some cherries, the photographs do not to the unskilled eye obviously confirm the observations in, and the conclusion of, the report. 116 Mr Kwan had almost no independent recollection of the circumstances the subject of his report. His oral evidence did not, in consequence, add to his written report. 117 Mr Hannaford gave evidence on each of the sheets of cherry photographs annexed to the report. While describing such defects in the cherries as appeared visible in the photographs, his general opinion was that they do not support the propositions in the report that 70%-75% of the fresh cherries were dimpled, etc and that 5%-10% had deteriorated and were rotting. Of some of the photographs he commented that the cherries look "quite good" or "quite bright". My own impression of the photographs is much the same as Mr Hannaford's. 118 I should add that on 19 January 2004 Mak sent Ms Churchill an email with four photographs attached which referred to the sea shipment and to having found a quality problem: "The cherries have mould, damage, bird's mark and holes". 119 Ms Churchill gave evidence of Farmlink's practice in loading sea containers. I need not narrate it here. This order and orders 4035 (9 January 2004), 4036 (10 January), 4038 (10 January) and 4039 (10 January) arrived in Hong Kong between 1 January and 16 January 2004. In aggregate they had an expected return, on Farmlink's case, of $168,982.50. Each attracted a purchase discount which, aggregated, amounted to $100,704.40. 121 As the applicant rightly observed in submissions, there were no written complaints from Mak, no emails and no Marinasia reports. There is no evidence at all as to any quality problems with those shipments. Ms Churchill in cross-examination sought to justify the discounts by analogy with the four Marinasia reports, the remaining three of which I refer to below. I disregard her speculation. I do accept, though, that she had no knowledge of how much Mak obtained on the sale of any of these five consignments. 122 On 2 January Farmlink sent two export packing orders to TVO, one (order 4022) for air freight to Singapore, the other (order 4023) for air freight to Hong Kong. The former had no purchase discount applied to the expected return of $7,749.00. The latter had a purchase discount applied which was equivalent to the expected return of $31,050.00 resulting in no actual return. 123 The latter, which arrived in Hong Kong on 5 January 2004, resulted in an email from Mak on 9 January 2004. It read "Devanned cherries found quality problem, mould, soften. pls see photos". Five photographs were attached. The photographs in the Court Book are unintelligible. Mr Hannaford's evidence-in-chief was that if the cherries were of such quality in fact as to be worthless on arrival, this would have been extremely obvious if looked at before they left Australia. He went on to indicate that, if the cool chain had not been properly maintained between 5 and 9 January, in a warm and humid environment the fruit could easily have rapidly broken down. 124 Ms Churchill conceded that the four day delay was "generally later" than what she would expect for a quality problem report to come in. She made no inquiries of Mak as to what happened between the 5 th and the 9 th . And the first she heard that Mak was not intending to pay anything for the order was when she received an email on 10 February 2004 to that effect which related to six orders. I will return later to that email. It was worst when it arrived China market. We had to incur heavy transportation fees for sending goods to China. Fruits were sold at very low selling price and could not cover the transportation cost. 125 Of some importance, on 2 January 2004 (the day order 4023 was sent to TVO), Mak sent Ms Churchill an email advising that the market price for cherries in China was slipping down and requesting a lower price or discount. He also advised of the need to reconsider the next air freight (scheduled for 5 January) "due to this market price change". We loss A$12/ctn. Due to price too high, please stop all air shipment until further advise. Thanks Also please advise if can lower the price, please negotiate with grower. As I later indicate, these emails probably shed some light on the fate of order 4023. By the time of the latter email, orders 4020 and 4023 would have arrived in Hong Kong: Mak had been caught on a falling market. 126 Reverting to Mak's 2 January ("China market price slipping") email, Ms Churchill's evidence is that she would have read it on 3 January and that she then had a conversation with Mr Hannaford in which she advised him of the email and told him they needed to look at "our prices" as the next order was subject to offering a lower price. Mr Hannaford then offered a 50 cents per kilo discount for the small 24mm size as there was a shortage of the large size. She then advised Mak on that day that she would reduce the price by $2.50 per carton on the 24mm cherries. Mr Hannaford's recall of this conversation differs somewhat in its detail but is similar in its essence. He acknowledged he was made aware there was "some weakness in the market". 127 On 3 January order 4025 was sent to TVO for air freight to Singapore. TVO's actual return on it was the expected return with no discount being applied. 128 It is necessary now to turn to the period 4 January --- 9 January in which there clearly were a series of communications between Ms Churchill and Mr Hannaford and Mr Hannaford and Mr Freeman. While there are inconsistencies in particularly Mr Hannaford's evidence, and reason to suspect reconstruction based on an email from Mak of 9 January, I do not consider that much of operative present significance can be made of this. I would foreshadow, though, that Mr Hannaford relies on two conversations from this period to found several of his misleading or deceptive conduct claims. For this reason I should indicate that I accept Ms Churchill's evidence of the conversations she said she had with Mr Hannaford on 3 and 7 January 2004 concerning the Hong Kong Market, each of which was followed by Mr Hannaford's agreement to a price reduction. 129 It is Mr Freeman's evidence that he spoke to Mr Hannaford "on or around" the first week in January 2004 when he told him of a conversation he had had with a Mr Chiu (from a major Hong Kong fruit importer). He was told by Mr Chiu, who apparently knew the agreed price between TVO and Farmlink, "that there [was] no way Tony Hannaford [was] going to get that price back". 130 Mr Hannaford's evidence of the conversation is that Mr Freeman told him that the China price was too low, his (TVO's) cherries were being sold in Guangzhou, China, at a fairly low price and that according to his buyer, someone was not going to get paid, probably him. Mr Hannaford said he could not precisely date this conversation. Having been shown the 9 January email (relating to order 4023), he still said he did not know whether it was before or after that date. He did indicate that around that time he and Ms Churchill were having conversations every day and that he had had a conversation with her about what Freeman had told him. He said Ms Churchill confirmed that the market was definitely over-supplied, and that the buyer had requested she cancel the next (Friday) shipment, but otherwise did not seem worried: "it is a big market, it can clear quickly. " Mr Hannaford then agreed to cancel the Friday shipment. Later the same day he rang her again and because he had fruit to move, instead suggested a lower price. He was subsequently told the buyer agreed to accept fruit at a $1.00 per kilo discount off the normal price. 132 In Mr Hannaford's pleading, the first of the above two conversations with Ms Churchill (that described in para [130]) was placed about 4 January: FASC para 13.7.4. The second in which he asked whether the Chinese market had collapsed (that described in para [131]) was dated about 6 January: FASC para 13.7.5. 133 It is Ms Churchill's evidence that, on 7 January, prior to her receiving the "serious decline" email from Mak of that date, she was called by Mr Hannaford who said he had information that the Hong Kong market had crashed. She told him she had heard nothing. Later the same day she read the 7 January email and contacted Mr Hannaford immediately telling him that she had received an email that supported what he had told her earlier in the day: "They have indicated that they are losing money on the prices that we have offered" and that "The market is in a state that requires us to stop shipping immediately and to look at renegotiating our price". He asked what he was going to do with all his cherries and she said they could not be sent to Hong Kong at this stage. The next morning, Mr Hannaford called to indicate that he needed to keep his stock moving and would be prepared to renegotiate a price to keep the stock flowing. He agreed to a $1.00 per kilo discount. Later that day, Ms Churchill indicated in an email to Mak that "we would like to keep this stock moving" at reduced prices for shipping on 11 January. Mak confirmed the discounted order on 9 January. Ms Churchill agreed that the discount was initially for the first shipment (which became order 4035) and was "to be negotiated if necessary after that". 134 I am satisfied that Mr Hannaford's location of the dates on which he had communications with Ms Churchill is unreliable. I find that the operative conversations concerning the market crash and the price reduction occurred on 7 and 8 January 2004 and that Ms Churchill communicated to Mr Hannaford the substance of the 7 January email, though without referring expressly to Mak losing $12 per carton. 135 To return to the consignments, on 6 January order 4028 was placed with TVO. It was for an air freight consignment to Hong Kong. A purchase discount of $33,300.00 was applied such that there was no actual return. The shipment was scheduled to arrive in Hong Kong on 7 January at 10.05 pm. It was delayed in Melbourne and arrived in the afternoon of the 8 th . There is no evidence as to whether, when in Melbourne, the consignment went on to the tarmac and was kept there for a while. There is no evidence at all concerning their storage in Melbourne. 136 In the evening of 9 January 2004 Mak sent Ms Churchill an email alleging quality problems with order 4028 and attaching a number of photographs which, coincidentally, were part of a larger number annexed to a Marinasia Report ("Marinasia II"), relating to this order, of 29 January 2004. Mr Kwan's inspection for the report was made on 9 January 2004 at the Cheung Sha Wan wholesale market. To anticipate matters, Mr Kwan prepared two further Marinasia Reports on Hong Kong consignments --- Marinasia III of 30 January in respect of order 4037 and Marinasia IV of 2 February in respect of order 4041. These inspections were all done at the same wholesale market where Mak trades. Some may be outside the store at other areas. Some may be outside in the open?---Yes. In the open air?---They are near the market. In a side street or something?---Yes. A lot of streets is --- the place is the market --- the place is a market. All right. So in one of the market alley ways?---Yes, but is close to --- to the source. 138 The opinion expressed in Marinasia II (on order 4028) on the condition of the berries inspected was that all were in soft condition; about 35% to 40% bore dimples, scars and/or bruising; and about 3% had deteriorated and were rotting. Overall they were said to be of inferior quality and of very poor appearance and condition. 139 Mr Hannaford's comments on the attached photographs were similar in tenor to those in Marinasia I. If the cherries were of good quality when they left your orchard, on that assumption, how could you account for there being at least some cherries in the state that is shown in the last two photographs, say, of MFI2?---It's my belief that there must be some serious breakdown in the cool chain at some stage, and the breakdown can occur quite quickly if the --- in a hot, humid environment and if they're allowed to heat up and then cool down a bit. I've got no way of ascertaining the actual age of these cherries, because they look to be significantly older than some of the earlier photos. I think the question that his Honour asked was if those cherries were in that state on the date shown --- which was 9 January --- even if the cool chain had been impeccably maintained, would there have been some indication when they left Australia?---Yes, there must have been. 140 On 6 January Farmlink confirmed with Freshmart a sea freight of cherries to Singapore. The sea order (made up predominantly of TVO cherries) was placed on the following day. This order (4031) needed to arrive in Singapore in time to service the Chinese New Year which that year fell on 22 January. The expected return on the order was $60,472.00. There was a purchase discount of $29,992.00. 141 The Singapore shipment was due to arrive on 18 January. It arrived a day late. On 19 January Ms Churchill and Mr Hannaford had a conversation in which Ms Churchill said that Mr Koh was going to look at the shipment to see whether he would sell it quickly or hold onto it. Ms Churchill's evidence was that she contacted Mr Hannaford specifically to ask him directions as to whether in his opinion the fruit was good enough to hold until after the Chinese New Year. She agreed that Mr Koh made the decision to hold it back but added that because Hannaford was not able to make a decision she instructed Mr Koh "to make a decision that would ... be best for Tony". The proposition that Mr Hannaford's advice was sought was never put to him. I do not accept that it was put in fact or that Ms Churchill "instructed" Mr Koh as she suggests. I find the decision was Mr Koh's. 142 On 26 January the container was opened. That day Mr Koh sent an email to Ms Churchill as a "preliminary report" with some photos attached alleging quality specific problems. A survey report was foreshadowed. On 29 January a further email attaching more photographs was sent. Both Mr Freeman and Mr Hannaford gave evidence that certain of these last photographs to which they were taken showed exposure of the cherries to the environment. The 29 January email seems to suggest the pictures were survey pictures. There is no evidence as to when they were taken. No survey report was tendered and no expert evidence of the quality of this, or of any other, consignment to Singapore has been given. 143 Reverting again to the sequence of consignments, on 8 January TVO filled part of order 4032 for air freight to Singapore. The expected return was $1,848.00 but a purchase discount of $336.00 was applied. Cherries shipped in this order were referred to in a more general email of 15 January 2004 that made quality complaints covering "the last few shipments". 144 9 January 2004. This was an eventful day concerning Hong Kong consignments. This was the first day on which Mak had made a quality complaint. He did so, first, in relation to order 4023 and, then, to order 4028 (as has been noted). Despite the 7 January "serious decline" email, he sent an email on the 9 th to Ms Churchill asking her to "arrange the maximum air space ... you can, we plan to ship volumes for ... NYS" (Chinese New Year). Mr Hannaford received Mak's email and photographs relating to order 4023 from Ms Churchill. He did not go and consult his own quality control records or "pallet sheets" (these were apparently destroyed the year after they were made). Finally, on the 9 th , order 4035 was sent to TVO for air freight to Hong Kong. I have dealt already with this order in the earlier omnibus treatment of five orders beginning with order 4020. 145 On 10 January Mr Hannaford had a conversation with Ms Churchill about the 9 January emails. She told him she had received another email and photos relating to order 4028. He said he told her he did not want to see "lots of pretty pictures" because photos in themselves do not actually prove anything. I accept this evidence rather than Mr Churchill's somewhat different version of the conversation which clearly contains elements of reconstruction. 146 On the same day Ms Churchill supplied TVO with a "Mud Map" (a plan) for four air freight consignments to Hong Kong and one to Singapore. It noted: "If there are too many quality problems shipments will stop. Please check very carefully. " Export packing orders were sent the same day. 147 Singapore order 4033 had an expected return of $27,732.00. A purchase discount of $17,952.00 was applied. The consignment was scheduled to arrive in Singapore in the early hours of 14 January. A quality complaint was made in an email of Mr Koh with accompanying photographs of, seemingly, 15 January 2004. It was sent late in the evening Singapore time. There is no evidence of the consignment's treatment after its arrival. 148 The Hong Kong order 4036 has been considered earlier with order 4020. 149 Hong Kong order 4037, on Farmlink's case, was expected to return $27,600.00. A 100 per cent purchase discount was applied. This consignment exported from Melbourne was estimated to arrive in Hong Kong in the evening of 13 January. As Marinasia III reported of it, it in fact arrived in the evening of 14 January. For unknown reasons it was sent on another flight. The report itself does not in its judgments or conclusions differ significantly from Marinasia II. Though it was dated 30 January 2004, the inspection was made on 15 January. What is very clear from the first page of the accompanying photographs is that the pallets (or some number of them) were, on Mr Kwan's evidence, standing at the entrance to Mak's store when he inspected them. On 15 January Mak, by email, made a quality complaint; foreshadowed a survey report; and sent several photographs the following day. 150 Hong Kong order 4038 has been considered with order 4020; as has order 4039. 151 The final overseas shipment was order 4041. It was a large air freight to Hong Kong and is the subject of some controversy. On 15 January Ms Churchill sent Mak an email informing him she had secured 300 x 6 x 2kg cartons of 28mm+ cherries; indicating she "could ship this to arrive Sunday"; and asking whether he was "able to accept 2 kg packs". Mak replied asking their price but did not confirm the order. Ms Churchill said she "would have" emailed a reply but could not locate it. Her evidence is that her initial email resulted from being asked by Mr Hannaford if she could export further stocks of cherries he had, some of which were in two kilogram packs. The same day she sent a facsimile to TVO informing Mr Hannaford that she had "got space to Hong Kong from Melbourne to Hong Kong tomorrow [the 16 th ]. 780 x 5kg ctns. Shipment must be in Melbourne 9 am tomorrow. On its face, it specified the order was for 780 cartons of "Lapins (good ones)", sized 24, 26 and 28 mm, to be delivered to Melbourne. There is disagreement between the parties as to what was conveyed to TVO by the order and this comment. Ms Churchill denied that she was saying the order was for 780 cartons confirmed and for 300 x 6 x 2kg to be confirmed: "I have [sic] not had a confirmed order for any of the items at that point. " Her evidence is that she later had a conversation with Mr Hannaford who rang her when the delivery truck arrived at TVO. He wanted to know if there had been any confirmation from Hong Kong for this order yet. She told him no. He advised that "in his opinion it should be all right" and he would "take the risk and send the goods to Melbourne. An airway bill was faxed to her by Danzas: it was for "1080 CTNS" of "perishable cargo". She gave the freight forwarder the instructions to put the goods on the aircraft accepting, though, that she had no confirmed order. She then sent Mak an invoice for both the 780 cartons and the 300 x 6 x 2kg packs. She accepted that after the alleged "take the risk" conversation, she did not contact him again about this consignment. Ms Churchill would not accept that, as of 16 January, she was the only person who knew she did not have an order: Mr Hannaford took the risk on "his potential purchase order". 154 Mr Hannaford is not of great assistance. He denied in cross-examination that on 15 January he rang Ms Churchill indicating he wanted to send more cherries to Hong Kong including 2 kg packs although he then said he did not recall the conversation and he was not trying to push extra fruit there. He equally denied that she said in the conversation that she did not have an order. He accepted that he had a conversation with her at the time the truck arrived and it was possible that he asked had the order been confirmed but he had no recall of what she told him. He emphatically denied saying he was prepared to take the risk. 155 The estimated time of arrival in Hong Kong of order 4041 was around midday on 17 January. The Lapin cherries's arrival condition is poor. Please see attached photos. 156 A Marinasia Report (Marinasia IV) was done on the order. The survey was conducted on 19 January at the wholesale market and the report prepared on 2 February 2004. By the time of the survey, the report indicated that the 2kg packs "had already been disposed of". The price of them to Mak was $50,400.00 which was well over half the total invoiced price of the order. 157 The conclusion of the report was that the cherries inspected had softened to varying extents. Many of them were of inferior quality, and were comprised of a mixture of decayed, scarred and dimpled cherries. The dimpling and scarring of sizes 24-26mm and 26-28mm was to the extent of 40 to 45 per cent in each carton inspected; the 26-28mm cherries had undergone a greater extent of deterioration and rotting of which about 20 per cent with progressive decay rendered them unfit for human consumption. The expected return to TVO was $70,500.00. The discount applied by Farmlink was in that amount. 158 My own conclusions concerning order 4041 can be briefly stated. I am satisfied from the documentation --- and reject Ms Churchill's inconsistent oral evidence --- that she placed (i) an order with TVO for 780 cartons which, against the background of her telling TVO she had got the requisite airspace, would in terms reasonably have conveyed to Mr Hannaford that it was a confirmed order and was filled as such; and (ii) an order for 300 x 6 x 2kg packs to be confirmed. I am not satisfied that she ever conveyed to TVO that the 780 carton order was not confirmed. In the absence of the emails Ms Churchill said she "would have" sent concerning Mak's inquiry about the cost of the packs, I am not prepared to conclude that Mak either confirmed, or rejected, the offer of the packs. What I do accept in the absence of any actual communication of a confirmation to Mr Hannaford concerning the packs, is that he may have been prepared nonetheless to take the risk of sending those packs to Melbourne. I am not satisfied that he assumed any greater risk than that, although for the reasons I give below, I do not consider that this finding has, in the event, any operative significance. When Ms Churchill gave the instruction to load the aircraft with the 300 packs without further communication with TVO, Farmlink, in my view, assumed the risk of Mak's rejection of those packs. This conclusion is informed in part by my conclusion that the TVO-Farmlink relationship was, in the 2003/2004 season, that of seller and purchaser and that the instruction to load the aircraft effected a sale to Farmlink. Though the evidence on the fate of the packs is scant, I nonetheless infer from Mak's lack of specific reference to them in his late 19 January email, let alone a reference to having already disposed of them, that he accepted and disposed of them in the ordinary course of his business even if he had not ordered them, or for that matter the 780 cartons, from Farmlink. I would further infer that he sold them knowing their invoiced price which had been sent to him by Ms Churchill. On 27 January Ms Churchill emailed Mak requesting "adjustments to Invoices for cherries and nectarines, so we can finalise some payments". No response being received she sent a further email on 10 February. It stated that growers were threatening and "some even refusing, to accept any claims for Cherries ... as I have been unable to supply further information". She sought information and payment promptly and indicated she was looking forward to a meeting with him in Kowloon on 18 February. Ms Churchill conceded in cross-examination that it was untrue that growers were refusing to accept claims but said she was endeavouring to get Mak to react as she was being pressured. 160 It was in reply to that email that Mak wrote his email of 10 February to which I earlier referred but will repeat here. It was worst when it arrived China market. We had to incur heavy transportation fees for sending goods to China. Fruits were sold at very low selling price and could not cover the transportation cost. Please also note that we did not receive any report for Inv 04023. I will call you later to discuss further. 162 It was in cross-examination on this email that Ms Churchill accepted that with a quality issue, Mak would "within a few days ... know that he could not get a return for [the] stock". She previously had conveyed a quite different impression in evidence about how long it took to get answers to quality inquiries --- it took a long time to work out quality claims. 163 When Ms Churchill went to Hong Kong she was unable to meet Mak for a projected breakfast --- "he was delayed in China" --- so she had a telephone hook-up at his office where recovery of money was discussed. Mr Hannaford telephoned her the morning of her return to Adelaide (which was on 20 February 2004). Her version of the conversation was that she told him she and Mak were negotiating and she was expecting this to be finalised in a couple of days. A couple of days later Mak gave his best figure. If it was acceptable he would transfer funds in the following 24 hours. She then contacted Mr Hannaford and told him this outcome. 164 Mr Hannaford said he had several telephone conversations with Ms Churchill in February. In that of around 20 February, he asked "if it was going to hurt". He was told "It's going to hurt a lot" which he could not understand given the season he had had. 165 On 26 February Farmlink was credited with $115,016.23 from Mak. That payment related not only to cherries sourced from TVO but also to peaches and nectarines from other growers. I would note in passing that Ms Churchill gave evidence that she negotiated a 15 per cent increase to secure that figure. There is no documentary evidence of this. I do not accept it occurred. 166 Ms Churchill went to TVO's office on 28 February. Mr Hannaford could not recall whether she then gave him two schedules referred to below. He was "that disgusted and shocked, I just couldn't comprehend the situation". The purchase orders were posted to him after the meeting. All of the purchase orders are in evidence. As I have noted, they indicated the expected return, the purchase discount (if any), and the total paid on each order. They clearly create the impression that the purchase discount applied in each case was the actual discount referable to that particular order. It only emerged in cross-examination that such was not the case in relation to Hong Kong orders and that for five such orders an aggregate discount was simply apportioned to these orders by Ms Churchill. 167 The following are the two schedules which Ms Churchill gave Mr Hannaford. They relate to Hong Kong and Singapore respectively. In a sense they speak for themselves. The annotations on them are to be disregarded. 168 The Hong Kong report can only be described as deceptive and self-serving and, I consider, designedly so. It also reveals Ms Churchill's awareness of Mak's trading in China. This was a subject upon which she repeatedly gave evasive and equivocal evidence during the hearing. While Ms Churchill may not, in respect of any particular order, have known to whom and where it was being on-sold by Mak, I am satisfied she was well aware throughout that his business did engage in the illegal cross-border China trade. 169 The Hong Kong schedule purports --- as is said in the lower central box --- to be an analysis of the outcome albeit the quality issues were based on the average cost in Singapore. That box equally asserts that "the buyer could only pay what he was able to collect, as his customers refused to pay any more". Ms Churchill conceded she had no documentary proof of Mak's returns. She relied on "10 years of honest dealings". The assertion made in the same box that, based on China Market Reports, she was "able to identify TVO stock due to my sizing format" must be treated with considerable reserve notwithstanding the confidence of the assertion. Ms Churchill was unable to identify the source of these reports: "I just Google searched for a China market report and that is what I got". She accepted, though, that China is a massive economy with hugely disparate markets. The China market reports she used were tendered. Having heard her explanation of how she identified TVO stock, I can only say I am not satisfied that there was any reasonable basis for her view. Having heard her explanation of the bottom two boxes of the Hong Kong schedule, it is difficult to resist the conclusion that the schedule itself was not a contrivance to provide some apparent explanation for Mr Hannaford's return. 170 Cheques for the outstanding balances referred to in the schedules cleared in TVO's account on 4 March. 171 On 26 March 2004, Farmlink was sent a solicitor's letter on Mr Hannaford's behalf concerning Farmlink's conduct "in acting as the agent" for TVO in relation to the export of its cherries during January 2004. Some reliance, necessarily slight: see [47](2) above and WK Witt (WA) Pty Ltd v Metters Ltd [1967] WAR 15 at 18; is placed upon this characterisation of the relationship. Reliance equally is placed upon a discovered TVO table relating to the exports to Hong Kong in which the heading: "Expected Price" and "Expected Amount" have been altered by hand to "Agreed Price" and "Agreed Amount". Mr Hannaford could not identify the handwriting. Farmlink relies on this as evidence of attempted reconstruction of events to support TVO's sale of goods claim. Though much has been said of the Australian market in general and of TVO's dealing with Woolworths and Coles in particular, I do not consider that the evidence on that market or on those dealings has any significant probative value either in characterising the TVO-Farmlink relationship or in resolving the quality questions raised. I would note in particular that it is accepted by TVO that their sales to local wholesale markets are conducted through agents; and that both Woolworths and Coles conduct their own inspections based on their own specifications and reject cherries that do not meet the specifications. No question of rejection has arisen in this matter although evidence was put on of three rejections by Woolworths of entire deliveries in January 2004. Equally, I draw from Dr Brown's evidence that risks to the maintenance of the cool chain for cherries transported in the domestic freight system are of a different order to those presented by export freight. 173 I equally have not had regard to evidence concerning TVO's dealings with other exporters --- and in particular Jayfresh "J" in other years. The bare detail of financial outcomes devoid of context and circumstance, I consider to be likely to mislead and therefore to prejudice. 174 A document was tendered by Farmlink which indicated graphically TVO's packed stock on hand in the 2003-2004 season and the hypothetical level of stock without Farmlink sales. It demonstrated, predictably, a marked rise from after Christmas peaking at about 17 January and then a progressive fall thereafter. It obviously demonstrates, if this was needed, that Mr Hannaford had cherries he wished to keep moving both around 7-10 January and on 15 January. 175 Before adverting (to the extent necessary) to the evidence on quality issues and quality control, it is necessary that I give my conclusions, first, on the proper characterisation of the TVO-Farmlink relationship in the 2003/2004 season and, secondly, to the terms of that relationship. I take this course because it has some real bearing on how the quality issues should be dealt with. As will be seen, their submissions in substance depend upon fact findings each invites me to make. 177 By way of preface to my own conclusions, I should make the following general observations. The relationships of TVO and Farmlink, and of Farmlink and Freshmart and Mak respectively, were clearly interdependent ones as the evidence of the process of making and filling orders reveals. It was open to Farmlink to choose to so structure its relationship with TVO --- or for that matter with Freshmart or Mak --- in a manner which obliged it to act in the interests either of TVO in the sale of cherries or of Freshmart or Mak in their purchase. It equally was open to Farmlink to choose to structure its relationships with TVO and the overseas buyers in a manner which, while requiring cooperation with, and some level of trust in, them, served its own several interests: cf Gibson Motorsport Merchandise Pty Ltd v Forbes [2006] FCAFC 44 ; (2006) 149 FCR 569 at [17] . In my view, Farmlink chose the latter course. This was clearly manifest in its price agreement with TVO and in its seller-purchaser relationship with the overseas buyers. There was nothing fiduciary about it. 178 The rival contentions of the parties can be simply put. TVO's case is that an overarching (or framework) conditional contract was entered into in or about December 2003 under which it agreed that, if it accepted an order or orders to sell cherries to Farmlink, it would do so at the prices that the parties had previously agreed. That agreement was effectuated in the individual orders filled by TVO. 179 Under the shadow of the principles to which I earlier referred and of the decisions of International Harvester Co , Ex parte White; In re Neville and Witt in particular, the factual matters upon which TVO relies primarily for this conclusion are: (i) the transaction between TVO and Farmlink was at a firm price; (ii) the documentation all reflected a sale from TVO to Farmlink; (iii) Farmlink set the price for the overseas sale and kept its sale price and margin a secret; (iv) Farmlink engaged all the freight forwarders and paid the freight costs itself; (v) Farmlink never accounted to TVO in a way which showed the total amount received, its margin and amounts paid for freight, etc; (vi) Farmlink issued invoices to its overseas customers; (vii) Farmlink alone knew the identity and location of its overseas customers; (viii) Farmlink identified itself as the shipper on the bills of lading and airway bills; (ix) Farmlink negotiated the changes in price without checking or obtaining instructions from TVO or Mr Hannaford; and (x) significantly in the year that there was insurance, the insured was Farmlink, the consignee's interest was noted, but there was no recording of TVO having any interest in the cherries. 180 Farmlink's submission is that the relationship formed in December 2003 was one of agency. The indicators of this, it contends were: (i) the parties did not intend, and there was no mutual assent to, a contract of sale whereby the property in the cherries was transferred to Farmlink; (ii) there was no identifiable "offer" and "acceptance" of a contract for sale of goods; in particular, there was no price agreed --- except to say it was agreed that TVO would accept whatever Farmlink stated on the completed and delivered purchase order; (iii) the course of dealings between the parties, including acceptance by TVO of the purchase discounts as applied by Farmlink, was more consistent with an agency for sale than a sale of goods; (iv) Farmlink accounted periodically for the proceeds of sales, by detailing the purchase discounts; it did not simply pay an agreed price; (v) remuneration was by a margin of $0.65 per kilogram, not by Farmlink making a profit on resale; (vi) in TVO's letter by its solicitors of 26 March 2004, TVO acknowledged that Farmlink was an agent for sale, not the buyer of its cherries; (vii) the arrangement was that Farmlink exported TVO's cherries, not that Farmlink bought the cherries as Farmlink's own property at a fixed price and resold them for what Farmlink could get, keeping any profit or taking any loss; (viii) the fact that "the price" was not ascertained until Farmlink completed the purchase order including any discounts was inconsistent with there being a contract of sale. 181 It is, in my view, not open to serious doubt that in effecting sales to Freshmart and Mak, Farmlink acted as seller of the cherries consigned, passing the property in them to the buyers and at prices agreed between it and the buyers. The respondents appear to have accepted as much. Farmlink was acting as a principal in the conduct of its own export business and not simply as an agent in the ordinary course of its principal's business. The email communications between Ms Churchill and Mak and Mr Koh exemplify this. They are redolent of transactions being effected between Farmlink and the overseas buyers: cf Ms Churchill's often stated judgments about "suitability" of cherries to be exported; her indications of the quality instructions she gave to her suppliers; and, in her email of 3 January 2004: "I will reduce the price $2.50/ctn on the 24mm". 182 The documentation passing between Farmlink and Freshmart and Mak respectively admits of no other conclusion, the more so given the international trading context in which the dealings occurred. It is, in my view, most improbable that the overseas buyers would reasonably have committed themselves to a contractual arrangement with a principal of whose actual identity or circumstances they may have been unaware, especially where the goods in question were perishables of a type that were apt to give rise to some level of quality issue during periodic dealings over a season: on the distinction between unidentified and undisclosed principals, see Carminco Gold & Resources Ltd v Findlay & Co Stockbrokers (Underwriters) Pty Ltd (2007) 243 ALR 472. The view I take of Farmlink's contracts with Freshmart and Mak is that they were ones to which TVO was a stranger. If the prices in those contracts were to be re-negotiated for reasons of quality defects, market conditions or whatever, that was to be by the contracting parties alone. Likewise if claims for defects in quality permissible under the applicable law against the seller were to be made they were to be made against Farmlink. 183 The final comment I would make on Farmlink's relationship with the overseas buyers is that it would have been obvious to them that Farmlink was not the grower of the cherries Freshmart and Mak purchased. It was an exporter. But there is nothing in the evidence reasonably to suggest that Farmlink was acting, or was purporting to act, in the overseas sales in a "representative" capacity: cf above [47](3). 184 The issue that remains is: what was the true character of the TVO-Farmlink relationship? As I have earlier indicated, while the relationships of agency and sale are mutually exclusive, it is not uncommon for an intermediary to be the agent of its seller-principal but to be a principal vis-à-vis a third party on a sale to it: see above [55]. In my view the present is not one such case. And it is, in any event, far removed from the reservation of title clause type of case exemplified by Romalpa on which the respondents' rely. 185 The evidence, in my view, simply cannot sustain a conclusion that Farmlink acted on TVO's behalf in a "representative": cf Bowstead & Reynolds at [1-001]; Colonial Mutual Life Assurance Society at 48-50; or "fiduciary": cf Restatement of Agency , Second , SS1.01; capacity in selling its cherries. Farmlink was a purchaser buying for the purposes of resale. It is significant in this that (i) the parties agreed in advance the prices at which TVO would sell its cherries --- they were not simply indicative prices (I will refer below to the significance in this of purchase discounts); (ii) while the consignments were into markets with which TVO had some, albeit rudimentary knowledge, they were simply two of the overseas markets into which TVO cherries were consigned by exporters in the 2003/2004 season; (iii) Farmlink, in contrast, was knowledgeable about, and experienced in, those two markets at that time: cf Witt at 18-19; (iv) TVO did not assume responsibility for the export or the costs associated with the export --- this was at Farmlink's expense: cf Witt at 18-19 --- and Farmlink, not TVO, bore responsibility for misadventures happening to the cherries after delivery to it; (v) TVO was not in a position to exercise practical control over Farmlink (other than by refusing orders); (vi) TVO was unaware of Farmlink's price; (vii) while Mr Hannaford doubtless understood that Farmlink would obtain its own return on the sales (howsoever this was done), there was nothing unusual about his having no interest in that matter as his relationship with Farmlink did not otherwise point to an agency relationship: cf Mercantile International Group plc at [5] and [36]; and (ix) TVO happened to know the Singapore buyer was a company with which Mr Koh was associated but did not know the identity of the Hong Kong buyer. In short, having regard to the context in which they dealt with each other, the relationship they formed in the making and filling of orders was that of seller and buyer for resale. The contrary inference that TVO appointed Farmlink its agent for sale is neither a reasonable, nor the most probable, deduction from the known facts. 186 I would add, because it is a matter relied upon by the respondents, that I do not derive any assistance from the manner in which Farmlink received payments from its buyers and "accounted" to TVO. If it was an agent, then, subject to how its accounting to TVO was (or was taken in the circumstances to have been) agreed, the manner in which it held the proceeds of sale of its principal's property (ie in its own trading account) may itself have constituted a breach of trust: see Palette Shoes Pty Ltd v Krohn [1937] HCA 37 ; (1937) 58 CLR 1 at 30; but cf The "Tiiskeri" [1983] 2 Lloyd's Rep 658 at 663 ff. For understandable reasons, I have not been addressed on this. However, if, as I have held, Farmlink was receiving the purchase price for its consignments from its purchaser and then was settling with its own seller, there was nothing unusual in the manner of its so doing. I would add that it may well have been the case that the timing of its settlement was an implied actual term of their framework contract (the bulk of orders being settled en bloc at the end of the season). As I earlier noted, it is agreed in light of my sale finding that property in the cherries passed in respect of each consignment when the goods were appropriated to the contract and this occurred on delivery: see Sale of Goods Act , s 18 rule 5 ; Gamer's Motor Centre (Newcastle) at 255; Carlos Federspiel & Co SA . The individual orders equally were subject to the provisions of s 14 of the Act as to implied conditions as to quality and fitness. Though it has not been the subject of contest by TVO, I am prepared to assume without deciding that, with the subject matter of the contract being perishables and it being a known purpose of the individual orders that the cherries were intended to travel to, variously, Singapore and Hong Kong for resale, it was an implied condition of each order filled that the cherries were, at the time of sale, in such a condition that they would still be fit for human consumption at the end of their shipment unless "that condition is unnaturally changed" after delivery to the first buyer, ie Farmlink: Sale of Goods Act , s 14(a) ; Kemp Ltd v Tolland (trading as James Tolland & Co) [1956] 2 Lloyd's Rep 681 at 684-685; Benjamin's Sale of Goods at [11-067], but see also [11-060] and [11-062] as it is contended by TVO that Farmlink had an opportunity to inspect prior to shipment. I will refer to this later in these reasons: see [235]. The corollary of this condition was that Farmlink bore responsibility for unnatural changes in the cherries' condition occurring after delivery to it and until delivery to the overseas buyers: Kemp at 684-685. 189 I have already indicated that I have refused to allow an amendment to the defence to permit the respondents to raise the first of the above alternatives which they said was an implied term based on past dealings. I will, though, indicate below that, even if I had allowed the proposed amendment to be made, it would not have availed them. The second alternative raises directly the contractual provenance, if any, of purchase discounts and their application. Before turning to it directly, I would note the following. 190 First, the terms of the contracts with the overseas buyers are not before me. I have found, though, that the contracts with them were separate from Farmlink's contract(s) with TVO and I have presumed from the email correspondence and the invoices sent to the overseas buyers that the prices invoiced were agreed prices . I emphasise this. Further, I have no actual evidence to suggest either buyer had any unilateral contractual right to insist on price discounts for quality or for other reasons although, as I indicated at the outset, the Farmlink-Freshmart, but not the Farmlink-Mak contract, may have been subject to the provisions of the Sale of Goods (Vienna Convention) Act and hence to the CISG's scheme permitting unilateral price reductions for non-conformity with quality requirements: see Art 50. 191 Secondly, given that Farmlink had separate contracts with TVO and the overseas buyers and at different prices for the cherries, it is not clear from the evidence how Ms Churchill translated the amount of a price discount in an overseas contract into an amount in the TVO contract. Nonetheless, Farmlink's submissions on the cross-claim for its "margin" would seem to suggest that, save probably in the cases of no return to it, in all transactions "where enough money was actually received from the overseas buyer to cover the margin and a return to TVO, Farmlink was [entitled to its margin]", any balance being passed on to TVO after deduction of Farmlink's expenses. 192 The very obvious difficulty with this alleged entitlement, and it is illustrated starkly in the evidence, is that quality defects notified by an overseas buyer to Farmlink may have been attributable to any one or more of a number of causes for which TVO, Farmlink or the overseas buyer may have been responsible, eg the defect may have been caused at the packing stage (TVO's responsibility), by an event during overseas transit (Farmlink's) or after delivery (the overseas buyer's). As between Farmlink and the overseas buyer, Farmlink may have taken steps to ensure that defects for which the buyer was responsible were not passed on to it (though there is no evidence that it did so). As between Farmlink and TVO, unless otherwise agreed (an unlikely prospect), Farmlink had no entitlement to pass on to TVO quality discounts to the extent to which they were attributable to causes for which it or the overseas buyer was responsible. I would simply note that there is little in the evidence to suggest that Ms Churchill had any real appreciation of this and of its practical consequence. That lack of appreciation carried over into the proposed amendment. Such a term would place the seller at the buyer for resale's mercy and would require a commercially most unlikely risk assumption on the seller's part. 194 Perhaps conscious of this, the respondents sought to limit their entitlement to pass on purchase discounts to those which were quality related. This was done when it was revealed that discounts from Singapore had been passed on for market reasons. I would comment in passing that while counsel for the respondents said that this was the "first time identifiably " such discounts have been passed on --- and I accept what counsel said --- I am not prepared to assume that the discount for order 4018 was the only actual instance ever of such a discount in the parties' dealings, absent proof of an appropriate investigation of price discounts in previous years of dealing. This unpreparedness, I would add, would have influenced somewhat the view I would have taken of any reliance placed upon prior dealings in the disallowed proposed amendment to establish a certain, and not illusory, implied term. 195 I would add, though it does not strictly arise given my amendment ruling, that I have great reservations about whether what we know about (a) past purchase discounts passed on; (b) the explanations for, and contexts of, them (we know nothing of the causes of the alleged defects: cf Kemp ); (c) the fact that the only catastrophic discounts (in the 2001/2002 season) gave rise to insurance claims which ameliorated the loss; and (d) the usually small to moderate amounts for discounts in past years revealed in the material before me, would be sufficient to justify inferring a term committing Mr Hannaford to accept a quality discount passed on to him, assuming such a term could be formulated intelligibly. 196 I should make this additional comment about prior dealings. It is clear that Mr Hannaford appears to have accepted as of course some level of price discounts during the preceding years of dealing with Farmlink. It is unsurprising that he did so given the perishable nature of cherries and the known factors that could produce defects even in well run orchards and packing sheds --- which he clearly considered TVO to be. There are quite often some issues, some problems. Maybe it is our fault. Maybe some cherries snuck through the system and so there are, from time to time there are some issues, either fair or unfair, that can result in some discounts, yes. 197 Parties to a sales contract are, as a matter of party autonomy, quite entitled to agree a regime of some form which would permit a buyer unilaterally to discount the price paid for the goods purchased because of some quality defect in them. As I earlier noted, the CISG contains such a regime: see also Sale of Goods Act (1979) (UK), s 48C(1)(a) and Benjamin's Sale of Goods (at [19-203]). Benjamin's Sale of Goods (at [12-129]) notes that this "special remedy of reduction of the price" is one which may lead to a monetary award different from what an award of damages would produce. 198 The protections to the seller in a discounting clause are for the parties to agree, but in a setting such as the present where recurrent dealings in perishables were envisaged, one would have expected notification of lack of conformity within a reasonable time would be a reasonably basic minimum requirement. Be this as it may, the problems with discounting clauses become pronounced where, as here, there is a chain of transactions where the defect in quality is discovered in the resale transaction and not in the original sale. If a price reduction is to be effected in the resale contractual relationship (whether unilaterally or by negotiation) any passing on mechanism permitting reduction of price in the original sale transaction would reasonably be expected to be one which ensures that the reduction could only be for defects having causes for which the original seller was responsible. If it did not --- and the "passing back" envisaged by the respondents seems not to --- the original seller would be exposed to the prospect of having to bear losses occasioned by causes for which the buyer for resale and/or the ultimate purchaser may be responsible. 199 Under the general law, a buyer who seeks to resist payment in whole or in part because of quality issues: cf Sale of Goods Act , s 52(1)(a) ; must establish both the cause of loss and that the seller was responsible for it. 200 The evidence in this matter does not suggest that Farmlink engaged in meaningful investigation of the causes of the overseas buyers' alleged losses nor, more significantly, that it effectually negotiated price reductions in the Farmlink-overseas buyer relationship notwithstanding Ms Churchill's evidence that she worked "very, very hard" to get the settlement sum from Mak. Farmlink was presented, it seems, with a fait accompli about which it said it negotiated, though Ms Churchill gave no evidence which I could accept as to the efficacy of her endeavours. 201 Whether the matter be viewed as one of a purchase reduction varying an agreed price, or as a mechanism for settling the agreed price where there were "quality" issues, the deficiencies in the contractual term propounded remain the same. TVO would be required to surrender the right to agree to the change of price. More importantly it would be rendered wholly vulnerable in the TVO-Farmlink relationship to what was agreed --- or simply accepted --- in the Farmlink-overseas buyer relationship. 202 Both the form of "purchase discount" sought unsuccessfully in the proposed amendment and the "settling of price" mechanism suggested by para 5.1.3 of the respondents' FAD are not terms to which, I consider, a reasonable commercial business would in the circumstances agree. And I am not satisfied that Mr Hannaford agreed, or should be taken to have agreed, to the latter in the circumstances. 203 Though I have analysed what appears to be the price discounting (or settling) mechanism as if it was stark in form, I am uncertain as to what in fact were to be the precise features of the term in question. I have not been assisted in this by the language used to describe its operation (eg the "passing back" of discounts) although it is understandable insofar as the respondents have denied there was a sale and resale. 204 Accepting both that price discounts were accepted by Mr Hannaford in the past and that quality issues for which TVO would accept responsibility could reasonably be anticipated to arise in the 2003/2004 season, I am nonetheless satisfied that Mr Hannaford did not in that season agree (by word or conduct) to a price reducing or price fixing term for quality issues such as seems to be propounded by the respondents. Rather he had fixed an agreed price with Farmlink that, ultimately, could only be varied with his consent. However, in recognition of the potential for price problems occurring, it could reasonably be anticipated that he would have been prepared to respond to a predictable exigency in the sale and export of his cherries by permitting a crude procedure to be followed as a reasonable and sensible means to deal with quality issues, but without surrendering his rights either to have his responsibility for alleged quality issues demonstrated or to consent to price variations. As I indicated at the outset of these reasons, this form of sensible commercial response in a market for perishables which short-circuits potential disputes in ongoing relationships where a level of trust and confidence is required to be maintained and a quick resolution of problems is desired, is understandable, probably necessary. It leaves the actual terms of the contract where they so often lie in business dealings. That is as default rules to be availed of where, as here, reason exists because of the circumstances to have the actual entitlements and responsibilities of the parties formally established. 205 Accordingly I find that TVO and Farmlink contracted for the 2003/2004 season on the basis of the agreed prices for different sizes of cherry as pleaded by the applicant. Those prices could only formally be varied by Farmlink with the consent of TVO, express or implied. Mr Hannaford did not accept the "discounts" for the 2003/2004 season. He put them in question. 206 I have so far made little reference to the contract pleaded by the respondents. I have already indicated that insofar as it was founded on Farmlink's Pre-Shipment Inspection Form, that document had no contractual effect. I have rejected the alleged price settling mechanism (such as it was) that was pleaded. I have presumed that the sale of cherries to Farmlink was subject to an implied condition of fitness for purpose under s 14 of the Sale of Goods Act . The alleged term referring to the Cherry Packaging Requirements seems, in the event, to be of no moment. Even if a term, there is no evidence that it was not complied with. It is the case, in my view, that the oral agreement pleaded by the respondents fell by the wayside as the case progressed, Farmlink's case becoming, as its counsel put it, essentially one of denial of the contract pleaded by TVO. 207 My conclusion in effect necessitates that the applicant must succeed in his claim to be paid the purchase price. Farmlink has not set up as a defence the seller's breach of the implied condition of quality and fitness: see BICC plc v Burndy Corporation [1985] 1 Ch 232 at 247; Sutton, Sales and Consumer Law at [22.24] ff (4 th ed, 1995). That breach is only relied upon in justification of the price discounts applied: FAD 8.2 and 10.3. While a cross-claim for damages for breach of the implied condition has been pleaded, it has not been prosecuted: see "The Cross-Claim" below. In the circumstances Farmlink can only be said to have persisted in a "self-help" remedy which lost any semblance of justification when TVO insisted on its strict legal rights. However, because they loomed large in the evidence adduced, though not so much so in submissions, I will state briefly my own views on them. 209 By way of preface to what I have to say, I should indicate that it is necessary to deal separately with quality issues as they relate to Singapore and Hong Kong consignments respectively. I have already indicated that for one of these (order 4018) the discount was market related. The same is probably the case with the discount for order 4019. The respondents do not press market related discounts. The remaining three instances of discounts (and possibly order 4019) were quality related. In relation to order 4031 (the sea shipment) and orders 4032 and 4033, specific quality complaints were made by Mr Koh by email with accompanying photographs of what purported to be TVO cherries. The email relating to the sea shipment foreshadowed a survey report. No such report was put in evidence. 211 I ruled that, though the emails were admissible as business records under s 69 of the Evidence Act 1995 (Cth), I would limit the use that could be made of them to the fact of complaints having been made. It was foreshadowed that Mr Koh, who is a respondent, would be called to give evidence. He was not. Without explanation the emails had little probative value. While the respondents sought to use Mr Hannaford's evidence-in-chief on the emails in their case, I considered this would be unfair given the failure to call Mr Koh --- the more so given the selectivity of most of the photographic images and the broad generalisations made by Mr Koh. Even if my ruling was incorrect, I would have attributed no weight to the emails for present purposes. They do not justify the discounts made. 212 No expert evidence was called in relation to these shipments. Ms Churchill, in passing the discounts on, appears simply to have assumed without inquiry that the alleged defects were caused by circumstances for which TVO was responsible. Given the view I take of the TVO-Farmlink contract, this was a matter for Farmlink to prove, not assume, if it was to secure a reduction in price: see Kemp . In any event, the evidence of the complaints made by Mr Koh does not establish the truth of what he alleged, let alone justify the discounts applied. I say this while acknowledging that, if the Farmlink-Freshmart contracts were subject to the provisions of the CISG, Mr Koh's emails may have provided the trigger to unilateral price reductions in the Farmlink-Freshmart contract, under Art 50 of the Convention. As to five of these --- orders 4020, 4035, 4036, 3038 and 4039 --- there is no evidence at all of any quality problems with them. There were no written complaints from Mak; no emails; and no Marinasia reports. Absent such evidence, Farmlink could proffer no reasonable basis for its accepting a purchase reduction let alone for passing it on to TVO. In any event the circumstances surrounding at least order 4020 excite a real suspicion that this order, and possibly some orders other than the above (eg order 4023), were discounted in whole or in part for reasons unrelated to quality as such. Mak, as I earlier indicated, had been caught on a falling market. 214 Of the remaining five orders, order 4023 elicited a belated email quality complaint and photographs from Mak on 9 January 2004; the remaining orders 4017 (the sea shipment), 4028, 4037 and 4041 resulted initially in emails and photographs alleging quality issues and subsequently in each instance, a Marinasia Report. I would emphasise that all five of these orders were total losses. The price discount in each instance exceeded TVO's agreed price and resulted in a nil return to Farmlink as well. In what follows I am concerned only with these five orders. The discounts applied to the other five orders were clearly not appropriately substantiated. 215 Before commenting on the five total losses, it is necessary to make brief reference to a number of factual matters and to the evidence of Dr Brown, the horticulturalist scientist to whom I earlier referred. It is unnecessary that I outline that evidence here, save to refer to four particular matters. 217 First, I have referred (a) to the fact that a significant amount of rain fell in the area of TVO's orchard over the period 20 to 22 December; and (b) to Dr Brown's evidence that rainfall late in the season prior to harvest causes fruit to swell with water, often to the point of splitting and that fruit bloated by rain is easy to bruise in normal harvesting procedures. Though a possible explanation for some of the quality problems in the cherries in Hong Kong and Singapore was said to be likely to be the softness of cherries on the tree, there is no direct evidence before me that such was the case. Having previously conceded that the rainfall in December was significant, Mr Hannaford indicated in re-examination that he did consider that where fruit was picked six days after rain "any detrimental effects would have been gone by then". There were no price discounts for quality for fruit picked and exported to Singapore and Hong Kong between 22 December and 29 December. The first consignment of fruit to have quality issues after 29 December was order 4017 (the sea shipment to Hong Kong), the fruit for which was picked between 27 and 31 December. 218 Secondly, in the 2003/2004 season TVO had its own quality control check list document --- a "pallet sheet" --- which was, according to Mr Hannaford, "done more thoroughly" in that season because TVO had had a lot of quality issues and a very bad year in 2002/2003. The checking which occurred was by way of sampling after packing. The sheet would indicate where the fruit came from, its size, variety and characteristics including defects such as marks, splits, bruises and no stems. No filled out forms for the 2003/2004 season were produced in these proceedings. The evidence was that it was TVO's practice to discard the completed versions of them 12 months after their completion. Needless to say, this has been a matter of some comment by the respondents' counsel in this instance. 219 Thirdly, critical comment has been made of Mr Hannaford's failure to consult TVO's own pallet sheets when quality issues first were raised on 9 January 2004 and of his not wanting to see the email photographs of alleged defects in fruit. Mr Hannaford's evidence on the first of these is that perhaps he should have looked at the pallet sheets but he had no idea why he did not. As to the photographs, the explanation he gave was that he did not want to see them because photos in themselves did not actually prove anything. 220 Fourthly, there is evidence, relied upon by each side when to its own advantage, both of cherries included in the consignments in question being picked from the same sub-block at the same time as those accepted by Woolworths and Coles and of such cherries being rejected by Woolworths and Coles. It is understandable that TVO would rely upon the former of these particularly in light of Devlin J's comment in Kemp (at 687) on the relevance of sales of the same commodity to other purchasers without complaint, when searching for causes of defects. The most that I consider should be said generally of the comparison of export and domestic consignments is that the domestic picture for comparable quality cherries does not match that from Hong Kong. However, I place little reliance upon this in relation to the five orders under consideration for the reason that the evidence on which to base the comparability of cherries going to Woolworths and Coles and to the export market does not for the most part permit meaningful --- and in the case of order 4028 any --- comparison: see Schedule 3 to the Schedules Brief. 221 The only expert evidence called by the respondents was that of Dr Brown. The instructions Farmlink's solicitors gave to Dr Brown are not unimportant in understanding his report and the significance to be attributed to it. We realise that some if not all of the observations and comments could have been due to causes during the export stage, but we do not seek your opinion on this issue, except to ask you to identify any observations or comments as to condition or quality that could not possibly have been caused during the export stage, and if so, for the reasons why not. 222 The applicant's counsel, again for understandable reasons, focussed upon the last paragraph quoted and has submitted that it constituted an admission made in circumstances such that it can be treated as having been made by Farmlink under s 87 of the Evidence Act . Before dealing with that submission, I would note that Dr Brown indicated in his report that he did "not cover possible causes of the fruit deterioration that may have occurred during transport, shipment and receival". authority. At first blush, the impugned statement may in form appear to be one adverse to Farmlink's interest. Read in its setting and having regard to its purpose, it should in my view be taken as recognising possibilities that a competent expert would otherwise explore but into which Dr Brown was instructed not to inquire. It was not an acceptance that those possibilities were causes of the condition and quality of the cherries in question. 225 In consequence, I rule that the statement is not admissible as an admission but it is admissible to explain the instructions given. Importantly, as Mr Hannaford neatly put it in evidence-in-chief: the report looked at issues relating to growing and packing but "not the whole picture". If left at ambient temperature the commercial life of a cherry is only a few days. Under good handling and storage systems this can be extended to 8 weeks. Any delay in any process from and including harvest will result in reduced commercial life of the fruit. In this document many poor handling practices are discussed including harvest date, harvest temperature, on farm transport systems, methods of cooling, methods of storing, methods of grading and methods of packing fruit. If mismanaged all these factors have a potential to dramatically shorten the commercial life of the fruit. It is concluded that while mismanaging any one of these practices may not normally lead to poor fruit quality in marketing, if several factors are combined then there is an increased risk of commercial failure as was observed with the Torrens Valley Orchards fruit in Singapore and Hong Kong. 227 Under the heading "Pre-harvest factors affecting fruit storage characteristics", "Harvest", "Storage", "Grading and Packing" and a number of other discrete subjects, were considered and their general significance explained. Neither Mr Hannaford nor Mr Freeman disagreed significantly with what was said. In relation to many of those subjects, the ill discussed was related in some way to the emails and photographs from Hong Kong and Singapore. Failure to use this material has potential to lead to soft fruit after transport to distant markets as was found in Hong Kong and Singapore for the TVO fruit. (ii) If harvest is delayed the fruit may have started senescence leading to soft fruit and fruit more prone to infection from rots as the fruit self defence mechanisms go into decline. This may partially explain the observed soft fruit and fruit rots that were encountered in TVO fruit in both Hong Kong and Singapore. (iii) If used [cluster cutters] probably contributed to some of the damage and fruit rots observed in Hong Kong and Singapore. And he acknowledged the damage that, for example, wind and cluster cutters can cause. His agreement with the substance of Dr Brown's report (other than its conclusion) cannot be taken as agreement that the pre-delivery factors referred to by Dr Brown were the causes of the defects identified in the photographs, emails and Marinasia reports. The fruit quality and storage potential of cherry fruit is affected by numerous factors from flowering through to marketing. While it is not common for any one of these factors to led to market failure, the combination of several of these factors can led to severely reduced fruit quality and poor out turns as was observed here. As a combination of factors was probably involved the identification of an offending activity can not be made and is not appropriate. The whole system in use at TVO needs to be reviewed to avoid this outcome in future years. (Emphasis added. 230 In his evidence-in-chief, by using the Schedule of Packing Dates at Tab 3 of the Schedules Brief, Dr Brown identified cherries which had been picked thirteen days before order 4041 was shipped, which he considered to be a long period of time for a highly perishable product. Farmlink has accentuated this in submissions. 231 In cross-examination, Dr Brown referred to the hazards of air freight (to which I earlier referred). As I have emphasised, TVO had no responsibility for misadventures in air or sea shipment. That's very different. I would have preferred to have been involved in this virtually the day the first problem appeared in the marketplace, as in 10.1.2004 and, at that point, actually be involved in an independent study, which is not one sided or the other, to actually come up with an independent report at that point in time, when we can actually track what's gone wrong. It is impossible now to actually say what happened. We can't tell from the photographs whether it was grey mould or penicillin. We can take a guess. We can have an educated guess, but it would have been better if we had had an independent person, looking at the day that there was a problem. (Emphasis added. 233 I would digress here to note that in the CISG's scheme for price reductions for nonconformity, it is accepted that a "reasonable period" for giving a notice of nonconformity under Art 39(1) for perishable goods must often be "within hours, or at least days": see Schlechtriem and Schwenzer at 467. Upon collecting the flowers at the site of the seller's business, the buyer's driver commented upon their "miserable" state. After receiving the goods, the buyer informed the seller of the "miserable" state of the flowers and refused to pay the purchase price. The court indicated that, where international trade in flowers was involved, the buyer can be expected to act immediately on the day of delivery: for the translation of this case see http://cisgw3.law.pace.edu/cases/980603g 1 .html. 234 Returning to the evidence, as I noted in the consignments narrative, there were some number of consignments which experienced unexplained delays in being sent to Hong Kong after being delivered to Farmlink, or unexplained delays before inspections/surveys were carried out. And there were delays in notification of a quality complaint. Of the five consignments of present interest, such delays affected orders 4023 (notification), 4028 (shipment), 4037 (shipment) and 4041 (inspection). There is no evidence as to how the latter three were stored, respectively, before shipment or before inspection. Equally the evidence of Mr Kwan in relation to orders 4028, 4037 and 4041 was that the cherries, when inspected, were in or near Mak's store and, seemingly, in all three instances, not in cool rooms. Again I emphasise that unnatural deterioration caused after receipt by Mak was not something for which TVO was responsible. 235 Finally, there are two pieces of evidence to which I should refer. The first is to reiterate that in her facsimile to Mak of 11 February in which, in relation to six orders (which include the five of present interest), she complained of "lack of sufficient details regarding the extent of the quality problem" and "inability for me to stop shipments had I been aware that we would not receive any return for shipments incurring a quality claim". The second point is that I am satisfied that, had Farmlink wished to do so, it could have had a system for inspection of TVO's cherries for quality after delivery and before shipment. I simply note Mr Freeman's account of Jayfresh's practice in this respect. While Ms Churchill made growing claims concerning her visits to TVO to inspect cherries at the shed for suitability, it is my impression from the manner in which this evidence came forth that it was likely she was claiming more than her due. 236 I note both of these matters, not because they illuminate the potential causes of defects, but because they bear upon the question whether, for the purposes of s 14(a) of the Sale of Goods Act (the condition of reasonable fitness for purpose), Farmlink relied on TVO's skill and judgment. As I earlier indicated, I was prepared to assume without deciding that there was in the TVO-Farmlink contract such an implied condition. That assumption may itself be a questionable one, but this matter has not been the subject of serious, direct argument. As I have already indicated, TVO's warranties of quality and fitness address the condition of its cherries at the time of sale to Farmlink, albeit that condition must be such that they would be fit for consumption on delivery overseas (unless their condition had been changed through causes for which TVO was not responsible: Kemp at 684-685). 238 The evidence clearly suggests potential causes contributing in whole or in part to the losses on the five orders in question for which, variously, TVO, Farmlink and Mak would, if made out, be separately responsible. And there is Farmlink's problem. The state of the evidence in relation to these five orders could not reasonably justify a finding that TVO was alone responsible for the total losses, bearing in mind that Farmlink would bear the onus of proof of that: Kemp at 685. This said, I am satisfied in relation to order 4041 in particular that a cause of defects in the cherries in that shipment could have been a matter for which TVO bore responsibility. 239 The Marinasia reports and the circumstances of three of the four surveys (orders 4028, 4037 and 4041) on which they were based are quite incapable of sustaining the burden of proving TVO's sole responsibility, the more so in relation to the three mentioned because of the unexplained delays in shipment or inspection and of the circumstances of the inspection (ie at Mak's store). There are, in consequence, real grounds for apprehending that the losses were caused or contributed to by causes for which either, or both, Farmlink and Mak were responsible, eg possible inappropriate storage during delays in air shipment (cf Dr Brown's evidence) and breaks in the cool chain through exposure to warm and humid conditions in Hong Kong. Equally, there are unresolved questions surrounding order 4017 (the sea shipment): eg was the vent setting altered? Farmlink packed the container, but did it break the cool chain after delivery to it? 240 The reports, moreover, while purporting to describe the condition and appearance of the cherries, do not address the causes thereof. While those causes ought to have been of some concern to Ms Churchill for the purposes of Farmlink's own contractual obligations to Mak, they should have been of vital concern to her if Farmlink was to ascribe sole responsibility for the losses to TVO under its contract with Farmlink. The evidence does not suggest that Ms Churchill questioned or probed the Marinasia reports or Mak in any way. TVO's responsibility for the loss seems to have been assumed and Mak's assertion of total losses accepted without question. And for the purposes of this proceeding, Farmlink has relied upon them. Mak was not called to give evidence. 241 The reports themselves are not altogether convincing documents. They are relatively standard form in their findings and they assert conclusions about the saleability of the cherries in the Hong Kong market. Mr Kwan's expertise to give evidence on the cherry market was obviously open to objection --- he simply relied on "commonsense". And if the photos "actually prove anything" (Mr Hannaford's comment), the evidence on them, as well as my own impression of them, do not accord with the reports' conclusions. 242 What is clear beyond question is that Mak did not supply, nor was he asked in a timely fashion to supply, adequate information on the nature, extent and circumstances of the defects and losses. The opportunity to make informed evaluations of the cause or likely causes of the losses (I am assuming they were in fact losses) was lost. One can understand why Dr Brown said: "It is impossible now to actually say what happened. " One equally can understand why it is accepted under Art 39 of the CISG that the time for notice of nonconformity for perishable goods is very short: cf the "Flowers" case, above. 243 Such are the doubts raised about the evidence in relation to any of the orders --- doubts exaggerated by Ms Churchill's failure to pursue the alleged quality complaints diligently --- that I cannot now be satisfied in relation to any of the alleged quality complaints that the cause or causes of the losses and price reductions were ones for which TVO alone was responsible. 244 In consequence Farmlink could not, by relying upon "issues of quality", have avoided an order to pay TVO the balance of the agreed purchase price. Nor could it have so made out a damages claim against TVO for an equivalent amount. The other sum is $432,473.80. The difference between the two, as I understand it, turns on whether or not, when Mr Hannaford agreed to a $1 per kilo discount on 7 January 2004, that was only for the 11 January consignment to Hong Kong. Ms Churchill applied it to later orders, although she agreed in evidence that, though it applied to the 9 January order, it was "to be negotiated if necessary after that". There is no evidence of such having occurred. Accordingly, I have chosen the higher sum. 246 There will need to be further calculations done for the claim for the loss of use of monies. I will give directions accordingly. It is necessary, though, to deal with the claims as they relate to each of the natural person respondents, Ms Churchill, Mr Plummer and Mr Koh. Though claims are made against all three under the TP Act (via s 75B), the Fair Trading Act 1987 (SA) s 54 and the Misrepresentation Act 1971 (SA) s 7, I will as a matter of convenience deal only with the TP Act claims given the view I take of the actual allegations made against the respondents individually. I would add that the TP Act claims against Ms Churchill provide in substance the foundation of the claims against Farmlink on whose behalf she was acting at all relevant times: see TP Act s 84(2). 248 It needs to be said at the outset that the claims, understandably, have been formulated against the contingency of fact findings quite different from those I have made. While it is necessary for the reason I gave above briefly to consider them, I recognise that those findings have rendered these claims superfluous. 1. Ms Churchill did not advise Mr Hannaford in those conversations of any difficulties with selling TVO cherries in the Hong Kong market, save and except for saying there were allegedly problems with the quality of cherries in one shipment. (iii) Finally, it is pleaded that (FASC para 19) Farmlink was, by Ms Churchill and its directors Mr Koh and Mr Plummer, silent as to the difficulties in fact being experienced in selling TVO's cherries in Hong Kong and Singapore markets at prices such that it could pay to TVO the Agreed Prices or at all. That silence, in the context of the relationship between TVO and Farmlink and the representations in (i) above made during negotiations constituted misleading and deceptive conduct or conduct which was likely to mislead or deceive": ("silence"). As I have indicated, the claims so perceived are at odds with fact findings I have made and especially with my characterisation of the TVO-Farmlink relationship. 251 Before dealing with the three categories of contravening conduct alleged, I should make the following observations about the principles to be applied to TP Act claims such as have been made. 252 First, misleading or deceptive conduct is conduct which in the circumstance does lead, or is capable of leading, a person into error or, in non-disclosure cases, which fails to disabuse a person of his or her error: Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 200; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 198. 253 Secondly, a statement of opinion (ie of a belief or judgment) will not be misleading or deceptive or be likely to be so merely because it misinforms or is likely to do so: Elders Trustee and Executor Co Ltd v EG Reeves Pty Ltd [1987] FCA 332 ; (1987) 78 ALR 193 at 242. It may be otherwise if the opinion was not in fact held, or had implicit in it the representation that it was reasonably based on a substratum of fact which was incorrect: RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd [1993] FCA 92 ; (1993) 41 FCR 164 ; Murphy v Overton Investments Pty Ltd [2004] HCA 3 ; (2004) 216 CLR 388 ; Cheshire and Fifoot at [11.116]. 254 Thirdly, by virtue of s 51A(2) where a corporation makes a representation as to a future matter and does not have reasonable grounds for making it, the representation is taken to be misleading: CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd (2005) ATPR 40-042. 256 Fifthly, put shortly, s 75B of the TP Act provides that if a person is "in any way ... knowingly concerned in, or party to" (inter alia) a contravention of s 52 of the Act by another, that person will be liable for that contravention under s 82 and s 87 of the Act. I have found that, prior to the making of any consignments to Hong Kong and Singapore, TVO and Farmlink entered into an agreement that the prices at which cherries were to be sold to Farmlink were fixed prices. Implicit in that agreement was the expression of a business judgment that, as and when Farmlink placed an order for cherries for resale to Hong Kong or Singapore, it would be able to make a return for itself on cherries purchased at the agreed prices. 258 Whether Farmlink did or did not have reasonable grounds for such a judgment, whether Farmlink did or did not actually make a return on all or any of its orders, could in reality be of no operative significance to TVO (there being no suggestion that the parties were dealing with each other on the assumption that Farmlink's capacity to pay TVO depended upon its receipts from its overseas buyers). Nor could it have led Mr Hannaford into an operative error. The price TVO was to be paid was not dependent upon Farmlink's sale price to its buyers but upon TVO's contract with Farmlink (whether or not renegotiated for whatever reason including quality defects for which TVO was responsible) and upon its compliance with its contractual obligations (eg s 14 of the Sale of Goods Act ). 259 While I do not consider that the alleged conduct gave rise to an actionable contravention of the TP Act, I accept that a judgment such as has been pleaded was probably conveyed to Mr Hannaford before any orders were placed, but in a setting in which it was well understood that agreed prices did not trump quality issues which could reasonably be expected to arise. The pleading is devoid of detail and of context and is quite unilluminating: cf the observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319. The submissions have not ameliorated this. 261 The representations alleged to have been made in phone conversations around 4 and 6 January 2004 relating to the China market cannot stand in light of my earlier findings. I have rejected Mr Hannaford's evidence as to the timing of the operative conversations and I have accepted Ms Churchill's evidence as to their substance. They occurred on 3 and 7 January and resulted in Mr Hannaford's agreement to two price reductions. These conclusions necessarily must lead to my rejection of both of these allegations of misleading or deceptive conduct. More significantly, I have found that at the relevant times Ms Churchill did make Mr Hannaford aware of the market conditions in the China market. 262 The final representation of this category was that after 6 January 2004 Ms Churchill had regular telephone conversations with Mr Hannaford but did not advise him of any difficulties with selling TVO cherries in the Hong Kong market save for saying there were allegedly problems with the quality of cherries in one shipment. An allegation so broadly cast is not only unsatisfactory, it is contradicted by a body of evidence. I will not reiterate that evidence here other than to note that I have found that on 7 January, Ms Churchill communicated the substance of Mak's "serious decline" email to Mr Hannaford; probably on 7 January he agreed to cancel a shipment; the next morning he suggested a price reduction to which Mak agreed on 9 January; on 9 January two separate quality complaints were made by Mak, these being the first such complaint made by Mak; and notwithstanding the above, Mr Hannaford agreed to Farmlink's "Mud Map" of 10 January proposing four air freight shipments to Hong Kong. Whatever might be said from this time onwards about the adequacy or otherwise of Ms Churchill's investigation of the quality complaints made, the burden of the complaint --- that she did not advise of any difficulties with selling in the Hong Kong market --- is not made out. 263 In the result, I am not satisfied that any of the pleaded contraventions of the TP Act have been made out or that Ms Churchill was knowingly concerned in, or a party to, such contraventions. 264 I would add for the sake of completeness that, as with the negotiation representations, the infringing conduct pleaded here, and the alleged vice in it, are premised upon a characterisation of the TVO-Farmlink relationship which differs in vital respects from that which I have found. As I have earlier indicated the particular non-disclosure alleged, ie of difficulties in selling at prices such that it could pay the agreed prices, could have been of no operative significance given the true character of the parties' relationship and of their respective rights and obligations under it. 266 I will order that the TP Act claims against Ms Churchill be dismissed. Because the claims against Farmlink are premised upon Ms Churchill's conduct, I will dismiss the claim against it as well. 2. While it is said that they had actual knowledge of the essential matters said to constitute the alleged contraventions of s 52 by Farmlink (via Ms Churchill), for the reasons I have already given, I am not satisfied that those contraventions have been established. Hence I will dismiss the claims against Mr Plummer and Mr Koh. I would add, though, without enlarging on it, that while the claims themselves were based on knowledge allegedly derived from the respondents' positions in Farmlink, as supplier and buyer respectively of cherries and from alleged communications from Ms Churchill, the evidence adduced could justify no more than speculation about what each respondent knew of the actual circumstances of the TVO-Farmlink relationship and of the conduct inter se of Ms Churchill and Mr Hannaford. A claim has been made on the alleged indemnity and for breach of the agency duties. 270 Given my previous findings, it is unnecessary for me to consider this claim. A claim for damages for these breaches is made, seemingly at least in relation to the s 14 claim, on the basis of sales to Farmlink. 272 A distinct plea is advanced for expenses incurred for export and transport costs Farmlink had to absorb. The basis of this claim seemingly is agency. 273 The former of these pleas was not opened at the hearing. Neither was it the subject of oral or written submissions. And it was quite inconsistent with the case put at trial insofar as it was premised upon the TVO-Farmlink relationship being that of seller and buyer. Even if it was not abandoned --- and I consider it was --- it inevitably would have failed for the reasons I gave in discussing "Issues of Quality". 274 The plea for expenses was opened but was expanded to include a claim for Farmlink's lost margin on sales. Counsel conceded that there might be some difficulty with such an enlarged claim, but relied on ordinary agency principles to justify Farmlink's costs and expenses. Having rejected an agency characterisation of Farmlink's position, this claim in turn must fail. 275 I will order that the cross-claim be dismissed. What needs to be understood is that those conclusions were based on the evidence, such as it was, that the parties considered appropriate to put before me and on the matters that they chose to put in issue. Significantly no reliance was placed upon practices and usages in this particular market or on the possible contextual significance of the CISG at least in relation to Singapore. It need hardly be added that this proceeding demonstrates the obvious inappropriateness of leaving the definition of the character and incidents of a complex, ongoing business arrangement to the inevitable uncertainties of an oral agreement. 277 I have indicated the orders that I will make. However, there are outstanding calculations to be made relating to the claim for the loss of use of monies. 278 I will direct that the applicant file and serve on or before Friday, 21 November 2008 (a) draft minutes of order to give effect to these reasons and (b) proposed orders in relation to the claims for loss of use of monies and for interest together with expert calculations upon which the former is based. I will adjourn the matter for the making of orders until Thursday, 18 December 2008 at 9.00 am. I certify that the preceding two hundred and seventy-eight (278) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | international sale of perishable goods whether exporter was an agent for sale for a grower or a buyer for resale from the grower criteria for distinguishing the two relationships. grower and exporter ongoing business relationship oral contract terms exporter "passing on" price reductions for alleged defects in quality whether contractually justified in so doing. whether sale contracts were subject to the sale of goods act 1895 (sa) or the sale of goods (vienna convention) act 1986 (sa) goods sold into singapore and hong kong singapore a party to the convention, but not hong kong. implied conditions as to quality and fitness sale for resale to overseas buyer defects alleged by overseas buyer liability of original seller to buyer for resale onus of proof. leave to amend defence sought at conclusion of final oral addresses after 16 day hearing a new implied contractual term proposed based on prior dealings leave refused. contract contract sale of goods sale of goods pleading |
She arrived in Australia on 7 October 2006 on a student visa to study English. On 11 September 2007 she lodged an application for a protection visa with the Department of Immigration and Citizenship. That application was refused by a delegate of the first respondent on 5 October 2007. On 9 October 2007 the appellant applied to the Refugee Review Tribunal (the Tribunal) for a review of that decision. The Tribunal affirmed the decision of the delegate of the first respondent to refuse to grant a protection visa to the appellant. It is the manner in which the Tribunal hearing was conducted that now falls for consideration. A Federal Magistrate, on 19 June 2008, dismissed an application for judicial review of the decision of the Tribunal ( SZLUD v Minister for Immigration and Anor [2008] FMCA 799). This is the judgment on appeal from that decision. She claimed that as a child she attended meetings with the group with her parents about once a week and continued to attend as she got older. In May 2001 the police found out about the group and raided her house during one of the meetings. The appellant stated that her father and four others tried to escape but were caught and arrested. The appellant stated her father's leg was broken and he remained in hospital for about six months. Following his stay in hospital he was detained by the police for a further two months. Subsequently, the police would come to her house to check on them from time to time. Her church group nevertheless continued to meet secretly and she continued to attend the meetings. The appellant stated that her father and siblings left the local area in 2004 because of the danger of being detained again. She claimed that she was unaware of where they were at the time of the hearing before the Tribunal. Because she was under 18 years old, she said she did not face the same risk of arrest as others so she was able to remain with her paternal grandmother. She claimed that she continued to attend the group services on a regular basis. Her grandmother could not go to the meetings because of her age although she was a committed Christian and knew a lot about the Bible. The appellant says that in 2006 her father arranged for her to travel to Australia to study because she was soon to turn 18 years and if she were to remain in China would be in greater danger of arrest because of her religion once she reached that age. The appellant stated that she did not apply for a protection visa prior to arriving in Villawood Detention Centre because, as an 18 year old person, she did not know that this was possible. Further, she speaks very little English and did not have anyone to help or advise her on what to do. It was satisfied that the appellant had 'embellished, if not entirely fabricated, material aspects of her claim to be a refugee'. The Tribunal referred to her 11 month delay in applying for a protection visa after arriving in Australia, stating that it would have expected her to have made more of an effort to seek to remain in Australia on a lawful basis. The appellant's explanation regarding her age, lack of understanding of the English language and lack of access to persons who could assist her did not satisfy the Tribunal as being acceptable reasons to explain her delay in applying for a protection visa. The Tribunal also referred to her inadequate knowledge of Christianity, finding that her level of knowledge was not consistent with the activities that she claimed to have participated in and participation in regular religious study. This issue in particular now falls for consideration. The Tribunal dismissed her application on the basis of 'the cumulative consequences of a number of adverse credibility findings'. The Tribunal also found that additional overseas material provided by the appellant did not overcome the concerns the Tribunal had regarding her credibility. Mr J Mitchell appeared on both hearings for the Minister. Before her Honour the appellant contended: Contrary to s 420 of the Migration Act 1958 (Cth) (the Act), the Tribunal failed to conduct the hearing in accordance with the requirements of substantial justice. The decision of the Tribunal made wrongful, illogical or unreasonable findings of fact which were contrary to the evidence provided and not based on logical grounds. The Tribunal's decision was affected by the Member's illogical and irrational findings about the [appellant's] credibility which were not based on findings or inferences of fact supported by logical grounds. The decision of the Tribunal was induced or affected by the bias of the presiding Tribunal Member. The learned Federal Magistrate, in considering the Tribunal's decision in light of the serious claims made by the appellant found that listening to the hearing tapes actually 'made clear the fair and measured way in which the hearing was conducted'. Her Honour found that the Tribunal Member asked the appellant open ended questions about her claims and had regard to her responses. Her Honour found that, in the circumstances and for the reasons it gave, the Tribunal's adverse findings were open to it on the evidence and material before it. Her Honour held that to the extent the appellant contended that the Tribunal was in breach of s 420 of the Act, s 420 is expressed to be facultative and not restrictive and does not create rights or a ground of review additional to those given in s 476 of the Act. The learned Federal Magistrate found that Grounds 2 and 3 merely disagreed with the findings of fact made by the Tribunal, inviting a merits review which could not be undertaken by the Court. Her Honour stated that the Tribunal's findings and conclusions, including its adverse credibility findings, were open to it on the evidence before it. Her Honour noted that illogical reasoning does not of itself constitute an error of law or a jurisdictional error. In relation to the fourth ground, the learned Federal Magistrate found the particulars in support of this claim were no more than a disagreement with the findings and conclusions of the Tribunal, including its adverse credibility finding. Her Honour found that, based on a fair reading of the Tribunal decision and her review of the hearing transcript and tapes, there was no evidence that the Tribunal approached its task with a mind not open to persuasion; nor that the Tribunal acted capriciously, arbitrarily or without proper credit findings and by whim or intuition. As no jurisdictional error was established, the application was dismissed. Her Honour erred by failing to find that the decision of the Second Respondent made wrong, illogical or unreasonable findings of fact which were contrary to the evidence provided and not based on logical grounds. Her Honour erred by failing to find that the decision of the Second Respondent was affected by the presiding Member's illogical and irrational findings on credibility which were not based on findings or inferences of fact supported by logical grounds. Her Honour erred in failing to find that the decision of the Second Respondent was induced or affected by the bias of the presiding Member. Her Honour erred by applying Maddy v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 233 ALR 503 in circumstances where the presiding Member's comments went beyond the scope of 'personal experiences'. To some extent these overlapped with the appellant's written submissions but I will deal with them first. The appellant raised two specific errors in the Tribunal decision. The passage of the decision in relation to the first suggested error needs to be reproduced. ' Attached to the migration agent's letter of 5 November 2007 was also a 'certificate' from a named pastor 'confirming the applicant has completed the "Reconnect Course", while she had been detained at Villawood Detention Centre. At the Tribunal hearing, the applicant also claimed the bible readings in Australia (prior to her detention) were conducted with friends, for instance at the home in which she lived in Auburn (where she resided with 3 or 4 other people). I understand that church services, as they exist in Australia, may not reflect church services in other countries. Further, the dangers involved in the practice of some religions in some countries, may limit the opportunity to gain a detailed knowledge of a religion in-country. However, as stated above, the present applicant did claim to have attended an underground church 'regularly' in China (in community with others), and to have studied her Bible regularly in Australia. The issue therefore, includes assessing whether the knowledge level of the applicant is consistent with claimed relevant activities and opportunities. When asked to tell the Tribunal her favourite bible story/s the applicant referred to 'Luke Ch.7. "love God love people". ' I then put to her I wished to assess whether she was a sincere Christian as she had claimed. I therefore asked her why she would be compelled to practice her religion in China. In response, the applicant said 'Jesus is lord', 'God create the universe', 'before born already knew what would happen in the future', 'sacrifice only son'. She also claimed she would be compelled to practice her religion because 'love from God'. What is perhaps more important, in my view, and is a fair submission from the appellant is that a quick reading of the paragraph dealing with the questions about religion would give the impression that the answers given were jumbled and confused. In fact, the appellant says, the answer as to the content of the passage from the bible was a perfectly accurate, if abbreviated, summary of it. I think there is some force to this submission. The question is also whether the Tribunal's decision conveys that the appellant could not easily demonstrate familiarity with the Bible or religious concepts. Whether this is so requires a more detailed examination of the transcript on this topic. Is there anything in particular that you would like to tell me in support of your claim to be a refugee? You've said that you- just as a matter of interest you said that you regularly read your Bible, is that correct? Sorry I withdraw that- you said that since arriving in Australia you have regularly read your Bible. What kinds of things did you discuss? That you should love God. Love people around you like you love yourself. What do you know about Christianity? Tell me some of the things that you know about Christianity. Created the universe. Thank you. ] I have been told that we have a computer recording system backup- so I intend to continue speaking notwithstanding the tape recorder seems to be- not beeping but emitting a sound. So what other kinds of things do you know about Christianity? Let me try another tag. You're claiming that if you had to suppress your religious beliefs to avoid prosecution in China, that would be prosecution for you. Please say that. Please say that. Please say that. What I need to do is go and think about it and draft my findings for reasons. ---today is Thurs- Friday, 26 th October, I am certainly prepared to give you to the close of business next Friday before I finalise any decision that I may write up. Please say that. But there is nothing in the exchanges, taken alone or with the totality of the questioning which suggests bias, procedural unfairness or other jurisdictional error on this topic. The second major factual error, according to appellant's counsel, related to the conclusion as to the alleged embellishment of the accounts concerning the confrontations with the police in 2004. Counsel for the appellant, Mr Prince stressed that the two statutory declarations taken together with the questioning of the Tribunal should lead to the inference that there was no mistake, inconsistency or embellishment. Counsel for the first respondent submitted that the questioning, in particular by the Tribunal, clearly showed embellishment in the sense that the Tribunal Member made it abundantly clear on three occasions to the appellant that he was questioning about the 2004 incident. There were only two incidents. Yet she 'feigned confusion' between the incidents when he pointed out to her the inconsistency in the answers given and said that she thought the Member was referring to an incident in 2001. No? Or members from- or people from the neighbourhood committee? Please say that. People there were singing religious songs. Now I'm talking about the second incident that was in 2004. Is that correct? Church people there but not many. You just said that he feared that he might be and then left. In your subsequent statutory declaration to the Tribunal you have referred to the 2004 incident... but you never said that he was caught- that you father was caught at that time with other underground church members. If I was to say that would appear therefore that you were embellishing if not entirely fabricating aspects of your evidence- of you claims. Is that something you would be able to translate? It therefore may appear to me that you are embellishing if not entirely fabricating some parts of your claims. I have said my view that you are embellishing if not fabricating your evidence about the 2004, the alleged 2004 incident. That is in 2004. Are you now saying that he was detained in 2004? I never said that he was detained. Are you talking about the 2001 incident? Was your father detained or arrested in 2004? She had mentioned an incident in 2001 (in the Attachment to the s424A letter I had incorrectly referred to her being 2 years old at that time --- the applicant was in fact approximately 12 years old). She had also stated her family, fearing further persecution, has fled their home area in 2004, leaving the applicant with her grandmother (who apparently lived nearby). In her statutory declaration of 20 October 2007 to the Tribunal, the applicant claimed her father was 'interrogated' in 2004, and this was why he had fled. The applicant then explained her father had been arrested. The Tribunal twice confirmed this was in 2004. The applicant then resiled from this claim and said her father was not arrested in 2004. She claimed to have been confused. However, I was commonly able to obtain a response meaningful to the question I asked, particularly if I repeated and or rephrased my question. Except for her apparent evasiveness, there was no other reason I had to be concerned about the quality of the interpreter at the hearing. However, given my other concerns, I do not accept the quality of the interpretation sufficiently explains the adverse credibility issues discussed herein. I therefore am satisfied the applicant sought to embellish, if not entirely fabricate her relevant material claims. It was therefore not open to the Member to make adverse findings regarding this evidence. It is not the case that the appellant sought to introduce an entirely new claim at any stage. Indeed it is the exact purpose of the hearing to offer the appellant the opportunity to explain and elaborate on claims which the Tribunal is unable to accept in their present form. 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. The transcript reveals that the appellant made the statement " [m]y father received a warning from the police and he was arrested in the name of disturbing the peace" however she neither attributes this to 2001 or 2004 . The Member immediately sought clarification and the appellant confirmed that the she did not say now or previously, that her father had been detained or arrested in 2004 . The appellant then explained [at the hearing that] her father had been arrested. The Tribunal twice confirmed this was in 2004. The appellant then resiled from this claim and said her father was not arrested in 2004. She claimed to have been confused. But again, the fact that a different conclusion may have been open falls a long way short of jurisdictional error. In fairness to Mr Prince's arguments, he does not contend otherwise but says that taking the 'two errors' cumulatively with the other features of the hearing to which he adverts and which I consider below, he contends that there was bias, apprehended bias and no substantially just hearing. The response to this from Mr Mitchell was that that was the way that the Federal Magistrate was invited to look at the transcript. Having done so both on a piece by piece basis and on viewing it as a whole, her Honour was very firmly of the view that it demonstrated that the questioning and answering was conducted very properly by the Tribunal. I accept that the conduct of the hearing taken as a whole needs to be considered. I informed counsel that I would, as requested, listen to the audio of the hearing as time in open court did not realistically permit that course. I should stress that the exercise of listening to the audio was not in order to see if the Tribunal reached the correct answer on the evidence before it. Rather it was in order to consider the serious submissions advanced by the appellant as to actual jurisdictional bias and illogicality of decision-making. Mr Prince for the appellant put the appellant's case on the premise that an examination of the Tribunal transcript revealed that the exchanges which occurred in the Tribunal hearing were very similar to those considered in Re Refugee Review Tribunal; Ex parte H [2001] HCA 28 ; (2001) 179 ALR 425. I will not repeat the entire transcript that appears in the Tribunal hearing presently under consideration as much of it is set out in detail in the decision of the learned Federal Magistrate. But it is necessary to set out some of the questioning which the High Court examined in Ex parte H in order to test the submission for the appellant that these proceedings were conducted in a similar manner. That transcript in Ex parte H is set out in some detail in the decision. [Male Prosecutor]: Yes. [The Tribunal]: All the rest of this is just a fabrication to -- to fix that problem. [Male Prosecutor]: Which ones? Which ones? [The Tribunal]: Well, that's how it looks to me". [The Tribunal]: ... my strong suspicion is that you wouldn't be sitting here. [Male Prosecutor]: No, they couldn't prove it. My -- my company managers they didn't -- they didn't think that I -- I stole it -- I did it -- I did it. It was used by four of us, actually. So, they -- after the company security investigations we -- all we went to the police station but they didn't harass the other three, other three people. Definitely thinking that I'm saying lies? [The Tribunal]: Yes, I -- you're absolutely right, Mr [H], I do think that. Perhaps I'll hear from your wife but you're absolutely right; that's precisely what I'm thinking, Mr [H]. [Male Prosecutor]: You think that? [The Tribunal]: Yes. [Male Prosecutor]: Do you believing that I'm lying? [The Tribunal]: Yes, that's precisely what I think at the moment, Mr [H]. [Male Prosecutor]: How can I make -- believe me? [The Tribunal]: I don't know yet. Perhaps I'll hear from your wife and we'll see how it looks to me then". [Male Prosecutor]: I had to make an entry, I went to the police station at the first incident when they told us. When I go to the police station do you know what he said to me, the police officer? [The Tribunal]: No, I don't, I wasn't there. Mr [H], I'm going to ask you to wait outside now while I hear from your wife, if that's all right. I think that -- that having been unsuccessful in coming to Australia for reasons of employment that you and your husband have decided, well, if we can't get in by getting a job with Ansett or Qantas we'll become refugees. [Female Prosecutor]: Yes, to do what? Indeed, if they did suspect you of anything else why wouldn't they have arrested you? I don't find it the least bit convincing. [Male Prosecutor]: I don't know, actually. [The Tribunal]: Are they idiots? [Male Prosecutor]: I'm not sure. [The Tribunal]: Well, are they really because they're a longstanding successful terrorist organisation and you don't get to be a longstanding successful terrorist organisation by sending people letters telling them what time two of your activists are going to be present at a certain location, do you? [Male Prosecutor]: Yes. [The Tribunal]: Absolutely laughable. [Male Prosecutor]: I don't understand you? [The Tribunal]: How unusual is your situation; you are a Sinhalese man who has married a part Tamil -- it's not very unusual, is it? [Male Prosecutor]: I did not quite get you? [The Tribunal]: How unusual is your situation, Mr [H]? [Male Prosecutor]: It's not that unusual. [The Tribunal]: No, it isn't that unusual, is it? [Male Prosecutor]: Yes. No, it's not that unusual. [The Tribunal]: Yet you're telling me it's because of your situation that you are suspected of -- despite the fact that you're a Sinhalese -- that you're suspected of assisting the LTTE? [Male Prosecutor]: Yes. [The Tribunal]: It's nonsense, Mr [H], isn't it? [Male Prosecutor]: I know that they suspect me; that's -- due to petitions, I know that, because of jealousies and all that, so. [The Tribunal]: I'm here to listen to you, Mr [H], but I'm telling you quite plainly, Mr [H], that I'm unconvinced by your evidence at this point in time. You're Sinhalese. There is no Sinhalese support for the LTTE. Your wife doesn't even speak Tamil. [Male Prosecutor]: The people around us they wanted to chase us away from that place. [Male Prosecutor]: They know that. [The Tribunal]: They can tell just by looking at her? That's certainly my understanding, that your situation is not particularly unusual. There isn't any evidence that people in your particular circumstance face difficulties, Mr [H]. [Male Prosecutor]: Well, I'm sorry, sir, I have. [The Tribunal]: Because they don't fit. They don't fit with what we know about Sri Lanka, they don't fit with your circumstance and I've heard you giving the evidence and I find you to be a most unconvincing witness. It's an improbable story and you've told it very badly". There was a further short exchange in which the male prosecutor said that he and his wife were hoping to go and hide in India to escape from their problems. I think that you've fabricated the story and it's most unconvincing. So that's the basis upon which I'm going to have to make a decision, Mr [H]. Good luck. Nevertheless it went on to observe that the Tribunal had gone too far. In other words, a fair-minded lay observer or a properly informed lay person might well apprehend bias by the tribunal against the male prosecutor. And because the female prosecutor's application stood or fell with his, a fair-minded lay observer or a properly informed lay person might, in our view, form the same view in her case. This invites a "yes or no" response to the final questions but fails to give the appellant the opportunity to respond to the many issues and questions raised throughout the monologue. In her Honour's analysis of these submissions (at [52]-[56] of her Honour's reasons) the submissions were rejected. Perhaps the most important observation to be made is that even if there were minor interruptions or some questions perhaps lengthily and inelegantly phrased, the Tribunal Member did, nevertheless, through the course of the hearing on three separate occasions invite the appellant to add anything else which she may consider to be relevant. I am unable to conclude that her Honour was incorrect in her assessment and description of the process. I accept the submission of counsel for the first respondent, Mr Mitchell, that the questioning and answering in these proceedings was completely different from the questioning and answering criticised by the High Court in Ex parte H . On listening to the audio record of the Tribunal hearing, at the outset the appellant clearly sounded apprehensive (unsurprisingly). She became more assertive particularly when pressed by the Member in later questioning. That said, the Member was in my assessment generally temperate and patient. He was detailed in his explanations to the appellant as to the processes, and in his questioning to the point that he would withdraw and clarify or recommence some questions to ensure clarity. If the latter were a vice, many good counsel could be guilty of it. When that occurred there was no reason to think on any occasion, that anything but the final form of a question was put to the appellant by the interpreter although there were occasions when the Member paused and broke up his comments and questions slowly and carefully to enable translation of the content. There was no indication of the process causing any difficulty. The interpreter raised no problems. There were some requirements to answer 'yes' or 'no' questions. There was nothing oppressive about these requirements in the circumstances when this was done. For example such a requirement was used when the Member was simply summarising an earlier answer. On the other hand occasionally in relation to the giving of some answers, there were considerable pauses while the appellant gave an answer slowly. She was not pressed. The appellant appeared to be able to explain herself. I am not saying that the Member demonstrated a willingness to assist the appellant with her claim --- rather he was testing the claims that she had made. To the extent he expressed scepticism about any aspect it was not, in my view, taken individually or collectively, in a manner which evinced a determination only to prove the falsity of her claims. I accept, as one must, that the maturity to prosecute the case would not change over night with the appellant turning 18, but the important distinction on which the Tribunal focussed was that the appellant was at least an adolescent rather than a child. The Tribunal did refer to the United Nations High Commissioner for Refugees Handbook on Procedures and Criteria for Determining Refugee Status under the 1951 Convention and the 1967 Protocol Relating to the Status of Refugees (the UNHCR Handbook) (not that it was obliged to do so) and cited from the Handbook (at [215]). It can be assumed that --- in the absence of indications to the contrary --- a person of 16 or over may be regarded as sufficiently mature to have a well-founded fear of persecution. ... The Tribunal is thus satisfied the applicant presents as a person with adequate "maturity" to prosecute her case. Further, the applicant provided no evidence that might have led the Tribunal to consider whether her experiences in China (or Australia) could have traumatised the applicant such that she was not able to prosecute her case before the Tribunal. I do not consider that there is illogicality in the approach which was taken by the Tribunal. Rather the Tribunal was taking a measured approach in balancing the fact that while the appellant was an adult, she had only just reached majority. I turn now to consider the specific grounds of appeal with particular emphasis on the legal principles they raise. The appellant contended that the Tribunal had failed to enquire orally about the police raid in 2001 (that being the origin of the appellant's fear of persecution due to her religious convictions), and had engaged in misleading and unfair conduct in the way in which it conducted its hearing. Her Honour noted that s 420 of the Act is expressed to be facultative, and not restrictive, and does not create rights or a ground of review additional to those given in s 476 ( Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 at 628; Sun v Minister for Immigration and Ethnic Affairs [1997] FCA 324 ; (1997) 81 FCR 71). In any event, s 420 , when understood in its legal and statutory context, is an inadequate foundation for an attempt to overcome the provisions of s 476(2). The history of legislative provisions similar to s 420 was examined in Qantas Airways Ltd v Gubbins . They are intended to be facultative, not restrictive. Their purpose is to free tribunals, at least to some degree, from constraints otherwise applicable to courts of law, and regarded as inappropriate to tribunals. The extent to which they free tribunals from obligations applicable to the courts of law may give rise to dispute in particular cases, but that is another question. It appears in Pt 7 , Div 3 of the Migration Act , which is headed "Exercise of Refugee Review Tribunal's powers". The following two sections deal with the constitution of the Tribunal. Part 7 Div 4 deals with the procedures to be adopted by the Tribunal. Part 7 , Div 5 deals with similar matters. There follows Pt 8 of the Act, which includes s 476 , and which provides a set of provisions which confer, and define, the Federal Court's jurisdiction to review Tribunal decisions. It was obliged to ensure that the appellant had an opportunity to say whatever she wished in support of her application. Her Honour concluded that a fair reading of the transcript of the hearing and listening to the tapes, made clear that the appellant was invited on three occasions to say whatever she wished in support of her claims. However, it was not for the Tribunal to make the appellant's case out for her ( Abebe v Commonwealth of Australia (1999) 197 CLR 510 at 576; SJSB v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 225 at 14-16). The appellant further contended that the Tribunal engaged in misleading and unfair conduct by asking long and convoluted questions, and asking questions and making comments then withdrawing them. Her Honour observed (at [65]-[66]) that whilst a particular question by the Tribunal was long, it was interpreted every few words. The appellant's answer was ultimately responsive and did not suggest any lack of understanding by the appellant about what she was being asked. The appellant further alleged that the Tribunal unfairly required the appellant to only answer certain questions in a 'yes/no' format, interrupted her when she was responding, and failed to give her an opportunity to state her case. Her Honour found that the Tribunal was entitled to ask questions inviting a yes/no response and to direct the appellant's answers to its concerns. The Tribunal put its concerns clearly to the appellant and provided her an opportunity to respond. It also put to the appellant open ended questions that gave the appellant an opportunity to say anything further she wished in support of her claims. The appellant was invited to elaborate on her claims at the hearing and was asked direct questions about her beliefs and practices relevant to her claims to being a Christian and her claims relating to the persecution of members of her church. The fact that she did so in only the briefest of terms does not show that the Tribunal erred. The Tribunal was not obliged to prompt or stimulate responses from the appellant and had no general duty to inquire further: Re Minister for Immigration and Multicultural Affairs; Ex parte S154/2002 [2003] HCA 60 ; (2003) 77 ALJR 1909 at [54] and [85][-86]; Minister for Immigration and Multicultural and Indigenous Affairs v SGLB (2004) 207 ALR 12 at [1], [42] and [43]. It was for the appellant to make out her case: Abebe 197 CLR 510 at [187]. It was also submitted by the appellant that the Tribunal failed to give appropriate weight to the consideration that the appellant was a minor at all times in China and at all material times in Australia. Further, it was submitted that the Tribunal failed to consider the relevant provisions of the UNHCR Handbook and failed to give proper consideration and weight to the further evidence and submissions provided to the Tribunal on 5 November 2007. Her Honour found that the Tribunal made clear that it considered the appellant's age both at the time of the alleged incidents in China and at the time she was giving evidence in Australia. The Tribunal found that the appellant had sufficient maturity to prosecute her case - a finding which was open to the Tribunal on the evidence and material before it and for the reasons it gave. Her Honour also found that the UNHCR Handbook had no binding force on the Tribunal and it was not obliged to consider it or make findings in respect of it ( Semunigus v Minister for Immigration & Multicultural Affairs [1999] FCA 422 at 8-9). Nevertheless, her Honour also found that a fair reading of the Tribunal decision did not support the contention that the Tribunal failed to consider the materials. The appellant had further contended that the Tribunal Member interrupted the appellant, 'was shutting down the hearing indicating that it had made up its mind' and that it only made enquiries into facts that might discredit the appellant and not those which may support the appellant's case. Her Honour found that the tapes of the hearing did not indicate that the Tribunal Member was aggressive, hostile or overbearing in the manner in which he asked questions. The Tribunal Member asked his questions slowly and carefully ensuring his sentences were interpreted every few words, and provided the appellant reasonable opportunities to respond. The appellant also claimed that the Tribunal Member failed to give proper consideration to the significance of the 2001 incident in establishing the appellant's well-founded fear of persecution; and failed to give proper consideration to the significance of the 2004 incident in establishing the appellant's well-founded fear of persecution. Her Honour found the Tribunal put to the appellant its concerns about the inconsistencies in her evidence surrounding these events, and that the adverse findings made by the Tribunal were open to it on the evidence before it. In the appeal before this Court, the appellant has made essentially the same submissions. I can discern no error in the approach of the Federal Magistrate. The Federal Magistrate found that the particulars listed by the appellant were no more than a disagreement with the findings of fact made by the appellant. Her Honour also noted that, in any event, illogical reasoning does not of itself constitute an error of law or a jurisdictional error ( NACB v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 235 at 29). For the Tribunal to act in accordance with the law, its decision-making process must operate reasonably and rationally and not arbitrarily: Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321 per Deane J at 366-367. The purported decision of the Tribunal has no "jurisdictional" foundation as its determination was based on the errors of fact described below: see Minister for Immigration and Multicultural Affairs; Ex parte Appellant S20/2002 [2003] HCA 30 ; (2003) 198 ALR 59 per Gleeson CJ at [5]-[9]; McHugh, Gummow JJ at [34], [37]; Kirby J at [116], [127]-[128]. These findings were not perverse, in the sense of being contrary to the overwhelming weight of the material before the Tribunal: Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321 at 368; see also NADH of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 328 ; (2004) 214 ALR 264 at [115] ; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 ; (2003) 77 ALJR 1165 (at [129]). There was little before the Tribunal, other than the appellant's assertions, that demonstrated she had been a member of an underground church in China. She had only joined a church in Australia nine months after her arrival in Australia and it was open to conclude that she showed only a vague and superficial understanding of Christianity. The fact that the Tribunal focussed on the appellant's lack of knowledge does not indicate perversity. It merely indicates that this aspect of the appellant's testimony weighed heavily on the Tribunal Member's consideration. Even if the Tribunal's appraisals of the appellant's testimony were incorrect or alternative inferences were open (which I have accepted), that does not ground jurisdictional error. Error of fact is a matter within the Tribunal's jurisdiction and does not demonstrate jurisdictional error: see Eshetu [1999] HCA 21 ; 197 CLR 611 at [40] , [45], [134], [137], [138], [145] and [147]; Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [92] ; Ex parte S20/2002 77 ALJR 1165 at [9], [36], [57] and [59]. In my opinion, the approach of the learned Federal Magistrate was correct. I have dealt with the general submission but on the two errors supposedly made, these would not suffice to constitute jurisdictional error. It is clear that even if the reasoning whereby the Court reached its conclusion of fact were demonstrably unsound, that would not amount to an error of law: SZJEZ v Minister for Immigration and Citizenship [2008] FCA 1741. Thus, at common law, want of logic is not synonymous with error of law. So long as the particular inference is reasonably open, even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place. If a Tribunal has reasonably come to the conclusion that it is unable to accept an applicant's evidence and its reasoning process cannot be faulted, there is no room for this Court to intervene even though it considers that it might have come to a contrary conclusion if it had been the original decision-maker. Ultimately, the Tribunal Member concluded that the appellant had 'embellished, if not entirely fabricated, material aspects of her claim to be a refugee'. In my view, this finding was open on the evidence before the Tribunal and no irrationality can be discerned in the Tribunal's reasoning. The Tribunal's appraisals of the appellant's testimony were open and based on a rational appraisal of her testimony. She claimed to have been committed to her faith from the age of 15, having been raised in a Christian family at least from the age of 12. At age 18 she attended the Tribunal hearing but was unable to articulate her beliefs in anything more than generalities. The Tribunal's appraisals were not illogical. Even if those appraisals were illogical, that of itself is not capable of constituting jurisdictional error: NACB [2003] FCAFC 235 at [29] ; NATC v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 52 at [27] . In relation to the 2001 and 2004 incidents it is conceivable that another reasonable mind may have concluded that the responses did not support evasion or fabrication. But equally, the findings reached by the Tribunal were open. It was not perverse. A finding may be irrational where the factual finding simply could not have been reached by any rational reasoning process. The ground of irrationality or illogicality requires a complete absence of a logical nexus between the evidence before the decision-maker, and the findings made, or inferences of fact drawn, by the decision-maker. It is similar to the concept of 'Wednesbury unreasonableness' as considered in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1 ; [1948] 1 KB 223 at 230. If the decision did display these defects, it will be no answer that the determination was reached in good faith. The Federal Magistrate found that a fair reading of the Tribunal's decision, in the context of having listened to tapes of the hearing and having read the transcript, did not suggest the Tribunal approached its task with a mind not open to persuasion; nor that the Tribunal acted capriciously, arbitrarily or without proper credit findings and by whim or intuition ( NADH [2004] FCAFC 328 ; 214 ALR 264). In the present appeal, the appellant submitted that the Tribunal Member had a pre-determined view about the appellant and certain issues relevant to her claim. The appellant pointed to parts of the transcript which it is submitted indicates that the Tribunal Member 'regardless of any explanation or argument given by the appellant...immediately and entirely rejects such explanations and maintains his pre-formed judgment'. In my view, the Tribunal Member has simply put to the appellant his reservations concerning aspects of her evidence. For example, at page 14 of the transcript, the Tribunal Member states 'I may then have difficulty accepting that you are sincerely religious in your beliefs as you claim otherwise I may have thought you may have sought to attend a church in Australia sooner than you did'. Further, he says at page 20, 'I may not think that you know much --- that you know enough about Christianity that I may be satisfied that you have any religious convictions'. In Minister for Immigration and Citizenship v MZXPA [2008] FCA 185 Sundberg J commented on the function of the Tribunal in conducting a review. It is required under the Act, in performing its review function, to consider whether or not it is satisfied that an applicant meets the criteria for a protection visa. If not so satisfied, it must refuse to grant the visa. See Minister for Immigration and Multicultural and Indigenous Affairs v VSAF of 2003 [2005] FCAFC 73 at [16] ---[18]. The Tribunal is accordingly required to assess the probative value of evidence put before it by an applicant. Where the Tribunal perceives weaknesses in that evidence, it is entitled vigorously to test that evidence: Re Refugee Review Tribunal; Ex parte H [2001] HCA 28 ; (2001) 179 ALR 425. Indeed, on listening to the audio, I would conclude the opposite was the case. The transcript does not show that the appellant was overborne in the manner identified in Ex parte H at [13]-[25] or that the Tribunal Member was openly hostile to the appellant in the manner identified in NADH [2004] FCAFC 328 ; 214 ALR 264 at [63] - [99] and [118]. In relation to allegations of bias, it is well established that such allegations must be distinctly made and clearly proved: Jia Legeng [2001] HCA 17 ; 205 CLR 507. That the Tribunal confronted the appellant with matters that brought her account into question is not indicative of bias: Ex parte H at [27] and [30]. Neither do the adverse credibility findings made by the Tribunal indicate, of themselves, that the Tribunal was not open to persuasion. It was open to the Tribunal to form a view, based on a consideration of her testimony and her demeanour, that she was not credible. That does not indicate bias: Ex parte H at [34]. Further, apprehended bias must be firmly established and is not found on any sense of unease about the Tribunal's findings: Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka [2001] HCA 23 ; (2001) 206 CLR 128 at [90] . In my view, no actual or apprehended bias can be discerned on the part of the Tribunal Member. The Tribunal had put to the appellant that it did not believe that she would not have asked members of her church congregation for assistance if she really was a refugee, then corrected, its language to say that it may have difficulty in believing that she did not ask. And particularly if you came from a church organisation where there were members of a community who --- who regularly claim refugee protection in this country. No error can be found in the approach taken by Her Honour in this regard. Her Honour did not err in her consideration of Maddy . The Tribunal Member clearly called upon his own previous experience of applications that had come before the Tribunal when it asked some of the questions it did. This was what occurred in Maddy : see at [75] and [80]. It was open for the Tribunal Member to do so and provided the appellant with an opportunity to address the matters raised by the Member. There was no error in the Tribunal so doing and there was no error in the Court below making findings that the Member's conduct was unexceptional. In my opinion, none of the grounds is made out. Her Honour's conclusion was correct. The appellant is to pay the costs of the first respondent to be taxed if not agreed. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | appeal application for protection visa alleged failure by tribunal to comply with s 420 of the migration act 1958 (cth) whether tribunal made wrongful, illogical or unreasonable findings of fact whether tribunal decision affected by actual or apprehended bias whether adverse credibility findings open on evidence before tribunal migration |
The Presiding Officers say that s 23 of the Federal Court Act is not a source of jurisdiction pursuant to which the Court can grant the relief sought. Further, or in the alternative, they say that there is no obligation under s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('the ADJR Act') to provide a statement of reasons, as there is no decision to which the ADJR Act applies. Further, they submit that even if there were such a decision, Mr Priestley is not a person aggrieved by it. He says that he referred the allegations to the Presiding Officers following advice from the Parliamentary Service Merit Protection Commissioner and in accordance with clause 2.3.3 of the Parliamentary Service Determination 2003/2 (Cth) ('the Determination'). Neither party contended that it was not. The reply to Mr Priestley, as signed by each of the Presiding Officers and dated 10 May 2007, referred to Mr Priestley's letter of 12 April 2007 making allegations about the conduct of the Secretary of the Department of Parliamentary Services under clause 2.3.3 of the Determination. His assertion seemed to be that, while the Presiding Officers referred the matter for advice and/or inquiry and a report, they did not refer the matter to the Parliamentary Service Commissioner in accordance with s 40(1)(b) of the Parliamentary Service Act , as required by subclause (2) of clause 2.3.3 of the Determination. Mr Priestley then seemed to assert that this constituted the claimed decision and sought a statement of reasons for that decision. The basis for Mr Priestley's assertion appears to be that the letter from the Presiding Officers to the Parliamentary Service Commissioner referred the matter for ' advice and/or an inquiry and a report ' but did not make any reference to s 40(1)(b) of the Parliamentary Service Act . In his written submissions, Mr Priestley submits that the Parliamentary Service Commissioner has no power to inquire into and report on matters relating to the Parliamentary Service unless a request is made. He says that the letter from the Presiding Officers to the Parliamentary Service Commissioner dated 10 May 2007 was a letter of referral only and not a letter of request. He contends that once the Presiding Officers formed the view that the matters referred to in his letter of 12 April 2007 required further investigation, they were obliged to make a request to the Parliamentary Service Commissioner in accordance with s 40(1)(b) of the Parliamentary Service Act . Parliament did not, he submits, give the Parliamentary Service Commissioner the power to decide whether or not to inquire into and report on matters relating to the Parliamentary Service. The Presiding Officers wrote to Mr Priestley on 24 October 2007 advising that there was no relevant decision capable of review under the ADJR Act and refused the request for reasons. DID THE PRESIDING OFFICERS MAKE THE CLAIMED DECISION? They point out that the decision made on 10 May 2007 was that the matters raised in Mr Priestley's letter of 12 April 2007 warranted further investigation, as a result of which the matters were referred to the Parliamentary Service Commissioner and that this decision was favourable to Mr Priestley. No statement of reasons is sought or has been sought in relation to that decision. Counsel for the Presiding Officers submitted during oral argument that Mr Priestley appears to be suggesting that the Presiding Officers deliberately worded their letter to the Parliamentary Service Commissioner so that it did not contain a reference to s 40(1)(b) of the Parliamentary Service Act , so as to deprive the Parliamentary Service Commissioner of the power to deal with the matters the subject of the referral. To the extent that Mr Priestley makes this contention, there is no evidence to support it. The Presiding Officers decided that the matters referred to in Mr Priestley's letter of 12 April 2007 may warrant further investigation and, accordingly, they referred the matters to the Parliamentary Service Commissioner in accordance with clause 2.3.3(2) of the Determination. There is no evidence to suggest that the Presiding Officers made a decision not to include a reference to s 40(1)(b) of the Parliamentary Service Act in the letter of referral so as to deprive the Parliamentary Service Commissioner of her powers under that Act. More generally, there is no evidence to suggest that the Presiding Officers made a decision not to refer the matter to the Parliamentary Service Commissioner in accordance with s 40(1)(b) of the Parliamentary Service Act , as required by clause 2.3.3(2) of the Determination. Following a decision by the Presiding Officers that a matter may warrant further investigation, the Presiding Officers must then decide the terms of the referral within the confines of the Determination. Clause 2.3.3(2) of the Determination, which uses the term ' and/or ' without further limitation, leaves open the possibility in option (d) above. A referral in terms of option (d) is not void for uncertainty ( Looke v Parbury, Henty & Co Pty Ltd [1950] VLR 94) but authorises the Parliamentary Service Commissioner to decide which of the above alternatives (ie. (a), (b) or (c)) to adopt ( Gurney v Grimmer (1932) 38 Com Cas 7). The option referred to in (d) above was the course adopted by the Presiding Officers in respect of Mr Priestley's letter of 12 April 2007. Mr Priestley says that the letter from the Presiding Officers to the Parliamentary Service Commissioner was a letter of referral only, and not a request under s 40(1)(b) of the Parliamentary Service Act . The term "refer" is defined in the Macquarie Dictionary (Revised 3 rd Edition) to mean ' to hand over or submit for information, consideration, decision, etc '. A "request" is ' the act of asking for something to be given, or done, especially as a favour or courtesy; solicitation or petition ' (Macquarie Dictionary, Revised 3 rd Edition). The referral by the Presiding Officers to the Parliamentary Service Commissioner, which was a referral for ' advice and/or inquiry and a report ' clearly encompassed the concept of a "request" as required by s 40(1)(b) of the Parliamentary Service Act . In summary, there is no evidence of the claimed decision. Mr Priestley has no entitlement to reasons for a decision that was not made. Contrary to Mr Priestley's submissions, the Presiding Officers decided that the matters raised in Mr Priestley's letter warranted further investigation and these matters were referred to the Parliamentary Service Commissioner for advice and/or inquiry and a report. The prescribed procedures were followed. The Parliamentary Service Commissioner's function was then, in accordance with ss 40(1)(a) and 40 (1)(b) of the Parliamentary Service Act , to give advice and/or to inquire and report on the matters specified in the letter of referral. It follows from my conclusions above that it is unnecessary to consider whether or not Mr Priestley is a person aggrieved or whether or not s 23 of the Federal Court Act is a source of additional jurisdiction. In any event, I considered these grounds in Priestley v Godwin (No 4) [2009] FCA 560 which was heard concurrently with this application and the same conclusions apply. Section 23 of the Federal Court Act is not a source of additional jurisdiction ( Thomson Australian Holdings Proprietary Limited v The Trade Practices Commission [1981] HCA 48 ; (1981) 148 CLR 150 at 161). Mr Priestley may not have established that he is a person aggrieved but that does not fall to be determined on this application under s 31A of the Federal Court Act. I am prepared to assume for the purposes of this notice of motion that, had the claimed decision been made, Mr Priestley would have been a person aggrieved. Mr Priestley made submissions concerning orders made at an earlier stage of these proceedings by a judge of the Court. No appeal or application for leave to appeal was brought against those orders in this Court. However, it appears that those orders were the subject of consideration by the High Court in Priestley v Godwin (Parliamentary Service Merit Protection Commissioner) (2008) 251 CLR 612. In that case, French CJ said that Mr Priestley's allegations regarding those previous orders were ' baseless '. I indicated to Mr Priestley that I would not deal with his submissions regarding those previous orders in these proceedings and I do not do so. In his application, Mr Priestley also seeks orders that he be provided with a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving reasons for the claimed decision dated 10 May 2007, as well as disclosure of the evidence or other material on which the findings on material questions of fact were based. To the extent that this represents an additional order to the order sought to provide reasons for the claimed decision, it is also predicated upon there having been a decision as Mr Priestley characterised it made on that date. The relevant facts as to whether or not the claimed decision was made and what decision was made are evident from the documentary material in evidence. There was no claimed decision. He is not entitled to these orders. Mr Priestley's application has no reasonable prospect of success. It follows that the proceedings should be dismissed pursuant to s 31A of the Federal Court Act, with costs. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | application for order pursuant to s 23 of the federal court of australia act 1976 (cth) (federal court act) that the respondents provide a statement of reasons for decision pursuant to s 13(1) of the administrative decisions (judicial review) act 1977 (cth) respondents seek summary dismissal pursuant to s 31a of the federal court act whether alleged decision was made whether s 23 of the federal court act is a source of jurisdiction pursuant to which the order sought by the applicant can be made whether the applicant is a person aggrieved administrative law |
2 The intention of the parties was apparently to transfer to Cairnsmore the right to service a number of clients of a financial planning and advisory business carried on at 60 Margaret Street, Sydney. That right, if effectively transferred, would have carried with it the right to receive the fees (or a proportion of them) paid by the clients for the services. 3 The business with which the parties were attempting to deal was the financial services business, the conduct of which was regulated under Chapter 7 of the Corporations Act 2001 (Cth). However, the SBA purported to effect the sale of assets of the business, without paying attention to the statutory scheme under which the business was conducted. 4 What is more, the SBA purported to effect the sale of a business that Bearsden did not carry on. The introductory recitals stated falsely that Bearsden carried on the business and that it had the legal ownership. 5 In fact, the business was that of Godfrey Pembroke Limited (GPL), which HBN Financial Management Pty Limited (HBN) conducted as an authorised representative of GPL in accordance with Part 7.6 of the Corporations Act . 6 HBN was the trustee of a discretionary trust. Bearsden was one of two unit holders in the trust. The principal of Bearsden, Mr James Pearsen Hodge, was also a personal authorised representative of GPL. 7 There was no contractual relationship between Bearsden and GPL. Bearsden was merely a recipient of fees earned by HBN as an authorised representative of GPL. 8 Bearsden was the trustee of Mr Hodge's family trust. Bearsden on-distributed the fees received from HBN to Mr Hodge and other members of his family as beneficiaries of the family trust. 9 The SBA provided for the purchase price to be payable in three instalments. The first instalment of approximately $351,000 was paid on 27 July 2004. The second instalment was due on 27 July 2005 and the third instalment 12 months later. 10 Cairnsmore did not hold authorised representative status under the Corporations Act , nor did its principal, Mr Vernon Howland. However, the SBA provided for Cairnsmore to have possession of the assets purchased on the date of payment of the first instalment. 11 In order to overcome the gap in satisfying the statutory requirements, the SBA anticipated that Mr Howland would undertake the necessary training to obtain authorised representative status. No period was stipulated for this to occur but the SBA provided for a "transition period" of two years. During the transition period Bearsden was obliged to assist in the "transition" of clients to Cairnsmore. 12 Provision was made in the SBA for Cairnsmore to obtain office services at the Margaret Street premises occupied by HBN. Cairnsmore was to pay a monthly fee of $5,800 as its proportion of the costs of the services. 13 Mr Howland was given space, albeit in the photocopy room, from 27 July 2004 and was introduced to clients commencing from that date. Cairnsmore received fees from that time and also paid its monthly cost allocation. 14 The SBA anticipated a possible change in the identity of the AFS licensee. That is to say, it was anticipated between the parties that the principal for whom the proper authority-holders were acting as authorised representatives would not be GPL. 15 Bearsden warranted in the SBA that if the identity of the AFS licensee should alter, during the transition period, then Cairnsmore would not be disadvantaged by any such change. See clause 9, extracted below. 16 With effect from 1 April 2005, HBN and Mr Hodge ceased to be authorised representatives of GPL. On or about 1 April 2005, Mr Hodge wrote to all of the clients of the business, including those purportedly transferred to Cairnsmore under the SBA, informing them that he would no longer be an authorised representative of GPL. 17 Mr Hodge's letters to the clients stated that he had notified GPL of his resignation "to join a new licensee under the name of, Paragem. By letter dated 1 July 2005, the then solicitors for Cairnsmore wrote to Bearsden's solicitors. The letter stated that Bearsden has repudiated the SBA. 19 Bearsden's solicitors responded to the letter on 18 July 2005, asserting the Cairnsmore had "walked away" from the SBA. 20 Cairnsmore solicitors replied on the same day stating that their instructions were that Cairnsmore accepted Bearsden's repudiation of the SBA and terminated that agreement. (ii) If so, whether Cairnsmore is entitled to damages for breach of contract in accordance with the principles stated by Dixon J and Fullagar J in McRae v Commonwealth Disposals Commission [1950] HCA 12 ; (1951) 84 CLR 377 at 409 --- 415. (iii) Whether the move from GPL to Paragem constituted the exercise of a "right of title" by Bearsden under cl 5.4 of the SBA, thereby entitling Cairnsmore to a refund of the first instalment and damages for breach of contract. See McDonald v Dennys Lascelles Limited [1933] HCA 25 ; (1933) 48 CLR 457. (iv) Whether the move from GPL to Paragem was to the disadvantage of Cairnsmore within the meaning of cl 9.1 of the SBA. (v) Whether Cairnsmore is entitled to recover damages either in contract or under the Trade Practices Act 1974 (Cth) for expenditure incurred by it in reliance upon representations made by Bearsden in the SBA that it owned and carried on the business and had the right to sell it. (vi) Whether Cairnsmore and Mr Howland are entitled to recover against Mr Hodge by virtue of ss 6(3) or 75B of the Trade Practices Act . (vii) Whether, if Cairnsmore's contentions are not correct, Bearsden is entitled to recover payment of the second and third instalments of the purchase price as claimed by it in its cross claim. It was not prepared by solicitors but was adapted by Mr Hodge from another contract that had been drawn by solicitors. The other contract provided for the purchase by HBN of a financial services business conducted at Milsons Point. 23 The parties to the SBA were Bearsden and Cairnsmore, but Mr Hodge's name appears on the cover sheet. The Seller carries on the Business. The Seller has legal ownership of the business and is authorised to sell part of that business to the Buyer. For the avoidance of doubt assets purchased excludes the WIP as at date of completion but includes any transfer of rights associated with all life insurance agencies, master trusts, wrap accounts, retail investments and other agencies or representative arrangements associated with the clients. Purchase price is three (3) times the Recurring Revenue as established at Completion Date. Therefore Recurring Revenue excludes plan preparation fees, implementation fees and commissions. Recurring Revenue excludes GST. If this right of title is exercised under this agreement then the Seller agrees to refund all payments made under clause 5.1 to the Buyer. It was also signed on behalf of Bearsden and Cairnsmore. 26 The document stated that the obligations entered into by HBN pursuant to the SBA were the obligations of Bearsden and Cairnsmore (to the extent of the SBA between Bearsden and Cairnsmore). It also stated that any amounts received or receivable by HBN pursuant to the Business Agreement SBA were received on behalf of and as agent for Bearsden and Cairnsmore. The amount was said to be as determined between them from time to time. The Seller will ensure that the same level and quality of services will be provided to Buyer from Settlement date. Costs associated with such services are as specified in Annexure B. It is agreed that these will be indexed to the Australia wide Consumer Price index (CPI) for the preceding prior year on the Second Payment Date. The document was headed "Cost Apportionment". That document provided for Cairnsmore to pay $5,800 per month. It also showed a comparison between revenue anticipated to be received by Cairnsmore under the GPL licence. This was compared with the revenue anticipated from the Paragem licence. 29 Relevantly, Annexure B showed that the licence fee payable to GPL was 12.5 per cent of gross revenue and the licence fee anticipated to be payable to Paragem was shown as 8.3 per cent. This would have resulted in a net advantage to Cairnsmore arising from a move to Paragem. The Buyer is to provide to Bearsden Holdings Pty Ltd a valid Tax Invoice, including GST, to cover the fee revenue receivable. The Seller is to provide to the Buyer a valid Tax Invoice, including GST, to cover the cost recovery payable. 32 The licensing regime contained in Part 7.6 is described in A J Black, "Licensing of Financial Services Providers" in Butterworths Australian Corporation Law: Principles and Practice , Vol 2 at [7.7.0005ff]. As Mr Black observes at [7.7.0005], the licensing regime secures the adequacy of capitalisation of providers of financial services; it excludes unqualified and untrained persons from the industry and enforces compliance with ethical standards. These objectives are stated in s 760A of the Corporations Act and are reflected in the provisions of Chapter 7. 33 The authors of Ford's Principles of Corporations Law point out at [22.010] that Chapter 7 seeks to regulate financial advice and dealings in relation to all financial products by a single regime which provides for licensing of all persons who offer financial services. 34 The relevant provisions for present purposes are ss 761A , 766A , 766B (1), 910A , 911A , 911B , 911C , 912A , 912B , 913A , 913B , 913C , 914A , 916A , 916B and 916F . I will reproduce only a number of those provisions, which are as follows. Note 1: Also, a person must not provide a financial service contrary to a banning order or disqualification order under Division 8. Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1)). Note: Failure to comply with this section is an offence (see subsection 1311(1)). 35 Section 912A(1) states the obligations of a Financial Services Licensee. These include complying with the conditions of the licence, taking reasonable steps to ensure that representatives comply with financial services laws, and ensuring that representatives are adequately trained and competent to provide the services. 36 Section 916B prohibits authorised representatives from appointing sub-representatives. (2) A purported authorisation contrary to this section is void. (2A) A person must not give a purported authorisation if that purported authorisation is contrary to this section. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). (3) A body corporate that is an authorised representative of a financial services licensee may, in that capacity, give an individual a written notice authorising that individual, for the purposes of this Chapter, to provide a specified financial service or financial services on behalf of the licensee, but only if the licensee consents in writing given to the body corporate. I have referred to most of them in the Introduction. 38 GPL was the Australian Financial Services (AFS) licensee. HBN was its corporate authorised representative. Mr Hodge and his associate, Mr Nicol, were personal authorised representatives of GPL. 39 HBN was the trustee of the HBN Financial Services Trust. Bearsden and Mr Nicol's company, Locin, each held two units in that trust. 40 Bearsden held its units in the HBN Financial Services Trust as trustee for the Korinya Trust, a discretionary family trust, for the benefit of Mr Hodge and his family. 41 The relationships are more fully explained in diagrammatic form in a document handed up by counsel for Cairnsmore. The diagram provides references to the various agreements under which the relationships were established. The commentary and the diagram are correct and I adopt the diagram and the explanatory statements made in it. A copy of that document is attached to my reasons for judgment. Counsel for Bearsden accepted the accuracy of the diagrammatic representation of the various relationships. 43 Mr Howland is a qualified chartered accountant. He was interested in a career change and wished to pursue a career in financial advice and planning. He approached Mr Hodge because he had heard that Mr Hodge may be interested in selling a part of his financial planning business. 44 Mr Howland and Mr Hodge had a preliminary meeting on 30 April 2004 to discuss the possible sale. Mr Howland was interested in buying into the business because he considered that GPL had an established reputation in the industry providing premium service, in particular, because of its connection with the NAB. 45 There was a follow-up meeting between Mr Howland and Mr Hodge on 7 May 2004. Mr Hodge wrote a letter to Mr Howland on that date which he provided to Mr Howland at the meeting. Don and I each own our individual client revenues, pay some costs directly and share other expenses. We trust each other as business associates and respect each other's contribution to our joint business. We have been together for nine years or so and share similar ideals and aspirations for our business. I would contact the client only when you felt I needed to, but would continue to attend annual review meetings for, say, two years or so, depending on how you felt. Don and I have been doing the latter for some time, as I will explain to you separately. There is often a conflict between what is in the client's best interest and what is in the adviser's or client's best interest. 47 The next meeting between Mr Howland and Mr Hodge took place on 19 May 2004. Mr Hodge handed a document to Mr Howland at the meeting. The document was a form of information memorandum for the sale of the business. It referred to Bearsden and was the first time that Bearsden's name was mentioned in the discussions between the parties. 48 The document was headed "Bearsden Holdings Pty Limited, Financial Planning Business, James Hodge, Client Adviser". It described the key characteristics of the business and stated that the client base could be considered to be "sticky" for a number of reasons. By that, Mr Hodge meant that the clients were likely to stick with the business, rather than move elsewhere. 49 The information memorandum referred to the form of computer software employed by the business for its financial products as "Tower Wrap". There was some discussion at the meeting about the Tower product. Mr Hodge said it was unsatisfactory and that he was looking for an alternative. 50 The information memorandum also stated that the business would introduce a number of changes that would lead to a significant improvement in net profit. One of these was that the fee payable to the AFS license holder would fall from approximately $170,000 to $25,000. According to Mr Hodge, this was because the licence would be owned jointly by Mr Hodge and Mr Nicol and "no dealer fee" would be payable. He said it was not referable to any possible move to Paragem. 51 The proposed purchase price was stated in the information memorandum as three times the ongoing fee revenue received from a named list of clients. 52 It is evident from section 5 of the information memorandum and the notes on it, that the parties discussed the sale of clients generating $300,000 per annum in fees. The total purchase price of approximately $900,000 would be payable in three instalments , with 40 per cent at the time when the contract was signed, 30 per cent 12 months thereafter and the final 30 per cent two years from the date of the contract. 53 The information memorandum stated that Bearsden owned the client fee income reflected in a profit and loss account of the HBN Financial Services Trust, which was attached. 54 At the meeting of 19 May 2004, or at a later meeting, Mr Howland told Mr Hodge that he would have to borrow the whole of the purchase price. He also informed Mr Hodge prior to execution of the SBA that he would have to give security to the lender over his family home at Warrawee. I reject Mr Hodge's denial of this. 55 There was a further meeting between the parties on 28 May 2004. Mr Hodge handed to Mr Howland a document entitled "Binding Term Sheet" which described the basis of the sale and purchase of part of the financial planning business of Bearsden. 56 The Binding Term Sheet stated an agreed position in relation to stipulated items. These included the subject matter of the purchase, the price, the instalment terms, the expenses to be met by the purchaser and the transition period. 57 On 17 June 2004, Mr Hodge emailed to Mr Howland a draft of the SBA. It is plain from the draft that it was the document upon which the final executed SBA was based. The draft document was a copy of a sale of business agreement prepared by a firm of solicitors for the purchase by HBN of a financial planning business at Milsons Point. 58 It is evident that by 17 June 2004, Mr Hodge had informed Mr Howland that Paragem Pty Limited was a company associated with Mr Ian Knox. Mr Knox wrote, on the letterhead of Paragem, to Mr Howland on 17 June 2004 confirming that it could provide assistance in educational material to enable Mr Howland to obtain the necessary financial services qualifications. 59 Prior to 29 June 2004, Mr Howland informed Mr Hodge that he needed a letter to provide to his bank showing the amount of the monthly outgoings to be met by the purchaser. On 29 June 2004, Mr Hodge sent a letter to Mr Howland confirming the monthly cost allocation of $5,800. 60 The letter also stated a comparison of the return forecast to Mr Howland under the GPL licence as compared to that which would occur under Paragem. The letter stipulated a 12.5 per cent fee to GPL and an 8.3 per cent fee to Paragem; that portion of the letter was replicated in Annexure B to the SBA. 61 Although the final form of the SBA was not executed until 26 July 2004, a document in virtually identical form was executed by the parties on 23 July 2004. Mr Howland delivered that document to his financier, the Commonwealth Bank of Australia, on 23 July 2004. All other documents are in order. I expect to get this during Monday (26th) morning. He asked Mr Hodge to confirm that if the move to Paragem took place during the transition period, Mr Howland would be involved. Mr Hodge told Mr Howland that the move would not take place without Mr Howland's consent. I reject Mr Hodge's denial of that conversation. Mr Hodge introduced him to clients as a person who had come into the business. Mr Hodge did not tell the clients that Mr Howland or his company had purchased the right to service the clients. 64 During the period Mr Hodge was pursuing his plan to move to Paragem. The plan was sufficiently definite that on 2 December 2004 he sent an email to one of HBN's large clients describing Paragem as "the dealer we will be changing to. The memorandum stated that Mr Hodge was proceeding on the assumption that "I will be advising my clients and resigning during the last week of January. " This was a reference to his intended resignation from his authorised representative status for GPL. He said he hoped that the move could be completed in February. It is plain from the memorandum that he regarded the move to Paragem as non-negotiable. He did not send a copy of the memorandum to Mr Howland. 66 Nevertheless there were some discussions between Mr Hodge and Mr Howland about the move to Paragem in January 2005. On 13 January 2005, Mr Hodge sent an email to Mr Howland, Mr Knox and Mr Nicol with a proposed draft letter to clients. The draft stated, "We have chosen Paragem Pty Limited as our new dealer organisation. It is plain that Mr Howland was concerned about the proposed move. 68 On 11 February 2005, Mr Hodge met with Mr Howland to discuss Mr Howland's concerns about the move to Paragem. It is clear from Mr Hodge's notes of the meeting that Mr Howland was unhappy about the lack of detail provided by Mr Hodge relating to the proposed move to Paragem. It is evident that he expressed his concerns and that Mr Hodge was "a little concerned with Howland's desire to proceed at this time. 70 Mr Hodge is not a 'details' person. He referred Mr Howland to Mr Knox to try to satisfy Mr Howland's concerns about the details of the proposed transaction. There were meetings between Mr Howland and Mr Knox in February and March 2005. 71 In February 2005, Mr Hodge gave notice to GPL of his intended resignation as an authorised representative. It would appear that this was to take effect by 1 April 2005. 72 On 1 March 2005, Mr Howland sent an email to Mr Hodge. The email referred to Mr Hodge's plan to send details to clients on 3 March 2005 advising them of the proposed move to Paragem. Mr Howland stated that he felt this was premature until a number of specified details were cleared up. 73 I reject Mr Hodge's evidence that he was unaware from the email that Mr Howland was objecting to the move to Paragem until Mr Howland's concerns were cleared up. 74 Mr Hodge's evidence was contrary to the plain terms of the email. His failure to accept what was put to him by counsel for Cairnsmore reflected badly on his credit. This was just one of many instances. 75 By 1 March 2005 and probably earlier (ie. 7 January 2005), Mr Hodge had made up his mind to move to Paragem come what may. He did not wish to brook any opposition to this course. 76 On 31 March 2005 Mr Howland sent an email to Mr Hodge. A lessening of offering to the GPL model would disadvantage our clients, and myself as a Financial Planner to service them. This is because there are a number of significant issues that are simply too important to say "they will be word out. Letters to clients were sent by Mr Hodge on the same day, 31 March 2005, or on 1 April 2005. The clients to whom the letters were sent included clients purportedly sold to Cairnsmore. I referred earlier to the letters which stated that "you will be transferred as a client of mine" to Paragem. 78 The effective date of the move to Paragem was 1 April 2005. HBN continued to receive fees from GPL in respect of services provided up to that date. A statement from GPL to HBN for the period 24 March 2005 to 7 April 2005 records commission payable. 79 The rate of dealer commission or fee to GPL for the last two-week period recorded in the commission statement was 9.11 per cent. This was lower than the 12.5 per cent recorded in the SBA. It has an important bearing on the issue of whether Cairnsmore was disadvantaged by the move to Paragem. I will deal with that issue later. 80 On 28 April 2005, there was a planning session for the move to Paragem. The meeting was attended by Mr Hodge, Mr Howland, Mr Knox and others. The meeting took place at the Azuma restaurant in the Chifley Tower. A document was handed out of the meeting and the discussion included a presentation made by Mr Howland. 81 Whatever took place at the planning session it is clear that Mr Howland was determined at about this time that he did not wish Cairnsmore to proceed with the SBA. In my view what engendered this was his opposition to the proposed move to Paragem. 82 A heated meeting took place between Mr Howland and Mr Hodge on 4 May 2005. Mr Howland told Mr Hodge that he did not wish to proceed with the SBA. He also said that he wanted Mr Hodge to return the money paid under the SBA, ie: the first instalment, but that he wanted to retain fees received by Cairnsmore to date. 83 By 4 May 2005 any trust and confidence between Mr Howland and Mr Hodge had gone. Mr Hodge did not want Mr Howland to be involved in the business. He told Mr Howland at the meeting of 4 May 2005 that Mr Howland was not welcome at the forthcoming Paragem launch and he should "stay away" from it. 84 The relationship between Mr Howland and Mr Hodge was so bad by this time that Mr Knox tried to act as an intermediary. There was a meeting between Mr Knox and Mr Howland for that purpose but Mr Knox's intervention was unsuccessful. 85 On 1 July 2005 Minter Ellison wrote on Cairnsmore's behalf to Bearsden's solicitors stating that Bearsden had repudiated the SBA. On 18 July 2005 Bearsden's solicitors wrote to Minter Ellison asserting that Cairnsmore was in breach. On the same date Minter Ellison wrote to Bearsden's solicitors accepting Bearsden's repudiation of the SBA and terminating it. 86 These proceedings were commenced by an application filed on 6 November 2006. 88 This requires the court when construing a commercial contract to have regard to the commercial purpose of the contract, the context and the market in which the parties were operating: Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 995-996; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at [22] . 89 The commercial purpose of the SBA was for Bearsden to sell a part of the business to Cairnsmore. The specified part was the "assets purchased. " They consisted of four items for which Cairnsmore was to pay approximately $1 million in three instalments. 90 Each of the assets purchased was an asset of the business as defined in the SBA. The business was that of providing financial planning and product advice to clients as authorised representative of GPL. 91 The only proper construction of the SBA on the face of the written agreement is that what Bearsden purported to sell was the financial services business which it conducted as authorised representative of GPL. That construction is reinforced by the provisions of Part 7.6 of the Corporations Act . 92 It was submitted on behalf of Bearsden that the business was Bearsden's income stream which was actually delivered to Cairnsmore for some part of the period during which Mr Howland worked in the business. I reject that approach to construction for three reasons. 93 First, it is contrary to the plain meaning of the SBA. Second, it ignores the elaborate structure which GPL and HBN put in place to comply with Chapter 7 of the Corporations Act . Third, it would produce an agreement that contravened the provisions of Chapter 7 of the Corporations Act . On an objective approach that could not have been the intention of the parties. 94 It was also submitted on behalf of Bearsden that any defect in its title was cured in about February 2006 when Bearsden became an authorised representative of Paragem. This submission cannot be accepted for at least two reasons. 95 First, it is not what Bearsden contracted to sell under the SBA. Second, it would have been contrary to Part 7.6 of the Corporations Act , in particular s 916B(3). As in McCrae , the only proper construction of the SBA is that it included a promise by Bearsden that the subject matter of the agreement existed: see McRae at 410. It is plain that the subject matter did not exist because Bearsden did not own the business. The subject matter was not simply a business conducted at the premises, it was the business owned by Bearsden. It is true that Bearsden had the power to direct where the income stream that it received through HBN was paid, but it had no enforceable right against GPL because there was no contractual relationship between those parties. 96 In short, the commercial purpose which Bearsden sought to achieve could not have been put in place without an agreement between HBN and Cairnsmore. It would in my view have been necessary in addition for GPL to have been a party. The defect was not cured by Annexure B to the SBA, ie, the Agency Agreement on p 743 of Exhibit A. That document was legally ineffective (even if it was properly executed on behalf of HBN, which I doubt). This is because it entirely ignored the structure in place in the various agreements fully described in counsel's diagram annexed to my reasons for judgment. 97 This case therefore falls within the principles stated by Dixon and Fullagar JJ in McCrae at 409 to 411. Bearsden must pay damages for breach of its promise to give title. 98 Whether or not Cairnsmore relied on that breach when it gave notice of the termination of the SBA, it is open to Cairnsmore to rely on that breach in these proceedings: see Shepherd v Felt & Textiles of Australia Limited [1931] HCA 21 ; (1931) 45 CLR 359. 99 I will deal later with the question of damages. 101 It is true that the word "assets" in the first sentence of cl 5.4 must be read as a reference to the "assets purchased. " However the reservation of title in cl 5.4 is in my view to be contrasted with cl 6 under which property in the assets purchased did not pass until payment of the final instalment of the purchase price. 102 It seems to me that cl 5.4 is concerned with the subject matter of cl 7. Under that clause, Cairnsmore obtained possession of the assets purchased on payment of the first instalment of the purchase price. What Bearsden obtained under cl5.4 was a power to take back Cairnsmore's right to possession at any time by exercising Bearsden's right of title. 103 In my view, Bearsden exercised its right of title when Mr Hodge gave notice to the clients on 31 March 2005. It is difficult to understand what else was intended by those letters. 104 Moreover, Mr Hodge acknowledged in cross-examination that since at least May 2005, all of the clients the subject of the SBA remained with him. Bearsden or Mr Hodge had possession of the clients and the client files. Bearsden obtained the economic benefit of the fee income generated by advice provided by Mr Hodge as an authorised representative of Paragem. 105 It follows from cl 5.4 that Bearsden was bound to refund to Cairnsmore the first instalment of the purchase price. 106 Clause 5.4 says nothing of any entitlement of Bearsden to recover the fees paid to Cairnsmore prior to the exercise of title. In my view, Bearsden was not entitled to recover those fees either under cl 5.4 or under general principles. 107 This was a contract for the payment of the purchase price by instalments. It is well established that a purchaser is entitled to recover the instalments other than the deposit where the contract is not completed: McDonald v Dennys Lascelles at 477 to 478. 108 Furthermore, a termination for breach is not a rescission ab initio . Both parties are discharged from further performance but rights which have been unconditionally acquired are not divested: McDonald v Dennys Lascelles at 476 to 477. It follows in my view that the fees paid to Cairnsmore were irrecoverable under this principle. 110 Counsel for Cairnsmore devoted a great deal of attention to this issue. A large number of reasons were put forward to support a finding that Cairnsmore did suffer a disadvantage by reason of the move to Paragem. 111 I am satisfied that Cairnsmore did suffer a disadvantage for two principal reasons. First, the conditions of Paragem's licence were more restricted than those of GPL. There were areas of business open to GPL that could not be undertaken by Paragem. One of these was life insurance. Mr Howland was interested in this area of practice and Mr Hodge conceded that some of the clients wanted this product. 112 The second disadvantage was the "dealer fee" or commission payable to the AFS licence holder. I am satisfied on the evidence before me that the fee payable by HBN to GPL at the time of the move to Paragem was 9.11 per cent. I reject Mr Hodge's evidence that the actual fee was 12.5 per cent and that the 9.11 per cent was explicable by reason of a volume discount. His evidence on this question was unsatisfactory and was not supported by any documentary records tendered to explain the payment of 9.11 per cent commission. 113 Nor was the fee payable to Paragem explained by any proper documentary evidence. Plainly it was not the 8.3 per cent referred to in Annexure B to the SBA. Mr Knox gave evidence that it was "net 10 per cent" fee. However, Mr Knox's explanation was not given with the clarity or directness I would have expected. 114 In my opinion the correct analysis of Mr Knox's evidence is that the fee payable to Paragem was 15 per cent. There was a separate arrangement between Paragem and Bearsden under which Bearsden obtained a five per cent rebate giving it a net 10 per cent commission payable to Paragem. However, there was nothing to suggest that the benefit of the five per cent rebate would have flowed to Cairnsmore. 115 It follows in my view that Cairnsmore suffered an economic disadvantage by reason of the higher commission payable to Paragem. 116 It seems to me that although cl 9.1 speaks of a "warranty," it was in truth a condition of the SBA that Cairnsmore would not suffer a disadvantage: see Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 39 SR (NSW) 632 at 641-642. 117 This view is supported by the object and purpose of the SBA and the surrounding circumstances, including GPL's standing as a premium dealer and Mr Howland's concerns that he be protected against a move from GPL. 118 Accordingly, in my view Cairnsmore is entitled to terminate for breach of cl 9.1. The wasted expenditure fell within the second rule in Hadley v Baxendale (1854) 9 Ex 341: see McRae at 413-415; see also The Commonwealth v Amman Aviation Pty Ltd [1991] HCA 54 ; (1991) 174 CLR 64 at 88-89. 120 There may be some differences from McRae in the present case; in particular, a question arises as to whether it was impossible for Cairnsmore to establish what its profits would have been under the SBA: see Amman at 89. However, I am inclined to the view that the difficulties which arose from the move to Paragem tend in favour of the application of the wasted expenditure principle to the facts of this case. 121 The question then becomes whether the wasted expenditure exceeded the amount of $194,000 received by Cairnsmore during the life of the SBA. The parties put forward a schedule of losses and there was an argument as to whether some of them fell within the wasted expenditure principle. 122 However, the short answer to this difficulty is that under cl 28.2 of the SBA, Bearsden indemnified Cairnsmore against all losses, costs, liability and expenses incurred by Cairnsmore because of a breach by Bearsden or because something was not as it was represented to be. 123 It follows from this that Cairnsmore is entitled to recover all of its claimed expenditure, other than the amount paid to obtain Mr Howland's PS 146 qualification and the income tax. 124 The total of the items recoverable under cl 28.2 exceeds the sum of $194,000. 125 The same amount is recoverable under s 82 of the Trade Practices Act : see I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited [2002] HCA 41 ; (2002) 210 CLR 109 at [50] . Those damages are recoverable by Cairnsmore and Mr Howland against Bearsden. It is clear that the representations were made in trade or commerce and that reliance was established. 126 I will deal below with the question of the personal claim against Mr Hodge. The admission was that oral and written submissions were made by Mr Hodge as second respondent, including on behalf of Bearsden, in terms of recitals A and B, cll 5.4, 6, 7, 8.1, 8.2, 8.3, 9.1, 9.2, 15.2, 19.1, 20, 24 and 25 of the SBA. 128 The question which arises is whether s 52 of the Trade Practices Act applies to Mr Hodge by reason of the extended operation of that provision to individuals under s 6(3) of the Trade Practices Act . 129 Alternatively, Mr Hodge will be liable if he was involved in the contravention under s 75B of the Trade Practices Act . 130 All of the relevant representations which were the subject of the admission were made not only in the SBA but in the draft of that document which was sent by Mr Hodge to Mr Howland by email on 17 June 2004. 131 It follows that Mr Hodge's conduct involved the use of postal, telegraphic or telephonic services under s 6(3) of the Trade Practices Act . Accordingly, s 52 applied to Mr Hodge and he is personally liable for the damages suffered by Cairnsmore and Mr Howland by that conduct. 132 It is therefore unnecessary to determine whether Mr Hodge is also liable under s75B , but I will do so briefly. 133 Whether Mr Hodge is liable as a person involved in a contravention turns on whether he had knowledge of the essential elements of the contravention: see York v Lucas [1985] HCA 65 ; (1983) 158 CLR 661. 134 There has been some debate in the cases as to whether liability under s 75B requires the accessory to know that the conduct of the principal is misleading or deceptive: see for example Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 ; (2003) 135 FCR 1 at [83] . 135 The question in the present case turns on Mr Hodge's knowledge. 136 Mr Hodge was an unsatisfactory witness. I cannot accept him as a witness of truth. He either could not or would not answer questions directly. He denied propositions that were put to him that were clearly supported by contemporaneous documents. His denials were in the teeth of the contemporaneous documentary record. 137 By contrast, I though that Mr Howland was a truthful witness. He did not have a good recollection of the detail but he did his best to answer honestly and directly. I prefer his evidence where it conflicts with that of Mr Hodge. 138 It is clear that Mr Hodge was aware of all the necessary elements. He made the representations and he was aware of the structure under which the business was established. In addition, the documents given to clients showed quite plainly that Mr Hodge informed them that HBN was the corporate representative of GPL and that Mr Hodge was the personal authorised representative of GPL. 139 However, if it is necessary for me to find that Mr Hodge knew the representations as to Bearsden's title were false, a real barrier exists as to a finding under s 75B. This is because I would have to find that Mr Hodge knew of the error in the SBA which was his own undoing. I could not make that finding notwithstanding the view I formed of Mr Hodge as an untruthful witness. 140 Accordingly, I prefer to rest my finding against Mr Hodge on the basis of the extended operation of the Trade Practices Act under s 6(3). Interest will be payable. The parties are to bring in short minutes to effect the reasons for judgment. 144 I have heard argument on costs. Ms Perry, the solicitor for Cairnsmore and Mr Howland, relied firstly upon an offer of compromise dated 11 December 2006. There can be no argument but that a proper exercise of my discretion in accordance with O 23 r 11(4) of the Federal Court Rules would be that Cairnsmore and Mr Howland should be entitled to costs on a party and party basis up to 28 days from 11 December 2006, with costs on an indemnity basis thereafter. 145 However, Ms Perry also points to the provisions of cl 28.2 of the SBA. This would give Cairnsmore full indemnity against all of the costs and expenses incurred by it and that seems to me to be the clear result of the contractual provisions entered into by the parties. I do not think that there would be any double-counting flowing from this. I have been referred without objection to what took place before the proceedings were actually commenced and it would appear that considerable costs were incurred when Cairnsmore and Mr Howland were represented by Minter Ellison. Those costs would fall within the indemnity provided under cl 28.2. 146 It follows that I will order Bearsden to pay the costs and expenses of the proceedings incurred by Cairnsmore on an indemnity basis pursuant to cl 28.2 of the SBA. 147 I also make a costs order in favour of Mr Howland but that costs order can only be in accordance with O 23 r 11(4) for party and party costs up to 11 January 2007. Indemnity costs are applicable thereafter. I certify that the preceding one hundred and forty-seven (147) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | principles of construction of written instrument promise that subject matter of agreement existed breach of essential term damages for breach of contract payment of first instalment non refundable where vendor commits breach of essential term reliance losses recoverable pursuant to indemnity clause reliance losses also recoverable where difficult to calculate loss of profit misleading and deceptive conduct use of postal, telegraphic or telephonic services requirements of knowledge for individual to be liable for involvement in contravention contracts damages trade practices |
It also sued two organisations with which he is associated, a listed public company, Sirtex Medical Ltd (Sirtex), and an incorporated association, the Cancer Research Institute Incorporated (CRI). The University alleges, in substance, that Dr Gray has been involved in the development of new technologies for treating cancer while a member of the University staff. It alleges that he has obtained intellectual property rights and benefits flowing from those technologies in breach of his contractual and fiduciary duty to the University. The acquisition of those rights by Sirtex, including in the case of one of the technologies, by assignment of rights from CRI, and the issue of shares in Sirtex to Dr Gray and CRI, have drawn those two bodies into the dispute. The University also alleges that Dr Yan Chen, a former member of the staff was involved in the development of the technologies. She is named as a cross-respondent to a cross-claim brought by Dr Gray against her and the University. The trial of the action is set down for hearing commencing on 4 September 2006. In the meantime, pursuant to undertakings given last year, CRI has informed the University of its intention to dispose of its shares in Sirtex. The University has filed a motion seeking an order restraining CRI from disposing of those shares. The basis upon which it brings that motion is that the shares were acquired from Sirtex in consideration of the assignment to Sirtex of rights relating to an invention embodying one of the disputed technologies, that it had an interest in those rights, and that knowledge of its interest was attributable to CRI. 6 CRI gave an undertaking to the University in February 2005 not to deal with any of its shares in Sirtex or exercise any option held by it in respect of Sirtex without providing 14 days written notice of its intention to the University's solicitors. The University gave a cross-undertaking as to damages. On 12 April 2006 CRI wrote to the University giving notice of its intention to donate its shares in Sirtex to the Walter and Eliza Hall Institute (WEHI). In response to that letter the University seeks interlocutory orders restraining CRI from dealing with any of its shares in Sirtex or exercising any option held by it in respect of Sirtex until further order. For the following reasons I am satisfied that I should make the orders sought. It is admitted that she entered into written contracts of employment with the University on 14 February 1989 and on 19 February 1992 and that she agreed to be bound by the University of Western Australia Act 1911 (WA), the Statutes and the Regulations as in force from time to time. It is also admitted that she agreed to be bound by the University's Patent Regulations. According to Dr Chen's affidavit of 30 May 2006 her employment with the University commenced on 1 September 1989 and ceased on 12 January 1993. She commenced employment with Royal Perth Hospital on 13 January 1993. 8 Initially the University was relying primarily upon an affidavit sworn by its solicitor, Ms Faulkner on 26 April 2006, in which she referred, inter alia, to matters of information and belief based on things that Dr Chen had told her. Because of objections taken to aspects of that evidence an affidavit sworn 30 May 2006 by Dr Chen was filed and relied upon. Dr Chen confirmed that which Ms Faulkner said Dr Chen had told her. 9 Dr Chen confirmed that she had written a letter dated 25 June 1992 on University letterhead to Dr Jonathan Hodgkin at CSIRO referring to 'interesting results' she had obtained using dextran sulphate in albumin microspheres. He thinks that at this stage we had better not publish any results about DOX-metal ion complex microspheres in case it has commercial applications. Therefor, I have to change the plan and put in something else. This and other elements of Ms Faulkner's affidavit are, in part, conclusionary in so far as they refer to a 'discovery' and locate it within the scope of Dr Chen's employment and within the course of her duties at the University. Those are aspects of the affidavit which should not be there and which I will disregard notwithstanding that Dr Chen agrees with them. 10 In par 36 of Ms Faulkner's affidavit she speaks of information from Dr Chen, confirmed by Dr Chen in her affidavit, of a conference she had with patent attorneys at Wray & Associates on 16 November 1994 in relation to the DOX-Spheres Invention. There are conclusionary statements in that paragraph which, again, do not change their character upon confirmation by Dr Chen. They include the statement that she 'discovered the DOX-spheres invention'. Whether or not she 'discovered' it in the sense of developing a novel technology may be a matter for debate. Paragraph 36 of Ms Faulkner's affidavit, as confirmed by Dr Chen, admissibly evidences that she conferred with patent attorneys and what she told them. It does not establish that she discovered the relevant invention. Paragraph 37 exhibits a written advice from Wray & Associates dated 21 December 1994 '... with respect to the ownership of the intellectual property in the DOX-Spheres Australian Application'. The advice itself is no evidence of the ownership. It reflects in part instructions given to the patent attorneys by Dr Chen. To the extent, however, that her belief and Dr Gray's belief about the ownership of the technology may be relevant, it is relevant that the patent attorneys told her that they believed the intellectual property in the invention resided with the University. There is evidence that Dr Chen sent a copy of the letter from Wray & Associates to Professor Gray attached to a letter she wrote to him on 30 December 1994. 11 I am prepared to infer from the evidence referred to thus far and the exhibits referred to in the affidavits that Dr Chen was involved in developing the microsphere technology which is referred to under the description DOX-Spheres Invention in the Statement of Claim. I am also satisfied that, as confirmed by Dr Chen, CRI contributed funds which were used for toxicity and clinical trials which post-dated the filing of a provisional specification for a patent for the invention in November 1993. That provisional specification was lodged in the joint names of Dr Chen and Dr Gray at that time. 12 CRI was incorporated on 30 January 1991 under the Associations Incorporations Act 1987 (WA). It was initially known as Friends of the Cancer Institute Inc. On 28 October 1993 it changed its name to Cancer Research Institute. Its stated objects included supporting the work of the Lions Cancer Institute and cancer research and education in general. One of its objects was to establish, maintain and administer a public fund or funds for any charitable purpose in relation to cancer research and education, but in particular for purposes recommended by the Medical and Scientific Advisory Committee of the Lions Cancer Institute. The duties of the Board, as described in cl 7, include the conduct of activities that will further the objects of the Association, the maintenance of all necessary financial records and the keeping of minutes of all Board meetings and general meetings. The Board is required to meet at least four times a year and the Chairman may at any time convene a meeting (cl 12). Dr Chen confirmed in her affidavit the statement in Ms Faulkner's affidavit that she was a member of the Board of Management of CRI from early 1993 to 'at least October 1994'. 15 A copy of the minutes of a meeting of the Board of Management of CRI held on 18 October 1994, exhibited to Ms Faulkner's affidavit, show Dr Chen as present at the meeting and an apology from Professor Gray, who is designated 'Medical Director'. In general business there is recorded the departure of Dr Chen to 'Delta West' where it was said she would be assuming a senior research position. The Secretary was asked to write to Dr S Jones inviting him to replace her as the research staff representative. The Chairman of the meeting was the Vice-President Mrs Leonie Mirmikidis. The Provisional Patent No PM2492 was taken out in the name of Y Chen and B Gray. She also confirmed that she received for signature a Deed of Assignment from Dr Gray in or about November 1994. The purported assignment to CRI was of the right, title and interest to the invention entitled Controlled Release Preparation and all letters patents of the United States to be obtained on a pending application filed under the Patent Cooperation Treaty on 17 November 1994. Dr Chen did not sign that document. She did, however, sign another document on 23 December 1996. By that document, in consideration of $1 '... and other good and valuable consideration' paid by CRI she assigned to CRI '... all my (our) right, title and interest in Canada in and to my (our) invention relating to 'CONTROLLED RELEASE PREPARATION' as fully described and claimed in the application for a patent for such invention and to all my (our) corresponding right, title and interest in and to any patent which may issue therefore'. 18 Dr Chen executed another assignment to CRI on 10 November 1996. This was an assignment of rights in the United States to the invention known as Controlled Release Preparation in respect of which it appears a patent application was pending in that country. 19 An international application PCT/AU94/00708 was applied for by CRI. According to Dr Chen the invention disclosed in the international application appeared to be the same as that disclosed in the Australian provisional patent application numbered PM2492 by the Australian Patents Office. A copy of the relevant provisional specification was exhibited to Dr Chen's affidavit. It showed the applicants as Dr Gray and herself and the date of application as 18 November 1993. The invention title was 'Controlled Release Matrix for Drugs and Chemicals'. In this application a description is provided for the controlled release of the drug Doxorubicin and cisplatin into a carrier matrix for the treatment of cancer. In that letter Dr Gorn said he was informing the University about CRI's recent negotiations to commercialise technology developed through the University. He raised two matters for consideration, the first being the relationship between CRI and the University and the second, relating to the further development of CRI's intellectual property. He referred to advice from Professor Gray, the current 'Medical Director' that the University had benefited from CRI's research by way of CRI scientific staff supervising students within the University. The first involves intellectual property involving the use of small ceramic particles to treat patients. This was funded through the CRI and developed in association with Monash University and the Chinese University of Hong Kong. The second area involves a new matrix for transport of an anti cancer drug and was developed by a scientist working at the CRI in Perth. The University of WA has no interest in these areas of intellectual property. So much is admitted by CRI in its defence. It is also admitted that in May 1997 CRI received $433,332 B ordinary class shares in Sirtex by reason of the CRI DOX-Spheres assignments to Sirtex. At that time Sirtex had not been publicly listed. 22 It is alleged by the University in its statement of claim in paragraphs to which CRI does not plead, that when Sirtex was floated each ordinary share in Sirtex already held by its shareholders was converted into 11.225646 shares. It is also said that Sirtex was admitted to the official list of the Australian Stock Exchange on 23 August 2000. As a result, CRI held 4,864,432 shares at the time of Sirtex's admission to the official list of the Australian Stock Exchange. It also evidently held options. Although CRI did not plead to these paragraphs of the statement of claim, it did not appear from the oral submissions that the existence of the CRI shareholding in Sirtex was in dispute. On that basis it contends that CRI was not a bona fide purchaser for value. 24 Then it is submitted that CRI had knowledge of the facts constituting, or which to a reasonable person, would have indicated that Drs Gray and Chen had breached their fiduciary duty to the University. The DOX-Spheres provisional application was filed on 18 November 1993. CRI has admitted on the pleadings that at the relevant time Dr Gray was an employee of the University. It was not contended by CRI that he was at any time employed by it. Nor was Dr Chen at any time an employee of CRI. While CRI did not admit in its defence that Dr Gray was a member of its Board of Management from June 1994 until February 1998 as alleged by the University, Dr Gray admitted that he was a member of the Board of Management from that time. This appears from the University's Notice to Admit Facts dated 21 March 2006 and Dr Gray's Notice Disputing Facts dated 18 April 2006. The University also relies upon a letter from CRI's solicitor dated 12 April 2006 in which it is admitted that Dr Gray and Dr Chen were members of the Board of Management. 25 There were two letters exhibited to Ms Faulkner's affidavit from Davies Collison Cave Patent Attorneys dated 9 December 1994 and 11 December 1996. Both were addressed to Professor Gray at the CRI. Both related to the DOX-Spheres Invention. The University submits that in the circumstances the knowledge of Dr Gray and Dr Chen concerning the provenance of the DOX-Spheres Invention and the interest of the University in it was to be imputed to CRI. On that basis, it is said, there is a serious case to be tried that CRI received the DOX-Spheres Invention as a volunteer in circumstances where it either knew the true provenance of the invention or was put on inquiry. 26 It is submitted on behalf of the University that if CRI is permitted to give its shares and options in Sirtex to WEHI, then WEHI may in turn dispose of them to third parties against whom the University could not maintain any equitable claim. Accordingly, the University would lose the ability to recover the shares if CRI were to dispose of them to WEHI. It is said that damages would not be an adequate remedy because the University would lose the benefit of any increase in value of the shares resulting from any exploitation of the inventions and CRI lacks sufficient assets to pay damages or equitable compensation in an amount equal to the value of the shares. 27 It is further submitted that there would be no prejudice to CRI or WEHI if CRI were restrained from giving away the shares or exercising the options it holds. If it were permitted to dispose of the shares there would be a risk of the University suffering irreparable harm for which damages would not be an adequate remedy. On that basis it is contended that the balance of convenience favours the granting of the injunctive relief sought. The University has not established by evidence that it has a good arguable case that Dr Chen invented DOX-Spheres in the course of her duties as a University employee. 2. The University has not established that CRI received personal property belonging to the University. 3. The University has not established by evidence that it has a good arguable case that CRI was possessed of the knowledge required to establish liability --- namely that it knew of facts that themselves would to a reasonable person tell of fraud or breach of trust or that it had consciously refrained from inquiry for fear that it would learn of the fraud. While those submissions have been prepared with care and particularity, they do not deflect me from the inference that on the materials presently before the Court there is a serious question to be tried that the relevant knowledge may be attributed to CRI through the involvement of Dr Gray as its Medical Director and Dr Chen as a member of its Board. These things taken together with the letter from Dr Gorn and the other factual matters and admissions to which I have referred, if unanswered may support a conclusion that requisite knowledge is attributable to CRI. I do not suggest that the seriously arguable case so disclosed is a particularly strong one or that its resolution would not involve careful analysis of legal and factual issues of some complexity. 30 It is well established that in considering the grant of an interlocutory injunction there is a relationship of interdependence between the strength of the case raised and the balance of convenience. Where the balance of convenience lies against the grant of an injunction, it may be overcome by a very strong case on the part of the applicant. When the balance of convenience lies the other way, it is not necessary that the case be as strong. 31 CRI is a voluntary and essentially charitable organisation. It has no commercial interest in the disposal of the Sirtex shares which it proposes to transfer as a gift to WEHI. It will suffer no substantive or substantial loss if restrained from effecting that disposal pending the hearing and determination of these proceedings. It may be said that WEHI is deprived of the opportunity to access the shares and to apply them or their value to its research purposes. There is no doubt however that there is a serious risk to the University that should the shares be transferred then ultimately its equity (if any) may be lost. I accept that there is no reasonable possibility of any effective damages remedy against CRI. 32 It is most unfortunate that CRI, which is a voluntary organisation with worthy goals, has become enmeshed in this litigation. It may be the case that the current Board of CRI, wishing as it does to simply dispose of the shares, may decide that there is little to be gained by taking any active role in the litigation. It may be that in those circumstances a transfer to WEHI could be effected on terms which preserve any equity that the University might have. That is a matter for the parties to discuss. I am, however, prepared to grant the interlocutory relief sought. CRI will have liberty to apply in the event of changed circumstances which affect the balance of convenience. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | interlocutory injunctive relief restraint on disposition of shares respondent acquiring intellectual property rights from former employee of university whether respondent fixed with knowledge of breach of fiduciary duty by former employee of university whether fixed with knowledge of university's ownership of intellectual property rights acquisition of shares in listed company in consideration of assignment of intellectual property rights whether shares fixed with equity in favour of university association desirous of transferring listed shares to research organisation for no consideration whether serious question to be tried in support of grant of interlocutory relief balance of convenience balance of convenience favouring university injunctive relief granted practice and procedure |
The offence was alleged to have occurred in Port Moresby, Papua New Guinea, between 10 and 16 September 2001. After a 6 day trial in which the Applicant gave evidence in his defence, a jury found him guilty of that offence. Upon conviction, the Applicant was sentenced to a term of imprisonment of 5½ years. A non-parole period of 3 years was fixed. The Applicant appealed to the Queensland Court of Appeal against the conviction. He also sought leave to appeal against the sentence. On 20 April 2007, the Court of Appeal dismissed his appeal against conviction and refused his application for leave to appeal against sentence. On 5 March 2008 a document entitled "The Queen v Frederick Arthur Martens: A Corrupt Prosecution", apparently prepared by Cameron Price Lawyers, the solicitors presently representing the Applicant, was directed to the Honourable Robert John Debus MP, then as now the Minister for Home Affairs (the Minister). On its face the document stated that it "had been prepared under relevant legislation both State and Commonwealth with the object of the release of Captain Martens, and upon his instruction as to the content and the factual material in support thereof. " The use of the title "Captain" in relation to the Applicant is derived not from naval or military service but rather from his civilian occupation. At the time of the commission of the offence and until imprisoned the Applicant was a senior commercial pilot operating an aviation business in Papua New Guinea. Following subsequent exchanges between officers of the Attorney-General's Department (the Department) and Cameron Price Lawyers, the receipt by the Department of comment from the Commonwealth Director of Public Prosecutions and the Australian Federal Police and further submissions from Cameron Price Lawyers, notably a submission in reply dated 12 August 2008, a submission was directed to the Minister by the Department. By that time, and seemingly as a result of assistance given to Cameron Price Lawyers by officers of the Department, what had been sought in the document of 5 March 2008 had come to be refined so as to be taken to constitute a request to recommend to the Governor-General the granting of a pardon to the Applicant or, alternatively, to refer the case to the Queensland Court of Appeal pursuant to s 672A of the Criminal Code 1899 (Qld) (the Queensland Criminal Code ). On 4 September 2008, for reasons which he set out in and further appended to his letter communicating his decision, the Minister declined each of the requests made of him. The following month, the present proceedings were instituted pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act). The Applicant seeks an order of review in respect of "the decision of the respondents declining to exercise the powers under s 672A of the Queensland Criminal Code ". The use of the plural "respondents" is referable to the Applicant's joinder of the Commonwealth of Australia as a party. That was an unnecessary joinder, it being both necessary and sufficient for the Minister to be named as the Respondent. One of the grounds of review alleges that the Minister did not have jurisdiction to make the decision under review. The other grounds of review are, save in one respect, not particularised, doing nothing more than reciting in an uncritical way grounds of review specified in s 5 of the ADJR Act. An allegation of bad faith on the part of the Minister purports to be particularised but not in a way that engages with how the Minister's decision, as opposed to the alleged conduct of others, is said to have been attended by bad faith. Perhaps in recognition of this, bad faith as a ground of review was not pressed in the course of the oral submissions made on behalf of the Applicant. It is appropriate to record that there is not a scintilla of evidence which would support a finding that the Minister in any way acted in bad faith in making his decision. In the course of oral submissions, counsel for the Applicant came eventually to particularise the improper exercise of power ground in the following way. If, which was denied, the Minister, as opposed to the Commonwealth Attorney-General, were the appropriate Minister of State to consider the submission, then, having regard to the nature and purpose of s 672A of the Queensland Criminal Code , the Minister was said not to have taken a relevant consideration into account namely, that the submission made to him, insofar as it sought a reference pursuant to that section, was based on fresh evidence. Related to this was the submission that the Minister had misapprehended the nature and purpose of s 672A. It was further submitted that, in deciding whether to refer the matter in the exercise of his discretion, it was relevant for the Minister to take into account certain hearsay evidence contained in the submission with respect to what was said to be a confession by the complainant that she had falsely accused the Applicant of the offence, even if such evidence might not be able to be considered by the Court of Appeal under s 672A. Notwithstanding that this precision in respect of the Applicant's case emerged only belatedly in the course of oral submissions, Mr McLeod, who appeared for the respondents, took the course of neither objecting to the informality with which the grounds of the application came further to be particularised nor of seeking a resultant adjournment. Instead, on behalf of the respondents, he met the case as refined on its merits. Especially given that, at least indirectly, the case touches upon issues which may go to the liberty of the subject, this was the stance one might expect of a model litigant. I record my indebtedness to Mr McLeod for his concise and candid submissions. In the result then, the issues which have emerged are these: Did the Minister have power to make the decision? Did the Minister fail to take a relevant consideration into account? Before turning to these issues it is desirable to set out the statutory provisions of principal concern and to make some observations about the amenability of the decision identified in the application to challenge under the ADJR Act. These provisions are directed to the subjects of appeals against conviction, applications for leave to appeal against sentence, Attorney-General's appeals, reservation of points of law and references to the Court of Appeal in respect of pre-trial rulings and directions. For the purposes of the Queensland Criminal Code , "Crown Law Officer" is defined by s 1 to mean "the Attorney-General or the Director of Public Prosecutions". It might further be noted that s 18 of the Queensland Criminal Code provides that nothing in that Code affects the Royal prerogative of mercy. Section 672A of the Queensland Criminal Code prima facie relates only to State offences and to the Royal prerogative of mercy exercisable in the name of Her Majesty the Queen by Her Excellency the Governor of Queensland in respect of State offences pursuant to s 36(2)(a) of the Constitution of Queensland Act 2001 (Qld). Such application, if any, as this provision of the Queensland Criminal Code has to the Royal prerogative of mercy exercisable by the Governor-General as The Queen's representative in respect of Commonwealth offences pursuant to s 61 of the Commonwealth Constitution is dependent on the operation of s 68 of the Judiciary Act 1903 (Cth) (the Judiciary Act ). The term "appeal" is defined by s 2 of the Judiciary Act to include "an application for a new trial and any proceeding to review or call in question the proceedings decision or jurisdiction of any Court or judge". The High Court has observed of s 68 of the Judiciary Act that it is a "central provision in the administration and enforcement of federal criminal law" which "fulfils an important role in ensuring that federal criminal law is administered in each State upon the same footing as State law and avoids the establishment of two independent systems of justice": R v Murphy [1985] HCA 50 ; (1985) 158 CLR 596 at 617. To this end, s 68 has been interpreted so as to permit the Commonwealth Attorney-General to appeal against a sentence in respect of a federal offence in circumstances where under State law and in respect of a State offence such a right of appeal was conferred upon a State Attorney-General: Peel v R [1971] HCA 59 ; (1971) 125 CLR 447 ( Peel's Case ). It was uncontroversial between the parties in the present case that a decision under s 68 of the Judiciary Act , in its application of s 672A of the Queensland Criminal Code , not to refer a case to the Court of Appeal was amenable to judicial review under the ADJR Act. Absence of controversy does not, of course, confer jurisdiction. Nonetheless, there is reason, at least in the absence of argument to the contrary, to think that a reasonable basis for the consensus between the parties as to jurisdiction exists. Peel's Case and a later decision of the High Court in relation to the operation of s 68 of the Judiciary Act , Rhode v DPP (Cth) [1986] HCA 50 ; (1986) 161 CLR 119 ( Rhode's Case), proved influential in persuading Ryan J in Perrier v Kerr (sued in his capacity as Minister for Justice) (VG 865 of 1995, 17 August 1997, unreported) to accept the correctness of the position adopted by the parties in that case which was that the effect of s 68 of the Judiciary Act 1903 was to grant to the respondent Commonwealth Minister (notably not the Attorney-General), in the context of an application for a pardon in respect of a federal offence, the discretionary power to refer that application to the then Full Court of the Victorian Supreme Court pursuant to s 584(a) of the Crimes Act 1958 (Vic) in like manner to the power granted to the Victorian Attorney-General under that provision in respect of a State offence. There was no issue in that case that only the Commonwealth Attorney-General, as opposed to the respondent Minister for Justice, could exercise the power made applicable by the Judiciary Act . His Honour also accepted as correct the further position of the parties, which was that the decision of the Minister for Justice not to refer the matter to the Full Court was a reviewable decision for the purposes of the ADJR Act, even though a decision to refuse the granting of a pardon was not. An assumption that a decision by Queensland's Attorney-General not to refer a case to the Court of Appeal under s 672A was amenable to judicial review under that State's analogue of the ADJR Act, the Judicial Review Act 1991 (Qld) (Judicial Review Act), underpins the decision of the Court of Appeal in Pepper v Attorney-General (Qld) (No 2) [2008] QCA 207 ( Pepper's Case). It was held that the State Attorney could not be ordered pursuant to s 38(2) of the Judicial Review Act (an analogue of s 13(4) and (4A) of the ADJR Act) to furnish a statement of reasons for the refusal. The basis for the Court of Appeal's so holding was not that the State Attorney's decision was not one to which the Judicial Review Act applied, but rather that it was a decision in the administration of criminal justice and thus, by virtue of the exemption for which s 31(2) and Schedule 2, item 1 of the Judicial Review Act provide, exempt from the statutory obligation to give reasons if requested. In Eastman v Attorney-General (ACT) (2007) 210 FLR 440 ( Eastman v A-G (ACT) ), Lander J, sitting as an additional judge of the ACT Supreme Court, after a comprehensive review of authority touching upon the extent, if at all, to which a decision to refuse a pardon was judicially reviewable, expressed the opinion that, while the exercise of the discretion in respect of the prerogative of mercy was not amenable to judicial review, he was "[not] prevented however from concluding that the processes which must be observed either by the statute which empowers the exercise of the prerogative (or statutory) power or by the law generally are subject to judicial review" (at 458-459, [78]). On appeal, it proved unnecessary for the Court of Appeal to explore the correctness of this aspect of his Honour's reasons: Eastman v Australian Capital Territory (2008) 163 ACTR 29 at 41, [41]. The discretion conferred by s 68 of the Judiciary Act by applying s 672A of the Queensland Criminal Code is a statutory adjunct to a prerogative of mercy. The prerogative forms part of the executive power of the Commonwealth but, as applied by s 68, the power exercised by the Court of Appeal upon a reference under s 672A is an exercise of the judicial power of the Commonwealth pursuant to a conferral of federal jurisdiction on that court for that purpose by s 68(2) of the Judiciary Act . It is consistent with the views expressed by Lander J in Eastman v A-G (ACT) to regard a Ministerial decision as to whether to engage that statutory adjunct as amenable to judicial review even if, as Horwitz v Connor [1908] HCA 33 ; (1908) 6 CLR 38 would bind me to hold, a decision to refuse a pardon is not itself reviewable. For completeness, reference should be made to von Einem v Griffin (1998) 72 SASR 110 in which a conception that the feature that the referral power was an adjunct to the prerogative of mercy led a Full Court of the South Australian Supreme Court to hold that a Minister's decision not to refer a case to the Full Court pursuant to that State's analogue of s 672A, s 369(a) of the Criminal Law Consolidation Act 1935 (SA), was not amenable to judicial review. Given that conception, Horwitz v Connor was considered to dictate that result. von Einem v Griffin was not a case where the judicial review application was made under an equivalent of the ADJR Act. In this case though, the view is open that, insofar as he refused to refer the case to the Court of Appeal, the Minister made a decision: under an enactment, namely s 68 of the Judiciary Act , which rendered applicable s 672A of the Queensland Criminal Code ; of an administrative character; and accordingly one to which the ADJR Act applies. Further, as the Court's jurisdiction is sufficiently invoked by the reliance on the ADJR Act, it is unnecessary to decide whether an alternative basis for a judicial review jurisdiction exists having regard to s 75(v) of the Constitution and s 39B of the Judiciary Act and given that the decision is one made under statute by an officer of the Commonwealth. Though Perrier v Kerr , Pepper v Attorney-General (Qld) [No 2] and Eastman v A-G (ACT) are not, strictly, binding, I ought to follow them unless, which is not the case here, I am convinced that they are clearly in error. I accept therefore that the decision made by the Minister is one to which the ADJR Act applies and that consequently this court has jurisdiction to review the Minister's decision to refuse to refer the case to the Court of Appeal. In so doing, it is unnecessary to decide and I refrain from expressing any view as to whether, were the Minister desirous of having the benefit of the opinion of the Court of Appeal on a point arising in the application for a pardon (for which s 672A(b) of the Queensland Criminal Code prima facie provides) a need to read s 68 of the Judiciary Act subject to the Constitution (s 15A Acts Interpretation Act 1901 (Cth)) (Acts Interpretation Act ) would prevent the application of that part of the provision to a person who sought a pardon in respect of a federal offence. A concern would be whether that application would be prevented by the prohibition, arising from the interpretation of Chapter III of the Constitution favoured in Re Judiciary and Navigation Acts [1921] HCA 20 ; (1921) 29 CLR 257 , against the furnishing of advisory opinions in the exercise of judicial power in federal jurisdiction. That is a subject which may only arise, if at all, in the event not only that the present decision were set aside but the Minister (assuming he is the relevant Commonwealth Minister of State) were disposed to act under s 672A(b), rather than s 672A(a), of the Queensland Criminal Code . The request made by the Applicant in his application and the way it was dealt with by the Minister suggest that it was both intended to be and was treated as one made under s 672A(a) only. Was the Minister empowered to make the decision? The Applicant's argument in respect of this issue was succinct but none the worse for that. There were officers of the Commonwealth whose title corresponded exactly with those State officers named in the definition of "Crown Law Officer" for the purposes of s 672A of the Queensland Criminal Code . That being so, it was submitted that there was no warrant for applying this provision, pursuant to s 68 of the Judiciary Act , "so as [it is] applicable", to enlarge its application so as to embrace the Minister. To the contrary, it was submitted that, having regard to the sensitivity which might attend the pardoning of a person convicted after a jury verdict and subsequent unsuccessful appeal, the choice in the definition of the Attorney-General and the Director of Public Prosecutions may not have been coincidental representing as it did the Crown's First Law Officer on the one hand and the senior independent officer holder charged with responsibility for prosecutions. The Respondent's argument was rather more elaborate. Its starting point was Ch II of the Constitution . Section 62 of the Constitution makes provision for a Federal Executive Council. In turn, s 64 of the Constitution provides for the appointment of members of the Federal Executive Council as Ministers, "the Queen's Ministers of State for the Commonwealth", "to administer such departments of State of the Commonwealth as the Governor-General in Council may establish". Section 65 then materially provides that those Ministers of State "shall hold such offices ... as the Governor-General directs". Against the background of these constitutional provisions, the Respondents evidenced the appointment on 3 December 2007 by the then Governor-General of the Minister as a member of the Federal Executive Council and as Minister for Home Affairs charged with the administration of the Attorney-General's Department. Also evidenced were the Administrative Arrangements made that day by His Excellency which, materially, consigned to the Ministers administering the Attorney-General's Department the administration of the Judiciary Act . The Respondents then pointed to the now accepted position that there is no constitutional prohibition against the appointment of more than one Minister of State to administer a department: Re Patterson; Ex parte Taylor [2001] HCA 51 ; (2001) 207 CLR 391 at 403, [17] ; 415-416; [66], 460, [211]; 498, [320] and 519, [380]; Zoeller v Attorney-General (Cth) (1987) 16 FCR 153 at 165; Attorney-General (Cth) v Foster [1999] FCA 81 ; (1999) 84 FCR 582 at 594; Tervonen v Minister for Justice and Customs [No 2] [2007] FCA 1684 at [128] to [130]. That being so, it was submitted that the Minister was entitled to administer the Judiciary Act , which included the administration of s 672A of the Queensland Criminal Code , to the extent that it was rendered applicable by s 68 of the Judiciary Act to the pardon application made by the Applicant. The office of Attorney-General is an ancient one. It evolved because the Sovereign could not appear in person in his courts to plead cases which affected his interests. Hence a need to appear by an attorney: see The Hon LJ King AC, QC , "The Attorney-General, Politics and The Judiciary" (2000) 74 ALJ 444. Conventionally, in relation to the criminal law of a body politic which is a constitutional monarchy, the Crown has the constitutional responsibility for the prosecution of crimes with that prosecutorial function being discharged in the courts on behalf of the Crown by the Attorney-General: R v Wilkes [1770] EngR 34 ; (1768) 4 Burr 2527 ; 97 ER 123. In more modern times, there has been parliamentary recognition that a need for independence from political considerations in the making of a range of prosecutorial decisions is enhanced by consigning the tasks of making decisions in individual cases and representing the Crown in criminal cases to an official removed from politics; a Director of Public Prosecutions. Nonetheless, Ministerial responsibility for the administration of the criminal law and for the office of a Director of Public Prosecutions, in conformity with convention, is usually consigned to the Attorney-General. It is certainly possible to explain the Queensland Parliament's definition of "Crown Law Officer" for the purposes of the Queensland Criminal Code by such considerations. That might be thought to support the Applicant's submission. Section 68 of the Judiciary Act does not, in terms, refer to any Minister. Rather, it "picks up" provisions of State legislation, which may or may not themselves refer to a State Minister or other official, and applies them "so far as they are applicable to persons who are charged with offences against the laws of the Commonwealth". In so doing, "the adoption of the State law must proceed by analogy", an observation made by Sir Owen Dixon in Williams v The King [No 2] [1934] HCA 19 ; (1934) 50 CLR 551 at 561, which commended itself to Gibbs J (as his Honour then was) in Peel's Case [1971] HCA 59 ; (1971) 125 CLR 447 at 469 and to Gibbs CJ, Mason and Wilson JJ in Rhode's Case [1986] HCA 50 ; (1986) 161 CLR 119 at 124; see also to like effect in that case the separate judgement delivered by Brennan J (1986) 161 CLR at 126-127. Proceeding in this fashion in Rhode's Case and in respect of a Victorian statute authorising the Victorian DPP, "on behalf of Her Majesty" to appeal against a sentence, Gibbs CJ, Mason J and Wilson J (and separately to like effect Brennan J), identified the Commonwealth Attorney-General as the proper officer to represent the Crown in right of the Commonwealth in the institution of an appeal against sentence in the application, pursuant to s 68 of the Judiciary Act , of the right of appeal in respect of a sentence imposed on a federal offender. That was so even though, by then, the office of Commonwealth Director of Public Prosecutions had been established. The Commonwealth Director of Public Prosecutions' ability to institute the appeal was held to stem not from the Judiciary Act but rather from s 9(7) of the Director of Public Prosecutions Act 1983 (Cth), which enabled the Director to exercise such rights of appeal as were exercisable by the Attorney-General. It is significant then for present purposes, though in Rhode's Case the State provision referred to the State Director of Public Prosecutions and there existed a like Commonwealth official, that the latter was able to exercise a right of appeal in respect of a federal offender's sentence was resolved by a examination of who was the appropriate officer within the public administration of the Commonwealth to exercise the right, not by an uncritical adoption of whoever had the same title in the service of the Commonwealth. One asks then, who, by analogy, is the appropriate Commonwealth officer to consider a request for a reference to the Court of Appeal under s 672A in its application pursuant to the Judiciary Act ? Section 672A of the Queensland Criminal Code contemplates that the question of whether or not to refer a case to the Court of Appeal will arise in the context of the consideration of a petition to the Governor for a pardon. In determining how this provision is to be applied by the Judiciary Act by analogy to the Applicant's case, it is necessary to identify to whom in the Executive Government of the Commonwealth the Ministerial consideration of an application to the Governor-General for a pardon may fall. In this regard, it is not only the Commonwealth Attorney-General who may have Ministerial responsibility for the consideration of such an application. The Minister has also been charged by the Governor-General with the administration of the Department and of the Judiciary Act . Insofar as Ministerial consideration of a pardon application in respect of a federal offender is required, either the Attorney-General or the Minister is the appropriate officer. As an applicable statutory adjunct and in terms of formal Ministerial responsibility, the question of whether to refer a case to the Court of Appeal is just as much a matter for the Minister as it is for the Attorney-General. That is not to say that the Attorney-General and the Minister might not come to an arrangement as to how best to discharge their portfolio responsibilities by, for example, the division between them of various public administration tasks. Here, there is no evidence that they have done that. A sequel to a decision under s 68 of the Judiciary Act in its application of s 672A of the Queensland Criminal Code may be the initiation by the method of a reference of proceedings in the Court of Appeal. While at first blush it might seem unorthodox that such a proceeding in respect of a federal offence might permissibly be a Minister for Home Affairs' reference, rather than only an Attorney-General's reference, that apparent unorthodoxy is really nothing more than a reflection of a failure to appreciate the present adoption of constitutionally permissible practices in the administration of the Executive Government of the Commonwealth. As already noted, s 68 of the Judiciary Act must be read subject to the Constitution : s 15A Acts Interpretation Act . While that provision of the Acts Interpretation Act has a purpose in preserving statutory provisions from invalidity by promoting their construction so as to accord with the limits of constitutional legislative competence, it also serves as a reminder that Commonwealth legislation ought not be construed in a way which ignores constitutionally permissible practices in the discharge of the business of the Executive Government. R v Judd [1919] HCA 9 ; (1919) 26 CLR 168 , O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1 , Attorney-General (Cth) v Foster [1999] FCA 81 ; (1999) 84 FCR 582 , Carltona Ltd v Commissioners of Works [1943] 2 All E R 560 and R v Secretary of State for the Home Department; Ex parte Doody [1993] QB 157 each offer an example of ways in which such practices have been taken into account by the courts in the construction of legislation and with regard to the validity of the exercise of powers by public officials. The deliberate lack of specificity is demonstrated by the absence of any reference to such prominent features of our system of democratic government as the office of Prime Minister, or the Cabinet. This is hardly surprising. The practices and conventions which promote efficient and effective government administration alter over time, and need to be able to respond to changes in circumstances and in theory. The consigning of the administration of a department of State and enactments to two Ministers is but one such practice. To do otherwise in considering the meaning and effect of s 68 of the Judiciary Act would to be to permit a choice made by a State Parliament with an eye to State practices of public administration unnecessarily to confine the operation of s 68 , which is intended by the Commonwealth Parliament to operate "so far as applicable" in the federal criminal jurisdiction. Such considerations weigh in favour of not confining the operation by analogy of s 672A of the Queensland Criminal Code to federal offenders so as only to authorise Ministerial decision-making by the Commonwealth Attorney-General. Such an outcome also has the advantage, in my opinion, of consistency with the way in which s 19A of the Acts Interpretation Act would operate in the present case were s 672A of the Queensland Criminal Code a Commonwealth parliamentary enactment. Failure to take a relevant consideration into account? For the purposes of the particular improper exercise of power error ground specified in s 5(2)(b) of the ADJR Act, where a statute confers on an official a discretionary power to make a decision, a consideration will be a "relevant consideration" in relation to the making of that decision if it is one which by that statute the official is bound to take into account either expressly or by necessary implication from its subject matter, scope and purpose: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 33 ; (1985-1986) 162 CLR 1 at 39-40. The Applicant submitted that s 672A did not authorise the Minister to act as a "gatekeeper", second guessing what the Court of Appeal might make of fresh evidence. The submission allowed that the Minister might refuse to refer an application which was obviously frivolous but that it did not authorise the ignoring, as was submitted had occurred, of the evidence submitted with the application to the Minister. The Respondents submitted that s 672A of the Queensland Criminal Code does not expressly specify any criteria as relevant to the exercise of the discretionary power for which that section provides, such that the scope of the discretion was unconfined save insofar as the subject matter, scope and purpose of the section dictated otherwise. So much may be accepted but it rather begs the question as to what is dictated by the subject matter, scope and purpose of s 672A? To answer this question it is necessary to consider in some detail authorities concerning s 672A and its analogues. As the capital statutes were repealed so as to apply the death penalty to fewer offences, appeals for pardons to the Crown tended to be made in cases of asserted miscarriages of justice, despite the anomaly to which a successful petition might give rise, that a person who has in fact come to be considered to have been wrongly convicted or innocent, is pardoned, and not acquitted of the crime. The importance of this avenue of recourse to justice, effectively controlled by the Executive, declined, after the introduction of the Criminal Appeal Act 1907 (UK) to establish the Court of Criminal Appeal, although no attempt was made to abolish it. It proved fortunate that this was so because there was, initially at least, a judicial reluctance to allow appeals in criminal cases, occasioned in part no doubt by the sanctity accorded, and usually desirably so, to the verdict of a jury, and less desirably, to the legal conservatism of some of the judiciary of the day. His Honour further stated (at [12]), "The issue to be determined by the Court of Appeal in considering a matter referred under s 672A(a) is the same as that falling for resolution on an appeal, namely whether there has been a miscarriage of justice". Further insight into the subject matter, scope and purpose of s 672A(a) is offered by another Queensland Court of Appeal decision, R v Daley; Ex parte Attorney-General (Qld) [2005] QCA 162 , and by earlier Queensland authorities concerning that section referred to by Keane JA, who delivered the principal judgment in that case (Williams and Muir JJA agreeing). However that may be, it seems that on a reference under Section 672A, the Court has a broader discretion to ensure that justice is done and is seen to be done. See The Queen v. Young (No 2) [1969] Qd R 566 ; The Queen v. Condren Ex Parte Attorney-General [1991] 1 Qd R 574 at 578, 579. The issue is whether a miscarriage of justice has occurred. See TKWJ v. The Queen (2002) 202 CLR 124; Ali v. The Queen [2005] HCA 8 ; (2005) 214 ALR 1. In the latter case (ibid), the Queensland Court of Criminal Appeal also confirmed a view which had been expressed in an earlier, unreported decision of that court to the effect that, because on a reference under s 672A the court sat judicially, not as an adjunct of the executive, it could only receive admissible evidence. I take that to mean that, though the referral discretion is an adjunct to an administrative power, if the discretion is exercised in favour of a reference the resultant proceeding in the Court of Appeal is judicial in character. Indeed, to the contrary, the words "the whole case" embrace the whole of the evidence properly admissible, whether "new", "fresh" or previously adduced, in the case against, and the case for the appellant. That test, as Mason CJ noted in Mickelberg , is derived from views expressed by four of the judges in Gallagher v The Queen [1986] HCA 26 ; (1985-1986) 160 CLR 392 (Gallagher). Of these, it is worthy of note in the present context that, in so concluding as to the nature of the relevant test, Gibbs CJ observed (at 399) that, "it is too severe, and indeed speculative, a test to require that the court should grant a new trial only if it concludes that the fresh evidence was likely to have produced a different result, in the sense that it would probably have done so. " Also worthy of note in the present context is a further observation of Mason CJ in his judgment in Mickelberg (at 272) in respect of the reference in that case that it indicated "the existence of public concern about the propriety of the convictions". It is one thing to set aside a conviction upon such a reference applying this test but, having done so, quite another to order the entry of a verdict of acquittal, as opposed to ordering a new trial. To order the former is to usurp a function ordinarily consigned to a jury under our system of criminal justice in respect of offences prosecuted on indictment. A discretion exists, but ordinarily an appellate court would exercise it against the entry of a verdict of acquittal unless it had held that the case considered as a whole required a jury to acquit the appellant because it must entertain a reasonable doubt or that a conviction would necessarily be unsafe: Dyers v The Queen [2002] HCA 45 ; (2002) 210 CLR 285 at 297, [23] per Gaudron and Hayne J and at 331, [134] per Callinan J, cf at 316-317, [86]-[90] per Kirby J; see also Condren; Ex parte Attorney-General (Qld) v R [1991] 1 Qd R 574 at 577 per Kelly SPJ and at 591 per Dowsett J, cf at 585-588 per Thomas J. Drawing these threads together, it follows, in my opinion, that it was relevant for the Minister, when considering an application requesting a reference under s 672A of the Queensland Criminal Code , to consider whether there was presented with the application evidence which might, arguably, when the whole case was considered, at least raise a significant possibility that the jury, acting reasonably, would have acquitted the Applicant. Not to consider such evidence at all or to fail to evaluate it by reference to such a test would, in my opinion, be to fail to take into account considerations made relevant by the subject matter, scope and purpose of s 672A. Were the evidence presented not, strictly speaking, "fresh", as opposed to "new", that circumstance would not, in itself, warrant a Minister to refuse a reference, for the Court of Appeal is not bound in such a proceeding to act only upon fresh evidence. Further, it seems to me to follow from the role consigned to the Court of Appeal on a reference under s 672A that it is no part of the role of the Minister, in deciding as a matter of discretion whether to refer a case himself, to apply a test to the whole of the case, including the new evidence, higher than that which the court would itself apply in evaluating the case were it to be referred. The existence of a discretion undoubtedly means that a convicted offender has no right to the reference of his case. That the reference power is discretionary indicates that it was contemplated that the Minister would make some evaluative judgment as to whether a reference ought to be made but not in so doing usurp the role that was consigned to an appeal court in the event of a reference. In this sense, the Minister is a "gatekeeper" who has a role in ensuring that the public interest in the administration of justice as furthered by the efficient allocation of judicial resources is not subverted by the referring of cases to the Court of Appeal which must inevitably fail. That the Court of Appeal on a reference itself had power to disregard grounds which it considered frivolous would not, in my opinion, prevent a Minister from refusing to refer a case where there was neither any new evidence nor even a ground of challenge not previously adversely considered, but care would need to be taken not to treat as frivolous a reasonable argument with which the Minister happened to disagree. Such considerations would not be exhaustive of matters to which the Minister might, without committing the error of taking into account an irrelevant consideration, advert in deciding whether or not to refer a case. Because, in making the decision, the Minister acts administratively, he might take into account material which would not be admissible on the consideration of a reference by the Court of Appeal. Thus, as for example, Mason CJ apprehended in his judgment in Mickelberg , he might note public concern as to the propriety of the conviction. His sources of information in this regard might, for example, be reports in the media, a petition presented to Parliament, a representation from a parliamentary colleague, or perhaps hearsay evidence as to the reliability of a complainant or other information in an application for a pardon which did not constitute admissible evidence which could be considered by an appellate court on a reference. None of these would though be considerations that he was obliged to take into account, ie "relevant considerations". These conclusions are, in my opinion, consistent with conclusions reached by Lander J as a member of the Full Court in von Einem v Griffin (1998) 72 SASR 110 at 138-140 concerning the analogous reference power upon the assumption (contrary to the conclusion he reached) that the South Australian Attorney's decision to decline a reference request was amenable to judicial review. The section has no application unless a petition for mercy has been presented to the Governor. It therefore assumes that the Petitioner has exhausted all of his or her legal rights and that all appeals have been exhausted and the conviction and the sentence must stand according to law. In that respect the section perhaps contemplates that fresh evidence has emerged which might make the conviction unsafe or unsatisfactory. It also contemplates that perhaps a restatement of the law may require the revisiting of a previous decision or the conviction. When a petition is presented to the Governor and referred to the Attorney General apart from advising on the question of mercy, generally, the policy and purpose of s369 is to have the Attorney General apply his mind as to whether or not it would be appropriate to invoke the Court's jurisdiction yet again, notwithstanding that the appeal process has been exhausted, so that the Court may determine whether, in any way, there has been a miscarriage of justice in relation to that petitioner. In considering whether the material raised in the petition raised a sufficient doubt about the correctness of the decision he was further advised that the material would not raise such a doubt unless it appears reasonably possible that a miscarriage of justice has occurred. Initially the plaintiff argued that the adoption of such a test was an error of law, but I think that it was otherwise said that the criterion adopted was so unreasonable that no sensible person could have adopted the test. The plaintiff argued, on this application, that that is the test which the Attorney General should have asked himself in relation to the matters raised on the petition. It was said that to approach the matter any other way amounted to an error of law and was so unreasonable that no sensible person could have adopted the test. It must be arguable that there has been a miscarriage of justice. He suggested that another test could be 'that some possible though real element of injustice might be thought to occur if leave were refused' (at 4). A matter which is being considered by the Attorney General under s 369 has already been the subject of appeal and all of the rights of appeal have already been exhausted. whether there was a reasonable possibility of a miscarriage of justice. It seems to me that the tests, in a sense, ask the same question. A point will not arguably show that there has been a miscarriage of justice unless there is a possibility that there has been a miscarriage of justice and, of course, that possibility must be reasonable. To answer that question first requires an understanding of the case made against the Applicant at his trial, of the defence case and of the basis upon which his appeal against conviction to the Court of Appeal failed. These matters are comprehensively canvassed in the judgment of McMurdo P (with whom Holmes JA and Cullinane J agreed) in the disposal by the Court of Appeal of the Applicant's appeal against his conviction: R v Martens [2007] QCA 137. It would only add unnecessarily to the length of these reasons to recite all of what is there stated. Some matters, salient in light of the present proceeding, should be recorded. That the complainant was under 16 years of age at the time of the alleged offence was uncontroversial, as were the facts that the Applicant was an Australian citizen and that he and the complainant were at least on some days, each in Port Moresby between the dates alleged in the indictment. Whether the offence was proved depended very much upon an evaluation by the jury of whether the complainant was to be believed in her account that the Applicant had intercourse with her while they were in Port Moresby. Her evidence was that she had twice flown to Port Moresby with the Applicant in 2001, firstly in March for the purpose of securing a passport to be used by her in later travelling to Australia for educational purposes and secondly, so she said, on a school day after her birthday (10 September) but before Papua New Guinea's Independence Day (16 September), the 2001 celebration of which in Port Moresby she stated she attended. At the trial the Applicant mounted a concerted challenge to the complainant's credibility. His evidence was that there had been but one flight to Port Moresby with the complainant as his passenger. According to him, it was this trip which was made for the purpose of the completion of the complainant's passport application. Apart from his oral evidence to this effect he produced his pilot's log book in which was recorded but one trip to Port Moresby with the complainant, on 10 August 2001. A passport photograph of the complainant endorsed on the reverse with the date 16 August 2001 and a related photographic laboratory receipt dated 11 August 2001 featured in the defence case. The evidence tendered by the prosecution included the complainant's passport which was issued on 24 August 2001. In order to be satisfied of the appellant's guilt, it was not necessary for the jury to be satisfied beyond reasonable doubt that the complainant had her passport photo taken in Port Moresby in March rather than August. Indeed, the preponderance of evidence favoured a finding that the photograph was taken in mid-August 2001. The jury were entitled to accept that the complainant was confused as to the date of the passport photographs, especially as she was young, unsophisticated and was not asked to recall these details for some years. This did not, however, compel them to find that she was not truthful about the later crucial events around mid-September 2001. It was a record made by the appellant apparently required to be kept by the Australian, not the Papua New Guinean, government. It commenced on 26 June 1998 and related to a "P.A.-31" aircraft. It contained the note "Rotary wing in separate log book". There was no independent entry until a biennial flight review stamp dated 28 March 2003, long after the disputed September 2001 flight. The log book did not compel the jury to have a doubt about the complainant's evidence that she had sexual intercourse with the appellant in Port Moresby after her 14th birthday on 10 September 2001 but before her country's national day on 16 September 2001. She also attests to the Applicant's estranged wife's accusation to her that the Applicant was having an affair with the complainant and to an absence at that time of any adverse comment concerning the Applicant by the complainant. Naomi Katu Kalana also attests to having again seen the complainant in Port Moresby in September 2001, lastly on 14 September. There is no reference in the statement to any complaint to her by the complainant concerning the Applicant's behaviour. (b) A statutory declaration from Willie Kalana, which is to like effect to that of Naomi Katu Kalana. (c) A statement made in a letter dated 14 August 2007 sent by Detective Chief Inspector Wellsh, Officer in Charge, National Criminal Records/Interpol Royal Papua New Guinea Constabulary that on 12 September 2001, at the urgent request of the Applicant and the complainant, who each attended upon him at his office in Port Moresby for that purpose, he had supplied a police clearance certificate in respect of the complainant to her. (d) An affidavit from Tahuni Tapari who also places the complainant in Port Moresby in August and September 2001, last seeing her there on 20 September 2001. Mrs Tapari also corroborates an account which the Applicant gave of having had an argument with two named individuals about air fares when he attended at Mrs Tapari's residence (where the complainant was then staying) for the purpose of flying her back to her family home in the Western Highlands. According to Mrs Tapari, the complainant declined the offer of a flight home because she wanted to stay in Port Moresby for the Independence Day celebrations. (e) Extracts from Papua New Guinea Civil Aviation Authority (PNGCAA) aero charges records which, together with a statement from an employee of that authority, Mr Paul Kafali, were capable of being regarded as corroborating entries made by the Applicant in his pilot's log book. Save for the PNGCAA material, none of this evidence is expressly referred to by the Minister either in his letter of 4 September 2008 or in the appended reasons. Only the PNGCAA material and Mrs Tapari's statement are expressly referred to in the Applicant's solicitors' final submission to the Minister in their letter of 12 August 2008. In his letter and in the appended reasons the Minister dealt with both the application for a pardon as well as the related request for the case to be referred to the Court of Appeal pursuant to s 672A of the Queensland Criminal Code as applied by s 68 of the Judiciary Act . In considering these applications, I take account of the separation of powers doctrine, which establishes a clear boundary between the roles of the executive and judiciary. The determination of guilt or innocence is wholly and properly a matter for the usual court process, other than in limited circumstances. I therefore require the presentation of fresh evidence not considered at trial or on appeal before an application will succeed. I consider it appropriate to refer a case to the Court of Appeal where the material presented raises a doubt or question about the conviction or sentence. The majority of the claims raised in the application were considered at trial or on appeal. In the absence of fresh and compelling evidence casting doubt on your conviction, paramount weight must be placed on the decision of the court. As the further evidence provided in the application was not fresh or compelling it does not warrant further consideration of this case by the Court of Appeal. The evidence at trial, including [the complainant's] evidence that the offence occurred on a Friday, was weighed by the jury in deciding whether the indictment was proved. The information in the log book is the same as that in the document from the Papua New Guinea Civil Aviation Authority (PNGCAA). It is therefore not 'new evidence' as the information was before the jury when it considered the case. Even without the material provided in the application, the jury seems to have been well aware that the defence questioned the accuracy of [the complainant's] evidence and argued that the trip actually occurred in August 2001. It therefore had no bearing on the jury's decision. Any concerns about the missing movement record could have been raised at trial or on appeal. There is no evidence that the AFP or RPNGC had knowledge of the record at the time and suppressed it. There is no evidence that the passport form was suppressed, especially as the RPNGC provided a statement on 20 July 2005 stating that the form had been located. The generalised allegations of conspiracy do not undermine the reliability of any of the substantive evidence presented to the jury on which the conviction was based. Any consideration of the Minister's reasons must commence from the premise that they are meant to inform and are not to be read narrowly or zealously with an eye for error upon judicial review: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 271-272. Further, and with all due respect to its author, the Minister was confronted with an application which, even as it came to be amplified, was diffuse and, as the title "corrupt prosecution" might suggest, attended with large claims about a course of conduct in respect of the Applicant allegedly involving agencies here and in Papua New Guinea tantamount to a conspiracy to pervert the course of justice. The Minister's reasons take the form in which they appear because of an evident endeavour by him and those advising him to engage in an orderly way with the Applicant's application. I do not underestimate the difficulty which that presented in the circumstances. The "conspiracy" aspects of the submission made to the Minister were supported by hearsay accounts of varying degrees of remoteness from various persons. Another part of Mrs Tapari's statement had such material in it. It is not necessary for the purpose of deciding this judicial review application to refer in detail to that part of her statement or to other hearsay accounts. The Minister could, in my opinion, have taken these into account in deciding whether or not to refer a case, but he was not bound so to do. In the form presented, this material did not constitute evidence to which the Court of Appeal might advert upon its consideration of the whole of the case. Likewise, the withdrawal of a separate charge in respect of a complaint by another person had nothing to do with whether there existed further evidence warranting a reference to the Court of Appeal. Grounds 3, 4, 5 and 6 of the Minister's reasons relate to these aspects of the application. Of the attached reasons, only grounds 1 and 2 appear to relate to the request for a reference under s 672A. In my respectful opinion, the Minister's reasons demonstrate that he has applied an overly rigorous test in deciding whether or not to refer the case to the Court of Appeal. As the further evidence provided in the application was not fresh or compelling it does not warrant further consideration of this case by the Court of Appeal. Evidence which is "fresh and compelling" may very well persuade an appellate court not only to set aside a conviction but also not to order a retrial and perhaps to order the entry of an acquittal. However, to secure the setting aside of a conviction, it is enough that the appellate court, considering the case as a whole, concludes that there is a significant possibility that the jury, acting reasonably, would have acquitted the appellant. It is true that, earlier in his reasons, the Minister expresses the opinion that, "I consider it appropriate to refer a case to the Court of Appeal where the material presented raises a doubt or question about the conviction or sentence. " Read in isolation, that might be thought to posit a test not materially different to that adopted in Mickelberg and Gallagher . As to that though, the Minister is not performing the function of an appellate court, only exercising a discretion as to whether or not there is a case which warrants referral to such a court. His role is to determine whether the applicant has presented a case in which it is reasonably arguable that an appellate court, applying the test in those cases and upon a consideration of the whole of the case, would set aside the conviction. That is a lesser threshold. Read in the context of the Minister's letter and attached reasons as a whole, his concern that the evidence needed to be "fresh and compelling" seems to be derived from an apprehension that to decide to refer a case on any lesser basis would be to transgress the "separation of powers doctrine, which establishes a clear boundary between the roles of the executive and judiciary". I take that to mean that the Minister conceives that, absent such evidence, to refer a case would be for the executive to subvert the finality of a jury verdict followed by an unsuccessful appeal against conviction. With respect, it does no such thing. Properly understood, what the Minister does in deciding to refer a case under s 672A(a) of the Queensland Criminal Code is to consign to the judicial branch of government the task of determining whether or not, having regard to the whole of the case, including the new evidence presented to the Minister, a miscarriage of justice has occurred. On such a reference it is judicial power which is exercised. If the Court of Appeal decides to set aside the conviction and to order a new trial, that new trial will, necessarily, having regard to s 80 of the Constitution , again be conducted before a jury. It, too, will be an exercise of judicial power. It is not the Minister's decision to refer a case which sets aside the earlier exercise of judicial power, but rather a consequential exercise of judicial power, sanctioned by Parliament, following a conclusion on the whole of a case that a miscarriage of justice has occurred, that yields an order setting aside the earlier conviction. Strictly speaking, in a circumstance where a request for a pardon and a reference under s 672A was accompanied by "fresh and compelling evidence" calling into question the guilt of a federal offender, the Minister might permissibly and as a matter of discretion decline the request for a reference and instead advise the Governor-General that it was appropriate to pardon the offender. Equally though, save in the clearest of cases and especially where the alleged offence had been the subject of public disquiet, the Minister might very well conceive that public confidence in the administration of justice was best served by referring the case to the Court of Appeal even though he regarded the evidence as both fresh and compelling. In that context, one consideration might well be, for example, that, even though it seemed inevitable on a, however misconceived, reference that a verdict of acquittal would be ordered, this was preferable to a perception, flowing from the direct granting of a pardon, that the executive branch had interfered with an earlier judicial outcome. Yet further, the Minister might, in a particular case, conceive that it was anomalous for a pardon to be granted, which would leave intact the earlier finding of guilt, as opposed to affording an applicant possessed of fresh and compelling evidence the opportunity of securing the entry of a verdict of acquittal. All of these are but contingencies which on particular facts might fall for the evaluative judgment of the Minister in relation to an application for a pardon and associated request for a reference. I mention them so as to underscore that which, with respect, I perceive to be an unwarranted ministerial inhibition, based on a misunderstanding of the effect of a ministerial decision to refer a case. A decision in an appropriate case to refer the case to the Court of Appeal does not violate the separation of powers; to the contrary, it defers to that separation in a way contemplated by Parliament. Another concern arises from the following passages in the Minister's reasons, "The majority of the claims raised in the application were considered at trial or on appeal" and, in respect of "Ground 2", "Even without the material provided in the application, the jury seems to have been well aware that the defence questioned the accuracy of [the complainant's] evidence and argued that the trip actually occurred in August 2001. " So much may be accepted, but those claims were not considered against the additional background of the further evidence provided by the Applicant in his application to the Minister. The history, as we have already mentioned, points in the same direction. The inhibitory purpose and effect of the words "as if it were an appeal" are merely to confine the Court to the making of orders, and the following of procedures apposite to an appeal, and further, and perhaps most relevantly, to require the Court to consider whether the overall strength of the prosecution case requires the Court to apply the proviso contained in s 689(1) of the Criminal Code . What was not before the jury or the Court of Appeal was the further evidence which formed part of the Applicant's submission to the Minister. Further, para [53] of the judgment also shows that the absence of contemporary corroboration of the Applicant's log book entries was recognised as a factor which need not have compelled the acceptance of the veracity of those entries. On a reference under s 672A that on the Applicant's earlier appeal the log book had been dealt with in this fashion might, when considering the whole of the case, which would include the PNGCAA material, be thought to raise a stronger interrogative note concerning the relative credibility of the Applicant and the complainant. The enhanced corroboration of other aspects of the Applicant's account of events offered by the other evidence might perhaps also be similarly viewed. Be this as it may, what can be said, having regard to this further observation in Mallard's Case , is that in deciding whether or not there is a reasonably arguable case advanced that on a reference an appellate court would conclude that there was a significant possibility that the jury, acting reasonably, would have acquitted the appellant, it does not follow that because, having regard to the then state of the evidence, an appeal against conviction was dismissed, like claims made against a broader evidentiary background must necessarily meet the same fate. The passage quoted from the Minister's reasons evidences a misunderstanding of the role of the Court of Appeal on a reference under s 672A. Of course, as McMurdo P was astute to point out in her judgment, the question before the jury at the Applicant's trial was not whether or not the complainant was mistaken as to the number of flights to Port Moresby she undertook with the Applicant, when and for what purposes. It was whether the Crown had proved beyond reasonable doubt on admissible evidence that the Applicant had committed the offence charged. Nonetheless, an assessment as to whether the offence had been so proved very much depended in the circumstances of this case on questions of credibility. What the Minister has not considered is whether on the whole of the evidence, as it now stands, the Applicant has presented an arguable case on the authorities for the setting aside of the conviction. A further concern is that the Minister has been dismissive of the Applicant's request for a reference on the basis that the evidence was not "fresh". Having regard to what was said in Daly's Case, Condren's Case and Mallard's Case, that new evidence contained in a request for a reference under s 672A might have been obtained with reasonable diligence prior to trial and therefore not strictly "fresh" does not mean that the Court of Appeal on a reference could not receive it as a matter of discretion. It is not even evident from the Minister's reasons whether, in referring to an absence of fresh evidence, the Minister is using "fresh" to mean that, though "new", it was evidence that might have been obtained with reasonable diligence prior to trial. It is therefore not 'new evidence' as the information was before the jury when it considered the case. At the trial, evidence on that subject came, inter alia, from the Applicant's oral testimony, that of the complainant and from the Applicant's log book. The PNGCAA documentation was evidence, was at least "new" and was never before the jury. These errors aside, the passage quoted is underpinned by the premise, erroneous on the authorities, that, because a subject was before a jury, that means that, faced with new evidence touching on that subject, an appellate court on a reference cannot hold, on the whole of the case, that there is a significant possibility that the jury, acting reasonably, would have acquitted the appellant had the "fresh" or "new" evidence been before it. This error, coupled with the absence in the Minister's reasons of any reference to any of the other new evidence that accompanied the Applicant's submission, leads me to doubt whether that has truly been taken into account. For it, too, touches upon subjects that were before the jury at the trial. That doubt is not assuaged by an absence of any reference to, much less analysis of, this evidence in the submission directed to the Minister by the Department, which is in evidence. For these reasons then my conclusion is that the improper exercise of power ground as it came to be particularised has been made out. The Minister has failed to take into account the relevant consideration that the Applicant's submission was accompanied by evidence, be it "fresh" or "new", which was receivable on a reference under s 672A(a) of the Queensland Criminal Code . Further, in so doing, he has, in the ways identified, misconceived the nature and purpose of the discretion vested in him and of the role consigned to the Court of Appeal upon such a reference. Insofar as he has decided not to refer a case under s 672A , the Minister's decision of 4 September 2008 must be set aside and the matter remitted to him for further consideration according to law. Obviously enough, that the Applicant is presently in custody makes it desirable that any such reconsideration occur as soon as reasonably possible. No case was cited as authority for the existence of a power to make such orders and none of any worth could be. For such orders are quite beyond the powers granted to the Court under s 16 of the ADJR Act. They are most certainly not, contrary to the Applicant's submission, authorised by s 16(1)(d) of that Act. To make such an order would be fundamentally to violate the role of a reviewing court on judicial review, qv Attorney-General (NSW) v Quin [1990] HCA 21 ; (1989-1990) 170 CLR 1 at 35-36. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | application for judicial review of a decision of the cth executive not to refer matter to an appellate court division of portfolio responsibilities between two ministers effect of division where two ministers appointed to administer under a governing commonwealth statute where relevant state act only refers to the state attorney-general whether minister for home affairs empowered to refer a decision to an appellant court pursuant to s 672a criminal code 1899 (qld) as applied by s 68 judiciary act 1903 (cth) whether decision reviewable under administrative decisions (judicial review) act 1977 (cth) held decision reviewable whether minister failed to take into account relevant considerations held minister for home affairs empowered to make decision but failed to take relevant considerations into account decision set aside appeal new trial and inquiry after conviction pardon, commutation of penalty, on petition for pardon and inquiry after conviction whether decision not to refer case to an appellate court was amenable to judicial review under the administrative decisions (judicial review) act 1977 (cth) nature of test to apply in deciding whether or not to refer case to an appellate court held correct test not applied judiciary act 1903 (cth) s 68 judicial review act 1991 (qld) application of criminal code act 1899 (qld) s 672a to federal offenders by virtue of the judiciary act 1903 (cth) s 15a acts interpretation act 1901 relevance of constitutionally permissible commonwealth public administration practice to determination of which officer of the commonwealth able to exercise powers conferred in state law made applicable by s 68 judiciary act held practice relevant constitution power of governor-general to appoint officers to administer departments of state of commonwealth effect of this practice in relation to identification of which officer able to exercise powers in state law applied by s 68 of the judiciary act 1903 administrative law criminal law statutory interpretation constitutional law |
The MRT had earlier affirmed a decision of a delegate of the respondent Minister to cancel the appellant's Student Temporary (Class TU) visa on the basis that the appellant had failed to maintain enrolment in a registered course. 2 The appellant seeks to rely on an amended notice of appeal dated 27 July 2007. The amended notice abandons each of the grounds of appeal previously relied upon, and raises four entirely new grounds. I shall return to that matter shortly. 3 It is necessary to say something briefly regarding the background facts. The appellant is a citizen of the People's Republic of China. He entered Australia on 2 September 2004 as a holder of a Student (Temporary) (Class TU) Subclass 571 (Schools Sector) visa ("the visa"). He had applied for that visa based on his enrolment at St Augustine's College in Sydney to study senior secondary years 11 and 12. He was enrolled to study at that College from 31 January 2005. 4 It was a condition of the visa that the appellant comply with condition 8202 as set out in Schedule 8 of the Migration Regulations 1994 (Cth) ("the Regulations "). In accordance with your visa regulations, the College has notified DIMIA of your misdemeanours. The school replied that the appellant was no longer enrolled "due to serious misconduct". 7 Again on 1 April 2005 the appellant was given notice by the Catholic Education Commission, pursuant to s 20 of the Education Services for Overseas Students Act 2000 (Cth), that he had breached a condition of his student visa. That notice particularised the breach as being his termination of enrolment at St Augustine's College by reason of "serious misconduct and failure to meet course requirements". It advised the appellant that pursuant to s 137J of the Migration Act 1958 (Cth) ("the Act ") his visa would be cancelled on the twenty-eighth day after the date of the notice, unless he reported to the Department by that time. 8 On 11 April 2005 the appellant attended the Department and was provided with a "Notice of Intention to Consider Cancellation". That notice identified the possible ground of cancellation as being that the appellant had breached condition 8202 by failing to maintain enrolment in a registered course of study in Australia. The notice further indicated that as a consequence his visa might be cancelled pursuant to s 116(1)(b) and 116 (3) of the Act and clause 2.43(2)(b) of the Regulations . On the same day the Minister's delegate decided to cancel the visa and the appellant was provided with notice of that decision. 9 The appellant applied to the MRT for a review of the delegate's decision. By letter dated 26 May 2005 the MRT provided the appellant with particulars of information that it considered would be the reason, or a part of the reason, for affirming the delegate's decision. It invited him to comment upon that information. That letter was provided pursuant to s 359A of the Act . Relevantly it noted that the appellant's enrolment at St Augustine's College had been terminated on 31 March 2005 by reason of serious misconduct and failure to meet course requirements. It further stated that he was not currently enrolled in a registered course of study. 10 By letter which appears to be incorrectly dated 7 May 2005 the appellant's legal representatives replied, advising that he had been enrolled in a different year 11 to year 12 course since 26 April 2005. They also provided the MRT with written confirmation of his enrolment at Australian Pacific College, Southern Cross High School as from 26 April 2005. 11 The MRT conducted a hearing on 26 July 2005. It found, on the basis of the documentary evidence, that the appellant was not enrolled in a registered course between 31 March 2005 and 26 April 2005. It also noted that he had not been enrolled in a registered course as at the date of the delegate's decision, namely 11 April 2005. 12 The MRT found that s 116(3) of the Act and clause 2.43 of the Regulations , when combined with condition 8202, established a mandatory regime for the cancellation of a visa once there had been non-compliance with condition 8202. It held that, on the basis of the above findings, it was bound to affirm the delegate's decision. 13 It should be noted that the MRT accepted that the appellant had provided a reasonable explanation as to why he had not enrolled in another course immediately after his enrolment was terminated. In substance, he told the MRT that another student had made a false complaint against him, and that a criminal charge that had been laid was without foundation. The MRT accepted that the appellant was entitled to the presumption of innocence as regards that charge, but stated that its only role in relation to condition 8202 was to determine whether a breach had occurred. Having concluded that there was a breach, it affirmed the delegate's decision. 14 The application before the Federal Magistrate was based upon a number of overlapping grounds of review. However, his Honour noted that the only relevant issue before the MRT had been whether or not there was a period during which the appellant was not enrolled in a registered course. He rejected a submission to the effect that the MRT had been obliged to consider the situation that pertained after the period of non-enrolment had occurred. He referred to the Regulations , as they stood before 8 October 2005, in support of that conclusion. 15 His Honour noted in passing that the Regulations had been amended as from that date to require the Minister to consider whether "the non-compliance was not due to exceptional circumstances beyond the visa holder's control". He observed that that amendment took effect without retrospective operation as from 8 October 2005 after both the delegate's decision and the MRT decision, and was therefore of no assistance to the appellant. 16 The appellant's amended notice of appeal identifies four grounds of appeal. 17 Ms Welshman, counsel for the appellant, frankly conceded before me that none of the grounds in the amended notice of appeal had been argued before the Federal Magistrate. She has also frankly acknowledged that there was no good reason why those grounds had not been raised. 18 The appellant requires leave to raise new grounds that were not argued before his Honour. The Minister opposes such leave on the basis that it is not expedient in the interests of justice that leave be granted. He submits that the new grounds have no reasonable prospects of success: NAJT v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 134 ; (2005) 147 FCR 51 per Madgwick J (with whom Conti J agreed) at [162]---[175]. 19 It is unnecessary to refer to the many cases which say that where there is no adequate explanation for the failure to take a point before the primary judge, and the point seems to be of doubtful merit, leave should ordinarily be refused. See, however, VUAX v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 158 at [48] . The real question, so far as leave is concerned, is whether any of the grounds sought to be raised has a reasonable prospect of success. That question cannot be determined without also considering the related issue of whether it would be futile to remit this matter to the MRT for reconsideration. 20 The legislation which relevantly governs the issues raised in this appeal is tolerably clear in its effect. Section 116(1)(b) provides that the Minister may cancel a visa if satisfied that its holder "has not complied with a condition of the visa". Section 116(3) provides that in such circumstances the Minister must cancel the visa if there exist prescribed circumstances in which a visa must be cancelled. Clause 2.43(2)(b) of the Regulations relevantly provided, prior to 8 October 2005, that for the proposes of s 116(3) the Minister must cancel a Student (Temporary) Class TU visa if satisfied that the visa holder has not complied with condition 8202. Condition 8202(1) requires the visa holder to comply with sub-clause (2). In order to meet the requirements of sub-clause (2) the visa holder must be enrolled in a registered course: see condition 8202(2)(a). That requirement, as with the other requirements in condition 8202, concerns a continuing state of affairs. In effect, the visa holder is not permitted to cease to be enrolled in such a course: Liu v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1170 at [19] ---[20]. 21 There is an inexorable and somewhat remorseless logic to this sequence of statutory requirements. The Minister has no discretion in the matter. The Regulations as they stood prior to 8 October 2005 plainly had the potential to operate unfairly. That was subsequently recognised, and clause 2.43 was amended. 22 However, there is clear authority for the proposition that the appellant's case must be considered in the light of the law as it stood at the time of the visa cancellation. Both the delegate's decision and the MRT's decision to affirm that decision took place before the amendments came into effect. The appellant cannot call in aid the ameliorated version of the clause because it has no retrospective effect. See the decision of the Full Court in Minister for Immigration and Multicultural and Indigenous Affairs v Zhou [2006] FCAFC 96 ; (2006) 152 FCR 115 at [44] per Ryan, Nicholson and Lander JJ. See also Liyanage v Minister for Immigration and Multicultural Affairs [2006] FCA 1489 per Marshall J. 23 It may well be that there is an arguable case to be made in support of one or more of the appellant's grounds of appeal, as set out in the recent notice of appeal. In the end, however, it seems to me to be unnecessary to determine that question. If this matter were remitted, the MRT would, on the authority of Zhou , still be required to consider his case on the basis of the Regulations as they stood prior to 8 October 2005. 24 Ms Welshman submitted that new material might be placed before the MRT which might lead it to conclude that the appellant had not ceased to be enrolled at St Augustine's College as from 31 March 2005. She submitted that it might be possible to attack the process by which the school arrived at its decision to terminate his enrolment. 25 That submission seems to me to have an air of unreality. This case has always proceeded upon the assumption that the appellant's enrolment at St Augustine's College came to an end as at 31 March 2005. I cannot conceive of any circumstances in which the MRT would, or could, arrive at any different conclusion. It follows that if this matter were remitted, the ultimate result of any reconsideration would inevitably be that the delegate's decision would be affirmed. 26 Futility is a well recognised basis upon which a Court will decline to grant judicial review: see SZBYR v Minister for Immigration and Citizenship [2007] HCA 26 at [29] . In such circumstances relief is refused because the applicant has in fact suffered no injustice since the statutory law compels a particular outcome. 27 Had any of the grounds of appeal that are now sought to be agitated before me been raised before the Federal Magistrate his Honour would undoubtedly have rejected the application for judicial review. That is because it would have been futile to grant the relief sought. 28 There is no basis upon which to grant leave to permit the new grounds to be argued. It would be futile to grant such leave. It also follows that no appealable error can be demonstrated in relation to his Honour's decision to dismiss the application for judicial review. 29 The appeal must be dismissed with costs. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. | appeal from decision of federal magistrate affirming decision of migration review tribunal breach of condition 8202 student visa cancelled on ground of failure to be enrolled in a registered course application for leave to argue grounds not before federal magistrate whether futile to grant such leave migration law |
Its priority date is 4 January 1991. The alleged infringements involve two versions of a product called 'Caravan Instant Shelter' which the respondents imported into and sold in Australia at various times. 2 The third applicant, KD Kanopy Inc, is a company incorporated in the United States of America and the assignee of the patent pursuant to an Assignment Agreement with the personal representative of the inventor, James Lynch (deceased), dated 19 October 2001. It is the registered proprietor of the Australian patent. The second applicant, Mr Dand, is a director of the first applicant (KD Kanopy Australasia) and he and that company claim to have been the exclusive licensees of the patent in Australia at all relevant times. 3 From about September 2000 one or more the respondents imported and sold a product called 'Caravan Instant Shelter' . A later version of this product was imported and sold from about May 2002. The respondents admit that the earlier version of the product has all of the essential features of, and may infringe, the claims of the patent in suit, but deny that the later version has those features. They contend that, to the extent that there has been infringement, there can be no liability to the first, second and fourth applicants. They deny that they are the exclusive licensees and able to maintain a claim for infringement. The focus of this aspect of their defence is upon a Distribution Agreement entered into between the first, second and third applicants on 24 December 1997. 4 The respondents also attack the validity of the patent in question on the grounds that it was not novel; that it lacks any inventive step and the claims in question are not fairly based and lack clarity. They cross-claim for an order revoking the claims the subject of the proceedings. Scissor assemblies allow it to expand into a canopy which provides shade or shelter. The author of the patent points out that structures such as this have been used for a very long time. The scissor assemblies are fastened to upright support members by mounts. The patent is concerned with these mounts. Specifically, the present invention relates to a structural device, in the form of a non-compressible mount having sockets, which capture end portions of scissor assemblies so as to connect scissor assemblies to each other and to other structural components of a canopy structure. The mounts are structured to provide free pivots while at the same time resisting lateral and torsional deflections. Accordingly, the present invention generally relates to the attachment of pivoting structural members in an integrated canopy system. US Patent No 4 641 676 is said to disclose a portable canopy structure which has a framework that may be collapsed into a stored state and yet may be expanded and erected for use. The framework includes a plurality of upright support members the adjacent ones of which are connected by means of scissor assemblies comprising either single or dual scissor units connected in end-to-end relation. A problem experienced by that structure (and that shown in US Patent No 4 607 656 issued to one Carter) is that the edge scissor assemblies which extend between adjacent support members are often subjected to lateral forces which tend to decrease their stability. That structure was improved by his US Patent No 4 779 635 (referred to as 'Lynch 3' in these proceedings). The canopy structure there referred to biased its corner support members so that the framework was placed in tension, as opposed to compression. The structure shown in his U.S. Patent No 4 947 884 ( 'Lynch 2' ), whilst workable, also had the disadvantages indicated. In an effort to further stabilise the structure and meet those problems he developed a stabilisation bar, but it added complexity to the structure and increased its weight and manufacturing costs. There is further a recognized need for interconnections which would be more resistive to shear and bending moments. This framework structure is adapted to be folded and stored and in a collapsed state and erected in an expanded state on a support surface in order to support a canopy covering above the support surface. The expandable framework broadly includes a plurality of upright support members each having a bottom end positionable on the support surface and a top end opposite the bottom end. In the collapsed state, the support members are oriented alongside one another but are moveable outwardly apart from one another towards the expanded state. Each edge scissor assembly has a pair of outer upper ends and a pair of outer lower ends, a plurality of novel mounts are disposed on the upright support members to fasten the edge scissor assemblies thereto. To this end, each of the mounts have sockets formed therein by spaced-apart facing sidewall portions so that the outer ends of the edge scissor assemblies may be captured in respective one of the sockets in close fitted engagement between the facing sidewall portions thereof. A fastening pin pivotally secures each outer end portion of each edge scissor assembly in its respective socket ...'. The sockets and mounts provide pivotal connections for the scissor bars, without being compressive; the sidewalls act to resist lateral and torsional deflections of the outer end portions of the edge scissor assemblies and thus the scissor assemblies themselves. In the preferred structure a floating mount, also having the sockets and fastening pins referred to, is used to connect the scissor units together. In its collapsed state the stationary and floating mounts at the framework end create an uninterrupted first rim and the sliding and floating mounts at the other end create a second rim. There follows drawings and a detailed description of the preferred embodiment. It should be appreciated, though, that the present invention is defined by the following claims construed in light of the prior art so that modifications or changes may be made to the preferred embodiment of the present invention without departing from the inventive concepts contained herein. I will refer to features of the dependant claims generally in connexion with the issue of novelty. The focus in these proceedings is upon the references in claim 1, to parallel sidewall portions; the close-fitted engagement; the planar contact surfaces formed and how they act together 'to resist lateral and torsional deflections' of the edge scissor assemblies. These references are repeated in claim 18, which adds the word 'mated' to the term close-fitted engagement. 12 Claim 23 refers to a structure similar to that in claim 1 but includes the feature that the fastening pin pivotally securing the edge of the scissor assemblies to the support members is non-compressive. This feature is also found in claim 17. It may be noted however that the word 'parallel' is not used in connection with the sidewalls referred to in claim 23. It was suggested by the applicants' patent attorney that claim 15 should not be said to be dependent upon later claims and claims 16 and 17 should be renumbered to follow claim 23. No amendment was sought. That experience includes the design of a collapsible shade structure. Dr Kneen's evidence was referrable to the issue of infringement of the applicant's patent and Dr Gilmore's to issues relating to invalidity. The evidence of another witness sought to be relied on by the applicants, their patent attorney, was not accepted as relevant to the understanding of a skilled person, so far as it was relevant to the question of construction of the patent. Dr Kneen in any event adopted much of this evidence as accurate. The respondent called Mr McKinnon, whose background included a business which sold awnings and shade structures. He also conceived of a collapsible shade structure and manufactured and sold a version of it from 1987. It and its prototype are relevant to the issues of novelty and obviousness. The respondent also called an engineer experienced in product design, Mr Kennard. Mr Kennard is also the author of some inventions. Of itself this is not a disqualifying factor. 15 The identification of the skilled reader, to whom the patent is addressed, (being a hypothetical, skilled but non-inventive, worker in the field covered by the patent to whom the invention would be of interest) was discussed in the joint expert report. It was said that there was general agreement that such a person would include a person in the blind, awning and/or tent industries with a practical knowledge of installation and manufacture. The respondents submit that this is too wide and that a person interested in the mount, the subject of the patent, and the problems they sought to overcome, would be a person involved in their design and manufacture. This was the initial position taken by Drs Kneen and Gilmore. The respondents add that Mr McKinnon is a person within this description, relying upon his experience in designing his canopy. 16 The hypothetical skilled person is a person acquainted with the surrounding circumstances of the state of the art and manufacture at the relevant time: Kimberly Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1; [2001] HCA 8 at [24] . They are likely to have a 'practical interest in the subject matter of the invention' : Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 at 242 and may often work in the art with which the invention is connected. Persons working in the awning, tent and shade structure business might be said to be interested in the method of attachment to the structure identified in the patent. It seems to me however that it is more clearly addressed to a person concerned with the particular problem it identifies. Such a person would be someone called upon to design such a structure and its components. Mr McKinnon's own use of an engineer to refine his prototype for production tends to confirm this. I accept however that there may be persons, not necessarily qualified as engineers, whose experience would provide them with the necessary knowledge and understanding. As the Full Court pointed out in Jupiters Ltd v Neurizon Pty Ltd (2005) 65 IPR 86; [2005] FCAFC 90 at [67] , much evidence is admissible from persons who do not precisely answer the description of the hypothetical skilled person. Some may be more skilled in the relevant art than others. It is for the court, having admitted relevant evidence, to come to a conclusion. The applicants must show that the two products which the respondents imported and sold have taken 'each and every one of the essential integers ' of the claims, in order to establish infringement: Olin Corporation v Super Cartridge Co Pty Ltd [1977] HCA 23 ; (1977) 180 CLR 236 at 246; Populin v HB Nominees Pty Ltd (1982) 41 ALR 471 at 475. 18 It would appear that the first of the two versions of the 'Caravan Instant Shelter' ('Product A') was imported and sold by the second respondents in a period from about September 2000 to mid November 2002 and by the first respondent from some time prior to May 2002 to February 2003. The respondents admit that Product A has all of the essential integers of the claims in question, as earlier mentioned. 19 The second version ('Product B') is said to have been imported and sold by the first respondent from May 2002 and by the second respondent from 15 October 2002. It has all the features of Product A, and therefore of the relevant claims, except that one of the sidewalls of the brackets on the fixed and sliding mounts is inclined away from the other sidewall and it has a rib. The general consensus is that the extent of the inclination is about 8 degrees. 20 The respondents' principal contention is that these features of Product B mean that the integers of parallel facing sidewall portions of the mounts and planar contact surfaces are missing. The two integers cannot be taken separately, for claims 1 and 18 make plain that the parallel sidewalls are to form planar contact surfaces for the purpose of resisting lateral and torsional deflections. There does not appear to be any dispute about this. Claim 23 does not have these integers, but does require that there be a close-fitted engagement between the sidewall and the end of the member of the scissor assembly that is inserted into the socket. The respondents contend this produces a similar requirement and is not met. 21 The other aspect of the invention is the use of a non-compressive pin. The respondents' Product B uses a screw. I shall refer to the respondents' argument in connection with this point of difference after dealing with the main issue. 22 The question whether there has been infringement is determined by the construction of the claims: Olin v Super Cartridge 180 CLR at 246. The claims are construed in the context of the specification as a whole, but that does not permit the limits of the monopoly claimed to be expanded by adding to the words of a claim glosses drawn from other parts of the specification: Welch Perrin & Co Pty Ltd v Worrel [1960] HCA 91 ; (1961) 106 CLR 588 at 610. 23 In construing the patent specification the court is to place itself in the position of the person to whom it is addressed: Kimberly-Clark v Arico [2001] HCA at [24]. The specification is to be read in the light of common general knowledge before the priority date. It is accepted that experts can give evidence as to the meaning which those skilled in the art would give to technical terms and phrases and unusual or special meanings which would be given by them to words which might otherwise bear their ordinary meaning. It is however the court's task to construe the specification: Sartas No 1 Pty Ltd v Koukourou & Partners Pty Ltd (1994) 30 IPR 479 at 485-486; Jupiters v Neurizon 65 IPR at [67]. It is not correct, and contrary to such an approach, to identify the 'substance' or the pith and marrow of the invention and determine the issue of infringement on that basis, it is submitted. The respondents view such an approach as non-textual. That approach, drawn from Clarke v Adie (1875) LR 10 Ch App 667 at 675, is not consistent with Catnic [1982] RPC 183, which changed the law in this area, it is submitted. This latter fact was recognised by Finkelstein J in Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 177 ALR 231; 49 IPR 225; [2000] FCA 980 and more recently by Hoffman LJ in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd (2004) 64 IPR 444; [2004] UKHL 46 (at [42]), it was submitted. In each case it was considered that a purposive construction, particularly one given effect to by the questions posed in Improver Corporation v Remmington Consumer Products Ltd [1990] FSR 181 at 189, leaves no area of operation for a pith and marrow approach (see also PhotoCure ASA v Queen's University at Kingston (2005) 216 ALR 41; 64 IPR 314; [2005] FCA 344). The respondents also point to the recognition by Lindgren J of the 'tension' between two ideas in the construction of patent claims: the idea that a person should be able to take the substance of the invention and avoid infringement by side-stepping the language of the claims and the idea that the language of patent claims sets the boundaries of the monopoly and ought not to be extended by the courts to catch that which the patentee has left open: Breville Pty Ltd v Warehouse Group (Australia) Pty Ltd (2005) 67 IPR 576; [2005] FCA 1893 at [40] . It would follow from the respondents' submission that the first mentioned idea reflects the 'pith and marrow' approach but that the latter is the correct approach. 25 Two recent decisions of this Court confirm that the identification of the substance, or essence, of an invention and its use in connection with allegations of infringement to be an incorrect method: Sachtler GmbH & Co KG v RE Miller Pty Ltd (2005) 65 IPR 605 at [55] per Bennett J; Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd [2005] FCAFC 220 at [38] - [43] and [92]. As the Full Court explained in Fresenius [2005] FCAFC 220 , it is an error of principle to ascertain the 'essence' of the invention to determine whether infringement has occurred. Fresenius [2005] FCAFC 220 reiterated that the correct approach is to identify the essential integers and that the form and wording of the claim are determinative. The two decisions also make plain that the incorrect approach reflects a misunderstanding of what was envisaged by the doctrine of pith and marrow. That doctrine has not been regarded by Australian courts as inconsistent with a proper approach to the construction of patent claims. 26 The decision in Fresenius [2005] FCAFC 220 also confirms as correct the explanation of the course the law has taken in this area in Populin v HB Nominees 41 ALR 471, which was confirmed in Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 161 IPR 545. Populin v HB Nominees 41 ALR at 475 stressed the importance of a patentee distinguishing essential and inessential integers and claiming only the former, because it must be shown that the alleged infringee has taken each and every one of the essential integers of the claim. If one essential integer is omitted that person will escape liability. At the same time, it is explained, the courts sought to avoid too technical or narrow a construction. Accordingly they held that the omission of an inessential step or part, or the substitution of an equivalent (an immaterial variation) would not provide an escape from infringement. Considerations such as this led to the pith and marrow test, expressed in the classic statement in Clarke v Adie (1875) LR 10 Ch App at 675. It has its limitations, however. As Gibbs J said in Olin v Super Cartridge [1977] HCA 23 ; 180 CLR 236 , the doctrine does not mean that there will be an infringement where the patentee has, in the form of the claim, left open that which the alleged infringee has done; and it does not affect the fundamental rule that there will be no infringement unless all of the essential features or integers of the claim were taken. 28 Turning to the reading of the complete specification, the Full Court in Populin v HB Nominees 41 ALR 471 pointed out that the essential integers are to be determined not by an abstract and uninformed construction, but by a common sense assessment of what the words used convey in the context of the then existing published knowledge. It is those novel features only that he claims to be essential that constitute the so-called 'pith and marrow' of the claim. A patent specification should be given a purposive construction rather than a purely literal one derived from applying to it the kind of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge ...'. The alleged infringer had the member inclined at 6 or 8 degrees from the vertical. The reduction had a negligible effect on function and the House of Lords found infringement, as would an Australian court. His Honour did not consider that Catnic [1982] PRC 183 propounded any novel principle or created a new category of 'non-textual infringement' (see also Fresenius v Gambro [2005] FCAFC at [91]; Pharmacia Italian SpA v Mayne Pharmaceuticals Pty Ltd (2005) 661 IPR 84 at 98 and see the cases there cited). 30 In Catnic [1982] PRC 183 the solution proposed by Lord Diplock was a construction which gave effect to what the skilled addressee would understood to be the protection claimed. The question identified by Lord Diplock (at 243) was whether a skilled addressee would understand that strict compliance with a word or phrase was intended to be an essential requirement, so that any variant would fall outside the claim, even though it could have no material effect upon the way the invention works. That question did not however arise if the variation had a material effect or if that would have been obvious to the informed reader. 31 The views expressed by Lord Diplock, that the essential features of a claim are what is referred to as the 'pith and marrow' and that they are to be determined by reference to the words of the claim, and not by some intuitive process, may also be seen as reflected in the statement of the High Court in Radiation Ltd v Galliers & Klaerr Pty Ltd [1938] HCA 17 ; (1938) 60 CLR 36 at 51 that, in connection with infringement, consideration must be given to 'the substantial idea disclosed by the specification and made the subject of a definite claim ' (emphasis added, as it was by the Full Court in Fresenius v Gambro [2005] FCAFC at [50]). 32 The decision in Fresenius v Gambro [2005] FCAFC at [91] confirms that both Populin v HB Nominees 41 ALR 471 and Catnic [1982] RPC 183 stand for the proposition that the essential integers of claims are determined by a common sense assessment of what the words of the claims convey in the context of then-existing knowledge. The cases show that the principle of the pith and marrow is concerned with the identification of what is essential and inessential. Where the omission or substitution in the alleged infringing article is not of an essential feature, the variation is immaterial and a conclusion of infringement may follow. The focus here is upon the socket where A and B, on the one hand, and C, on the other, are the sidewalls. The inclined sidewall with rib is shown at A and B. The outer end portion of the scissor assemblies (or truss as it is also referred to) is inserted into the socket and held in place with a screw. 35 Claim 1 of the patent in suit envisages the sockets of the mounts being formed by sidewalls which are spaced apart and parallel. The outer end portions of the scissor assemblies are held closely in the socket between the sidewalls which are 'parallel facing' in a 'close-fitted engagement' . The end portions of the scissor assemblies 'thereby ' form 'planar contact surfaces' with the sidewalls. The sidewalls, it is said, 'may act' on the outer end portions 'along the planar contact surfaces' to 'resist lateral and torsional deflections' of the scissor assemblies. Claim 18 repeats the reference to the sockets having spaced-apart parallel sidewalls in connection with both the stationary and sliding mounts, the close-fitted engagement and the sidewalls acting along the planar contact surfaces in order to resist deflections. 36 The respondents concede that the word 'parallel' in the claims would not be understood by a person skilled to refer to the sidewalls being precisely geometrically parallel, but rather parallel within manufacturing tolerances. Dr Gilmore, in dealing with the issue of fair basing, said that a geometric parallel sidewall could not be achieved. The claim would be understood to say 'reasonably parallel ' and consistent with the structure working as described. 37 The applicants' witnesses did not attempt to put a figure upon what would be 'reasonably parallel' . Mr McKinnon suggested that anything more than an inclination of 5 degrees from the other sidewall could not be considered to be parallel and could not function as such. It may easily be inferred from the claims that the requirement of parallelism is not to be read on its own and without reference to function. The focus then shifts to the formation of the planar contact surfaces and what is necessary to achieve this. The respondents did not deny such an approach, but submitted that the function of forming planar contact surfaces reinforces the meaning of parallel as being as close to parallel as can be achieved in manufacturing. 38 Dr Kneen gave evidence as to the importance of the contact sought to be achieved. He explained that the improvement sought in the behaviour of the mount, as seen in the specifications, the resistance of lateral and torsional deflection, is to be achieved by restraining the rectangular end portions of the scissor assemblies against rotation. This involves the end coming into contact with the sidewalls. The essential element is claimed to be the presence of planar contact surfaces on the sidewalls. 39 Mr McKinnon did not consider that the inclined side and rib of Product B provided a planar contact surface. Although he conceded that the end portion of the scissor assemblies would sit straight in the socket of Product B, and that it would be parallel with the other sidewall, he did not see this as achieving the same effect as a socket having sidewalls which were both parallel. Mr McKinnon pointed out that, if the gap between the two points of contact (A and B on Dr Kneen's drawing) was too great, it would allow for lateral and torsional deflection. He did not say however that this variation in Product B had the result that its function was different. I infer that it does not. Mr McKinnon's point was that the inclined wall and rib provided for contact points , not contact surfaces . He considered that the latter required the contact to be continuous. 40 Dr Gilmore was of the view that the gaps created by the angle of the sidewall in Product B maintained a reasonably planar surface. The applicants' case as to this feature, as with that of parallel sidewalls, was that there is a tolerance permitted by the claims when regard was had to their function. 41 Dr Kneen pointed out that the contact surface between the end member of the scissor assemblies and the sidewall in the specification will not always be over the whole of the plane as it moves. It may be at isolated points. The claim may imply that it is over a significant surface, but it does not say that it has to be over the whole plane. He would define a planar contact surface as a series of points that form a plane on which contact can be made. Dr Gilmore considered that the angle of the sidewall in Product B maintained a reasonably planar surface. 42 Dr Kneen observed that the claim did not require the planar contact surfaces to be the parallel sidewalls of the sockets. The claims suggest that the planar surfaces could be the sides of the ends of the scissor members. The patent itself says that the sidewalls may act on the end portions along the planar contact surfaces. I note that Mr McKinnon appears to have been alert to this question, but was not confident about the conclusion. It seems to me that Dr Kneen's view is borne out by the language of the claim. Dr Gilmore also referred to what the claims have to say about the end portion of the scissor assembly. It is not likely that it was predicted that it would always be entirely smooth and providing one continuous plane. If it is, its surface, which is the point of contact, may come into contact at a number of points. The claims refer to contact surfaces . The plane may then be the side of the end portion itself. The respondents submitted that if this were the case it is even more important that the sidewalls be as close to true parallel as possible. The evidence did not however suggest that a substantially parallel wall would act differently upon the end of the scissor assemblies in any significant way. 43 In reality the respondents' argument not only linked the requirements of the sidewall being parallel with the function of planar contact surfaces, it equated them. Once it is accepted that the claims see the end portion end of the scissor assembly providing the plane on which contact surfaces or points are provided, the remaining question is whether the sidewalls have to be as close to true parallel as possible. This is not necessary for the behaviour of the mount sought to be achieved. Substantially parallel will suffice. That is how the skilled addressee would understand the patent to require which regard was had to the function of the mount. The variation in Product B has no effect upon the function of the sidewall upon the end portion of the scissor assembly. 44 Claim 23 does not contain a requirement that the sidewalls be parallel. The respondents sought to resist a finding of infringement because there is only contact at two points. It was submitted that the integer, that there be a close-fitted engagement, is therefore missing. There is however nothing which suggests Product B failed to achieve this objective. 45 The respondents' approach to the requirement that there be a non-compressive fastening pin was curious. There was no dispute that it was an essential integer of claim 23. The respondents' witnesses accepted that the screw in Product B had the features of the pin referred to in the claim. Nevertheless the respondents in submissions reserved their position on infringement on the basis of the view expressed by Dr Gilmore, in connexion with the issue of anticipation, that the bolt utilised in Mr McKinnon's Original canopy did not anticipate the patent. The weight of the evidence however was that the screw in Product B functioned in the same way as the non-compressive pin in the claim. 46 Infringement of the independent claims 1, 18 and 23 has been made out. The respondents did not suggest that there was any feature of the dependant claims which excepted them from a finding of infringement. The applicants have therefore established infringement of claims 1, 2 and 8 to 23 inclusive by each of Products A and B. These requirements are often bound up with the question of infringement. In the latter respect the respondents argue that if the claims are to be interpreted as including walls that are reasonably parallel, but not as parallel as technically possible, and do not create one planar surface between the inclined sidewall and the end portion of the scissor assembly, they travel beyond, and are not fairly based upon, the matter described in the specification: Kimberly Clark v Arico [2001] HCA at [15]; Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [2004] HCA 58 ; (2004) 217 CLR 274 at [57] . For this purpose an overly meticulous and verbal analysis is to be avoided: Synthetic Turf Development Pty v Sports Technology International Pty Ltd (2005) 67 IPR 475; [2005] FCAFC 270 at [26] . The question is whether there is a real and reasonably clear disclosure in the body of the specification of what is then claimed, so that the alleged invention as claimed can be said, in a general sense, to be described in the body of the specification: Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 95 per Gummow J. 48 The respondents submit that it is clear from the patent specification that the invention contemplates continuous contact over the entire plane between each inside wall and the side of the end portion of the assembly. It is this feature that is described in the specification as providing the resistance against lateral and torsional deflection. The specification does not contemplate one sidewall parallel with the end portion and having planar contact with it but, on the other side, contact at only two points and not over the planar surface of the sidewall. 49 The respondents rely upon the preferred embodiment described in the specification (pages 12-15) in their particulars of invalidity. It is submitted that it is there made clear that the sidewalls are required to be parallel so that there are planar contact surfaces between the sidewalls and the outer ends of the assembly in order to resist deflection. A reference to the preferred embodiments in this regard shows that they are concerned with floating and central mounts having parallel sidewalls. The end portions of the scissor assemblies are said to fit into a socket having 'spaced-apart' sidewalls. It is said that it is due to the close fitted engagement with the end portions in the sockets that planar contact surfaces are formed. The latter feature is not attributed to the sidewalls being parallel. 50 In any event the specification should not be construed as disclosing an invention limited to the preferred embodiment where there is a statement that it is not so limited. In such a case the consistory clause may be treated as disclosing the invention: Rehm v Websters Security 81 ALR at 94-95 ; Lockwood Security v Doric Products 217 CLR at [93]. The specification in the patent in suit contains such a statement. The consistory clause describes the sockets of the mounts as having 'spaced-apart facing sidewall portions' so that the end portions of the scissor assemblies may be captured in close-fitted engagement. The invention so described does not have geometrically parallel-sided sockets. 51 The respondents also allege that claims 1, 8, 12 and 18 are invalid because two phrases lack clarity: 'close-fitted engagement' and 'planar contact surfaces'. If 'planar contact surfaces' is to be interpreted to include contact at discrete points, then the phrase is not clear, it is submitted. With regard to 'close-fitted engagement' (and 'close-fitted mated engagement' ) the phrases are said not to be clear because there is no limitation on how far apart the components can be. 52 The applicants point out that mere generality of language in a claim is not fatal, so long as the claim indicates the territory which is forbidden: Adhesives Pty Ltd v Aktieselskabet Dansk Gaerings-Industri [1934] HCA 71 ; (1935) 55 CLR 523 at 546. A claim is not ambiguous if a skilled addressee, applying common sense and common knowledge, can resolve it: Innovative Agriculture Products Pty Ltd v Cranshaw (1996) 35 IPR 643. 53 In reality the respondents' argument concerning 'planar contact surfaces' was that it was capable of bearing a meaning which did not imply unbroken contact. This does not establish a lack of clarity. There is nothing unclear about an engagement between the sidewalls of the socket and the end portion of a scissor assembly being close-fitted. This is particularly so when regard is had to the purpose, namely that contact surfaces be provided in order to resist deflection. Clearly enough a gap which would cut across that objective is to be avoided. An engagement which is 'mated' is one which would be well understood to a skilled addressee, as it would to almost any person in a mechanical workshop. (The amendments of s 7 and the dictionary definition of 'prior art base' effected by Act No 160 of 2001 do not apply to this patent). The respondents rely upon four prior patents as anticipating the patent in suit: the two Lynch patents referred to in the patent in suit ( 'Lynch 2' and 'Lynch 3' ) and another, US Patent No 4 885 891 ( 'Lynch 1' ), together with US Patent 402 755 ( 'Lyon' ). They also pleaded two instances of prior use in Australia before the priority date: the use of a collapsible canopy designed by Mr McKinnon (referred to as his 'Original' canopy), that use including its use at public events such as motocross races and jetski races; and the commercial sale and use of a collapsible canopy under the trademark Quikshade by the company with which Mr McKinnon and his father were associated, Summercraft Blind & Awning Company Pty Ltd. I did not understand the respondents to press reliance upon the Quikshade canopy, however, since it does not employ a two-sided socket such as that shown in the patent. It may remain relevant to the question of common general knowledge, particularly in connection with obviousness. 55 The test for anticipation, or want of novelty, is 'reverse infringement' : Meyers Taylor Pty Ltd v Vicarr Industries Ltd [1977] HCA 19 ; (1977) 137 CLR 228 at 235. It enquires whether the alleged anticipation would infringe the patent, assuming for that purpose that it is valid. The prior publication or use must disclose or embody all of the essential integers of the claims in question, and do so in 'clear, unequivocal and unmistakeable terms' : Nicaro Holdings 161 IPR at 549. A person skilled in the art must be able to perceive, understand and be able to practically apply the discovery by reference to the information in the prior art without further experimentation: Nicaro Holdings 161 IPR at 549; Hill v Evans (1962) 31 LJ Ch 456 at 443; Merck & Co Inc v Arrow Pharmaceuticals Ltd (2006) 58 IPR 511; [2006] FCAFC 91 at [105] - [107] , [111]. 56 Section 7(1) of the Act provides that prior art information in the nature of a single act which was made 'publicly available' may be used for the comparison required in connection with novelty. In the present case the information contained in Mr McKinnon's Original canopy must have been made available to any one member of the public in a way which left them free, in law and equity, to make use of the information: Stanway Oyster Cylinders Pty Ltd v Marks (1996) 66 FCR 577. Lynch 1 --- (US Patent No. These pins are referred to in claims 15, 16, 17 and 23. There was a further issue as to whether sliding mount 55 in Figure 8 disclosed sockets formed by spaced-apart parallel sidewall portions (claims 1, 18 and 23 and dependant claims). Dr Gilmore did not consider that it was possible to reach any conclusion regarding the structure of the mount. Both Mr Kennard and Mr McKinnon agreed that it was difficult to determine its structure. Mr McKinnon's statement that it was 'clear enough' to him does not provide sufficient certainty. Mr Kennard deduced that they might be parallel by reference to other, unnumbered, mounts which he thought had inside walls. He inferred that what was depicted was an apparatus with a U-shaped socket. Clearly enough Mr Kennard has made an assumption which a skilled addressee would not make without a more specific drawing or explanation, as Dr Gilmore points out. There was general agreement, disclosed in the joint expert report, about whether mount 70 on Figure 6 had two ears, but disagreement about how the drawing should be interpreted. Mr McKinnon thought that it had two ears, but Mr Kennard thought that one pair of ears was disclosed at right angles --- in essence and L-shaped socket. Mr Kennard also observed that the figure showed a socket (74) where the front wall and part of the back wall can be seen. These are referred to in the specifications as 'pairs of ears' . He reads the drawing as showing the front and back walls as parallel. He also understands the patent, in describing other sockets as pairs of ears, to suggest that they too comprise parallel-facing sidewalls. Dr Gilmore agreed that the description of the socket was of facing sidewalls, but did not consider that it was sufficiently clear for a conclusion that they were parallel. It seems to me, again, that Mr Kennard and Mr McKinnon may have expected this to be the case that this is not sufficient. The patent refers only to a 'pair of ears' and goes no further. It follows, in Dr Gilmore's view, that planar contact surfaces are not disclosed. It seems to me that Dr Gilmore is correct; and that Mr Kennard's reading of the patents requires assumptions that a skilled addressee would not make without more. 59 Two other features are absent from Lynch 2: the structure disclosed is not a roof support assembly extending between and connected to at least one pair of facing edge scissor assemblies (claim 10); and it does not have an edge scissor assembly including a 'pair of scissor units connected' by floating mounts (claim 8). Dr Gilmore also suggested, at one point in his evidence, that the feature of a non-compressive fastening pin was not present in the Lynch 2 patent. The other evidence however makes plain that bolts, which are clearly disclosed, can operate in the same way. Lynch 3 does not disclose a roof support assembly which includes an internal scissor assembly extending between and connected to at least one pair of facing edge scissor assemblies (claim 10). 61 The specification on Lynch 3 (col 5, l55) refers to a U-shaped bracket mounted to a corner support member and an L-shaped socket (which is taken to be effectively one-sided) to a corner. Mr Kennard understood the specification to convey that the socket on the mount used to attach the scissor end has only one side and the socket on the mount used to attach the roof truss has two sides. Whilst the sockets used to attach the ends of the scissor assemblies do not have parallel sidewalls, as the patent in suit requires, but only a single sidewall, he considers that, because Lynch 3 discloses sockets having two sidewalls for use in attaching the roof truss, it would be a matter of routine to adapt the sockets for attaching the scissor assembly to be two-sided as well. Mr Kennard has not addressed the correct question. As Dr Gilmore points out, it is not whether, in an engineering sense, this other application could be deduced. Application of the mount used for attaching the roof truss represents a different engineering feature of the structure and, importantly, is not taught by this patent. It is difficult therefore to understand that the slots did not function as sockets, as Dr Gilmore suggested. There was general agreement that the slots had parallel sides. The document does not however disclose a pin, as referred to in claims 1 and 23, passing through the slots and end portions inserted into them. It utilises wires or chords which lie in grooves at the end of the brackets. The wires are said to constitute axes upon which intersecting parts are to hinge. That is the only description provided. The respondents submit that it must be inferred that the wire must go through the cross-bar or other connecting part which is inserted into the slots and then pivot in the same way as the pin, which passes through the sockets and the end of the scissor assembly. This is not however apparent from the Lyon patent and Dr Gilmore did not accept that it was disclosed. The patent is dated 1889 and contains a limited description. He suggested another way in which the wire could have been threaded, namely on a groove on the inserted connecting part, utilising umbrella technology. This would not necessarily involve the wire acting as a pivot. There is not a clear disclosure. 63 It was also accepted that the features of upper and floating mounts (claim 8) and the internal scissor assembly connected to at least one pair of facing edge scissor assemblies (claim 10), were not anticipated by this patent. There was general agreement that the requirement of claim 23, that the pin be non-compressive, was not met. It folded, concertina style, and had a scissor arrangement which enabled it to expand. At this time Mr McKinnon was involved in motocross and jetski racing events and needed a shelter for his equipment and tools. From 1984 he made a number of prototypes of a collapsible canopy with four upright metal posts and scissor trusses between each post. There are no copies of the Original in existence and the only photographs said to be of it do not show how the scissor assembly was attached to the uprights. 65 The applicants submit that Mr McKinnon's evidence needs to be closely scrutinized in these circumstances. So much may be accepted. It does not however entirely lack corroboration. Mr McKinnon's earlier evidence about how he made U-shaped brackets which attached the scissor truss ends to each post was somewhat unclear. He suggested that they were formed by a piece of metal shaped into a 'U' by fitting it around a post and that the bracket extended beyond the upright posts. His methods may have changed because of the number of prototypes he made. In any event he eventually went to Mr Soward, a metal fabricator, to weld the parts to the posts. Mr Soward does not now recall their shape. His employee, Mr Forster, recalls them being made from U-shaped channels. It may be inferred from Mr McKinnon's evidence that one was added to the top of the upright post to form a stationary mount. Mr Forster recalls a sliding mount on the post which was comprised of a U-shaped bracket which he welded to a piece of square hollow section of metal which slid along the post. The brackets had holes in either sides, through which a bolt could be threaded. It appears elsewhere from the evidence that the bolt was threaded only part of the way. This has an effect upon its function to which reference shall be made. Mr McKinnon's evidence was that he used a nylon washer on either side of the end of the scissor end because the two sides of the socket were slightly larger than the width of the end and to 'take up the slack' . He thinks that the washers were about 1 mm thick. 66 Mr Forster gave evidence that he worked only on a section of the canopy but that Mr McKinnon showed him the final product, of which there is a photograph. He does not recall how the components were utilised. 67 Mr McKinnon believes that he started taking the canopy to races in 1987, and possibly before. In his initial evidence he spoke of other competitors, friends and members of the public seeing the canopy and expressing interest in it, indeed being intrigued by it. He loaned the prototype to friends when he was not attending the races himself. He identified one family to whom he loaned the canopy, the McPhersons, and gave evidence that a photograph in evidence was of the canopy that he had loaned to them. He says that he was asked to make and sell copies of the canopy but he was busy and did not think that it was worth his while. In 1987 a friend returned from the United States of America with a copy of an advertisement made by another company. He then became interested in manufacturing his canopy. He took his prototype to a product engineer, Mr Dawes. Mr Dawes designed a system which clipped together and had injected moulded plastic mounts different in shape from his prototype. He applied for a patent in November 1987. The Quikshade canopy was manufactured and sold from 1988. Neither it nor the patent are relied upon as anticipating the patent in suit but as forming part of common general knowledge in connexion with the issue of obviousness. Despite its commercial success Mr McKinnon was not satisfied with its strength and stability. In 1995 he redesigned the brackets to have a single wall on each side of the bracket. He sold the Quikshade business but remained as an employee until June 2004. He no longer has any interest in it. 68 Clearly enough Mr McKinnon's structure utilised U-shaped brackets which could be said to have parallel facing sidewalls. A number of points of difference between the patent claims and his Original canopy were initially identified by the applicants, but it seemed to me that only two features remained in issue at the conclusion of the evidence --- whether a close-fitted engagement between the scissor truss ends and the U-shaped bracket was achieved when nylon washers were inserted between them; and whether the Original canopy collapses so that the stationary and floating mounts abut one another to form an uninterrupted rim. The feature of the non-compressive pin was met because the bolt utilised on the Original canopy operated in the same way. It compressed only to the extent of its thread. 69 The respondents submitted that the claims of the patent in suit could not be got around by the use of a small washer. Dr Gilmore's evidence was to the effect that it could prevent a close-fitted engagement, depending on the size of the gap it was meant to take up. I did not however understand him to say that a gap of 1 mm would prevent that engagement. That was the extent of the gap on the Original canopy and equates with what the patent discloses. It may be that the washer was unnecessary. It does not in any event alter the function of the socket. 70 The Original canopy may be said to anticipate the claims of the patent in suit, save in one respect. Mr McKinnon conceded that it did not collapse in such a way that an uninterrupted rim was formed (claim 14). Dr Gilmore identified it as a unique feature of the structure. I did not understand the respondents to contend that it was not essential. They contended that it was obvious at the priority date. This contention is however only based upon the possibility that it might have been achieved on the Original by countersinking bolts once the idea was known. In any event it was not pleaded in connection with the issue of obviousness, to which I shall shortly turn. It remains to consider whether the Original canopy was made available to the public in the way required, on the footing that it did anticipate the patent's claims. 71 Mr McKinnon's earlier evidence may have established the availability of the canopy for inspection by members of the public. His later evidence does not however make such a conclusion possible. He accepted that the photograph taken at the races of the canopy loaned to the McPhersons was of the later Quikshade canopy and conceded that he may never have loaned an Original canopy to them. When Mr McKinnon was reminded that he applied for a patent of the Original in late 1987 he retreated from his earlier evidence about making the canopy available at the races in the period prior to that. He said that he had attempted to keep it from the public; that he erected it at the back of the pits and out of public view; that he sought to do so until it was patented and because he was conscious of the prospect of people taking his ideas; and that he was guarded about lending it. The possibility that he might have continued to use it after his application for the patent was not rendered more certain by evidence. The Quikshade canopy which he did use appears to have been produced shortly afterwards, in 1988. 72 The only other evidence of disclosure upon which the respondents relied was of the Original canopy to Mr Forster. It could not however be inferred that he was at liberty to make use of it, as is required. The circumstances in which he was placed, and his or his employer's relationship with Mr McKinnon, suggest strongly that the information contained in it was confidential and could not be imparted to others or utilised by him. The patent was applied for on 23 December 1991. The effect of s 7(2) is that it does not involve such a step if it would have been obvious to person skilled in the relevant art, in the light of common general knowledge as it existed before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information referred to in subs (3). That subsection refers to one piece or two or a combination of pieces, of prior art information that the skilled person could reasonably be expected to have ascertained, understood and regarded as relevant. The skilled person for these purposes is assumed to be non-inventive. 74 As the High Court pointed out in Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59 ; (2003) 212 CLR 411 at 423 at [21], in seeking to discharge the onus upon them, the party alleging invalidity must lead evidence looking back to the priority date, sometimes many years prior to trial. The authorities are replete with warnings about the misuse of hindsight. This danger is particularly acute where there is a new combination. 75 The respondents' case on obviousness had two approaches: it was assumed that common general knowledge extended to what was disclosed in the three prior Lynch patents. Features of them, such as the use of scissor assemblies connected to vertical upright supports, could also be seen in the Lyon patent and the Quikshade canopy. Viewed from that perspective it would have been obvious to the skilled person that the attachment means could be changed to mounts having L-shaped or U-shaped sockets, the argument proceeds. They would provide greater strength and stability. The other approach relied upon Mr Kennard's consideration of how he might design a component to connect an upright post and a horizontal post in such a way as to enable the latter to be free to slide along the upright post. He had been instructed that the area for design concerned a problem with a collapsible canopy. The application of what he termed 'engineering principle' led him to a choice between a bracket with a U-shaped or L-shaped socket. 76 Mr Kennard's evidence was that all of the features of the Lynch patents were known to skilled persons before the priority date. In particular scissor assemblies, vertical support posts for canopy roofs, the combination of stationary and sliding mounts, of U-shaped and L-shaped sockets in brackets used for attachment and the use of floating mounts and the use of non-compressive pins were all known. Dr Gilmore accepted that the discrete technologies which comprised the structure as described in these patents would have been common general knowledge. However, the knowledge that the specific types of discrete technology would combine well to make a practical and useable device would not be common general knowledge and would need to be 'taught' . Discrete technologies were put together in a particular and a unique way in each of the prior patents. There were a wide range of possibilities open to a person designing a structure such as this and that person would need to research and use their skill in design, he said. The assumption that all collapsible canopies would use scissor assemblies was incorrect, as some prior art documents confirm. Scissor mechanisms could be expected to be observed in various applications, but specific knowledge of how to apply them to advantage in making collapsible structures would not have been readily observed. The use of sockets with parallel sidewalls to accommodate bars with ends of rectangular cross-section were known to help to prevent lateral and rotational distortion of the socket relative to the bar; but whether this assist in preventing distortion of a collapsible structure, while allowing the bar to pivot freely, would depend upon the details and geometry of the design of that structure. The respondents' case, it will be recalled, assumes that structure has been designed. 77 Mr Kennard's evidence was also strongly suggestive of hindsight. It appeared to me that he was prepared to assume a greater knowledge of the type of structure in question than may have been the case at the relevant time. His starting point was his awareness 'for many years' of collapsible canopies used in Australia, at market stalls for example. Whilst he was directed to knowledge as it existed at the relevant date, it could not safely be concluded from his evidence that he took his mind back to that point. By the time he turned his mind to the question of available knowledge he had had regard to the patents and prior art. 78 No reason is shown for rejecting the evidence of Dr Gilmore. There is a basis for doubting the accuracy of Mr Kennard on this question. It follows that common general knowledge as it existed at the priority date should not be taken to have extended to the structures disclosed in the prior Lynch patents, nor the use of scissor assemblies as shown in the Lyon patent and the Quikshade canopy. 79 In addition to what was commonly known, s 7(3) also enquires whether the skilled person could reasonably be expected to have ascertained the prior art information in question. Mr McKinnon said that the Quikshade canopy was sold mostly to motocross competitors in the period 1987 to the end of 1990 and he did not advertise it very much. There is nothing to suggest that a person, such as an engineer undertaking the research to which Dr Gilmore refers, would have been alerted to its existence. There were no journals in the awning and canopy industry and Dr Gilmore's evidence suggests that information of this kind was not likely to appear in engineering design journals. In any event an inspection and observation of the canopy would have shown only the use of a scissor assembly connected to upright posts as one possibility. 80 The Lyon patent also shows the use of a scissor assembly, but as Dr Gilmore explains this does not take one far towards the patent in suit. There is much to be determined in the detail of the design and its geometry before the design of the brackets is considered. The question which in any event arises with respect to it and the Lynch patents is whether they were available to be searched, and would have been searched, online by a design engineer at a time before the priority date. To the extent that the skilled person includes someone within the industry, it may be taken that they would not have routinely undertaken such a search. In Commissioner of Patents v Emperor Sports Pty Ltd [2006] FCAFC 26 the question posed by the statute, and in particular that of ascertainability, was discussed. In many areas it may be assumed that the relevantly skilled person would be familiar with professional journals or other technical information. Unless an inference could be drawn, evidence would generally be required about what that person may reasonably be expected to have done. There is no such evidence in the present case. 81 The respondents' case on obviousness is based upon an assumption that the skilled person proceeds to design the attachment means of the edges of a scissor assembly to upright posts holding a canopy roof, on the basis that they are acquainted with the structures disclosed in the Lynch patents. That assumption is invalid. If that assumption was correct they would in any event have failed to establish that the use of parallel-facing sidewalls, having the function and purpose disclosed in the patent, would have been obvious. Applying the test propounded in Aktiebolaget Hassel v Alphapharm 212 CLR at 433, at [53], the question is whether the skilled person, armed with the information provided by those patents would have been directly led, as a matter of course, to try a bracket having a socket with parallel facing sidewalls and using a non-compressive pin. The latter assumes little importance if the socket is obvious. In this regard it may be accepted that brackets having L-shaped and U-shaped sockets were part of common general knowledge at the time. 82 Dr Gilmore accepted that a person seeking to refine the structure in the prior Lynch patents might consider the use of brackets of this type. That however assumes that knowledge of the structure so disclosed would mean that they would pursue that course. They might consider other possible structures. There are many possibilities and that in the Lynch patents is not mandated by design principle. The choice of other structures might lead the skilled person away from the brackets. The choice of the means of attachment depends so much on the geometry of the structure, as earlier mentioned. I also infer from Dr Gilmore's evidence that the prospect of a choice being presented assumes an identification of the problem of stability as the deficiency necessary to be addressed. It is not said how this would be apparent to a skilled person upon reading them. 83 Dr Gilmore gave evidence that there were other means available if it was desired to resist deflection of the scissor assemblies. He identified one such method. Even if the skilled person understood the Lynch patents to be suggesting the use of the brackets having either L-shaped or U-shaped sockets, that did not mean that a non-inventive step was involved, in his view. He saw the choice as itself inventive. It may also be observed that if the skilled person thought that each of them were 'worth a try' it may beg the question posed by the statute: see Aktiebolaget Hassel v Alphapharm 212 CLR at [72]. 84 Mr Kennard was given his design task by the respondent's lawyers prior to his seeing the patent in suit and the prior art. The description of the task and the questions arising in its course were however such that he was effectively directed to the use of brackets with sockets having parallel facing sidewalls. He was asked to design a 'component' to connect an upright post to the horizontal post in such a way as to enable the latter to be free to slide along the upright post. He was asked to consider a socket connection which might pivot about a bolt. He was then asked to consider ways to strengthen the connection. At that point he was asked to 'explain the general engineering principles behind using parallel facing sidewalls in sockets' . If they improved strength he was asked to explain how. The questions may have put the focus upon the strength and not stability but Mr Kennard was alert to this. In these circumstances I do not consider that his evidence in response to these instructions can carry any weight. 85 The respondents' case on obviousness fails. An 'exclusive licensee' is defined in Sch 1 to mean a licensee under a licence granted by the patentee which confers upon the licensee, or persons authorised by them, the right to exploit the patented invention throughout the patent area to the exclusion of the patentee and all other persons. In their statement of claim the first, second and third applicants alleged that the third applicant, KD Kanopy Inc, is the legal assignee of the patent and that the first and second applicants, KD Kanopy Australasia and Mr Dand, were at all relevant times the exclusive licensee from KD Kanopy Inc. This was not admitted by the respondents. The issue has grown incrementally since the respondents were given leave to amend their defence to raise a positive case that KD Kanopy Australasia and Mr Dand did not have an exclusive licence. 87 Section 195(1) of the Act provides that the register is prima facie evidence of any particular noted upon it. KD Kanopy Australasia and Mr Dand have been noted upon the register as exclusive licensees, pursuant to an agreement dated 24 December 1997, since 31 July 2003. The respondents contend that the terms of that agreement deny the necessary exclusivity in the first and second applicant. 88 The Distribution Agreement of 24 December 1997 was for a term of five years. By cl 1, KD Kanopy Inc granted to KD Kanopy Australasia and Mr Dand the sole exclusive right to manufacture and distribute products known as the KD Majestic and KD Starshade in Australia and New Zealand. Those products are manufactured in accordance with the patent. The right was expressed to include the grant of sub-licences. An exception to the sole and exclusive right created by cl 1 was provided by cl 21.7. It preserved the right of KD Kanopy Inc to continue to deal directly with Alishan Pty Ltd in New South Wales and any other customer as may be agreed. Clause 21 was expressed to prevail over cl 1. Clause 19(f) provided that the agreement was not to be amended, altered, changed, modified, supplemented or rescinded in any manner except by a written agreement executed and acknowledged by the parties to it. Clause 13 provided the distributor an option to renew. The terms of each renewal were to be the same as those contained in the agreement. 89 The option to renew the agreement was exercised by KD Kanopy Australasia and Mr Dand on 8 November 2002. 90 There was a history to cl 21.7, as explained by Mr Dand and the representative of KD Kanopy Inc, Mr Matthews. The KD Kanopy products had earlier been imported by the company Alishan and KD Kanopy Australasia purchased products from that company. In 1995 Mr Dand and Mr Matthews discussed the prospect of KD Kanopy Australasia manufacturing the products in Australia. The first agreement between the parties concerning the manufacture and distribution of the products was entered into on 24 January 1996. Clause 9 of that agreement permitted KD Kanopy Inc to fulfil its existing contractual obligations to Alishan, although KD Kanopy Australasia and Mr Dand became its suppliers after production commenced. At the time cl 21.7 was written Mr Matthews had in mind relinquishing sales to Alishan when it was obvious that Alishan was comfortable in its dealings with them. 91 On 24 March 1998 KD Kanopy Australasia and Mr Dand entered into a licence agreement for the distribution of the products with Kanopy Co, which is now the fourth applicant, Instant Marquee Systems Pty Ltd. That agreement recites that a licence is given to market, promote and distribute the products in Australia and New Zealand, but not in New South Wales. License agreements subsequently entered into by the first and second applicants, with other distributors or franchisees, do not extend to New South Wales, where it is said that the first and second applicants have a non-exclusive right. 92 Mr Dand explained that their agreement merely reflected the 1997 Distribution Agreement. Subsequent to that agreement a further agreement was reached in a conversation with Mr Matthews sometime in 1998 or 1999. That conversation concerned KD Kanopy Australasia and himself having the sole and exclusive rights of distributorship of the products and KD Kanopy Inc discontinuing its sales to Alishan or any one else. At that point Alishan was already ordering nearly all of its products from KD Kanopy Australasia, Mr Matthews says. Mr Dand says that he was motivated to make the request because he and KD Kanopy Australasia were about to expend considerable monies on further plant and equipment and he wished the security of exclusivity. Mr Matthews agreed to his request. He and Mr Dand say that the companies have honoured that agreement, despite it not being reflected in the written Distribution Agreement. 93 It is fair to say that this aspect of the case has taken some turns. In the end however it was reduced to a relatively narrow compass. Clearly the first, second and third applicants were able to vary the agreement of December 1997 in the way they did, notwithstanding a clause such as cl 21.7 and the requirement of formality. The determining factor in such a circumstance is always the intention of the parties: Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10 ; (1957) 98 CLR 93 at 144. GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688 involved a similar clause, which provided that there was to be no oral modification of the agreement. The question which arose was whether it rendered ineffective an oral or implied variation. Justice Finn held that it did not. His Honour observed that the usual objection raised in allowing oral modification, and the alteration of the variation clause, is that it involves a failure to give effect to what the parties had agreed (at [220]). The question for the court however, as a United States commentator had observed, was whether to enforce the first or the second agreement. Common law courts chose the second. His Honour considered that this was of particular application to contracts which might be evolutionary in character. 94 The respondents do not now contend to the contrary of these views. Their case is that the Court should not accept the evidence of the later agreements. They suggest that Mr Dand's evidence should be treated as unreliable because the oral agreement was not referred to until the respondents had identified the difficulty with the terms of cl 21; and because he did not volunteer the license agreement with the fourth applicant and those with other distributors at an earlier point. These submissions overlook the way in which the matter developed. Mr Dand also explained that he and his wife, who found the document, had overlooked the existence of the agreement. I do not find it difficult to accept that documents relating to entities controlled by a person may assume a lesser significance to them than other documents might. 95 The respondents submit that the objective evidence strongly suggests that cl 2.17 remained operative. The terms of the sub-license agreements, which excluded distribution in New South Wales, remained the same throughout 2002 and 2003. Further, KD Kanopy Inc sold some products to the first respondent on two or three occasions in those years. It appears that the goods were ordered by the first respondent directly from KD Kanopy Inc and shipped to it in New South Wales. They also submit that some inference adverse to the applicants should be drawn because Mr Matthews has not further commented upon these sales, or given evidence that there have been no others. 96 Mr Dand has explained, and I accept, that the license agreements were of a proforma type and no thought was given to whether they reflected the current state of affairs agreed to between the first, second and third applicants and put into effect by them. The evidence relating to the sales by KD Kanopy Inc to the first respondent is consistent with an oversight on its part. The evidence is insufficient to permit an inference of conduct inconsistent with the oral agreement. Moreover, Mr Dand's electronic communications to Mr Matthews, when he realised that a competitor had KD Kanopy products, supports a conclusion that he and KD Kanopy Australasia held an exclusive license. The terms of his communications may be polite, but his concerns are clearly consistent with them having that right and KD Kanopy Inc no longer having the right to sell. Mr Matthews gave his evidence some months prior to reference being made to these sales. The respondents had not earlier referred to them despite being within their knowledge. On the state of the evidence I do not think it could be said to have been incumbent upon the applicants to have Mr Matthews provide a general rebuttal or further comment upon the two or three sales which had occurred. 97 The first and second applicants had the exclusive licence to manufacture and distribute from some time after March 1998, prior to the dates of the alleged infringements. They may therefore sue for infringement. The grant of the sub-licence is an incident of those rights and does not detract from it. It was unnecessary to join the fourth applicant to the proceedings on the alternative basis that they may have obtained the exclusive license. Their cross-claim will be dismissed with costs. They have conceded infringement of the patent by reference to their product A and the applicants have made out a case that the respondents' Product B also infringes. The respondents should pay the applicant's costs of the proceedings for infringement. I certify that the preceding ninety-eight (98) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. | patents infringement identification of the skilled reader construction of the claims whether to apply a purposive construction doctrine of 'pith and marrow' characterisation of essential and inessential integers of the claim whether products took each and every one of the essential integers of the claim commonsense assessment invalidity fair basis and clarity whether real and reasonably clear disclosure in the specification novelty whether claim anticipated by prior art and use whether previous structure publicly available non-exclusive agreement subject to later agreement for exclusivity obviousness exclusive licensee no oral modification clause whether clause rendered ineffective oral or implied variations intention of parties skilled person exclusive licensee purposive 'pith and marrow' intellectual property words & phrases |
On 1 June 2009, the Administrative Appeals Tribunal held that the applicant, Mr Vidler, made taxable supplies when he sold two parcels of land and rejected his claim that the sales were input taxed. The Tribunal's decision followed from its rejection of the claim that the properties were "residential premises" as defined in s 195 -1 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act). In so deciding the Tribunal confirmed the respondent's objection decisions made in 2008. Both properties were in Ipswich, Queensland; one at Gledson Street, North Booval and the other at Gladstone Road, Sadliers Crossing. The Tribunal also considered a separate question in relation to a third property however that property is not the subject of the present application and it is not necessary to mention it further. The facts relevant to the two properties that are the subject of the present application are not in dispute and the following summary is taken from the Tribunal's decision. The land comprised 2.7 hectares of vacant land and was zoned residential low density. It was connected to the electricity supply but not to the gas, water or sewerage although access to each of these services was available at the boundaries of the land. The property was purchased by Mr Vidler for $175,000 in May 2004, and was subsequently sold in April 2005 for $285,900. Access to electricity, water and sewerage was available but the services were not in fact connected. On 30 June 2006 the Commissioner issued Notices of Assessment of GST for each sale. With respect to the Gledson St property, the notice stated that GST in the amount of $122,727 was payable, and with respect to the Gladstone Road property the amount was $10,081. On 5 September 2006 Mr Vidler lodged a notice of objection against the assessments. The objection was disallowed by the Commissioner on 11 May 2007. Mr Vidler then sought review of the Commissioner's objection decision in the Administrative Appeals Tribunal. The Tribunal on 1 June 2009 found in favour of the Commissioner and affirmed the objection decision in relation to the assessments. The present application is an appeal from the Tribunal's decision. It is not entirely clear whether the requirement that the properties be "used predominately for residential accommodation" adds anything to the definition of "residential premises" in s 195-1 however the question does not arise unless the properties meet the definitional requirement. It is common ground that at the time of their respective sales neither property was occupied. Consequently sub-para (a) of the definition does not apply and it is to sub-para (b) that attention must be directed. Under that sub-paragraph it is necessary to show that the property was "intended to be occupied, and [was] capable of being occupied as, a residence or for residential accommodation". The respondent takes the view that vacant land, even if zoned residential can never be "residential premises" because it lacks "some form of permanent structure with living facilities" which would allow it to be used as a residence or for residential accommodation. In resisting this submission the applicant attached much importance to the disjunction between "land" and "building" in the opening words of the definition. While he may well be correct that "there is no warrant to read the word 'land' to mean land with a building on it", it is still necessary, as the applicant accepts, for the land to meet the requirements of the definition, in this case, the criteria in sub-para (b). In South Steyne Hotel Pty Ltd v Commissioner of Taxation [2009] FCA 13 ; (2009) 71 ATR 228 at [17] - [39] I gave detailed consideration to the GST Act definition of residential premises including the effect of the amendments made to the definition following the decision in Marana Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 307 ; (2004) 141 FCR 299. Following those amendments which added the reference to residential accommodation as well as the instruction to disregard the term of the occupation or intended occupation, I concluded, at [31], that "only the element of shelter and basic living facilities such as are provided by a bedroom and bathroom" were necessary. That conclusion was accepted by the Full Court in South Steyne Hotel Pty Ltd v Commissioner of Taxation [2009] FCAFC 155 ; Emmett J (with whom Finn J agreed at [30], Edmonds J at [86]. The reference to bedroom and bathroom in the above comment was given as an example only; it does not limit the concept of shelter and basic living facilities. Indeed it may well be that shelter and basic living facilities could exist without there being, in any conventional sense, a bedroom or a bathroom. Given that the Gledson Street and the Gladstone Road land were not occupied at the time of sale, if they are to fall within the definition of residential premises they must, at that time, have been capable of providing some shelter and basic living facilities. In terms of the facilities available there was no material difference between the two properties; both were vacant land; electricity, water and sewerage services were available in both cases even if not actually connected at the time. With minor differences that are presently irrelevant, both properties were zoned "residential". It may well be that zoning permitting residential occupation is necessary for land or a building to be capable of providing shelter and basic living facilities but it is not sufficient. Neither the Gledson Street land nor the Gladstone Road land provided any element of shelter and basic living facilities. The applicant put forward quite a different construction of the definition of residential premises to support his submission that both properties were "intended to be occupied, and [were] capable of being occupied, as a residence or for residential accommodation". The applicant called in aid the explanatory memorandum to the A New Tax System (Indirect Tax and Consequential Amendments) Act 1999 (Cth) which introduced the definitional requirement that the land be "capable" of being occupied as a residence. The new definition requires that for the land to be considered residential premises it must be intended to be occupied, and capable of being occupied, as a residence. That is, it is permissible to use the land for residential purposes and the land has some facilities ordinarily associated with residency (i.e. water and sewerage). 1.168 The amendment ensures that the sales of vacant residential land will not be input taxed under s 40-65. He further submitted that reference in para 1.167 to "permissible" should be read as satisfying the requirement for the intention to use the land --- that is, that if the land is "permitted" to be used for residential purposes, it is "intended" to be used for those purposes. The applicant submits that para 1.168 refers to "bare" vacant land, while the para 1.167 refers to "serviced" vacant land. In my view, these passages do not lend any support to the applicant's construction of the statutory definition. Sub-paragraph (b) of the definition is focussed on the capacity of the land to be used at the relevant time for the nominated purpose; it is not concerned with the potential for the land to be developed to have that capacity. Both sub-paragraphs of the definition are concerned with occupation. The difference between them does not relate to capacity but only to whether the land (having such capacity) is actually being used (occupied) for the nominated purpose. The fact of actual use in sub-para (a) obviates any need to refer to capacity. The reference in sub-para (b) to being "intended to be occupied" is an additional requirement and does not detract from the necessity for the land to be capable of being occupied. Paragraph 1.167 does not mention vacant land at all. The reference to water and sewerage in para 1.167 of the explanatory memorandum is an example of "some facilities ordinarily associated with residency" but does not purport to give those facilities the status of defining characteristics. The paragraph provides no foundation for a distinction between "bare" vacant land and "serviced" vacant land. The applicant's analysis treats the proposition that serviced vacant land is included in the definition of residential premises as both the premise and the conclusion of the argument. The logical fallacy is immediately apparent. Moreover, para 1.168 makes it abundantly clear, without qualification, that this interpretation cannot be accepted. For the reasons given above the present application must fail. In oral submissions for the Commissioner it was suggested that should I find in favour of the respondent, it was open to me to rule that vacant land can never be considered "residential premises" for the purpose of the GST Act. While it is difficult for me to envisage a scenario in which such a characterisation would be plausible, I am not inclined to make so expansive a ruling. The view I have expressed in South Steyne, that an element of shelter and basic living facilities are required to satisfy the definition of residential premises, has been approved by a Full Court. Recognition of that requirement was sufficient to dispose of the particular issue in South Steyne and is also sufficient to dispose of the present application. It may be that other circumstances will show that while necessary, this requirement is not sufficient. It is neither necessary nor appropriate for me to attempt to anticipate such circumstances. The application must be dismissed with costs. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. | a new tax system (goods and services tax) act 1999 (cth) ss 40-65 & 195 -1 "residential premises" whether vacant land without living facilities can be characterised as "residential premises" whether residential zoning sufficient taxation |
The application was filed on 24 August 2009 in respect of a decision of the Federal Magistrates Court of 1 October 2008 ( SZMKK v Minister for Immigration & Anor [2008] FMCA 1416). Order 52, r 15(1) of the Federal Court Rules requires a notice of appeal to be filed within 21 days of the decision. Order 52, r 15(2) provides that, notwithstanding this time period, "the Court or a Judge for special reasons may at any time give leave to file and serve a notice of appeal". The proper approach to an application for an extension of time for the filing of a notice of appeal has been explained in numerous decisions. The guiding principles are set out in Hunter Valley Development Pty Ltd v Cohen (1984) 3 FCR 355 at 348 to 349, and include a requirement that there be some acceptable explanation for the delay, and require the merits of the substantial application to be taken into account. Furthermore, even where there are special reasons why the appeal should be permitted to proceed, the Court has the discretion to grant or refuse the extension of time sought. The Refugee Review Tribunal ( the Tribunal ) accepted that the applicant is a citizen of Lebanon. It also accepted that in 2005 the applicant visited Australia and disclosed information to the Australian Federal Police about a relative's criminal activities in connection with Australia and other places. Subsequently, the applicant's relative was prosecuted in Lebanon and associates of the applicant's son-in-law were prosecuted in Australia. Following these prosecutions the applicant was harassed by his relative. The applicant feared persecution as his relative has political connections in Lebanon. The applicant therefore returned to Australia in 2007 and applied for a protection visa. Despite its acceptance of the applicant's factual history, the Tribunal characterised the harm that the applicant feared as harm arising from the criminal activities of the relative and not for any reason specified in the Convention relating to the Status of Refugees (189 UNTS 150, date of signature 28 July 1951, entered into force 22 April 1954) as amended by the Protocol relating to the Status of Refugees (60 UNTS 267, date of signature 31 January 1967, entered into force 4 October 1967), being the requirements set out in s 36 of the Migration Act 1958 (Cth) for a protection visa. After the Tribunal's decision was handed down on 20 May 2008 the applicant appealed to the Federal Magistrates Court. In his Honour's reasons for decision of 1 October 2008 the Federal Magistrate, after referring to the Tribunal's acceptance of the applicant's basic claims, recorded that it was unfortunate that the applicant did not have the benefit of legal assistance. The Federal Magistrate (at [10]) said that, assisted by counsel for the Minister for Immigration and Citizenship ( the Minister ), he had "endeavoured... to consider the arguments which could be presented on this issue on behalf of the applicant, if he had been legally represented". Apart from the applicant's submissions (which, as is not uncommon in these matters, the Federal Magistrate found to be of no real assistance), the Federal Magistrate identified two issues of concern in the Tribunal's reasons. First, the Federal Magistrate considered that it was arguable that the Tribunal had misapplied the "real chance" test, that is the test as to whether a protection visa applicant risks a real chance of persecution if he or she is to return to his or her homeland. The Federal Magistrate, with some justification, described the Tribunal's language in part of its reasons as "not reassuring in this respect" (at [11]). However, I am not persuaded that its reasoning reveals that it ultimately assessed the relevant risk of Convention-related denial of State protection on a balance of probabilities test, or upon another test which was more demanding than the real chance test. The Tribunal, however, made no finding that this conduct was for a purpose otherwise than that of strengthening the claims. I therefore find that the Tribunal did not make the determination under s.91R(3)(b) when referring to the applicant's conduct in Australia. Rather, it turned upon its assessment whether his evidence supported the existence of a real chance that there would be a Convention related reason for the applicant suffering harm and not being protected by State authorities. Its determination that his fears were not well-founded upon a Convention reason would have been the same, whether the Tribunal had positively accepted the history claimed by the applicant or had merely assumed the truth of the claimed history. In his very brief affidavit sworn on 14 August 2009 the applicant said that when the Federal Magistrate dismissed his appeal he wrote to the Minister requesting that the Minister's discretion to grant a visa be exercised in the applicant's favour. The Minister refused in a letter dated 7 July 2009. In so doing the applicant sought to invoke s 417 of the Migration Act "(i)f the Minister thinks that it is in the public interest to do so, the Minister may substitute for a decision of the Tribunal under section 415 another decision, being a decision that is more favourable to the applicant, whether or not the Tribunal had the power to make that other decision". The applicant's affidavit repeated his fear of persecution if he returned to Lebanon given that he provided information to the Australian Federal Police about his relative's criminal activities. The affidavit also referred to the applicant's name having been disclosed in a Lebanese newspaper as an informant. In his oral submissions the applicant provided further information. He explained that he had been in contact with a particular officer of the Minister's Department. That officer had advised the applicant that his case was unusual (which it is) and intimated that his request for a Ministerial decision in his favour had a real chance of success. With this hope the applicant went to the Department every month to check on the progress of his request of the Minister. Because he had fled Lebanon in fear of his relative and the relative's criminal associates the applicant had not seen his daughters. One daughter had escaped to Syria. He was deeply distressed and in fear for his life even in Australia. He had been told that friends of his in Lebanon had been offered money by criminal associates of his relative to disclose his whereabouts in Australia so he could be dealt with as an informant. I asked the applicant whether he could provide copies of the letters identified in his affidavit (as they were not annexed). The applicant did not have copies with him but later forwarded them by facsimile. The letter to the Minister is from Toufic Laba-Sarkis, community volunteer, and is dated 28 October 2008. The letter said that the applicant had acted as he was ethically bound to do by informing the Australian Federal Police on the criminal activities of the applicant's relative. The relative was involved in the importation of drugs into Australia which the applicant believed wrong. As a result the applicant was now in fear for his life because the gang involving his relative had political influence in Lebanon. The applicant's history could be confirmed by two officers of the Australian Federal Police whose names could be provided on request. The letter in response is dated 7 July 2009. It records that the Minister had personally considered the applicant's request but decided that it would not be in the public interest to intervene. Given that this information emerged only during and after the hearing I gave the Minister an opportunity to make further submissions. The Minister correctly identified that the information about the applicant's contact with a Departmental officer had not been put to the Federal Magistrates Court and was not supported by evidence, amounting to no more than submissions from the bar table. The letters relating to the request to the Minister simply confirmed that the request had been made and declined. They did not advance the applicant's case for an extension of time. The Minister otherwise submitted that the Federal Magistrate had considered the Tribunal's decision in detail but could not identify any jurisdictional error. The delay was lengthy. According to Vu v Minister for Immigration and Citizenship (2008) 101 ALD 211 ; [2008] FCAFC 59 at [29] delay due to a request to the Minister to exercise discretion in an applicant's favour is insufficient to amount to a "special reason". In any event, the Minister refused the applicant's request on 7 July 2009 and yet the notice of motion seeking the extension of time was not filed until 24 August 2009. That delay was also lengthy and had not been explained. I accept that the reference in the applicant's submissions to his communications with a Departmental officer was put from the bar table and was not evidence. I give no weight to those communications but note that, contrary to the Minister's submissions, they could not have been put to the Federal Magistrates Court because they relate to events occurring after the dismissal of the appeal by that Court. Nevertheless, I consider that a number of factors apparent from the unusual circumstances of the present case, taken together, warrant a finding that there are special circumstances sufficient to justify the grant of an extension of time to the applicant. As in many cases of this nature, the applicant is not legally represented. He appears to have little command of English. The only assistance which he has received appears to be from Mr Laba-Sarkis. Unlike the case of Vu , nothing in the available material is capable of supporting any suggestion that the applicant decided to make a request to the Minister as a tactical decision to increase the length of his stay in Australia, keeping the prospect of an application for an extension of time as a form of fall-back. The applicant, given his circumstances, arranged for his request to be forwarded to the Minister reasonably promptly after the decision of the Federal Magistrate. Irrespective of the information he might or might not have received from a Departmental officer the applicant's circumstances are unusual. His belief that the Minister might respond favourably to his request was not unfounded. The Minister's response was not forthcoming until 7 July 2009. For a person in the applicant's position the delay between receiving the response and arranging for someone who could write English to complete his notice of motion and affidavit in support and to file those documents with the Court is not unreasonable. Equally importantly, the Federal Magistrate discerned one potential issue in the Tribunal's reasons which could not have been discerned by the applicant given his lack of English and legal representation. Although the Federal Magistrate considered this issue of the potential misapplication of the real chance test with great care, his Honour was also careful to record the difficulty he had in resolving it. This issue involves the drawing of an inference from the Tribunal's reasons. Inferences of this nature are inherently contestable. Had the Federal Magistrate drawn a contrary inference the applicant's appeal would have succeeded. The second issue which the Federal Magistrate identified, relating to s 91R(3) of the Migration Act would now have to be resolved in light of the High Court's decision in SZJGV . Reasonable minds may differ about these questions. Taking all of these considerations together I am persuaded that I should grant the applicant an extension of time in which to file and serve a notice of appeal. I also consider that, given the nature of the matters properly identified by the Federal Magistrate as of potential concern in the Tribunal's decision, and the applicant's apparent lack of means to obtain legal assistance, I should exercise my power under Order 80 r 1 of the Federal Court Rules to refer the applicant to the Registrar of the Court for a referral to a legal practitioner on the pro bono panel for the purpose of obtaining legal advice and, if the practitioner considers it appropriate, the drafting of an amended notice of appeal and legal representation on the appeal. I am satisfied that, for the reasons given it is in the administration of justice that this be done and so order. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | application for an extension of time to file a notice of appeal migration |
During riots in 1998 his business salon in Jakarta was looted and destroyed. While neither he nor his family were harmed physically, the Refugee Review Tribunal accepted that he had a fear of persecution. It was not satisfied, however, on the basis of independent evidence and the evidence given by him, that his fear of persecution was well-founded. 2 No specific Convention claims were made by the other appellants, his wife and two children. The fate of their applications, as members of the family unit, rested on that finding. Their appeal to this Court is dependent on the grounds raised by the first appellant and it is convenient for me to refer to him in these reasons as 'the appellant'. 3 The Tribunal decision was made on 9 December 1999 and dated 12 January 2000. The Tribunal gave three bases for its conclusion. The appellants were unharmed and there was no evidence of difficulties since experienced by the appellant's siblings, who continue to reside in Indonesia. • The ' evidence from many credible sources ' was that there have been ' significant changes ' in Indonesia since the appellant left in August 1998. • The new political leadership, as at the Tribunal hearing, was determined to promote racial tolerance ' and in this appears to have the support of a substantial proportion of the population '. Federal Magistrate Scarlett characterised the Tribunal's conclusion as a finding that, if there were a further riot, it would be no more than speculation that ethnic Chinese might be the target and, even if they were, the chance was remote that the appellants may face serious harm ( Applicants S1266/2003 v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FMCA 335 at [22] ). 5 In the appeal to this Court the appellant alleges a denial of natural justice by the Tribunal and a failure on the part of the Federal Magistrate to recognise that fact. Before Scarlett FM, the alleged denial of procedural fairness was a failure to put to the appellant country information comprised in 15 reports referred to by the Tribunal in its decision. In the amended notice of appeal in this Court, the appellant raises a failure to afford procedural fairness with respect to 13 of those reports. 6 The Federal Magistrate considered that the Tribunal complied with its obligations to provide natural justice. His Honour observed that there was no requirement to provide all material to the appellant as long as an opportunity was given to deal with adverse information ' that is credible, relevant and significant to the decision to be made ' (at [23] citing Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 at 629). His Honour also stated that '[a] decision maker is not required to disclose information that is already obvious '. 7 The appellant also submitted to his Honour that the Tribunal failed to consider the question of state protection. This ground was not included in the amended notice of appeal. Federal Magistrate Scarlett concluded that the Tribunal did not need to consider whether protection may be withheld for reason of ethnicity (at [22]). That finding followed from the conclusion that the Chinese in Indonesia were not targeted because of their ethnicity and that it was speculation that ethnic Chinese might be targeted. 8 A further issue arose during the hearing of this appeal that was not within the amended notice of appeal. That is whether there was an absence of evidence or of an available inference, so that the Tribunal's conclusion was not open to it or that the Tribunal decision was otherwise illogical. There was no objection to these grounds of appeal. The parties addressed the issue in more detail in written submissions filed after the hearing. The May 1998 riots did target ethnic Chinese. 2. Only a very small percentage of the country's ethnic Chinese were harmed during those riots. 3. The appellants were unharmed. 4. There is no evidence that the appellant's siblings, who continue to reside in Indonesia, have been harmed since May 1998 because of their race. 5. There have been changes in Indonesia since August 1998, when the appellant left the country. 6. There were demonstrations in Jakarta in September 1999. 7. Those demonstrations were directed at the authorities; there was some looting of businesses in Chinatown but the evidence does not indicate that ethnic Chinese were among those targeted because of their race. 8. There was an outbreak of violence in Bandung in 1999 in which a predominantly Chinese area was targeted but there were no reported deaths or injuries. 9. Even if there were a further riot, it is no more than speculation that ethnic Chinese might be targeted because of their race. 10. Even if Chinese were targeted, the chance of such riots resulting in serious harm to the appellant was remote. 11. Indonesia's new leadership, with the apparent support of a substantial proportion of the population, is determined to promote racial and religious tolerance. In the context of the evidence of a breakdown in law and order and in the absence of evidence that the appellant, as distinct from ethnic Chinese generally, was singled out for harm or threats because of race, the Minister submits that the Tribunal was entitled to conclude, and it was not perverse to conclude, that the destruction and looting of the appellant's business in Jakarta was not due to race. The Tribunal did not reach a positive state of satisfaction that harm experienced by the appellant was directed at him based on his race. The Minister submits that, despite evidence to the contrary, the Tribunal was entitled to reach that conclusion. 11 The Minister emphasises that the fact that alternative inferences in the appellant's favour were open on the evidence is not sufficient, where reasons have been given, to find that the decision was perverse, or that the decision could not have been arrived at or is beyond jurisdiction. Indeed, she submits, it is not illogical. 12 Mr Karp, who appears for the appellant, acknowledges that mere illogical reasoning on the part of the Tribunal is not sufficient to attract jurisdictional error ( Minister for Immigration and Multicultural Affairs v Al-Miahi (2001) 65 ALD 141 at [34]). He points out, however, that a decision that was irrational, illogical and not based upon findings or inferences of fact supported by logical grounds may be so infected ( Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2002) 198 ALR 59 at [34]---[37]). 13 In NADH of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 214 ALR 264 at [136]---[137], Allsop J (with whom Moore and Tamberlin JJ agreed) provided some elucidation of the analysis to be undertaken in dealing with an allegation of illogicality. As his Honour pointed out, perfect logicality is a standard not necessarily achieved in the reasoning process of many decision makers; indeed, illogicality may highlight the understanding of how an error occurred within jurisdiction. There must, of course, be a process of reasoning. 14 Mr Karp does not submit that the Tribunal decision was of the kind described by Allsop J in NADH , a decision that lacked reasoning. It cannot be said that the Tribunal could not or did not reach its conclusion by a process of reasoning. 15 It was not inevitable, logically, that because the May 1998 riots were directed towards the ethnic Chinese and the appellant was ethnically Chinese, that the destruction of his family's business in Jakarta was racially motivated. It cannot be said that the conclusion was so unreasonable that no reasonable person could have come to it. It was open to the Tribunal to conclude that, in the context of general lawlessness, the destruction of his salon was not based on his race. 16 The appellant has not established jurisdictional error on this ground. Accordingly, the appellants were entitled to be accorded natural justice at common law ( Minister for Immigration and Multicultural and Indigenous Affairs v NAMW [2004] FCAFC 264 ; (2004) 140 FCR 572 at [139] ). The Tribunal concluded that the appellant's fear, though genuine, was not well-founded. In its view, the chance of persecution was remote. That specific information should have been disclosed, he submits, to enable the appellant to answer realistically and meaningfully ' the case that the Tribunal had amassed against him '. The general proposition that there had been changes in Indonesia since May 1988 could only lead to a general response, for example that there had not been sufficient change to enable a return. Accepting that the Tribunal is not obliged to put its thought processes to the appellant, Mr Karp submits that specific information was cited in the decision, not as a reflection of thought processes but as evidence on which the Tribunal relied. Disclosure of that specific information could, he contends, have elicited a more detailed rebuttal. 21 Mr Karp contends that what is obvious and relevant to the decision maker may be less so to the appellant, especially if the information is used adversely against him ( Re Minister for Immigration and Multicultural Affairs Ex Parte Miah [2001] HCA 22 ; (2001) 206 CLR 57 at [141] ---[142]). Further, he contends, there is a requirement to disclose information known to the appellant if any adverse conclusion arrived at would not obviously be open on the known material ( Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 591-2). The appellant must be given the opportunity to deal with adverse information that is credible, relevant and significant to seek to establish that it is not credible, not relevant or not sufficiently significant ( Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 222 ALR 411 at [17] ). 22 Mr Mitchell appears for the Minister and contends that the Tribunal's findings, upon which the decision was based, were, in essence, put to the appellant. He submits that it was not necessary to put the specific evidence to him, nor the process of drawing conclusions from that evidence. Nor was it necessary to put the generalisations drawn from the specific evidence, although in his submission the Tribunal did give the appellant the opportunity to respond to those generalisations. What information was put to the appellant? • Indonesians of Chinese descent were active in the growing democratization process. • Numerous rumours of planned attacks on ethnic Chinese had ' rarely materialised '. • Since November 1998, Java had been ' relatively quiet '. • Official and informal discrimination against ethnic Chinese has existed. • There were signs of a commitment by the post-Suharto government to begin to eradicate institutionalised discrimination against Chinese Indonesians. • The Indonesian Constitution provided for religious freedom for members of five out of six officially recognised religions. He submits that the Tribunal breached the requirement to provide to him the information used by it in sufficient detail to enable him to comment on it sensibly. 26 One example given by Mr Karp is that the appellant may have been aware of the fact that his religion, Catholicism, was constitutionally recognised as noted by the Tribunal but this does not mean that it is tolerated by diverse sections of the Indonesian population. He was not given the opportunity to put that constitutional recognition in context. 27 The Minister contends that the substance, or "essential features" of each factor on which the decision turned were brought to the appellant's attention ( Pilbara Aboriginal Land Council Aboriginal Corporation Inc v Minister for Aboriginal and Torres Strait Islander Affairs [2000] FCA 1113 ; (2000) 103 FCR 539 at [70] ). Mr Mitchell submits that it is apparent from the Tribunal's reasons that the appellant was given the opportunity to deal with the substance of the information which was credible, relevant and significant to the decision, with the possible exception of information that was obvious or favourable to or corroborative of the appellant's claims ( Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 190 ALR 601 at [133] - [134] per McHugh J). Examples of obviousness of the constitutional protection of Catholicism and the population of Chinese Indonesians of the order of 5 million are given. The change in government is conceded not to be in this category but it is submitted that it was raised by the Tribunal with the appellant. 28 The Minister also submits that, because the information was in the public domain and sourced from newspapers, it was "obvious" and therefore there was no requirement to put it to the appellant. The Minister relied on Kioa at 633 and Miah at [141] in support of its submission. Those authorities do not stand for that proposition and the submission is rejected. The mere fact that information has been published does not make it obvious, nor does mere publication make apparent the use to which the information will be put by the Tribunal. 29 The transcript of the Tribunal hearing was not available to the Federal Magistrate. After the hearing of the appeal, the Minister filed a copy of the transcript and supplementary submissions which referred to the transcript without objection. The appellant was given an opportunity to, and did, put further submissions in reply. The parties thereby consented to my perusal of the transcript. 30 The Tribunal told the appellant that the recent changes in Indonesia were ' quite significant ' as far as the appellant was concerned and that there had been some ' significant changes ' since the May 1998 riots. The Tribunal stated to him that there had been no press reports of anti-Chinese riots in Java in 1999. 31 The Tribunal put to the appellant that Bandung ' didn't explode ' after May 1998, with which he agreed and that there were no reports of riots involving harm to Chinese in Bandung in 1999. The Tribunal member also told the appellant that her impression was that the problems in Ambon between Christians and Muslims were local and did not necessarily apply to Java and around Bandung. 32 The Tribunal referred the appellant to the fact that the new leadership in Indonesia was regarded by many as an advocate for the rights of the Chinese minority and that President Wahid had taken steps to ensure protection. When the Tribunal put to the appellant the interest of the new government in protecting the ethnic Chinese community and its actions in that regard, it also put to him, for reasons which it gave, its view that it was unlikely that he would be harmed for that reason. 33 After the Tribunal put these matters to the appellant, it invited him to ask for them to be repeated or to respond, which the appellant did. He referred in particular to President Wahid and an event near Bandung where Chinese-owned shops were looted and burned. 34 Subject to one additional matter, the Tribunal did put to the appellant the key factors and critical issues on which that aspect of the decision was ultimately based and explained why they were important. The Tribunal was not obliged to put to the appellant the conclusions drawn from those facts or its reasoning ( Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S 154/2002 (2003) 201 ALR 437 at [54] per Gummow and Heydon JJ and at [85]---[86] per Kirby J). It was not obliged to provide the appellant with the specific documents recording the information where the substance of the information was provided ( VHAP of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 80 ALD 559 at [28] per Allsop J with whom Gyles and Conti JJ agreed; SZBPM v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 215 at [19] to [20]). He claimed that Chinese people had been killed in the riots of May 1998 and that all ethnic Chinese were in danger. He claimed that ethnic Chinese and even poor Chinese were targeted by looters and that wealthy Indonesian military officers and public servants were not. 36 The appellant's evidence, which the Tribunal accepted, was that the appellant and his family were not harmed during the 1998 May riots. The Tribunal accepted that, during those riots, the appellant's family business in Jakarta was looted and destroyed. The Tribunal did not accept, however, that this occurred because the business was owned by a Chinese family and that the appellant and his family were singled out for harm or threats because of their race. The Tribunal concluded that the destruction of the family's business ' occurred in the context of a breakdown of law and order and widespread rioting affecting many shop-front businesses in Jakarta '. 37 Mr Mitchell submits that this conclusion was open to the Tribunal on the facts before it. He submits that there was evidence on which the conclusion could be based, that the Tribunal has not acted perversely or unreasonably and that the findings are not illogical or irrational. That does not, however, answer the assertion of a denial of natural justice. 38 The Tribunal accepted that the family business in Jakarta was looted and destroyed in the May 1998 riots. She did not suggest to him that ethnic Chinese were not targeted in the 1998 May riots because of their race. To the contrary, she suggested that this part of his claim was accepted. 40 The Tribunal accepted in its decision that ' some ethnic Chinese suffered harm amounting to persecution during the 1998 riots ' and that ' if there were a real chance that an individual might face [such harm] during riots or at any other time, because of his or her race, that person would come within the definition of a refugee '. However, it drew a distinction between those persons and the appellant. It found that the looting and destruction of his business occurred not because the business was owned by a Chinese family, but in the context of a breakdown of law and order and widespread rioting affecting many shop-front businesses. The Tribunal said that it was not satisfied that the appellant was targeted because of his race. 41 The Minister submits that the Tribunal accepted the appellant's subjective fear arising during and subsequent to the May 1998 riots; that was not contradicted in the Tribunal's findings. The Minister contends that the Tribunal was not satisfied, however, that the looting of the appellant's shop was for reasons of his or his family's ethnicity. That is, the Tribunal accepted the appellant's subjective fears but did not accept that they were objectively well-founded at the time of the Tribunal decision. 42 The Minister submits further that, with respect to the Tribunal's expressed satisfaction that the attack on the family's business did not occur because it was owned by a Chinese family, there was no denial of procedural fairness. The Minister emphasises that the Tribunal is not bound by technicalities or rules of evidence, is not under a general duty to inquire or seek elaboration of the claims and that it is for the appellant to satisfy the Tribunal. She submits that the obligation to afford procedural fairness is less onerous with respect to a finding of non-satisfaction than a finding based on adverse material. Further, as is the case, the Tribunal is not obliged to provide a running commentary upon the appellant's case and the prospects of success. 43 In that context, the Minister submits that there was no obligation to put to the appellant the Tribunal's appraisal of the material with respect to the looting and destruction of the business as it was based on insufficiency or inadequacy of evidence to satisfy the Tribunal that the incident was based on ethnicity. 44 The Tribunal is not obliged to assist the appellant in the presentation of his case or as to the evidence presented. However, it could well be said that, had the appellant known that the Tribunal did not accept the ethnic link with the attack on the family business, he would have presented further material or argument to the Tribunal. The Tribunal put to the appellant that there had been significant changes since the May 1998 riots, in particular changes in the attitude to ethnic Chinese. 46 The conclusion as to the absence of a racial basis for the looting and destruction of the appellant's family business in May 1998 impacts upon the Tribunal's characterisation of the events of September 1999 and its conclusion that ' even if there were a further riot, it is no more than speculation that ethnic Chinese might be its target because of their race and, even if they were, the chance is remote that [the appellant] may face serious harm during it '. It also impacts on the failure by the Tribunal to consider whether there had been a relevant change between May 1998 and September 1999 even in the context of a change in political leadership and policies. To the extent that the Tribunal relied upon evidence that some ethnic Chinese were not targeted because of their race but instead suffered harm in the context of a breakdown of law and order, that evidence was adverse information that was "credible, relevant and significant" in the sense discussed in VEAL at [16] to [17]. The Tribunal was obliged to give the appellant the opportunity to deal with it. Its failure to do so resulted in a denial of natural justice and jurisdictional error. 47 The observations of the High Court in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 are apposite. In SZBEL the Tribunal did not challenge what the appellant said, express reaction or invite him to amplify those matters that the Tribunal later found to be "implausible' (at [3]). Where an issue arose at the Tribunal hearing that was not an issue before the Delegate, the High Court held that it was incumbent on the Tribunal to identify that issue and to tell the applicant of it (at [35]). The applicant was entitled to be on notice that his account on a particular aspect was an issue arising in relation to the decision under review (at [42]). Where the Delegate had not based his decision on an aspect, the Delegate's reasons did not indicate that that aspect of the account was in issue and the Tribunal did not identify the aspect as important and did not challenge what the appellant said, there is a denial of procedural fairness (at [42]-[44]; [47]). 48 Had the appellant been given an opportunity to respond to the issue of the cause of destruction of the salon in 1998, the Tribunal may have concluded that the looting of businesses in the Chinatown district of Jakarata did have a racial nexus, and that if this were to reoccur, as it apparently had in Bandung, the applicants could suffer harm serious enough to amount to persecution. 49 The Tribunal stated that its failure to be satisfied that the appellant had a well-founded fear of persecution was for three reasons. The second of these was that there had been significant changes since the appellant left and, even if there were a further riot, the chance was remote that the appellant would face serious harm. This, on its face, is a separate basis for its conclusion that there was no well-founded fear of persecution. I am satisfied that the Tribunal did put to the appellant the changes that had generally taken place in Indonesia after May 1998. However, this second reason was inextricably linked to the Tribunal's conclusion that, while demonstrations in September 1999 involved looting of businesses in Chinatown, ethnic Chinese were not then targeted because of their race and as such, it was speculation that ethnic Chinese might be targeted in the future. 50 The Tribunal denied the appellant natural justice by suggesting to the appellant that it accepted that the family's business had been destroyed because of Chinese ethnicity, when it concluded that the business was destroyed as part of a general breakdown of law and order and the evidence which supported that conclusion was not put to the appellant. 51 The Tribunal's finding, that there was no link between the harm and the appellant's race could have affected the Tribunal's conclusion that the chance was remote that the appellant would face harm in the future from any riots as an ethnic Chinese. 52 That finding, in turn, could have affected the conclusion as at the date of the Tribunal decision, that changes in Indonesia meant that, it there were a riot, the chance of harm was remote. If there has been a denial of natural justice, there is jurisdictional error where, as here, the ultimate conclusion could have been affected ( VAAD v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 117 at [80] ---[81] citing Re Refugee Review Tribunal; ex parte Aala [2000] HCA 57 ; (2000) 204 CLR 82 at [51] ---[52] and [104]). 53 Accordingly the appeal should be allowed. His Honour understood that it was merely a recommendation but included reference to it in his reasons and in his orders. I was informed at the hearing that, apart from drafting a letter that was not forwarded to the Minister, no action was taken to give effect to that recommendation. 55 I do not approve that course of action. I would have thought that the solicitors had an obligation, at the least, to bring that recommendation to the attention of their client. This obligation is, in my view, analogous to the obligation to pass on to a client any matter requiring further instructions. This would apply to a recommendation by a judicial offer where the party is a holder of public office. 56 I am informed that guidance issued by the Minister provides that it is inappropriate for the Minister to consider exercising her discretion under s 417 of the Act where there is migration-related litigation that has not been resolved. The appeal lodged from the decision of Scarlett FM resulted in the suspension of further consideration of the referral of this matter to the Minister by the Department. I am also informed that the Department has expedited its assessment of the appellant's case. That does not affect the obligation on the part of the solicitors to pass to the client the Federal Magistrate's recommendation. The Court then sought further submissions from the parties as to the specific question of a denial of natural justice in light of the matters discussed at [35]---[52] above. In the circumstances, I will hear from the parties as to costs. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | logical difficulty with tribunal's conclusion that harm suffered by appellant not racially motivated in circumstances where tribunal satisfied that ethnic chinese in indonesia suffered harm amounting to persecution tribunal's conclusion nevertheless open no jurisdictional error in tribunal's reasoning process allegation that tribunal denied appellant common law procedural fairness application for protection visa filed prior to the commencement of s 422b tribunal not obliged to provide the appellant with specific documents where substance of information provided mere fact that information has been published does not render it obvious tribunal suggested to appellant that it accepted that ethnic chinese suffered persecution tribunal suggested to appellant that it accepted that he, as an ethnic chinese, suffered persecution tribunal found that appellant had not suffered persecution issue as to whether some ethnic chinese were not targeted because of their race should have been put to the appellant denial of natural justice appeal allowed migration |
In making the application the plaintiff relies on the defendant's failure to comply with a statutory demand, served in accordance with s 459E of the Corporations Act . On or about 6 October 2005, notices of assessment of superannuation guarantee charges and additional charges for the year ended 30 June 2003 and the quarters ended 30 September 2003, 31 December 2003, 31 March 2004, 30 June 2004, 30 September 2004, 31 December 2004, 31 March 2005 and 30 June 2005 issued to the defendant. 3 The assessments remained unpaid and, on 11 July 2006, the plaintiff issued a statutory demand in the prescribed form for a debt of $176,146.97, being the sum then due by the defendant to the Commonwealth of Australia. This debt was payable by the company to the plaintiff, and recoverable by the plaintiff under and in pursuance of the provisions of the Taxation Administration Act 1953 (Cth). 4 The plaintiff served the statutory demand by posting it on 11 July 2006 by prepaid post to the registered office of the company in the ACT. The debt remained unpaid and on 31 October 2006, the plaintiff commenced these proceedings by originating application. The originating application complies with the statutory requirements of s 459Q of the Corporations Act . 5 Following the commencement of proceedings, the company supplied further information to the plaintiff. Amended assessments were issued for each period mentioned above, save the 2001 year. On or about 15 March 2007 notices of amended assessment of superannuation guarantee charges and additional charges for the years ended 30 June 2002 and 30 June 2003 and the quarters ended 30 September 2003, 31 December 2003, 31 March 2004, 30 June 2004, 30 September 2004, 31 December 2004, 31 March 2005 and 30 June 2005 issued to the defendant. Between February and May 2007 the company made eight payments of $5,000 each and one payment of $6,200 for the total sum of $46,200.00. The amended assessments and instalment payments reduced the company's liability for superannuation guarantee charges, additional charges and penalties to $81,002.60, which remained outstanding as at 29 May 2007, when the hearing concluded. 6 As at that same date, the company had a running balance account deficit debt in the vicinity of $50,005.56. The total liability owed by the defendant to the plaintiff is $131,008.16. 7 By virtue of s 75 of the Superannuation Guarantee (Administration) Act 1992 (Cth) (" Superannuation Guarantee (Administration) Act "), the production of a notice of assessment is conclusive evidence of the due making of the assessment and that the amounts and particulars of the assessment are correct. Section 459A provides that, on an application such as that which is the subject of these proceedings, "the Court may order that an insolvent company be wound up in insolvency. " Section 459C(2)(a) empowers the Court to presume that a company is insolvent if the company has failed to comply with a statutory demand. According to s 459F , a company is taken to have failed to comply with a statutory demand where it has not been complied with within 21 days from the date the demand is served. 9 While a company may apply to the Court to have a statutory demand set aside (s 459G(1)) , this must be done within the 21 day time limit described above. Leave to file an amended notice of opposition in this matter was granted by Registrar Hedge on 29 March 2007. 12 Finally, the Court has a general discretion under s 467 not to wind up a company "even if a ground has been proved on which the Court may order the company to be wound up". There is "no justiciable issue" before the Court as the amended assessments displaced the initial assessments on which the statutory demand was based. 3. The defendant is solvent. 4. There is a genuine dispute about the debt. 5. There are other reasons why the demand should be set aside. Ms Gail Freeman, sole director of the defendant, deposed that she did not receive the statutory demand until 2 August 2006, which she believed to be after the date before which an application had to be made to have the demand set aside. 15 During the hearing the defendant pressed mainly the second ground. It was argued that, should this ground not be accepted, then the defendant would, in the alternative, seek leave, pursuant to s 459S of the Corporations Act , to raise grounds it could have raised in an application to set aside the statutory demand. The defendant submits that these proceedings should be struck out because the "initial debts" which underpin the statutory demand and which provided the " raison d'etre " for the current proceedings have been dissipated. Accordingly, there is said to be no longer any "justiciable issue" before the Court. 16 It is not in contention that the statutory demand which underpins the current proceedings relies upon the initial assessments that were issued prior to the current proceedings and which had a legal existence and effect prior to the plaintiff raising amended assessments on or about 15 March 2007. 17 According to the defendant the debt relating to the initial assessment raised for 2001 has been paid. Hence that part of the debt no longer represents any "justiciable" matter and the plaintiff cannot rely on that part of the debt in these proceedings. 18 As to the remaining debts which were the foundation of the statutory demand, the defendant submits that a fresh liability arises with respect to the defendant from the moment the plaintiff effected service of the notices of amended assessment. Service by post to the registered office shown on the records maintained by the Australian Securities and Investments Commission is effective service under s 109X(1)(a) (see for example FP Leonard Advertising v KD Travel Service Pty Ltd (1993) 11 ACLC 1,203. Section 29(1) deems postal service under s 109X(1)(a) to have been "effected at the time at which the letter would be delivered in the ordinary course of post", after it has been sent in a properly addressed, prepaid and posted letter. As a result, a statutory demand is validly served if posted to the registered office of the company as at the date of posting, even though service is deemed not to be effected until a time after posting, namely when the letter would be delivered in the ordinary course of post. 22 By virtue of s 160 of the Evidence Act 1995 (Cth) the statutory demand in the present case is presumed to have been served on Monday 17 July 2006, being the fourth working day after posting on Tuesday 11 July 2006. The defendant could have applied to set aside the demand in the period ending on Monday 7 August 2006. This was not done. 23 Further, no evidence has been submitted to warrant the presumption provided for in s 160 of the Evidence Act 1995 (Cth) being called into doubt. 24 In my opinion there was proper and effective service of the statutory demand. The first part was that the debt which was the basis for the statutory demand does not now "exist at law" (the so-called "no justiciable issue" argument), and the second that the discretion of the Court should be exercised in its favour. 26 The first argument was said to be a stand-alone argument which, it was said, did not require the exercise of discretion under s 459S. It is true that such an argument is not one which the defendant could have relied on in an application to set aside the statutory demand (had one been made) because the amended assessments were issued after the deadline for making such an application. On one view, this may mean that they may not be proscribed by s 459S. Let it be assumed that that is so. Nevertheless, the arguments fail. 27 The defendant was unable to suggest any authority to the effect that, where the Commissioner founds a statutory demand on an assessment and there is a later assessment, the statutory demand is thereby invalidated. The defendant sought to rely on comments of Finkelstein J in NT Resorts Pty Ltd v Deputy Commissioner of Taxation (1998) 153 ALR 359. These do not suggest any support for the propositions argued. It is true that a statutory demand is defined by s 9 to include a demand that purports to be a demand. That is, a demand that professes or claims to be a statutory demand will be a statutory demand for the purposes of the Corporations Law: see Kalamunda [ Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd (1994) 51 FCR 446 at] 452. Nevertheless, there may be a case where a document that professes to be a statutory demand contains such a serious deficiency that it is impossible to treat the document as a statutory demand no matter what it professes to be: Topfelt [ Pty Ltd v State Bank of New South Wales Ltd (1993) 47 FCR 226 at] 238; Kalamunda at FCR 452. In this case it is not necessary to decide whether the demand is a statutory demand because it has not been established that the debts were not due and payable when the demand was served. By independent operation of different statutory provisions there are now lawfully payable debts which the defendant cannot duly pay so as to compel a conclusion of insolvency. At no relevant time has the defendant ever been free of debt to the plaintiff at a level sufficient to enable resort by the plaintiff to the insolvency provisions of the Corporations Act . The statutory demand did not contain "such a serious deficiency that it is impossible to treat the document as a statutory demand" for the same reason as that given by Finkelstein J: it has not been shown that the debts in question "were not due and payable when the demand was served " (emphasis added). Leave is not to be granted unless the Court is satisfied that the grounds are material to the solvency of the company. The leave which may be granted under s 459S(1) is not leave to apply to set aside the statutory demand, but rather leave to oppose the application on a particular ground. If the ground of opposition is one which the company could have relied upon, but did not, in an application to set aside the demand, leave is required. 30 The scheme of Part 5.4 of the Corporations Act is to enable quick resolution of the issue of solvency and the determination of whether the company should be wound up, without the interposition of disputes about debts unless they are raised promptly ( David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43 ; (1995) 184 CLR 265 at 270). The Corporations Act provides that disputes about the existence of debts demanded in a statutory demand are to be resolved through the process of applying to set aside the statutory demand ( Chief Commissioner of Stamp Duties v Paliflex Pty Ltd [1999] NSWSC 15 ; (1999) 17 ACLC 467 at [38] ). 31 The exercise of the discretion under s 459S(1) does not lead to the setting aside of the statutory demand, and therefore does not remove the presumption of insolvency which arises under s 459C(2)(a). If the Court grants leave, its task is to deal with the proceedings for winding up, rather than cutting away the demand which is their substratum. The overall question of solvency is the critical issue (see, for example, D.A.G. International Pty Ltd v D.A.G. International Group Pty Ltd [2005] NSWSC 1036 at [5] per Brereton J). 32 In my opinion, the grounds sought to be relied upon by the respondent are those which could have been relied on in application to set aside the statutory demand. As such, for these arguments to be raised the Court must be satisfied that they are material to the present solvency of the defendant company. For the reasons set out in [28] and [35], it has not been demonstrated by the defendant that these grounds are relevant to the solvency of the company. 33 Leave to raise the grounds listed above is refused. The company is required to prove, to the requisite civil standard, that it is able to pay its debts as and when they become due and payable. No leave is required to oppose the winding up on this ground. 35 Prior to the hearing, the defendant put on some evidence of its current assets and liabilities. These figures were contained in the form of a balance sheet and admitted a current deficit of approximately $64,000. After the first day's hearing I adjourned the matter for several weeks to allow the defendant to put on further evidence regarding solvency and in support of its request that I exercise the discretion allowed by s 459S (discussed above). No evidence was submitted with respect to the discretion. A further affidavit sworn by Ms Freeman on 28 May 2007 annexed a "schedule of financial records" to demonstrate solvency. However, these records, rather than demonstrating solvency, confirm that the defendant is unable to meet the debt presently owed to the plaintiff. 36 The evidence which has been adduced on this point is insufficient to rebut the s 459C presumption. I am not satisfied that the company is not insolvent. For example, it may, in appropriate circumstances, be better for creditors as a whole to allow the company to trade on rather than have the company wound up. The Court has a duty when considering whether to make a winding up order to have regard not only to the interests of the applicant creditor, but to the interests of all creditors: Re Presha Engineering (Aust) Pty Ltd (1983) 1 ACLC 675 at 677. 38 No evidence was put forward regarding the position of unsecured creditors other than the plaintiff. The National Australia Bank is a secured creditor. In the absence of such evidence, it cannot be said that it is against the interest of any creditors that the defendant be wound up in insolvency. 39 There was a plea of hardship as to Ms Freeman's personal position. That the company might be wound up is a sad affair for her and she has had some unfortunate and affecting distractions, not of her making. Nevertheless, over a period of years she has been the controller of the company and has permitted it to slip into its insolvency. There is no proven prospect that that state can tolerably quickly be cured. 40 In any event Ms Freeman is not the company. If people choose to trade through the means of an independent, corporate, legal entity, what may be a hardship or misfortune for them, which a court might be anxious to relieve, is not the hardship or misfortune of the corporate entity. 41 It was also put that a process was underway, albeit belatedly, whereby initial assessments by the plaintiff were being reduced as further information was supplied by the defendant. It is true that the defendant has succeeded in having the initial assessments reduced by providing additional information. There are avenues, namely appeals to the Administrative Appeals Tribunal already in prospect whereby, theoretically, that process might continue. However there is no evidence to suggest that the intended appeals would bear fruit. Moreover the company has had more than ample time to investigate and produce the necessary information. No basis is shown for discretionary refusal of the relief claimed. 42 Nor does the adventitious fact that the assessments that founded the debt justifying the statutory demand have been superseded by other assessments, which in turn support a conclusion of insolvency, justify the Court in intervening on discretionary grounds in favour of the defendant. 43 The application is allowed with costs. | winding up winding up in insolvency statutory demand failure to comply with statutory demand leave sought to rely on grounds which could have been raised in an application to set aside statutory demand statutory demand based on 2005 assessments those assessments subsequently amended fresh assessment unpaid and company insolvent as at hearing corporations |
The applicant also seeks an order imposing pecuniary penalties on the first respondent, the Construction, Forestry, Mining and Energy Union ("the CFMEU") and the second respondent ("Parker"), an organiser of the CFMEU, and an employee and member of that organisation. No pecuniary penalty is sought against the third respondent ("Corbett"), who was, at all material times, a CFMEU shop steward and a CFMEU member, but who has since retired. 2 The alleged contraventions arose during a dispute over whether Hooker Cockram Projects Limited ("Hooker Cockram") was required to engage an apprentice throughout the construction period of a police and law courts complex in Morwell, Victoria ("the project"). 3 Work on the project was governed in part by the Hooker Cockram Ltd and CFMEU Building and Construction Industry Collective Bargaining Agreement 2000-2005 ("the Collective Agreement"). The CFMEU understood that it also had an oral agreement with Hooker Cockram that an apprentice would be engaged on the project, for the duration of the project. An apprentice was engaged on the project from around September 2004 when the project commenced until late September 2005. 4 On 28 September 2005, Parker informed Hooker Cockram of the CFMEU's understanding of the parties' agreement in relation to apprentices: Hooker Cockram had agreed to have apprentices employed on the project site, for the lifetime of the project. As there was then no apprentice employed on the site, Hooker Cockram had broken that agreement. Hooker Cockram's position was that it had only agreed to encourage its sub-contractors to engage apprentices. On 6 October 2005 Parker and Corbett held a meeting with all workers at the project site over the issue. Following the meeting, an overtime ban was imposed on the site which continued until 13 October 2005. 5 By a statement of claim filed on 5 December 2006, the applicant claimed that the respondents had contravened ss 38 and 43 of the BCII Act by recommending and supporting the overtime ban. 6 The matter was listed for trial on 21 April 2008. On 16 April 2008 the applicant filed a Statement of Agreed Facts between the applicant and the respondents in which each of the respondents admitted the alleged contraventions. The issues at the trial were thus limited to those relating to what relief, if any, should be granted by the Court. 10 It was an agreed fact that the building and construction work performed at the site constituted building work within the meaning of that term in s 5 of the BCII Act . 11 The overtime ban was clearly a ban on the performance of building work in accordance with the terms and conditions prescribed in the industrial instruments, and was therefore, building industrial action within the meaning of ss 36(1)(b). It is, therefore, not necessary for me to express a concluded view as to whether or not paragraphs (a) or (c) might also apply. 12 The overtime ban was also clearly unlawful industrial action within the meaning of s 37 (see paragraph [8] above): a clear purpose of the ban was to disrupt the performance of work (see paragraph (d) of the definition of "industrially-motivated" in s 36(1)) and the ban adversely affected Hooker Cockram in that it jeopardised its ability to meet its contractual commitments on the project and led to it having to pay certain contractors despite them being unable to perform work because of the bans (see paragraph (b) of the definition of "constitutionally-connected" in s 36(1)). It was not suggested that the ban fell within the definition of "excluded action", being protected action within the meaning of the Workplace Relations Act 1996 (Cth) ("the WR Act "). 13 It follows that any person who engaged in the ban contravened s 38 of the BCII Act . A person who is "involved" in a contravention of a civil penalty provision is treated as having contravened that provision (see s 48(2)). A person is involved in a contravention if he or she has aided, abetted, counselled or procured a contravention. It is an agreed fact that, at the 6 October 2005 meeting, Parker and Corbett raised for consideration, encouraged and supported a decision of the meeting that an overtime ban be imposed on the site. Parker and Corbett were clearly involved in the ban, and are therefore treated as each having contravened s 38. Pursuant to s 69(1)(b) of the BCII Act , the conduct of Parker as an organiser of the CFMEU and an employee of that organisation is taken to be conduct of the CFMEU. The conduct of Corbett, as a CFMEU shop steward, is taken to be conduct of the CFMEU pursuant to s 69(1)(d) of the BCII Act . The CFMEU has, therefore, also contravened s 38. 14 The overtime ban was in force from 6 October 2005 to 12 October 2005, inclusive. The question is whether the entire period of the overtime ban should be regarded as one continuing contravention or whether on each day on which the overtime ban was imposed there was a separate contravention. The Court was not invited to treat the ban as being a series of daily bans. The BCII Act does not prescribe the way in which a continuing breach or a course of conduct is to be treated for penalty purposes: cf s 79(2) Trade Practices Act 1974 (Cth) and s 719 WR Act , referred to in Mornington Inn Pty Ltd v Jordan (2008) 247 ALR 714 at [41]. The BCII Act does, however, direct that "a reference to building industrial action includes a reference to a course of conduct consisting of a series of building industrial actions" (s 36(3)). In my view it is appropriate to treat the ban as a single action when determining appropriate penalties. These conditions will be referred to, collectively, as "the Employment Requirement". 17 The term "action" in s 43(1) is not defined. Importantly, it is not limited to "building industrial action". The prohibition extends to organising or taking any action where there is an intention to coerce another to engage in the conduct referred to in paragraphs (a) --- (d). The intention of the respondent, in imposing the overtime ban, was clearly to ensure that the Employment Requirements were met. By organising the meeting of workers on 6 October 2005 and ensuring the continuation of the overtime ban until the Employment Requirements were met, Parker and Corbett clearly contravened s 43 of the BCII Act . Pursuant to s 69(1)(b) and s 69(1)(d) , this conduct is taken to be conduct of the CFMEU. Therefore, the CFMEU also contravened s 43(1). Parker, apparently with the Framework for the Future document in mind, requested that apprentices be engaged on the project. It is an agreed fact that the issue of engaging apprentices on the project was discussed at the meeting. The parties are at odds about what was agreed during these negotiations. It appears that these differences did not become apparent until September 2005 when there was no longer an apprentice engaged at the site. 20 From the commencement of the project until September 2005, an apprentice was engaged on the project by one of Hooker Cockram's sub-contractors, Clifton Formwork Pty Ltd. In late September 2005, the work of Clifton Formwork was coming to an end and the apprentice was removed from the project. 21 On 28 September 2005, Parker, Corbett and Mr Ray Wilson, a CFMEU Occupational Health and Safety Representative, met with the Construction Manager of Hooker Cockram, Mr Jeff Owen. It is an agreed fact that Parker and Corbett raised for consideration, encouraged and supported a decision of the meeting that there be an overtime ban from that evening, which was to continue until Hooker Cockram agreed to the Employment Requirements (see paragraph [16] above). On each occasion, Hooker Cockram was told that the ban would continue until Hooker Cockram ensured that the Employment Requirement was met. Hooker Cockram could not meet its contractual commitments on the project unless the employees were prepared to work overtime. Any time worked on the site after 3.30 pm was overtime. As a result of the overtime ban, Helleren rescheduled works which were due to be conducted on the site after 3.30 pm on 6 October 2005. The most significant of these works was a concrete pour for the second floor slab, which was scheduled for Friday 7 October 2005 and was the last major concrete pour Hooker Cockram needed to undertake on the project. The performance of certain work, including a roof structure, walls, waterproofing and the fit-out, was contingent on the completion of the second floor slab. The second floor slab could not be completed without overtime being worked. Each day the concrete pour could not proceed meant that the project lost a day's work for approximately 30-40 people on the site. 25 The project usually involved 25 to 30 people working overtime on Saturdays. No work was conducted on Saturday, 8 October 2005. The project never involved work on Sundays. The application was initially returnable on 12 October 2005. This was later postponed and the application was subsequently withdrawn. Owen stated that Hooker Cockram was not in a position itself to employ an apprentice at the site as it did not employ people on the project who could supervise and train an apprentice. Parker stated that he could not lift the overtime ban without Hooker Cockram agreeing that it would meet the Employment Requirement. He would, however, recommend to Corbett and the workers that the overtime ban be lifted whilst the discussions between Hooker Cockram and the CFMEU continued. 28 Parker, Owen, Tessier and Milne agreed that Parker would direct Corbett to arrange for the lifting on the overtime ban, on the understanding that Hooker Cockram and Crowe would make a proposal by 14 October 2005 to satisfy the CFMEU's demand. Parker said that he would be on holidays on 14 October 2005 and directed Hooker Cockram to communicate the resolution to Mr William Oliver, the Branch Assistant Secretary of the CFMEU Construction and General Division, Victorian Building Unions Division Branch. Crowe stated that he was under instructions to settle the matter. It was agreed that Hooker Cockram would ensure that the Employment Requirement was met: an apprentice would work with various contractors on the site; the sub-contractor for whom the apprentice was working would meet the costs of the Employment Requirement; where the apprentice could not be placed with a sub-contractor and was utilised by Hooker Cockram, Victoria Police would pay for the cost of the Employment Requirement being met. On 13 October 2005 Corbett caused the overtime ban to be lifted and workers at the site recommenced working overtime on that day. 31 The resolution of the dispute was communicated to Oliver by Owen on 14 October 2005. Oliver accepted this resolution on behalf of the CFMEU. On 20 October 2005 Hooker Cockram agreed to employ an apprentice. From late November 2005 until the project was completed in October 2006, an apprentice was employed on the project by Hooker Cockram. Pursuant to s 49(1) of the BCII Act , the Court may, on application by an Australian Building and Construction Inspector ("ABC Inspector"), impose a pecuniary penalty on any person who has contravened a civil penalty provision. 35 The maximum pecuniary penalty for a Grade A civil penalty provision is 1,000 penalty units for a body corporate and otherwise 200 penalty units (see s 49(2) of the BCII Act ). The maximum penalty for each contravention of the BCII Act by the CFMEU is, therefore, $110,000. The maximum penalty for each contravention of the BCII Act by Parker is $22,000 see: s 4AA Crimes Act 1914 (Cth). 37 The applicant submits that the Court should impose a penalty of $65,000 against the CFMEU ($20,000 for the contravention of s 38 and $45,000 for the contravention of s 43(1)). The applicant also seeks the imposition of a penalty of $11,000 against Parker ($2,000 for the contravention of s 38 and $9,000 for the contravention of s 43(1)). She submits that any order imposing a penalty against Parker should be wholly suspended for 12 months. As noted above, the applicant does not seek the imposition of a penalty against Corbett. 38 The respondents submit that no penalty should be imposed against any of the respondents but do not oppose the Court making the declarations sought by the applicant. These considerations were derived from a number of decisions of this Court including Trade Practices Commission v CSR Ltd [1991] HCA 7 ; [1991] ATPR 52 ,135 (41-076) (which concerned contraventions of the Trade Practices Act 1974 (Cth)) and Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (No 2) (1999) 94 IR 231 (which concerned contraventions of Part XA of the WR Act ). • The circumstances in which that relevant conduct took place. • The nature and extent of any loss or damage sustained as a result of the breaches. • 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. • The size of the business enterprise involved. • Whether or not the breaches were deliberate. • Whether senior management was involved in the breaches. • Whether the party committing the breach had exhibited contrition. • Whether the party committing the breach had taken corrective action. • Whether the party committing the breach had cooperated with the enforcement authorities. • The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements. • The need for specific and general deterrence. cf Hadgkiss v Aldin [2007] FCA 2068 ; (2007) 164 FCR 394 at [61] ; Furlong v Australian Workers Union (2007) 162 IR 171 at [7] --- [10]; Carr v Communications, Electrical, Electronic, Engineering, Information, Postal, Plumbing and Allied Services Union of Australia [2007] FMCA 1526 at [7] ; and Cruse v Construction Forestry Mining and Energy Union [2007] FCA 1873 at [71] . The ban was only lifted once Hooker Cockram had agreed to meet the Employment Requirement, after being told three times that the ban would not be lifted until the Employment Requirement was met. In my view the conduct was serious and was designed to coerce Hooker Cockram (or, through it, one of its sub-contractors) to meet the Employment Requirement. The ban was imposed in preference to alternative, lawful, actions such as negotiations or resort to dispute resolution procedures which were available to the CFMEU and its members. The overtime ban was encouraged and supported by Parker and Corbett on their understanding that Hooker Cockram had broken an agreement to engage an apprentice for the duration of the project. Hooker Cockram had a different understanding of what had been agreed in July 2004 in relation to apprentices. The first time this misunderstanding appears to have become apparent was on Wednesday 28 September 2005, when Parker and Corbett met with representatives of Hooker Cockram. However, Parker and Corbett did not hold a meeting of workers until the Thursday of the following week, 6 October 2005, the day before the last major concrete pour for the project was scheduled. The overtime ban was effective immediately following the meeting of workers. In my view, this timing was deliberate and was intended to confront Hooker Cockram with the prospect of significant disruption to work on the project. I accept that the overtime ban was intended to and did place pressure on Hooker Cockram. If the project was not completed on time, Hooker Cockram was liable to the Victoria Police for liquidated damages. In addition, Hooker Cockram had to pay the sub-contractors doing the formwork and concreting by the hour, even if the work could not be completed. It was an agreed fact that any impact of the overtime ban could not be quantified and would, at most, be modest. Although the project finished slightly over time and slightly over budget, this could not be said to be due to the overtime ban and Hooker Cockram did not have to pay any liquidated damages for the delay. In the present case, the applicant invites the Court to have regard to previous contraventions by the CFMEU of the WR Act in determining the appropriate penalty for the CFMEU's contraventions of the BCII Act . Similar previous conduct demonstrates that the respondent has a history of engaging in the particular conduct in question, that the penalties previously imposed were insufficient to deter the respondent from re-engaging in that conduct and that the respondent has failed to take adequate steps to prevent further contraventions. Conduct which is of a different character does not assist this assessment see: Leighton Contractors Pty Ltd v Constructions, Forestry, Mining and Energy Union (2006) 164 IR 375 at [67]. Similar conduct which has been found to contravene other legislative provisions will have potential relevance. In this case, any previous contraventions of the provisions of Part 9 of the WR Act which relate to unlawful industrial action and coercion are relevant in determining the appropriate penalty. 45 The CFMEU has been found to have breached s 38 of the BCII Act on two previous occasions. In Leighton, the Supreme Court of Western Australia relevantly found that the CFMEU had committed 18 contraventions of s 38 of the BCII Act between 9 March 2005 and 8 March 2006 by convening and conducting unauthorised meetings of employees of Leighton Contractors Pty Ltd and imposing strikes and bans on the performance of work on the New Metrorail City Project in Western Australia. The Court imposed a penalty of $90,000 against the CFMEU. In Cruse , the Federal Magistrates Court found that the CFMEU contravened s 38 of the BCII Act by being involved in unlawful industrial action, in that case a strike, by approximately 300 workers at the Roche Mining (JR) Pty Ltd mineral sands separation plant between 22 and 28 September 2005. The Court imposed a penalty of $35,000 against the CFMEU. 46 The CFMEU has not previously been found to have contravened s 43 of the BCII Act . It has, however, been penalised for coercive conduct under the WR Act see: Ponzio v B & P Caelli Constructions Pty Ltd & Ors (2007) 158 FCR 243. 47 Parker and Corbett have not been found to have contravened the BCII Act or the WR Act . In my view, this should properly be viewed as one course of conduct. As noted earlier, the applicant did not invite the Court to treat the ban as being a series of daily bans between 6 October 2005 and 12 October 2005. The CFMEU is a very large national organisation. Its financial report for the year ending 31 December 2006 states that as at 31 December 2006, the CFMEU had 118,000 members and had net assets of $366,856.00. The overtime ban was designed to cause significant disruption to work on the project, and Parker and Corbett expressly stated that the overtime ban would continue until the Employment Requirement was met. The correlation between the wording of the Employment Requirement and s 43 of the BCII Act confirms my view that the breaches were deliberate. This was not disputed by the respondents. Indeed, it was Oliver who confirmed that the settlement proposed by Hooker Cockram was acceptable to the CFMEU (see above at [31]). The application was filed on 5 December 2006. The Statement of Agreed Facts was not filed until 16 April 2008, three business days before the matter was listed for hearing. The submission of a Statement of Agreed Facts did avoid the expense, time and effort of a full hearing on liability. By the time it was lodged, however, the applicant had filed a considerable volume of affidavit material relating to liability. There was no agreement by the parties as to the amount of an appropriate penalty. 53 The Statement of Agreed Facts refers to a seminar conducted in May 2006 by legal officers of the CFMEU. The CFMEU was concerned that its officials were made aware of the potentially serious consequences of their action under the BCII Act , and a significant part of the seminar was dedicated to the definition of "building industrial action" under the BCII Act . Parker attended the seminar. While the conduct of the seminar indicates a desire to avoid repetition and credit should properly be accorded to the CFMEU in this regard, there is no evidence of any contrition on the part of the respondents cf Cruse at [83] --- [84]. No apology has been given to Hooker Cockram. Nor has there been any expression of regret by the CFMEU or the other respondents. The principal object of the BCII Act 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" (s 3(1)). 57 The imposition of pecuniary penalties for contraventions of civil penalty provisions gives effect to the statutory purposes of the BCII Act . Penalties must be imposed at a meaningful level if they are to serve as a general deterrent to others who may be disposed to engaged in proscribed conduct see: for example, Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 2) [2007] FCA 11 at [66] ; Finance Sector Union of Australia v Commonwealth Bank of Australia (2005) 147 IR 462 at [41]; Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] FCA 383 ; [2001] ATPR 41-815 at [13] . 59 I accept the applicant's submissions that there is also a need for the penalty to have a specific deterrent effect on the CFMEU and Parker. There is no evidence of any regret contrition or remorse on the part of the CFMEU or Parker. The contraventions were substantial contraventions of the prohibition on coercion in relation to the engagement of building employees and the prohibition on unlawful industrial action. The respondent's position is that no pecuniary penalty should be imposed against the CFMEU or Parker. Were the Court to accept this submission and act on it no meaningful penalty would be imposed and nothing would be done to dissuade the CFMEU and Parker from again contravening s 38 or s 43 of the BCII Act . This principle is designed to ensure that the aggregate of penalties imputed is not such as to be oppressive or crushing see: Kelly at [30] referred to with approval by Buchanan J in Australian Opthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 ; (2008) 165 FCR 560 at [89] . The orthodox position requires the determination of appropriate penalties for each contravention arising from the same course of conduct. The aggregate figure is then considered to ensure that the penalty is an appropriate response to the conduct in question see: Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 at 53 and Ponzio at [145] per Jessup J. 62 The order imposing a penalty against Parker will be wholly suspended for 12 months from the day on which this order is made. He has not previously been found to have contravened industrial legislation and he should be afforded the opportunity and provided with an incentive to demonstrate that he is willing to abide by statutory requirements which relate to his work as a union official. If Parker is not found to have breached any provision of the BCII Act or the WR Act as a result of conduct that occurs during that period, he will not be required to pay the penalties. 63 An order will be made that all penalties be paid into the Consolidated Revenue Fund. 64 As I have found that each of the CFMEU, Parker and Corbett have contravened s 38 and s 43 , the Court will make declarations recording those contraventions. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | penalty hearing admitted contraventions civil penalty provisions relevant considerations in determining appropriate penalty penalty determined ' unlawful industrial action' , ' involved' industrial relations words and phrases |
2 On 20 October 2004 a sequestration order was made against the estate of Thanh Y Nguyen ('the bankrupt') and, by virtue of s 156A(3) of the Bankruptcy Act 1966 (Cth) ('the Act') Scott Darren Pascoe, the respondent, became the trustee of the bankrupt's estate. Lien Thi Khuat Nguyen, to whom I will refer as the appellant, is the wife of the bankrupt. 3 Until about 4 July 2005 the appellant and the bankrupt were the registered proprietors as joint tenants of the property. 4 By virtue of s 58(1)(a) and (2) of the Act the interest of the bankrupt in the property vested in equity in the respondent forthwith upon the making of the sequestration order. 5 On or about 4 July 2005 the appellant and the respondent became the registered proprietors of the property as tenants-in-common in undivided one-half shares. 6 Section 30 of the Act confers general powers on the court. It is a facultative provision giving the Court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not words of limitation but of extension. 10 On 6 December 2005 the Federal Magistrate ordered the appellant to file and serve a Notice of Appearance by 7 December 2005, but this did not occur. However, at about 4.01 pm on 7 December 2005 Mr Thanh Tung Vo, a solicitor in the firm known as Australasia Legal & Migration Services, Solicitors attempted to file a Notice of Appearance dated 7 December 2005 by forwarding same by facsimile to facsimile number 9230 8535, which he believed to be the facsimile number for the Federal Magistrates Court. Whether this Notice of Appearance reached the Court or not is uncertain. It certainly did not reach the relevant Federal Magistrates Court file number SYG 3351 of 2005. The Federal Magistrate also ordered that the Respondent file and serve 'a Notice in accordance with Form 149 stating grounds of opposition and affidavit supporting grounds of opposition' by 22 December 2005. Once again, this did not occur. 11 Whilst a notice in accordance with Form 149 stating the appellant's grounds of opposition to the trustee's application was never filed, an attempt was made to prepare an affidavit for the appellant propounding that she had contributed $37,000 out of a total purchase price of $67,000 paid for the property, that the balance had been funded by an advance from Commonwealth Bank of Australia to the appellant and the bankrupt and that she had paid all the monies due under the mortgage. Page 1 of the affidavit suggests that it was sworn on 15 December 2005. This is patently incorrect, but I am satisfied that no deception of the Federal Magistrates Court was intended. Each of the annexure notes in respect of annexures 'A', 'B' and 'C' to the affidavit indicate that it was in fact sworn on 15 February 2006. Mr Vo's evidence is that he was responsible for the insertion of the date 15 December 2005 which was the date when he set about drafting the affidavit. Due to inadvertence on his behalf he failed to cause the correct date to be inserted on page 1 of the affidavit when it came to be sworn on 15 February 2006 in its final form. No attempt was ever made by the appellant to file the affidavit and it was never read. However, on 16 February 2006 it was handed up to the Federal Magistrate. It was not formally tendered but it seems clear to me that it was intended by Mr Vo that it should become an exhibit on the hearing of an application made by him orally on that day to which reference will be made hereafter. Although my husband and I were registered as proprietors of the Property as joint tenants, I in fact paid all the monies as necessary to purchase the Property in our joint names together with the monies advanced by the original mortgagee, the Commonwealth Bank of Australia (CBA). Annexed and marked "B" is a copy of another payment made by me to my conveyancing solicitor, although the receipt was in joint names. I made the mortgage payment from my monies solely. My husband did not contribute any to the purchase or the mortgage repayment at any time. I having made an informed decision, I oppose the sale of the Property which, is in fact mine and which is the only home of myself, my husband and my three children. 13 In cross-examination before me it was put to Mr Vo that there had been no suggestion by the appellant prior to 16 February 2006, when reliance was placed on the abovementioned affidavit, that the interest of the appellant in the property had been greater than 50%. This was disputed by Mr Vo who referred to passages on pages 2, 3, 15 and 16 of the transcript of proceedings before the Federal Magistrate on 6 December 2005 where reference was made to documents having been handed up by Mr Vo to the Court. The document entitled 'Respondent's Submission' dated 6 December 2005 and the annexures to it were tendered before me to demonstrate that claims had been made before 16 February 2006 to a greater equitable interest than 50%. The Respondent [referring to the appellant] is a registered owner and is in fact the sole contributor , and therefore the sole owner , of the residential property known as Folio Identifier 24/7/5701 ("the property"). He also ordered the appellant to pay the respondent's costs assessed in the sum of $750.00 within 28 days. According to Mr Vo, the costs ordered to be paid on 17 January 2006 have already been paid. 15 On 16 January 2006 the bankrupt filed a notice of motion in the proceedings in which the sequestration order had been made, namely proceedings SYG 2821 of 2004, in which he sought an order that the sequestration order against his estate be set aside and other relief. The relevant filing fee of $173 was paid by Mr Vo on the bankrupt's behalf, but he was not identified as the bankrupt's solicitor. On the same day, namely 16 January 2006 Mr Vo filed an affidavit sworn 16 January 2006 by the appellant in SYG 3351 of 2005 to which she annexed a copy of her husband's Notice of Motion seeking an order that the sequestration order be set aside. 16 On 17 January the Federal Magistrates Court noted that if the bankrupt was unsuccessful in his application to set aside the sequestration order, the appellant would consent to orders for the sale of the property known as 9 Rosemont Street, Punchbowl. I think that's the best way and if Mr Vo has said, if Me (sic) Vo has said that if the sequestration order is not set aside he will consent, is that right Mr Vo? I have never consented to the sale of my home by the Respondent. Mr Vo's evidence left the matter hanging explaining that in his draft of the affidavit sworn by the appellant on 5 June 2006 the paragraph quoted above had not been included. 20 Mr Vo did file a 'Response' on behalf of the appellant in accordance with Rules 4.03 and 4.04 of the Federal Magistrates Court Rules on 16 January 2006, in which he nominated himself as 'Solicitor for the Respondent'. It is clear that he has been the solicitor for the appellant throughout. According to the Federal Magistrate, Mr Vo also made submissions, at times, on the part of the bankrupt (see [2006] FMCA 227 at [1] ). 21 On 16 February 2006 the matter was listed for hearing before the Federal Magistrate at 9.30 am but the appellant did not appear. In the circumstances, the matter proceeded ex parte at about 9.38 am and a number of orders were made as sought by the respondent shortly thereafter. The orders would appear to have been incorporated in short minutes of order which were apparently initialled by the Federal Magistrate and amended in green. The land comprised in Certificate of Title Folio Identifier 24/7/5701 and known as 9 Rosemont Street Punchbowl in the State of New South Wales (Land) be sold by the Applicant as Trustee for sale, with all the obligations and privileges pertaining (including signing for and on behalf of the Respondent any Contract for the Sale of Land and any Real Property Act form of Transfer and determining the price at which the Land is to be sold) and the proceeds after payment of all expenses of and incidental to such sale be divided equally between the Applicant and Respondent and that prior to distribution of the Respondent's share, there be deducted from such share the Applicant's costs of and incidental to this application. Pending the sale of the Land, and to the extent that she is able, the Respondent shall continue to meet one half of the mortgage instalments and meet all other outgoings (including electricity, gas, telephone, council rates) in respect of the Land. In the event that the Respondent defaults in payment of any money available pursuant to Order 3, then the appropriate adjustment and deduction shall be made from that person's share of the proceeds on completion of a sale of the Land. The Respondent pay the Applicant's costs of and incidental to this application to be taxed, if not agreed in accordance with the Federal Court Act and Rules. These orders be entered forthwith. 23 After the orders had been made ex parte, Mr Vo arrived at the Federal Magistrates Court. It would appear that he then made an application to the Federal Magistrate ore tenus for an order setting aside the abovementioned orders which had been made earlier in the day. He did not articulate his application with any clarity. The transcript of proceedings before the Federal Magistrate on 16 February 2006 is a little over six pages in length. It does not indicate the time at which the hearing concluded, but one might reasonably guess that it lasted for somewhere between 10 and 20 minutes before a short ex tempore judgment on Mr Vo's application and on matters of costs was delivered. The record of the ex parte hearing commenced at the top of page 2 of the transcript, the ex parte orders are recorded as having been made in the middle of page 3. The Court was then engaged in considering whether an additional order should be made in respect of the costs of the trustee who was represented by Mr Soliman, solicitor, when the proceedings were interrupted by Mr Vo. Mr Vo, you're a bit late. I have made an order already against you. Yes? Another property matter is actually contained in this one [referring so it would seem to the affidavit sworn 15 February 2006 which bears the date 15 December 2005 on the first page] , so would you please have a look at it to see whether that is a good ground for actually opposing the sale because she has a claim of 100 per cent ownership in that property by way of constructive and ... resulting trust and that's a matter for the equity division in the Supreme Court to decide on the issue of this ... The husband and wife and therefore the trustee. I haven't seen this material. I mean 50 per cent is not appropriate. On 17 January 2006 I brought this matter before the court for the respondents default. The respondent --- and the court noted on that day that the respondents indicated that if the bankrupt was unsuccessful in this application to set aside the sequestration order the respondent will consent to orders for the sale of property known as 9 Rosemont Street, Punchbowl. I have given him leave to sell and orders to make your client take part in the sale. Isn't that right? You raise it now at the heel of the hunt. You've raised all sorts of other things. As indicated above this matter had been raised in the 'Respondent's Submission' of 6 December 2005. 25 It may also be observed that on about 60% of the occasions when Mr Vo was addressing the Court he was cut off in his submissions either by the Federal Magistrate or Mr Soliman. ... After I had made orders pursuant to s.30 of the Bankruptcy Act 1966 (Cth) permitting the sale of the property, Mr Vo arrived. He presented me with an affidavit dated 15 December 2005. In that affidavit, the respondent suggests that she is in fact the equitable owner of the entire property. Mr Vo, I think, was asking me to set aside the order I had made in his absence and to declare that the sole benefit of the property belonged to his client. Alternatively, Mr Vo was asking me to adjourn this matter so that he could make a similar application in the Supreme Court of New South Wales. ... I cannot be satisfied that the respondent has any arguable case that should prevent the sale of this property. In all probability the sale will not take place for some weeks, so that if the respondent is able to provide more convincing evidence of her alleged equitable interest, the matter can be reopened. I confirm the orders which I made before Mr Vo's appearance, being the orders contained in the short minutes of order initialled by me and amended in green, and I also order that the respondent pay the costs of the trustee in the total sum of $11,963 on the basis of the matters contained in the affidavit of Scott Darren Pascoe dated 15 November 2005 and the second affidavit of Scott Darren Pascoe dated 14 February 2006. I further order that the respondent pay the applicant's costs of the proceedings excluding the specific order for costs made on 7 February 2006 (sic) in relation to that day's hearing only. The costs are to be taxed if not agreed pursuant to the Federal Court Act and Rules on a party and party basis. 32 On 8 March 2006 the appellant filed a notice of appeal in which she appealed 'from the whole of the Judgment and Orders of Raphael FM ... given and made on 16 February 2006 ...'. The Court below erred in law in failing to find that the Appellant's Affidavit dated 15 December 2005 disclosed a prima facie or arguable case that the Appellant is the equitable owner of the entire property comprised in Certificate of Title Folio Identifier 24/7/5701 and known as 9 Rosemont Street Punchbowl in the State of New South Wales ("the property"). The Court below erred in law in failing to set aside orders made in the absence of the Appellant on 16 February 2006. The Court below denied to the Appellant procedural fairness by failing to permit her an opportunity to be heard as to whether she is the equitable owner of the property. 35 The appeal came before Sackville J for directions on 30 March 2006 and again on 27 April 2006. 36 By an order made by Sackville J on 27 April 2006 as varied by me on 10 May 2006, the orders of the Federal Magistrate made on 16 February 2006 were stayed pending the hearing of the current appeal or the determination of any application for leave to appeal which may be filed or any further order. 37 On 4 May 2006 the appellant filed an application for leave to appeal should such leave be necessary. 38 On 18 May 2006 the respondent filed a notice of motion seeking an order pursuant to Order 52 Rule 18(1) of the Federal Court Rules that the appeal be dismissed as incompetent. The respondent submitted that the contingent nature of the application for leave to appeal meant that it was not in reality an application for leave to appeal at all. I reject that submission. Whilst the nature of the challenged decision in this case is quite clear, there are many instances where the doubt attending the status of a judgment --- is it interlocutory or is it final --- renders it appropriate to seek leave to appeal as a precautionary measure. The form which the application took is unimportant. 39 Under s 24(1A) of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act') an appeal may not be brought from a judgment of the Federal Magistrates Court, such as that of the learned Federal Magistrate in this case, unless the Court or a Judge gives leave to appeal, if it is 'an interlocutory judgment'. 40 The usual test for determining whether an order is final or interlocutory is whether the order, as made, finally determines the rights of the parties. The test requires the appellate court to look at the consequences of the order itself and to ask whether it finally determines the rights of the parties in a principal cause pending between them. Accordingly, orders refusing to set aside a default judgment or refusing to grant an extension of time are not final judgments because the unsuccessful party could make a further application for the same relief, even though such an application might have very little prospect of success (per McHugh, Kirby and Callinan JJ in Bienstein v Bienstein [2003] HCA 7 ; (2003) 195 ALR 225 at 230 [25] ; see also per McHugh ACJ, Gummow and Heydon JJ in Re Luck [2003] HCA 70 ; (2003) 203 ALR 1 at 2 [4] ). 41 It is clear from the learned Federal Magistrate's reasons for judgment that he intended that his decision, declining to set aside his earlier orders, would be interlocutory, he having indicated that if the appellant was able to provide more convincing evidence of her alleged equitable interest, the matter could be reopened. His intention is, of course, not determinative of the matter. Not only was this his intention, I am satisfied that it was the legal effect also. The appellant submitted that the Federal Magistrate's decision to refrain from setting aside his earlier orders was final in its legal effect, but this seems to me to be plainly wrong. In the circumstances, the appeal filed 8 March 2006 was incompetent in the absence of a grant of leave to appeal. It is open to the Court to now grant leave to appeal, notwithstanding that the application for leave was not filed within the time permitted by Order 52 Rule 5(2) of the Federal Court Rules . In the application for leave to appeal filed 4 May 2006 an order has also been sought that compliance with Order 52 Rule 5(2) be dispensed with in accordance with Order 52 Rule 5(3). Such an order has not been opposed by the respondent. 42 For a grant of leave to appeal to be made, it is necessary for the appellant, as the applicant for such a grant, to establish that the decision of the Federal Magistrate on the application to set aside the orders made earlier in the day on 16 February 2006 was attended with sufficient doubt as to warrant its reconsideration and that substantial injustice would result if leave were refused. 43 Where an absent party later complains about orders made in her absence, it does not follow, as a matter of right, that the orders will be set aside. Normally, the absent party will be bound by the orders made against her in her absence if, with notice of the proceedings, she has disregarded the opportunity to appear and participate in the trial of the proceedings. But, in this case it could not be said that there was a total disregard of that opportunity. (2) Where judgment has been given after a trial it is the explanation for the absence of the absent party that is most important: unless the absence was not deliberate but was due to accident or mistake, the court will be unlikely to allow a rehearing. (3) Where the setting aside of judgment would entail a complete retrial on matters of fact which have already been investigated by the court the application will not be granted unless there are very strong reasons for doing so. (4) The court will not consider setting aside judgment regularly obtained unless the party applying enjoys real prospects of success. (5) Delay in applying to set aside is relevant, particularly if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it. (6) In considering justice between parties, the conduct of the person applying to set aside the judgment has to be considered: where he has failed to comply with orders of the court, the court will be less ready to exercise its discretion in his favour. (7) A material consideration is whether the successful party would be prejudiced by the judgment being set aside, especially if he cannot be protected against the financial consequences. (8) There is a public interest in there being an end to litigation and in not having the time of the court occupied by two trials, particularly if neither is short. 45 It seems clear that the appellant did not relevantly disregard the opportunity to appear at and participate in the hearing listed for 9.30 am on 16 February 2006. The arrival of Mr Vo, albeit late, suggests that the appellant's absence was anything but deliberate. It does not appear that there was an extensive trial before the Federal Magistrate on 16 February 2006 before Mr Vo arrived. There was plainly no relevant delay on the part of the appellant in seeking to set aside the orders made earlier in the day on 16 February 2006 and there would appear to be no real prejudice to the respondent if the orders made earlier in the day on 16 February 2006 were to be set aside. The conduct of the appellant in failing to comply with orders of the Federal Magistrate in relation to the provision of particulars of her grounds of opposition to the trustee's application and the filing of affidavits warrants criticism, but does not, in my view, compel a conclusion that the application to set aside the earlier orders should have been refused. It is but one of the matters to which the Federal Magistrate was entitled to have and should have had regard in the exercise of his discretion. 46 The substantial consideration, in the circumstances of this case, seems to me to be whether the appellant would enjoy 'real prospects of success' were the orders made in her absence on 16 February 2006 to be set aside. 47 Whilst the Federal Magistrate appears to have conducted something of a mini trial by reference to the appellant's affidavit of '15 December 2005' and the corroborative documents upon which she sought to rely being annexures 'A', 'B' and 'C' to that affidavit, the fact remains that notwithstanding the Federal Magistrate's findings in respect of the corroborative evidence, her untested evidence as recorded in the affidavit was, as the Federal Magistrate found, to suggest that she had 'advanced $37,000 of the $67,000 purchase price, the balance being a mortgage to the Commonwealth Bank of Australia, which she says she made all the payments for'. 48 It seems to me that, if at a hearing of the trustee's application, the facts deposed to by the appellant were accepted, then it may well be inappropriate for there to be a sale of the property with an equal division of the proceeds of sale as contemplated by the orders made by the Federal Magistrate (see generally Calverley v Green [1984] HCA 81 ; (1985) 155 CLR 242, Muschinski v Dodds [1985] HCA 78 ; (1985) 160 CLR 583, Baumgartner v Baumgartner [1987] HCA 59 ; (1987) 164 CLR 137 and Parsons v McBain [2001] FCA 376 ; (2001) 109 FCR 120). 49 The Federal Magistrate's decision to refrain from setting aside his earlier orders seems to me to be attended by sufficient doubt to warrant a grant of leave to appeal from it, given the substantial injustice which would result if a sale of the property were to proceed at this stage. Once sold, the property could hardly be recovered. 50 This brings me to a consideration of the appeal itself. In accordance with s 25(1A) of the Federal Court Act the Chief Justice has considered it appropriate for the appellate jurisdiction of the Court in relation to this appeal to be exercised by a single Judge. Accordingly, it falls to me to determine whether or not the exercise by the learned Federal Magistrate of his discretion to set aside the orders made by him earlier in the day on 16 February 2006, miscarried. 51 Whilst counsel for the respondent submitted that leave to appeal should be refused because of the non compliance by the appellant with the orders of the Court, the repeated conduct of Mr Vo in arriving late for hearings and the finding by the Federal Magistrate, after rejecting the appellant's corroborative evidence, that 'I cannot be satisfied that the respondent [referring to the appellant] has any arguable case that should prevent the sale of this property', the respondent elected not to put any submissions in opposition to the appeal being allowed, once leave to appeal had been granted. In this regard it should be noted that the application for leave to appeal and the appeal were dealt with sequentially rather than at the same time. At the commencement of the hearing of the leave application counsel for the respondent indicated that the respondent would be opposing both the leave application and the appeal. However, after considering the evidence given on the leave application, the respondent resiled from this position. There can be no doubt that, at the conclusion of the hearing of the leave application, the appellant's conduct in failing to comply with earlier court orders seemed far less significant than may have appeared at the outset. 52 I am satisfied that after the Federal Magistrate made his orders on 6 December 2005, the appellant attempted to file an appearance in the Federal Magistrates Court on 7 December 2005 in the manner described above. I am also satisfied that whilst the learned Federal Magistrate, quite reasonably, was critical of the appellant's affidavit of '15 December 2005' having only 'surfaced' on 16 February 2006, that affidavit was in fact sworn on 15 February 2006, the completion of its preparation having been delayed from a starting date of 15 December 2005 coupled with an inadvertent but unintentional failure by Mr Vo to cause the date on the front of the affidavit to be brought into harmony with the date indicated on the relevant annexure notes as the date of swearing, namely 15 February 2006. Whilst Mr Vo failed to correct the Federal Magistrate's quite reasonable misunderstanding that the affidavit was in fact sworn on 15 December 2005, it also seems clear, as counsel for the appellant submitted, that Mr Vo was constrained in his ability to put his submissions to the Federal Magistrate on 16 February 2006 by the constant interjections to which reference has been made earlier. It is also important to note that the suggestion that the appellant's claim of a 100% interest in the property was not made at the 'heel of the hunt' on 15-16 February 2006 as the Federal Magistrate surmised in the course of the hearing on 16 February 2006. Clearly, such a claim had been propounded in a document provided to the Court on the appellant's behalf at the outset on 6 December 2005. The issue was not raised as a last ditch attempt to avoid the sale of the property after a failed application by the appellant's husband to have the sequestration order set aside and the lapsing of caveats which had been filed on the appellant's behalf in respect of her claimed interest in the property. 53 In my opinion, the Federal Magistrate's exercise of his discretion in respect of setting aside his earlier orders, miscarried. The untested affidavit of the appellant of '15 December 2005' provided a sufficient basis for those orders to be set aside. The very text of the affidavit is inconsistent with a conclusion that the appellant was without an arguable case to prevent the sale of the property. 54 The parties are agreed that, should the appeal be allowed, not only should the Court set aside orders 1 to 5 inclusive and 8 of the orders made by the Federal Magistrate on 16 February 2006 as later entered on 3 March 2006, but also order 6 which was made after Mr Vo arrived at the Federal Magistrates Court on 16 February 2006 and order 7 which was amended after Mr Vo appeared. 55 In my opinion the Court should dispense with compliance with Order 52 Rule 5(2) of the Federal Court Rules , grant leave to the appellant to appeal from the decision of the Federal Magistrate refusing to set aside the orders made by him on 16 February 2006 in the appellant's absence, the orders made by him on 16 February 2006 should be set aside and the respondent's application filed 16 November 2005 should be remitted to the Federal Magistrates Court for hearing. The respondent's motion filed 18 May 2006 should be dismissed. 56 It remains for me to consider what, if any, orders should be made in respect of costs. Four matters need to be considered, firstly the costs of the leave application, secondly the costs of the appeal, thirdly the costs of the respondent's motion and fourthly the costs thrown away in the court below as a result of the course which the matter has taken. Counsel for the appellant has submitted that I should leave the determination of the last mentioned costs for the Federal Magistrate who may hear the respondent's application hereafter. I do not propose to accede to that request given that I have an ample understanding of the appellant's earlier defaults without which the respondent's application could have been disposed of one way or another on 16 February 2006. In the result, there is a need for the matter, to, in effect, now start all over again. 57 In relation to the costs of the application for leave to appeal which occupied more than 90% of the hearing time before me on Tuesday 6 June 2006, I consider that there should be no order as to costs. The appellant submitted that leave was not required, even though a formal application for leave was made. In this regard the appellant failed. In relation to the question of whether or not the judgment of the Federal Magistrate was attended with sufficient doubt to warrant its reconsideration there was much to be said at the commencement of the hearing, for the view that the appellant's several defaults and, arguably, deception of the Court, would have fully justified the Federal Magistrate's decision. However, when Mr Vo drew attention, in the course of his evidence, to the matters referred to above, it became clear that the Federal Magistrate had misunderstood the conduct of the appellant in certain respects. In these circumstances, even though the respondent's opposition to the grant of leave to appeal failed, the proper order as to costs would be that there be no order as to costs. 58 In relation to the costs of the appeal, a similar order, should, in my opinion, be made especially in the light of the fact that when the Court embarked upon the hearing of the appeal the respondent indicated that he did not wish to be heard in opposition to the making of the orders sought by the appellant. 59 As to the costs of the respondent's motion, no new issues arose under it and it occupied no hearing time. In respect of it there should be no order as to costs. 60 In relation to the costs thrown away in the Federal Magistrates Court, it seems clear to me, that not only should the appellant have been ordered to pay, as she has, the costs of the hearing on 17 January 2006, she should also be ordered to pay the cost of the hearings in the Federal Magistrates Court on 6 December 2005 and 16 February 2006. The value of the hearing on 6 December 2005 was totally eroded by the default of the appellant in complying with the directions that were then given in relation to disclosing her case and providing evidence in support of it. Had the appellant filed and served her affidavit nominally dated 15 December 2005, but in fact sworn on 15 February 2006, in a timely fashion and had Mr Vo been punctual in attending the hearing on 16 February 2006, that hearing may have allowed the respondent's application to be finally heard and disposed of. Whilst satisfactory explanations have been provided in respect of some of the appellant's conduct, what remains in terms of non compliance with the Federal Magistrate's orders and the appellant's solicitor's lack of promptitude warrant the severest criticism. Counsel for the respondent has asked that these costs be ordered on an indemnity basis. Whilst an alleged lack of financial resources may have prevented the appellant's affidavit, the preparation of which commenced on 15 December 2005, from being finalised prior to 15 February 2006, I consider that it would be grossly unfair for the bankrupt's creditors to be prejudiced by the unsatisfactory conduct on the appellant's behalf. In these circumstances the costs of the hearings on 6 December 2005 and 16 February 2006 should be awarded on an indemnity basis. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | leave to appeal from a federal magistrate's refusal to set aside orders made by him ex parte on a trustee's application for relief under s 30 of the bankruptcy act in respect of a property jointly owned by the bankrupt and his wife in which the wife claimed a 100% equitable interest practice and procedure |
These are the reasons why I made those orders. 2 On 21 April 2008 the second defendant (the Company) appointed the first defendants (the Administrators) joint and several administrators of the Company in exercise of the power given to the Company by s 436A(1) of the Corporations Act 2001 (Cth) (the Act). The resolution to exercise that power was passed by the sole director and secretary of the Company, the third defendant (Samantha Leonie --- I adopt this form of reference to distinguish her from two other persons with the surname Williams mentioned below, and without intending any discourtesy). 3 The Administrators furnished their report to creditors on 19 May 2008. At the second meeting of creditors held on 27 May 2008, the creditors resolved, on the recommendation of the Administrators, that the Company execute a deed of company arrangement in the form presented to the meeting (DOCA). Under the DOCA, Samantha Leonie paid $120,000 to the Administrators which, after payment of the Administrators' remuneration and expenses, was to be distributed among creditors. This would give unsecured creditors a dividend of approximately eight cents in the dollar. 4 According to the Administrators' report, the two major unsecured creditors were the plaintiff (Johnson) which was owed $527,767.00, and the "Hughes Family Trust" which was owed $782,346.05. As will appear, there is an association between the Hughes Family Trust and the Williams family. Another creditor, Christine Margot Williams (Christine Margot), the mother of Samantha Leonie, was owed $1,000.00. Christine Margot works for "Northstar Accountants" which, according to the Administrators' report, was owed $6,325.00. 5 At the second creditors' meeting, Samantha Leonie held a proxy from her mother. Grant Hughes of GTH Pty Ltd as trustee for the Hughes Family Trust was proxy for that Trust and also for Paddle Sports Australia Pty Ltd which was shown in the Administrators' report as being owed $37,018.00. Grant Hughes was also proxy for Northstar Accountants. The resolution in favour of the Company's executing the DOCA was carried on votes cast by Mr Hughes and Samantha Leonie over the opposition of Christopher Thompson, the proxy for Johnson. 6 Johnson now applies under s 445D of the Act for an order terminating the DOCA. While Johnson makes no criticism of the Administrators, its case is that they were misled by others into providing a report that contained material information that was false or misleading and omitted material information. I have reached the conclusion that the Company should be wound up and that a liquidator nominated by Johnson should be appointed. The Administrators do not oppose the making of such orders. They properly take the position that the matter is one for the Court. They point out, however, that there would be some saving in costs if they were appointed rather than Johnson's nominee. 8 Samantha Leonie is taken to have been served with the originating process pursuant to an order that I made for substituted service. She did not appear on the hearing. 10 On 29 November 2002, the Company was incorporated as "Johnson Outdoors Watercraft Pty Ltd" (on 6 July 2004 the Company changed its name to its present name, "Canoe Sports Pty Limited"). Upon incorporation, Samantha Leonie was appointed as a director of the Company, and her mother Christine Margot was appointed as both a director and secretary of the Company. 11 On 1 May 2003, a "Canoe Sports Unit Trust" was created by a Unit Trust Deed of that date. According to Samantha Leonie, in May 2003, the Company purchased its present business, including stock at the time, from the Hughes Family Trust for a price of $1,274,508. Apparently 400,000 units in the Canoe Sports Unit Trust were issued to the Hughes Family trust, and 200,000 units were issued to the "Williams Family Trust". 12 On 1 June 2004, the Company and Johnson entered into a Distribution Agreement with effect as from July 2004. Pursuant to the Distribution Agreement, the Company purchased goods from time to time from Johnson. 13 On 5 July 2004, Tina Williams (Tina), the sister of Samantha Leonie, was appointed as both a third director and secretary of the Company. As mentioned earlier, it was on the following day, 6 July 2004, that the Company changed its name. 14 On 16 May 2005, Tina resigned as a director and secretary. Accordingly, Tina was a director for only some ten months from July 2004 to May 2005. 15 In July 2005, the 400,000 units in the Canoe Sports Unit Trust that were apparently issued to the Hughes Family Trust were redeemed. At the same time, the 200,000 units apparently issued to the Williams Family Trust were redeemed. In a further report to creditors dated 15 July 2008, the Administrators stated that the redemption was by way of issued capital and increase in liabilities, essentially turning the units into loan account. 16 On 24 August 2005, Christine Margot purchased a property at 28 Ocean View Drive, Wamberal, and Johnson contends that she used money of the Company for the purpose. 17 On 10 February 2006, Samantha Leonie purchased a commercial property at 6/260 Captain Cook Drive, Kurnell, and Johnson contends that she used Company money for the purpose. 18 On 21 November 2006, Johnson terminated the Distribution Agreement between it and the Company. Samantha Leonie has informed the Administrators that the Company has not purchased any new stock since the termination. According to the report of the Administrators, by November 2006 the Company was insolvent. 19 On 30 November 2006, Samantha Leonie and Christine Margot, as directors of the Company caused the Company to pay $805,875.12 to the Williams Family Trust ($310,000) and the "Monowatu Family Trust" ($495,875.12). Both of those trusts are associated with members of the Williams Family. 20 On 17 January 2007, that is to say, not long after the money had gone from the Company, Christine Margot resigned as a director and secretary of the Company, leaving Samantha Leonie as the sole director. Samantha Leonie was appointed secretary of the Company on that same day. 21 On 27 February 2007, Tina caused Kayak Wholesalers Pty Ltd, known from 11 July 2007 as Bengal Distribution Pty Ltd, to be incorporated with the same registered address as that of the Company. 22 In March 2007, the Company ceased trading. 23 On 8 March 2007, a "loan" to the Monowatu Trust was "discharged" but according to the Administrators' report, the Monowatu Trust was overpaid $294,038.88, that is to say, the Monowatu Trust was paid that amount over and above the amount of the debt owed to it. 26 On 13 August 2007, Johnson filed a statement of claim in the District Court of New South Wales, commencing proceeding No 3478/07 in that Court. It is not necessary to trace the course of that proceeding: it suffices to say that on 22 January 2008 judgment was entered in favour of Johnson for $NZD567,000. 27 On 6 February 2008, Samantha Leonie sold a property at 18 Heath Street, Mona Vale for $1,620,000. 28 On 7 February 2008, a Judicial Registrar gave Johnson leave to enter judgment against the Company for AUD 527,767.55 plus costs to be assessed. The Company was required to provide security of $400,000 within 28 days as a condition of obtaining a continuance of a stay of execution of the judgment to enable the Company to pursue a cross-claim against Johnson, but the security of $400,000 was not provided. 29 On 28 March 2008, Christine Margot mortgaged the adjoining property at 16 Heath Street, Mona Vale to secure financial accommodation of $243,000. 30 As noted earlier, on 21 April 2008, the Company entered into voluntary administration. 31 On 23 April 2008, Johnson furnished a completed proof of debt to the Administrators for the amount of its judgment debt. 33 On 2 May 2008, the first meeting of creditors was held. 34 On 19 May 2008, the Administrators gave notice of the second meeting of creditors to be held on 27 May 2008, accompanied by their report to creditors. 35 On 27 May 2008 the creditors resolved, over the dissenting vote of Johnson, that the Company execute the DOCA. • At the date of our appointment, the Company had assets consisting of cash at bank, stock and plant and equipment. The Company had ceased trading at the date of appointment. • The Company's major creditors are Johnson Outdoors Watercraft Limited ("Johnson Outdoors") and the Hughes Family Trust who have lodged claims against the Company for the amounts of $527,767 and $782,346 respectively. The Company's unsecured creditors total $1,354,457. • Johnson Outdoors commenced legal action against the Company in March 2007 to recover its outstanding debt relating to the supply of kayaks, canoes and accessories to the Company. The Company has defended the court action and lodged a cross claim against Johnson Outdoors for damages with respect to loss of profit due to the termination of a distribution agreement contract. • The company has incurred substantial costs defending the recovery action commenced by Johnson Outdoors. The Company's sole director, Ms Samantha Williams ("Ms Williams") has advised that the Company's legal costs to date have amounted to $88,946. • The focus of this administration to date has been to investigate the Company's financial affairs and to locate interested parties to purchase the Company's residual stock and plant and equipment. To date no buyer has been secured to purchase the Company's residual stock and plant and equipment. • Ms Williams has proposed a Deed of Company Arrangement ("DOCA") for creditors to consider. The DOCA proposed by Ms Williams is estimated to provide unsecured creditors of the Company with a dividend of approximately 8 cents in the dollar. Our investigations into the Company's affairs reveal that a dividend to creditors in a liquidation scenario is unlikely. • A meeting of creditors has been convened pursuant to section 439A(1) of the Act on 27 May 2008 to determine the Company's future. It is our recommendation that creditors vote in favour of the Ms Williams' [sic] proposed DOCA which is estimated to provide creditors with a better return than winding up the Company. In their report the Administrators explained that they were relying on schedules prepared by Christine Margot. 38 Hunt and Hunt, the solicitors for Johnson, wrote a lengthy detailed letter to the Administrators dated 7 June 2008 raising numerous queries arising out of the Administrators' report and the solicitors' own investigations. This prompted the Administrators to provide a supplementary report to creditors on 15 July 2008, addressing points raised by the solicitors. It will be noted, however, that the supplementary report post-dated the creditors' resolution that the Company execute the DOCA. The nature of the business was that of a wholesaler of kayaks, canoes and accessories which was carried on from leased premises at Unit 2, 6 Taronga Place, Mona Vale, NSW 2103. (2) Samantha Leonie completed the RATA on 28 April 2008 showing that the Company's assets comprised money (in three bank accounts) totalling only $1,269.00 and that its unsecured creditors amounted to $1,245,926. (3) In the period commencing November 2006, following the termination of the Distribution Agreement and some three months before the Company ceased trading in March 2007, Samantha Leonie and Christine Margot caused the Company to pay amounts totalling $805,875.12 to a Wespac Banking Corporation personal loan account held in the name of Samantha Leonie and Christine Margot. (4) Amounts totalling $427,259.09 paid by the Company over the period 31 March 2005 to 22 February 2007 were, according to Samantha Leonie, paid to Williams Trust in repayment of loans. The Administrators were advised that the primary beneficiaries of that Trust are Samantha Leonie and Christine Margot. The Administrators were not able to confirm the existence of the loans due to the insufficiency of the bank statements available to them. Of the $427,259.09, $310,000 was paid after Johnson terminated the Distribution Agreement. (5) Numerous payments were made over the period 3 June 2004 to 31 July 2007 totalling $645,353.90 to the Monowatu Trust of which apparently Monowatu Pty Ltd, a company of which Samantha Leonie is a director, was the trustee. Again, Samantha Leonie explains that to the extent of $351,315.02, the payments of $645,353.90 were repayments of a loan account. As the Administrators observe, this would signify an overpayment of $294,038.88 which should be repaid by the Monowatu Trust to the Company for the benefit of its creditors (see [23] above). (6) In their report, the Administrators expressed the opinion that the making of payments would have affected the Company's cash flow and were a cause of the Company's insolvency. (7) The Administrators recommended the DOCA proposed by Samantha Leonie on the basis that recovery action by a liquidator may not yield fruit because Samantha Leonie had informed them that she had no assets. In fact she did, although after allowing for a mortgage to Westpac Banking Corporation, her equity may be very small. (8) It appears that the report to creditors understated the total liabilities of the Company by $585,836 (in their supplementary report, the Administrators refer to the accounts that were initially supplied to them not having recorded certain transactions). (9) The Administrators' report stated that the Hughes Family Trust appeared to be owed a provable debt on the basis that it had been shown as a creditor of the Company in the Company's balance sheet since at least 30 June 2005. However, financial statements for the Canoe Sports Unit Trust for the year ended 30 June 2005, the original of which was apparently signed by Samantha Leonie and Christine Margot, do not show that liability (the balance sheet does show a current liability for "unsecured loans" of $739,021). (10) As noted earlier, the Administrators expressed the opinion that recovery action against Samantha Leonie may not be commercially beneficial to the creditors of the Company on the basis that she had no assets. However, in a discussion on 9 July 2008, Samantha Leonie did disclose certain personal assets, and she did not disclose having transferred her interest in 18 Heath Street, Mona Vale for $1,620,000 in early 2008. (11) The Administrators' report noted that Christine Margot had not had an opportunity to confirm or deny owning any of the properties listed in her name, but on 9 July 2008 she confirmed ownership of the properties. She was a director of the Company on 30 November 2006 when $805,875.12 was paid out of its account into the joint account of herself and her daughter as mentioned earlier. The properties owned by Christine Margot may have a net equity of $1,751,000. (12) The Administrators' report omitted (I do not suggest fault on their part) certain material information, including details of the assets owned by Samantha Leonie, her sale of the property at 18 Heath Street, Mona Vale in early 2008, the amount of the net proceeds of sale and how much of them are still held by her; information relating to the financial position of Christine Margot and, in particular, details of properties in her name. (13) According to the Administrators' report, Samantha Leonie had informed the Administrators that the Company purchased the business from the Hughes Family Trust for $1,274,598.94 inclusive of stock in May 2003. A copy of the alleged contract provides that $1 million of the purchase price was payable immediately. The Administrators' report did not contain information as to how the purchase price was paid (evidence filed by the Company in the District Court proceeding suggested that the price was only $600,000). (14) The Administrators' report omitted details of how the debt of $671,882.00 claimed to be owing to the Hughes Family Trust arose. 40 The aspects of the matter to which I have referred above suggest a close relationship between the Hughes and Williams families and the desirability of an investigation by a liquidator as to the recoverability of the Company's money that was paid away. According to the Administrators' report, Johnson is the largest unrelated creditor and would stand to benefit from any recovery. Importantly, Johnson has proffered an undertaking to the Court to fund a liquidator's investigation to the extent of $50,000. 41 In my opinion the Company should be wound up in insolvency. 42 There is a question whether Mr Struthers who has been nominated by Johnson or one of the Administrators should be appointed as liquidator. It is suggested that the Administrators have carried out investigation of the Company's business to date to a significant degree, and that there would be a saving in costs if one of them were to be appointed as liquidator. 43 I accept that considerable investigative work has been carried out by the Administrators. I have found their report and supplementary report informative and helpful. No criticism is made of them by Johnson. The misstatements in and omissions from their report were due to the insufficiency of records made available to them, the time constraints under which they were labouring and the fact that they had to rely on Samantha Leonie for information. Nonetheless, for a number of reasons I think that Mr Struthers should be appointed. 44 First, to be balanced against the considerable work carried out by the Administrators, is the considerable investigatory work that has been carried out by Johnson's solicitors, Hunt and Hunt. It is no less undesirable that the benefit of that work be lost to the liquidator to be appointed, than it is that the benefit of the Administrators' work be lost to him. 45 Second, the administration has reached a stage where the issues for a liquidator to pursue have crystallised and the next phase will probably be the liquidator's examinations of various people and, depending on the outcome, the institution of recovery proceedings. In other words, it is doubtful that there is considerable advantage now to be gained by appointing one of the Administrators as liquidator. 46 Third, while it is common enough for the accountants of an insolvent company to suggest a particular person as administrator, in this case there seems to be a close relationship between members of the Williams and Hughes families and Northstar Accountants who nominated the Administrators. It is important that Johnson have confidence that the liquidator to be appointed will vigorously pursue all sources of recovery free of any sense of obligation to Northstar Accountants, not just that in fact he will do so. 47 I emphasise that no criticism is made of the Administrators. In particular, I do not suggest that their report to creditors was influenced in any way by a sense of obligation to Northstar Accountants. Nor do I suggest that they would not pursue vigorously such lines of recovery as they may be advised to pursue. Rather, I am referring only to the perception of Johnson in relation to the future course of events. 48 Fourth, if one puts aside the debts owed by the Company to "related" parties, what emerges is that the one substantial independent creditor is Johnson. In addition, Johnson has proffered the undertaking to fund the liquidator to which I referred. Weight should be given to Johnson's preference in these circumstances. 49 For the above reasons, I made an order on 20 August 2008 setting aside the DOCA, an order for the winding up of the Company, an order appointing Mr Struthers as liquidator, and orders protecting Johnson in relation to its costs of this proceeding and the Administrators in relation to their remuneration and costs, including their statutory indemnity. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | deed of company arrangement application by creditor for order under s 445d of corporations act 2001 (cth) terminating deed payments made by company to directors or to entities controlled by them, not satisfactorily explained desirability that company be wound up and that the investigatory and recovery powers of a liquidator be available misleading information in, and omissions from, an administrator's report whether creditor's nominee or one of the administrators should be appointed liquidator discretionary considerations. held: orders made terminating deed, winding up company and appointing creditor's nominee as liquidator. corporations |
The Plaintiff, Regional Publishers Pty Limited ('Regional'), desires to acquire those preference shares compulsorily, pursuant to the provisions of Part 6A.2 of Chapter 6A of the Corporations Act 2001 (Cth) ('the Act'). Regional is able to do so, so long as it satisfies the prerequisites of Part 6A.2 and, in the events that have happened, it establishes that the terms on which it proposes to acquire the preference shares give a fair value for them. Dr Elkington and Gepps say that Regional has not satisfied the prerequisites of Part 6A.2 and that, in any event, the terms upon which Regional proposes to acquire their preference shares does not give them a fair value for the preference shares. Section 664F is activated where people who hold shares object to the proposed acquisition. However, the procedure contemplated by Division 1 must be followed before any application is made to the Court for approval under s 664F. Under s 664C(1) the 90% holder must prepare a notice that sets out a cash sum for which the 90% holder proposes to acquire the shares and provides certain other information specified in that provision. The Commission must nominate an appropriate person to prepare the report. In determining whether a person is an appropriate person to prepare an expert's report, the Commission must consider the nature of the company to be valued. The 90% holder must lodge with the Commission a copy of any objection forms returned under that provision. If people who hold at least 10 per cent of the shares covered by the compulsory acquisition notice object to the acquisition within a specified period, the 90% holder must give everyone to whom the compulsory acquisition notice was sent, relevantly, a notice that the 90% holder has applied to the Court for approval of the acquisition under s 664F. 8 Under s 664F(1), if people who hold at least 10 per cent of the shares covered by a compulsory acquisition notice object to the acquisition within a specified period, the 90% holder may apply to the Court for approval of the acquisition of the shares covered by the notice. Under s 664F(3), if the 90% holder establishes that the terms set out in the compulsory acquisition notice give a fair value for the shares, the Court must approve the acquisition of the shares on those terms. Otherwise the Court must confirm that the acquisition will not take place. Section 664F(4) provides that the 90% holder must bear the costs that a person incurs on legal proceedings in relation to such an application, unless the Court is satisfied that the person acted improperly, vexatiously or otherwise unreasonably. By letter of 18 October 2005, Regional's solicitors, Deacons, requested the Commission to nominate a person for the purpose of preparing an expert's report under s 667AA of the Act. By letter of 2 November 2005, the Commission nominated three companies pursuant to the request made by Deacons. One of the companies named in the letter was described as follows: ' Licence holder: Ernst & Young Advisory Services Ltd '. The letter of 2 November 2005 stated that one of the three companies named could be chosen to prepare the necessary report. The letter also referred to the provisions of the Act whereby an appeal lay to the Administrative Appeals Tribunal from the Commission's decision nominating those three companies. 10 For the purpose of nominating independent experts under s 667AA, the Commission maintains two registers of experts. One is a register of experts who are able to prepare reports for large companies, being companies with a consolidated gross operating revenue of more then $10 million or consolidated gross assets of more than $5 million. The second is a register of experts who are able to prepare reports for companies that meet neither of those criteria. The Commission appoints to the registers only experts with a licence under s 913B of the Act that authorises a person who carries on a financial services business to provide financial services ('Australian financial services licence'). 11 As at 2 November 2005, the registers maintained by the Commission included the name ' Ernst & Young Advisory Services Ltd '. There is no company with that name. However, there is a company with the name ' Ernst & Young Transaction Advisory Services Ltd ' ('Ernst & Young'). Ernst & Young is the holder of Australian financial services licence No. 240585. The Commission intended to appoint Ernst & Young to the registers maintained by it. And it is clear that the registers contained an error in relation to the name of Ernst & Young. That error resulted in the Commission, in its letter of 2 November 2005, nominating ' Ernst & Young Advisory Services Ltd ' rather than Ernst & Young. 12 Ernst & Young wrote to Regional on 9 January 2006, setting out the proposed terms of its engagement by Regional to prepare an independent expert's report in relation to the proposed compulsory acquisition of preference shares in the Company. On 28 February 2006, Regional acknowledged that that letter and its attachments formed a binding agreement between Ernst & Young and Regional. 13 Pursuant to that engagement, Ernst & Young provided to Regional a report prepared by it, dated 20 March 2006 ('the E&Y Report'). • Regional has full beneficial ownership in at least 90 per cent by value of all the shares of the Company. Ernst & Young's reasons for their opinions were set out in a detailed attachment to the E&Y Report. It also gave the Company copies of those documents. Accordingly, on 19 May 2006, Regional applied to the Court pursuant to s 664F of the Act for approval of the acquisition of the preference shares covered by the compulsory acquisition notice. Dr Elkington and Gepps have appeared in the proceeding and have been joined as defendants. Another holder of preference shares has made a written submission through Regional, but has not appeared. However, several specific issues have been raised by Dr Elkington and Gepps. The first issues concern the nomination of Ernst & Young by the Commission. First, they say that Ernst & Young was not nominated and that a non-existent company was nominated. Secondly, they say that Part 6A.4 only permits the nomination of an individual as an appropriate person to prepare a report and does not permit the nomination of a company. 17 In addition, the defendants have raised an issue concerning the content of the E&Y Report. They say that the E&Y Report does not satisfy the requirements of s 667C in determining what is fair value for the preference shares. However, each eschews a contention that any failure to comply strictly with s 667C invalidated the process that led to Regional's application to the Court. Rather, they say that the evidence before the Court, insofar as it is limited to the E&Y Report, falls short of establishing that the terms set out in the compulsory acquisition notice gives a fair value for the preference shares. Specifically, they point to what they say is a special value arising from the benefits that accrue to the Company by becoming a wholly owned subsidiary of Regional: they complain about the allocation of the value of those benefits between the ordinary shares and the preference shares of the Company. 18 It is convenient to deal first with the Commission's nomination of Ernst & Young and then with the valuation questions. There is no company with the name Ernst & Young Advisory Services Ltd. Notwithstanding the reference to a company with that name in the Commission nomination of 2 November 2005, I consider that the letter should be construed as referring to Ernst & Young. In any event, the misnomer is no more than a procedural irregularity and a nomination by the Commission pursuant to s 667AA(2) is a proceeding under the Act. Regional calls in aid s 1322 of the Act, which deals with relief from the consequence of irregularities. Under s 1322(1), a proceeding under the Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by an appropriate order of the Court. Clearly the misnomer has caused no injustice. The nomination of 2 November 2005 was not invalid by reason of the misnomer of Ernst & Young. Clearly, the word ' person ' first appearing includes a corporation. That is to say, s 664A clearly contemplates that a corporation may be a 90% holder in relation to a class of shares. It would be curious, therefore, if the word ' person ' when used in the same sentence had a different meaning, such that it is limited to a natural person. 21 Section 22(1)(a) of the Acts Interpretation Act 1901 (Cth) provides that the word ' person ', when used in a statute, includes a corporation unless the contrary intention appears. Further, s 23(a) of that Act provides that words importing gender include every other gender. The question is whether a contrary intention appears from the context in which the word 'person' is used in s 667AA. 22 The expert's report called for by s 667A must state whether, in the expert's opinion, terms proposed give a fair value and whether the person giving the compulsory acquisition notice has full beneficial ownership in at least 90 per cent by value of all the shares. I do not consider that the requirement that the report state an opinion requires that the expert be a natural person. 23 Certainly, a corporation can act only through its agents, including its directors and employees. It has long been accepted that a corporation, through its relevant agents, can acquire a state of mind, such as an intention; a corporation can, through its relevant agents, acquire knowledge. There is no reason, in principle, why a corporation cannot, through appropriate agents, form an opinion. 24 There is no indication in the scheme of Part 6A.4 that a natural person must take responsibility for the opinion expressed in an expert's report and must be able to support it on oath, as suggested by Dr Elkington. There is no requirement in the Act that an expert's report be verified on oath or by any other means. The person nominated, of course, must accept responsibility for the opinion. Doubtless, when considering a nomination, the Commission would have regard to the capacity of the person to be nominated to provide a reliable opinion. Even if a nomination by the Commission is subject to review by the Administrative Appeals Tribunal, that gives no hint that a nominated person must be a natural person and cannot be a corporation. 25 The word ' person ' is used throughout the Act to refer both to corporations and to natural persons. I do not consider that there is anything in the context in which s 667AA is found to suggest an intention contrary to the primary effect of s 22(1)(a) of the Acts Interpretation Act . 26 That conclusion is supported by the scheme of the Act generally and Chapter 7 in particular. Chapter 7 is concerned with financial services and markets. Part 7.6 deals with the licensing of providers of financial services. Under s 911A, a person who carries on a financial services business must hold an Australian financial services licence covering the provision of the financial services. It could not be suggested that a company is not a person for the purposes of s 911A. 27 Under s 766A, a person provides a financial service for the purposes of Chapter 7 if, amongst other things, the person provides financial product advice. Under s 766B, financial product advice means, for the purposes of Chapter 7, a recommendation or a statement of opinion or a report of either of those things that is intended to influence a person or persons in making a decision in relation to a particular financial product. Under s 764A(1)(a), a security is a financial product and, by the operation of ss 761A and 9 , a share in a company is a security. 28 It follows that a person who provides an expert's report under s 667A must be the holder of an Australian financial services licence. Clearly, the Act contemplates that any holder of an Australian financial services licence could be nominated by the Commission to prepare an expert's report for the purposes of s 664C of the Act. While that is not decisive as to whether such an expert can be a company, it is persuasive of that conclusion. I consider that the nomination of Ernst & Young in the Commission's letter of 2 November 2005 was valid and effective. There are three steps, the first of which, in the present context, is to assess the value of the Company as a whole . The second step only arises where there is more than one class of issued securities in a company, as is the present case. Thus, the issued capital of the Company consists of ordinary shares and preference shares. The value of the Company as a whole, determined in the first step, is then to be allocated between the ordinary shares and the preference shares in the Company. The value of each class of those classes is then to be allocated, pro rata , among the shares in that class. 30 The requirement of the third step, that the value of each class be allocated pro rata among the shares in that class, is a purely arithmetical process. However, the first and second steps call for judgment on the part of whoever is determining fair value. The first judgment is as to the value of the relevant company as a whole. The second judgment is as to the manner of allocating that value among the classes of issued shares. 31 To arrive at the value of property on a particular date, it is necessary to make a judgment as to the price at which the property would be sold on that date by voluntary bargaining between a seller and a buyer willing to trade, but neither of whom is so anxious to do so that the buyer or seller would overlook any ordinary business consideration. The judgment must be made on the assumption that both buyer and seller are perfectly acquainted with the property and cognisant of all circumstances that might affect its value, either advantageously or prejudicially. Having placed itself in the position of such parties at the relevant date, the question for the decision maker to determine is the point at which the buyer and seller would meet: that is to say, the aim is to determine the sum that the buyer would be willing to pay and the price that the seller would be prepared to take (see Spencer v The Commonwealth [1907] HCA 70 ; (1907) 5 CLR 418 at 441). So much is undoubted. 32 However, the first question that arises in the present context is to determine just what is to be valued. Section 667C refers to ' the company as a whole '. That phrase signifies the overall enterprise or undertaking of the relevant company, in the sense of the whole of its assets and its liabilities as a going concern or as a cohesive collection of resources organised so as to produce a return through outlay. Attention is directed at the sum of the component parts, viewed as a productive organisational whole and not at any particular asset or advantage (see Teh v Ramsay Centauri Pty Ltd [2002] NSWSC 456 at [13] ). 33 In particular, the phrase does not direct attention to the value of particular share capital of the relevant company. On the other hand, dealings in the share capital of a company may give considerable assistance in the task of determining the value of that company as a whole. 34 The date as at which the value is to be determined is the date at which the 90% holder gives the relevant compulsory acquisition notice. It is at that point that the 90% holder initiates the process for compulsory acquisition. The holders of the shares that are to be subject to acquisition are drawn into a relationship with the 90% holder, whether they like it or not, by the operation of the Act (see Teh v Ramsay Centauri at [28]). The E&Y Report referred expressly to the provisions of s 667C(1) and referred to Practice Note 43, issued by the Commission, which provides guidance on possible valuation methodologies for an expert to consider. However, notwithstanding the express reference to s 667C(1), the E&Y Report adopted the approach of valuing the ordinary shares and the preference shares in the Company and then aggregating those values to arrive at the value of the Company as a whole. While, ultimately, the result of such an exercise may be helpful, that does not appear to me to be the approach called for by the terms of s 667C. The E&Y Report began with an overview of that industry followed by a profile of the Company. The core operating activity of the Company is publishing ' The Advocate ', a regional daily newspaper based in Burnie, Tasmania. The Company also operates a printing business which prints The Advocate as well as undertaking general printing for third parties. The Company also has a 40 per cent interest in The Examiner Newspaper Pty Ltd, which publishes ' The Examiner ', a newspaper based in Launceston, Tasmania. 37 Ernst & Young's first step was to determine the value of the ordinary shares in the Company, using, as the primary methodology, prices paid for ordinary shares. Prior to September 2005, Regional had acquired 85.3 per cent of the ordinary shares in the Company, at a price of $32 per share. In September and November 2005, Regional acquired the 14.7 per cent of the ordinary shares in the capital of the Company that it did not own, at a price of $36.38 per share. Ernst & Young concluded that the ordinary shares should therefore be valued at $36.38 per share. On that basis, Ernst & Young concluded that the fair value of ' the ordinary equity ' in the Company was $55,821,000, as at 20 March 2006. 38 The second step taken in the E&Y Report was to consider the reasonableness of the value of $58,821,000 for the ordinary equity by reference to the earnings before interest, tax, depreciation and amortisation ('EBITDA') of the Company. Ernst & Young had regard to the multiple of the Company's EBITDA that was implied by the value of $55,821,000 and the reasonableness of that value in the context of EBITDA multiples observed by Ernst & Young in respect of comparable listed entities and transactions. • Forecast EBITDA trading multiples of similar companies operating in the Australian newspaper industry, having an average of 11.1. • Historical EBITDA trading multiples of companies operating in the printing industry in Australia, having an average of 7.3. • Forecast EBITDA trading multiples of companies operating in the printing industry in Australia, having an average of 6.1. In addition, Ernst & Young considered the EBITDA multiples implied by other transactions in the newspaper industry. Finally, Ernst & Young had regard to the fact that the selected comparable companies are all much larger and diversified than the Company, which operates only in the small market of regional Tasmania, with limited readership. Such factors increase the exposure of smaller companies to the effects of recessions and other ' negative earnings shocks ', as Ernst & Young put it. 41 In the course of determining the implied EBITDA multiples, Ernst & Young derived an ' enterprise value ' for the Company. That entailed adding, to the value of the issued capital of the Company, the amount of the net debt of the Company, of $8,914,000, plus 40 per cent of the net debt of The Examiner Newspaper Pty Limited, of $3,700,000. Ernst & Young concluded elsewhere in the E&Y Report, as indicated below, that the preference shares had a fair value of $54,000. Accordingly, the fair value of the total share capital of the Company was determined as $55,875,000, being $55,821,000 plus $54,000. The conclusion was an ' enterprise value ' for the Company of $68,489,000. 42 The Company's EBITDA for 2005 was $9,375,000 and the Company's forecast EBITDA for 2006 was $11,245,000. On the basis of an enterprise value of $68,489,000, the multiple for 2005 would be 7.3 and the multiple for 2006 would be 6.1. Those multiples for the years 2005 and 2006 were comparable with Ernst & Young's observations of other participants in the industry. The E&Y Report concluded, therefore, that the multiples of 7.3 and 6.1 were not unreasonable for a company engaged in the industry in which the Company is engaged. 43 Ernst & Young's third step was to determine the total value of the 50,000 issued preference shares in the Company by capitalising future maintainable dividends, including an allowance for franking credits. Ernst & Young considered that that was the appropriate methodology, having regard to the rights attached to those shares. That conclusion was based on an examination of the Company's capital structure and the rights and conditions attaching to the preference shares. 44 Clause 95 of the Company's Constitution sets out the terms and conditions upon which the directors were authorised to issue preference shares. • The shares rank, both as regards dividend and return of capital, in priority to all other shares in the Company, but confer no further rights to participate in profits or assets. • The capital paid up on the preference shares is not liable to cancellation or reduction. • Preference shareholders have the same rights as ordinary shareholders as regards receiving notices, reports and balance sheets and attending general meetings. However, preference shareholders have no right to vote at general meetings except in respect of specified matters that directly affect the preference shareholders. In such exempted matters, the preference shareholders were to have the same voting rights as ordinary shareholders. • There can be no creation or issue of further preference shares, beyond the first 130,000, no repayment of preference capital and no alteration of the rights of preference shareholders, unless agreed to by a resolution of the holders of at least three-fourths of the issued preference shares at a special meeting called for that purpose. • They attract a fixed preferential dividend of 6 per cent per annum, paid semi-annually in March and September of each year. • They are non-redeemable, in that a preference shareholder can realise the capital investment only by selling the preference shares or in a winding up. In the latter case, the preference shareholder would receive a maximum of $1 per share. Accordingly, the value of the preference shares was not directly dependent upon the value of the Company's assets unless it were to experience financial difficulties such that it was unable to make the preference share dividend payments or repay the capital upon a winding up. There was no evidence that any such circumstances existed. 47 Against that background, Ernst & Young adopted the methodology of capitalising future maintainable dividends, including an allowance for franking credits. Ernst & Young concluded, after conducting that exercise, that, depending upon the appropriate pre tax dividend yield adopted, the fair market value of each preference share was between $1.01 and $1.14. That gave a total fair market value of the issued preference shares of between $50,420 and $57,143, with a mid point of $54,000. 48 Ernst & Young then took into account the recent share trading history of the preference shares. Regional had purchased preference shares at $2 per share up to May 2004 and at $2.50 per share thereafter, giving an average price of $2.14 per share. Those prices are not higher than the price proposed under the compulsory acquisition notices. 49 The final step taken by Ernst & Young in the E&Y Report was to aggregate the value that had been determined for the ' ordinary equity ' in the Company and the value that had been determined for the preference shares. Ernst & Young concluded that the value of the Company as a whole was between $55,871,000 and $55,878,000, giving a mid point of $55,874,000. 50 Because of an argument that a special value should be attributed to financial benefits that would be derived by Regional's increasing its interest to 100 percent of the preference shares, Ernst & Young considered such potential ' special value '. Ernst & Young concluded that, in two areas, there were possible benefits for the Company. 51 First, Ernst & Young observed that, in the event that the remainder of the preference shares are required by Regional, the Company would no longer be required to produce separate statutory accounts or be the subject of a separate audit opinion. Ernst & Young assumed that the value of that benefit could be quantified at approximately $100,000 per annum. 52 Secondly, Ernst & Young postulated other minor benefits to Regional in not having minority shareholders in the Company. Ernst & Young suggested that such benefits could include reduced administration costs and the avoidance of legal costs that might be required from time to time in relation to the outstanding holders of preference shares. While Ernst & Young considered that it was difficult to quantify such benefits, the assumption was made, for the purposes of the analysis, that such benefits could be in the order of $100,000. 53 Based on assumed savings of $200,000 per annum and the implied multiples referred to above, Ernst & Young concluded that such a special value could be considered to be in the order of $1,400,000. If the benefits of 100 per cent ownership by Regional are to be taken into account in determining the value of the Company as a whole, that would involve adding the sum of $1.4 million to the value otherwise determined. 54 Against the possibility that special value was relevant, Ernst & Young allocated the postulated special value of $1.4 million pro rata, based on the respective values of the ordinary shares and the preference shares, as determined above. On that basis, a special value of 3 cents would be allocated to each preference share. The result was a notional fair value per preference share, if special value is included, of between $1.03 and $1.17, giving a mid point of $1.10. Thus, Ernst & Young concluded that, even if special value is to be taken into account, the fair value for each preference share was still well below the price of $2.50 to be paid by Regional under the compulsory acquisition notices. That is to say, a valuation was carried out in relation to the two classes of shares and the two valuations were aggregated to arrive at the value of the Company as a whole. Ernst & Young did not directly consider the second step required by s 667C, although, by working backwards, the allocation of the value of the Company as a whole between the two classes of shares is simply a matter of examining the two valuations that were aggregated to produce the value of the Company as a whole. 56 The exercise conducted by Ernst & Young, in order to test the reasonableness of the value of ' the ordinary equity ', is really the exercise that should have been conducted as the primary first step. Thus, according to the Commission's Practice Note 43, an appropriate methodology for valuing a company as a whole is to apply earnings multiples appropriate to the businesses or industries in which that company is engaged, to the estimated future maintainable earnings or cash flows of that company. That figure would then be added to the estimated realisable value of any surplus assets. In effect, Ernst & Young determined a value of the Company as a whole as a check of its valuation of ' the ordinary equity ' in the Company. That value was the enterprise value of $68,489,000. 57 I do not consider that an addition for the special value identified in the E&Y Report is appropriate, having regard to the language of s 667C. As I have said, the first step requires the determination of the value, as at the date of the compulsory acquisition notice, of the Company as a whole, in the sense indicated above. It is impermissible, in determining fair value, to make any allowance for synergies to be achieved by the acquisition. It is equally impermissible in determining fair value to take into account special benefits deriving from full ownership (see Winpar Holdings Ltd v Austrim Nylex Ltd [2005] VSCA 211 at [35] ). 58 I have taken some trouble to deal with Ernst & Young's opinion in some detail since, for the reasons I have indicated, I consider that it adopts an inappropriate approach. However, neither defendant suggested that such an inappropriate approach invalidated the process. That is to say, they accepted that it is a matter for the Court, on the basis of the evidence before it, which was limited to the Expert's Report, to determine whether Regional has established that $2.50 per preference share gives shareholders a fair value for the preference shares. The contention appears to be that Regional is a buyer of preference shares, and the present holders, apart from Regional, are sellers of preference shares. They suggested that it is necessary to allocate the special value of $1.4 million identified by Ernst & Young between Regional, on the one hand, and preference share holders, who include Regional, on the other hand. Something in the order of half and half was suggested as appropriate. The contention appears to be that that exercise should be undertaken as part of the allocation of the value of the Company as a whole between the two classes of shares. 60 However, the argument ignores the express terms of s 667C. The allocation between the two classes of shares is to be effected, taking into account the relative financial risk and voting and distribution rights of the classes. The Act does not require any other factor to be taken into account. Indeed, the presumed object of Part 6A(2), is to eliminate special value of the kind in question from the exercise that is to be undertaken in accordance with s 667C. Even if special value is to be taken into account, it is taken into account in the assessment of the value of the Company as a whole. There is no warrant in the Act for allocating special value of the kind in question between classes of shares on a basis different from the basis upon which the value of the Company as a whole is to be allocated. 61 The starting point is to determine the value of the Company as a whole. I consider that, on the material presently before me, the value of the Company as a whole can be postulated from the E&Y Report by applying appropriate multiples to the Company's EBITDA for 2005 and the Company's forecast EBITDA for 2006. According to the E&Y Report, multiples in the range 6.1 to 7.3 are reasonable. The application of those multiples to the EBITDA for 2005 and 2006 results in a value of the Company as a whole, in the relevant sense, in the vicinity of $68,489,000. That is the figure determined by Ernst & Young as the enterprise value . 62 The defendants point out that the E&Y Report makes no attempt to determine maintainable EBITDA of the Company for the future. Rather, Ernst & Young simply looked at the Company's EBITDA for 2005 and the Company's forecast EBITDA for 2006, which exceeded actual EBITDA for 2005. Nevertheless, it is clear enough that the basis on which Ernst & Young proceeded is that the actual EBITDA and the forecast EBITDA give a reasonable indication of maintainable EBITDA. No evidence was adduced by the defendants to suggest that maintainable EBITDA of the Company was significantly greater than that forecast for 2006. 63 The defendants also contended that it is not open to Regional to choose its own multiple, which should be determined by an expert. However, it is clear, from the exercise carried out by Ernst & Young in the E&Y Report, that Ernst & Young, who clearly are experts, formed the view that multiples between 7.3 and 6.1 were reasonable for the Company. Again, no evidence was adduced by the defendants to suggest any other EBITDA multiple. 64 The real issue in the proceeding is the way in which the second step should be undertaken. That step requires the value of the Company as a whole to be allocated between the ordinary shares and the preference shares, being the only two classes of shares in the Company. Certainly, no formula is suggested by s 667C(1)(b). Gepps complained that Mr Bright, who was an author of the E&Y Report and who gave evidence and was cross-examined, did not explain the rationale for allocating the value between the two classes of shares on the basis of the market value of the shares. Dr Elkington, in written submissions made after the hearing, contended that the value of the Company as a whole should be allocated ' in the way that the market would allocate it '. 65 The only evidence as to that question was that of Ernst & Young, in the E&Y Report, to the effect that the appropriate manner of allocation is by reference to the market value of the two classes of shares. Ernst & Young suggest that the appropriate basis for allocation is valuation determined in the manner explained in the E&Y Report. The defendants adduced no alternative evidence as to the manner of valuing the two classes of shares. On the evidence before the Court, there is no reason to depart from the basis adopted by Ernst & Young in the E&Y Report. 66 Section 667C requires that, in making the allocation, it is necessary to take into account the relative financial risk and the voting and distribution rights of the ordinary shares and the preference shares. In addition, it is necessary to take into account the price paid for the preference shares within the previous six months. 67 The ordinary shares bear a greater risk than the preference shares. That is to say, the preference shares confer the right to a return of paid up capital and a fixed dividend in priority to any distribution to the ordinary shares. However, to the extent that there is any excess profits or capital, that belongs entirely to the ordinary shareholders. The preference shareholders have a right to receive a dividend of 6 per cent per annum and no more, whereas the ordinary shareholders are entitled to distribution of all profits that are distributed. On a winding up, any surplus beyond the paid up capital of the preference shares and any outstanding fixed dividend on the preference shares goes entirely to the holders of the ordinary shares. The preference shareholders are not entitled to vote except in relation to matters that specifically concern their rights. 68 The right to receive accounts and to attend meetings and the right to vote in relation to matters that affect preference share rights directly are merely incidents of the right to receive the fixed dividend and to a right to return of the paid up capital on the winding up, in priority to any distribution or return to the holders of ordinary shares. While, under the constitution of the Company the preference capital cannot be repaid without the agreement of the holders of at least three-fourths of the preference shares, that right is expressly abrogated, in effect, by the operation of Part 6A.2 of the Act. That is to say, but for Part 6A.2, the holders of the preference shares would be entitled to continue to hold their shares in perpetuity, subject to the winding up of the Company and subject to agreement by the holders of three-fourths of the preference shares. 69 In the circumstances, I consider that it is appropriate to allocate the total value of the Company as a whole between the preference shares and the ordinary shares on the basis of their respective values, as determined by Ernst & Young. If the value of the Company as a whole is not to take account of the special value, the enterprise value of $68,489,000 would be the value of the Company as a whole, although it might be greater if the Company's maintainable EBITDA were greater than was impliedly assumed by Ernst & Young. Assuming, contrary to the view expressed above, that the special value should be brought into the calculation of the value of the Company as a whole, the sum of $1,400,000 would be added to the amount of $68,489,000, to give a value of the Company as a whole in the vicinity of $70 million. 70 Ernst & Young concluded that the respective market values of the ordinary share capital and the preference share capital were $55,821,000 and $54,000. On that basis, the allocation of $70 million would be $69,932,349 to the ordinary share capital and $67,651 to the preference share capital. If the latter figure is allocated among the 50,000 preference shares pro rata, a fair value for each preference share would be $1.35. The maintainable EBITDA would have to be significantly above the figures for 2005 and 2006 in order to result in an allocation of the value of the Company as a whole to the preference shares that would result in a figure that was close to $2.50. 72 It follows that the terms of the compulsory acquisition notice give a fair value for the preference shares. It is appropriate, therefore, to make the order asked by Regional, approving the acquisition of the preference shares under the compulsory acquisition notices. Regional should pay the costs of Dr Elkington and Gepps, as provided by s 664F(4). | compulsory acquisition of shares shareholder objection to acquisition application for court approval of compulsory acquisition whether applicant has satisfied provisions of part 6a.2 of the corporations act 2001 (cth) whether the nomination of a company is the nomination of an individual whether fair value given for preference shares corporations |
The Court also ordered the plaintiff, Mr James Byrnes, to pay the defendants' costs of the proceeding. Liberty was reserved to the defendants to file, within seven days, any application they wished to make as to further costs orders. On 9 June 2009, pursuant to that liberty, Macquarie Capital Advisers Limited ( Macquarie Capital ) and Macquarie Bank Limited ( Macquarie Bank ), who were originally named as second and third defendants in the proceeding (together the Macquarie Companies ), filed an application for an order for the payment of costs on an indemnity basis, and an order for the payment of those costs in a lump sum. Therefore, there are now two issues before the Court. The first is whether Mr Byrnes should be ordered to pay the costs of the Macquarie Companies on an indemnity basis, and the second is whether those costs should be calculated as a lump sum. In dealing with those issues, it is necessary to say something about the background to, and the course of, the litigation. The first defendant is BrisConnections Management Company Limited ( BrisConnections ), to which the State of Queensland awarded a concession to design, construct, operate, maintain and finance a connection road between suburbs of Brisbane, including a physical tunnel, roadwork, facilities and other systems ( the Airport Link ). BrisConnections was to receive toll road revenue from the roadway for a period of 45 years. BrisConnections is the responsible entity of two trusts, being the BrisConnections Investment Trust and the BrisConnections Holding Trust (together, the Trusts ). By way of initial public offering on 24 June 2008, BrisConnections offered units in the Trusts to members of the public, on terms described in a product disclosure statement. Units in the Trusts were described as "partly paid stapled units" and units in the Trusts were to be traded together. Each unit had an issue price of $3, which was to be payable by way of instalments, as follows: $1 on application, $1 nine months after the allotment date, and the final instalment of $1 payable no later than 18 months after the allotment date. The third instalment was due to be paid by 29 January 2010. In excess of 390 million units were issued to subscribers, who became members of the Trusts. On 2 March 2009, BrisConnections issued a call notice to members of the Trusts for the payment of the second instalment by 29 April 2009. Macquarie Capital was an underwriter of the initial public offering and Macquarie Bank lent money to BrisConnections under an equity bridge syndicated facility agreement. By that facility agreement, Macquarie Bank made available a revolving cash advance loan facility to BrisConnections. The funding for the project to construct the Airport Link was structured such that payments in respect of the second and third instalments for the units would be applied by BrisConnections to repay borrowings under the syndicated facility agreement. Things did not necessarily go according to plan. On 12 February 2009, Australian Style Investments Pty Ltd ( Australian Style ), which was a unit holder in the Trusts, requested BrisConnections to call a meeting of members of the Trusts to consider a resolution to wind up each of the Trusts. On 20 February 2009, Australian Style also requested BrisConnections to call a meeting of members of the Trusts to consider six further resolutions, in the event that the resolutions to wind up were not passed. Those steps gave rise to two separate pieces of litigation. On 3 March 2009, BrisConnections commenced proceedings in the Supreme Court of Victoria, concerning the validity of the requests to convene meetings. On 5 March 2009, BrisConnections issued a notice of meeting of members to consider the winding up resolutions. On 20 March 2009, Australian Style called a meeting of members, pursuant to s 252C of the Corporations Act 2001 (Cth), to consider the further resolutions on the basis that BrisConnections had failed to call a meeting to consider those resolutions in accordance with the request of 20 February 2009. On 2 April 2009, the Supreme Court of Victoria dismissed the Victorian proceedings. The meetings scheduled for 9 and 14 April 2009 were adjourned by the Court, subject to BrisConnections undertaking to call a new meeting on 14 April 2009, to consider the winding up resolution and the additional resolutions. On 6 April 2009, BrisConnections issued a notice of meeting accordingly. At the meetings of members held on 14 April 2009, all of the proposed resolutions were rejected. On 30 March 2009, Macquarie Capital and Macquarie Bank commenced proceedings in the Supreme Court of Queensland, seeking declaratory relief designed to enforce contractual rights that they asserted would be breached if the Trusts were wound up, or if the additional resolutions were passed and implemented. On 14 April 2009, the Supreme Court of Queensland dismissed the claims brought by the Macquarie Companies, insofar as urgent relief was sought, and adjourned the balance of the claims, together with cross-claims, to a date to be fixed. In the meantime, Mr Byrnes engaged in correspondence with BrisConnections and others concerning the affairs of the Trusts, and in particular, concerning the product disclosure statement. On 4 March 2009, Mr Byrnes wrote to BrisConnections about a proposal to restructure BrisConnections. He said that, if the board ignored his offer to meet and discuss a proposal, which he said would have the support of a substantial number of unit holders, BrisConnections and its directors would be opened up to a raft of claims from unit holders, funders and underwriters. Mr Byrnes' proposal included a capital reduction, a capital raising, amendments to the terms of the Trusts to accelerate depreciation, and various other matters. BrisConnections declined to meet with Mr Byrnes until he had provided more detail concerning the proposal. On 5 March 2009, Mr Byrnes wrote again, stating that if the board refused to take the opportunity that was being offered, it was opening the doors for 100% of unit holders to mount a class action against the directors personally and against BrisConnections. Mr Byrnes said that the Macquarie Companies were facing an $800 million write-off, and that the professional indemnity insurance of the directors of BrisConnections might not cover the losses. On 12 March 2009, Mr Byrnes wrote to various journalists, noting that he had made a proposal and that BrisConnections refused to meet with him. He asserted that he had told BrisConnections to put the professional indemnity insurer on notice. Mr Byrnes then turned his attention to the holders of units, writing to them on 13 March 2009, seeking proxies for the proposed meeting of 9 April 2009. Mr Byrnes asserted that he had been a full-time consultant to Australian Litigation Funders Pty Limited for several years, and had established relationships with firms that specialise in class actions. He expressed the belief that, with a united front, holders of units could mount a competent defence and cross-claim to any action to recover calls on the units. On 17 March 2009, Mr Byrnes somewhat extraordinarily wrote to legal counsel appearing for BrisConnections in the Victorian proceeding. He suggested that BrisConnections had not kept the market informed as to his proposal, and that the failure to meet with him may cause unit holders to suffer as a result of negligence and give rise to a complete off-setting claim. He threatened to vote his proxies in favour of winding up at the forthcoming meetings. Also attached to that communication, was a letter from Mr Byrnes to Australian Securities Exchange, asserting that BrisConnections had misled the market. On 30 March 2009, Mr Byrnes sent a message to Ms Tamira Herbst, the secretary of BrisConnections. In that communication, he threatened proceedings for the appointment of a liquidator to BrisConnections. On 30 and 31 March 2009, there were communications from Mr Byrnes and from his solicitors to the Macquarie Companies, raising the purchase by the Macquarie Companies of units that had previously been the subject of a contract with a company associated with Mr Byrnes. At this stage, Mr Byrnes was not a unit holder in either of the Trusts. However, on 6 April 2009, he acquired units in the Trusts. On 8 April 2009, Mr Byrnes wrote again to Ms Herbst, with copies to various people, including Freehills, who were acting for the Macquarie Companies. The email was in poor taste. It contained a picture with a sign saying, "Shit Creek Paddle Store Franchises Available. Perhaps, that includes talking nicely to your unit holders and getting Mac Bank to actually ring someone who can resolve this. Following his acquisition of units in the Trusts, Mr Byrnes took further steps towards the commencement of this proceeding. A website of Australian Litigation Funders Pty Limited lists Mr Byrnes as the only point of contact. Between 17 and 23 April 2009, a website described as "Aussie Stock Forums" included a number of postings under the name of Mr Byrnes. On 20 April 2009, he said that he was looking for an original, initial public offering purchaser, preferably being someone who believed what was said in the product disclosure statement. He said that the person he was looking for should have little in the way of assets, and that such a person would be the perfect person to be the plaintiff in a proposed class action. On 21 April 2009, Mr Byrnes said, on Aussie Stock Forums, that a class action was now almost ready to be filed which would include all unit holders. He asserted that false and misleading statements had been identified in the product disclosure statement. He also said that the proposed class action would include all current unit holders and all previous unit holders, and that the class action would seek additional damages equal to the next two instalments that had been ruled on by the Supreme Court of Queensland. He said that one of the Macquarie Companies would be a second defendant for a claim within a range deemed to be between $1.3 billion and $1.8 billion. He asserted that the Macquarie Companies would no doubt seek to get unit holders who agreed to sell to them to give up their rights. Later on the same day, another posting referred to a little bit of relief being in sight, in that Macquarie Bank had agreed to make some form of conditional offer to the small unit holders. The posting exhorted that unit holders beware, since they are likely to have large claims against BrisConnections and the Macquarie Companies. He asserted that the Macquarie Companies wanted to mop up the people who have real and proper claims, but that the class action would automatically catch every person and would require an application of the Court to be released in the short term. He said that that would scuttle the offer, presumably referring to an offer that had been made by one of the Macquarie Companies. Later still on 21 April 2009, another posting carried what seems to have been a rhetorical question, "Do you think we would have arranged for a funder to commit $1 million in funding if they did not believe there was a good case? " Still later on the same day, Mr Byrnes said that he was "going after the deep pockets first. " Then finally, just before midnight on 21 April 2009, another posting from Mr Byrnes appreared, saying that there is one point that was unable to be proved correct, namely, the statement in the product disclosure statement, in big letters, to the effect that Brisbane is the fastest growing capital city in Australia. On the following day, 22 April 2009, Mr Byrnes returned to the forum, saying that he apologised for not being specific on causes of action. He said that he may have thrown in a few red herrings, as he knows that Macquarie Bank and BrisConnections read the blogs. He said, however, that he could confirm that a very, very high profile QC had agreed to act on the class action, and that two senior juniors had also been engaged. On 23 April 2009, another posting by Mr Byrnes said that, as soon as they had filed the claim in the Federal Court, he would scan and cut and paste it onto the site. He warned Macquarie Bank shareholders to beware, because the share price of Macquarie Bank was likely to be hammered. Later on in the evening of 23 April 2009, Mr Byrnes invited readers to have a look at the website of the product disclosure statement, because he was very keen for good readers and bloggers to provide him with information concerning mistakes in the product disclosure statement. And finally, later in the evening of 23 April 2009, Mr Byrnes said that he and his associates had formulated a plan of attack, and had prepared a class action, and had arranged to fund the class action. He said that, while the funder makes a tidy fee of about 33%, the aggrieved gets 66%, and that 66% of something is better than 100% of nothing. Mr Byrnes said that a second payoff was very personal to him. He said Macquarie Bank had been a little unkind to him in the past and that this was a little payback. He wondered whether anyone understood what sort of personal satisfaction one derives in not only being paid to do a service, but in helping thousands of people who have been badly affected by their dealings. This proceeding was commenced on 24 April 2009, with an appointment for directions at 9.30 am on 27 April 2009, for the purposes of hearing an application for abridgement of time for service. The application claimed both final relief and interlocutory relief. The final relief included: a declaration that the contracts to purchase units were void, or in the alternative, were voidable, a declaration that the calls for the second and third instalments were unenforceable, and damages for the loss of commercial opportunity in an amount of about 1.3 billion dollars. Late in the afternoon of 24 April 2009, Messrs Whittens, who were acting for Mr Byrnes, sent an email to Freehills, attaching a copy of the application and statement of claim that had been filed. The email said that the application and statement of claim were enclosed as a matter of courtesy and asked whether Freehills had instructions to accept service. At 7.28 pm on 24 April 2009, Freehills sent an email to Whittens, asking whether an undertaking as to damages would be provided, and if so, seeking evidence of Mr Byrnes' ability to meet that undertaking. On the morning of Saturday, 25 April 2009, Whittens again requested confirmation that Freehills had instructions to act and accept service of the application and statement of claim. Freehills responded at 11.08 am, saying that they had instructions to accept service, and repeating the inquiry of their email of the previous evening. That was repeated, in substance, at 3.58 pm on 25 April 2009. At 3.09 pm on Sunday 26 April 2009, Freehills again emailed Whittens, asking them to advise as soon as possible whether Mr Byrnes was providing an undertaking as to damages. No response was received to that email. In none of the communications received by Freehills from Whittens was there any indication that the purpose of the directions hearing listed for 27 April 2009 was merely to seek an order for abridgement of time for service of the application and statement of claim. Nor was there any indication that Mr Byrnes would not press for any of the interlocutory relief when the matter came before the Court. At all times between the time when Freehills first received the pleading on the evening of 24 April 2009 and commencement of the directions hearing on 27 April 2009, Freehills prepared urgently for a substantive interlocutory hearing, which was expected to take place on 27 April 2009, or Tuesday 28 April 2009, as well as a directions hearing on 27 April 2009. In those circumstances, a significant amount of work was required to be undertaken by Freehills, and counsel retained by them on behalf of the Macquarie Companies on the evening of 24 April 2009 and the weekend of 25 and 26 April 2009 in preparing for the proposed hearing on 27 April 2009 and if need be, on 28 April 2009. That work included a substantive review of the original pleading, including the basis for the interlocutory relief, preparation of evidence on behalf of the Macquarie Companies, demonstrating the significant injury that might be caused should the interlocutory relief be granted, and preparation of submissions in relation to the position to be adopted by the Macquarie Companies in response to the interlocutory relief. At about 10 am on 27 April 2009, before the matter was called on for hearing, Mr Renzie Duncan from Whittens, who had the carriage of the matter on behalf of Mr Byrnes, told Mr Marjoribanks of Freehills that Mr Byrnes was no longer pressing for interlocutory relief. Shortly after the commencement of the directions hearing, counsel for Mr Byrnes indicated to the Court that Mr Byrnes was no longer pressing for interlocutory relief. Counsel confirmed that the matter was listed that morning, initially to get short service of the application, but that service had, in effect, been arranged, and that the parties were present. He said that the purpose was to obtain an early hearing date for an interlocutory hearing, but that he was now instructed that Mr Byrnes did not wish to proceed with the interlocutory matter, and therefore asked that the matter be stood over for about six weeks. Counsel said that it was their intention to make some amendments to the application, that some information was needed, but that they were not in a position to make amendments at that stage. In light of that observation, the matter was adjourned to enable the respondents to obtain some instructions. On resumption, senior counsel for the Macquarie Companies intimated that he wished to move to strike out the present pleading for a number of reasons and forewarned Mr Byrnes and those appearing for him that, at the end of that, if successful, they would seek indemnity costs as a result of being brought to Court on that day. After some further dialogue with counsel, I indicated to counsel for Mr Byrnes that I was disposed to strike out the statement of claim but give leave to re-plead. Counsel was unable to justify six weeks as the time needed to amend the pleading, but said that he wished to have that time to make inquiries as to evidence and the obtaining of information in connection with the proposed proceeding. Counsel for Mr Byrnes indicated that the proposed amendments were not designed to overcome any deficiency, but were simply designed to make the pleading clearer. He said that the pleading, as it stood, could go forward but that he wished to make it clearer, so that there was no argument about some matters. He asserted that there was no wish to change the cause of action, or causes of action, but that what they wanted to do was particularise the causes of action in more detail. After further dialogue and another brief adjournment, the Court granted leave to the Macquarie Companies to file a motion returnable on 6 May 2009 for the purpose of considering a strikeout application. Following the directions hearing, a significant amount of work was undertaken by Freehills and counsel for the Macquarie Companies in preparing for the proposed strikeout application. That included: On the morning of 30 April 2009, those acting for Mr Byrnes served on the Macquarie Companies an undated notice to produce returnable at 9.30 am on the following day. Shortly after 10 am on 30 April 2009, Freehills sent an email to Whittens asking them to explain why the notice to produce had been issued in circumstances where the current pleading faced a strikeout challenge. Whittens were asked to explain why the documents were needed, and why they were needed so urgently. There was no response to the email. At 8.49 am on 1 May 2009, Whittens sent an email to Freehills indicating that Mr Byrnes was prepared to limit the call on the notice to produce to two documents. Freehills responded, saying that any production of documents at that stage would be resisted. The notice to produce was called on 1 May 2009. At an early stage, I asked Mr Duncan, who was appearing for Mr Byrnes, what the relevance the documents had to the strikeout application. Mr Duncan responded that, on the previous occasion, counsel for Mr Byrnes had made it clear that they intended to amend, and that they wanted six weeks to carry out the amendments. When it was suggested that counsel had indicated that they were really simply tinkering and tidying up and giving further particulars, Mr Duncan responded that they were always trying to improve the pleading. The documents in question included the product disclosure statement and Mr Duncan said that the documents were needed in order to be satisfied that what had been assumed up to date was, in fact, correct. He said that the documents were not available to the public or anybody who had subscribed for units in the Trusts. That seems somewhat curious, since the whole thrust of the complaint was that people subscribed for units on the basis of misleading statements in the product disclosure statement. Mr Duncan confirmed that the documents were wanted so that a case could be formulated that was not presently formulated. It was put to Mr Duncan that it appeared that there is a defect in the pleading that he was trying to cure and he was effectively conceding that the pleading should be struck out, something that had been suggested to counsel for Mr Byrnes on the earlier occasion. In response to a suggestion it would be easier for the pleading to be struck out, if it is defective, Mr Duncan responded that that would be the most efficient way of going forward. Accordingly, by consent, I ordered that the statement of claim that had been filed on 24 April 2009, be struck out. I gave Mr Byrnes leave to file an amended statement of claim no later than 8 May 2009 and said that I would stand the matter over to 22 May 2009 for further directions after the defendants had had a chance to consider the new pleading. Counsel for the Macquarie Companies then announced that the Macquarie Companies would seek an order for costs on an indemnity basis. Mr Duncan indicated that that would be opposed. An amended statement of claim was filed on 15 May 2009. Surprisingly, without any prior intimation, Ms Cynthia Lachat was joined as applicant. Macquarie Bank was no longer shown as a defendant. Rather, Mr Trevor Rowe was named as the third defendant. The claim for interlocutory relief was abandoned entirely. No amended application was filed and no application for leave to remove parties or join parties was made on behalf of Mr Byrnes. On 19 May 2009, Whittens wrote to Freehills, saying that they had considered the material in the affidavit of Mr Jason Betts of Freehills, and that, as a result, it appeared to Whittens that there may be an issue as to whether Mr Byrnes can adequately represent group members in the proceedings. That may be an allusion to the fact that Mr Byrnes clearly had not acquired any units on the basis of any representation in the product disclosure statement, since he had not acquired his units until well after he was aware of any matters about which he now complains. The letter went on to say that, in order to avoid any issues arising from Mr Byrnes being named as the representative party, Ms Lachat had consented to be named. The letter said that, in those circumstances, it was proposed to seek an order that Ms Lachat be substituted as the representative plaintiff. A proposed form of notice of motion to that effect was enclosed. Freehills responded on 20 May 2009, outlining their concern that the application to substitute Ms Lachat was designed to defeat an argument that the proceeding was an abuse of process. The letter sought confirmation as to Mr Byrnes's continuing role in the proceeding and requested information in relation to the preparedness of Mr Byrnes and Ms Lachat to meet orders for costs. Whittens replied on 21 May 2009, saying that Mr Byrnes would have no further role in the proceeding, apart from his role as a class member, being the holder of 3000 units. The letter said that Mr Byrnes would provide no undertaking to pay any costs and that the costs to date was a matter for the Court. The letter confirmed that neither Mr Byrnes, nor Ms Lachat would offer security for the costs of the proceeding. On 22 May 2009, the proceeding was adjourned to 2 June 2009. On that day, submissions were made on behalf of BrisConnections and Mr Rowe in support of an application for summary dismissal. Senior counsel for the Macquarie Companies adopted the submissions made on behalf of BrisConnections and Mr Rowe. Counsel for Mr Byrnes opposed the making of any summary order at that stage and submitted that the appropriate course was to give further leave to re-plead. For the reasons I then gave, I ordered that the proceeding be dismissed summarily. It is against that background that this application has been brought. In addition to evidence in the form of affidavits by Mr Jason Betts, of Freehills, I also have affidavit evidence from Ms Suzanne Ward, a director of Pattison Hardman Pty Ltd, cost consultants, and Mr Timothy Rybak, who is also a legal cost consultant. Ms Ward was retained by Freehills, Mr Rybak by Whittens. Mr Betts' affidavit was read without objection, as were the affidavits of Ms Ward and Mr Rybak. There was no cross-examination of Mr Betts or of either of the cost consultants. Mr Betts explained the possible detrimental consequences to the Macquarie Companies if interlocutory relief had been granted. First, it would have interfered with the repayment to Macquarie Bank of the significant loans that it had made to BrisConnections pursuant to the syndicated facility agreement. The repayments were due to be made in the first instance in early May 2009 from the proceeds of the first call. Second, there was the possibility of breach of contractual obligations owed to Macquarie Bank pursuant to the syndicated facility agreement, to ensure that calls were due and payable on or before the relevant call payment date. Either of those breaches would give rise to an event of default under the syndicated facility agreement and the underwriting agreement with Macquarie Capital. Deferring of the call would prevent Macquarie Capital from exercising the rights provided to it under the underwriting agreement to pursue unit holders in respect of unpaid calls. The Macquarie Companies were of the view that the size and significance of the Airport Link project, and the potential impact of the interlocutory relief that was claimed, required that work necessary to resist the grant of any relief in the proceedings be undertaken on an urgent basis, as thoroughly as was permitted. I referred earlier to an offer made by Macquarie Capital to unit holders to transfer their units. The terms of the offer involved eligible unit holders transferring 100 per cent of their units to Macquarie Capital, in consideration for which their liability to pay the second and third instalments would be cancelled. Eligible unit holders were those on the register as at 14 April 2009 as the holders of 50,000 or fewer units. The deadline for acceptance was 4 May 2009. Ms Ward was provided with a detailed narrative of Freehills' professional fees in the proceeding from 29 April 2009 to 2 June 2009, together with records of disbursements made by the Macquarie Companies in connection with the proceeding during that period. Freehills' total fees amounted to $240,304 including GST, or $218,458 excluding GST. Disbursements totalled $71,755 including GST, or $65,232 excluding GST. The thrust of the case advanced on behalf of the Macquarie Companies is that an order for indemnity costs is justified on four bases, either separately or considered together. First, they say urgent interlocutory relief was foreshadowed and then the possibility of interlocutory relief was abandoned on 27 April 2009, causing unnecessary expense to the Macquarie Companies. Secondly, pleadings were filed that were misconceived, hopeless, pleaded no cause of action against the Macquarie Companies, and were subsequently disowned. Thirdly, pleadings were filed and the proceeding was purportedly reconstituted without reference to or the leave of the Court. Finally, the conduct of Mr Byrnes in relation to the proceeding was unacceptable and an inference should be drawn that the proceeding was brought for an ulterior purpose and was an abuse of process. The approach adopted on behalf of Mr Byrnes was, in a sense, somewhat curious. He adopted the position that it should have been apparent to the lawyers representing the Macquarie Companies that the proceeding as formulated could not succeed without significant amendment. His contention appears to be that, therefore, they should not have been concerned about the case brought against them, notwithstanding the severe detriment that might be occasioned if by chance it succeeded. I should say that counsel who advanced these contentions in relation to costs on behalf of Mr Byrnes did not appear at the earlier hearing in relation to the pleadings. Mr Byrnes' conduct, as I have summarised it, was out of the ordinary. He acknowledged in some of the things that he said that he wished to pay back Macquarie Bank for some unarticulated grievance that he felt in relation to their conduct. He clearly had no possible basis for saying that he suffered some loss or damage by conduct on the part of Macquarie Bank or BrisConnections that was misleading or deceptive in relation to the initial public offering and the product disclosure statement. He was not a unit holder until well after he knew everything that was the subject of the claims made in both the initial statement of claim and the amended statement of claim. Mr Byrnes was never a possible or appropriate class leader, for the purposes of conducting an action in relation to the product disclosure statement. When I summarily dismissed the proceeding on 2 June 2009, I intimated that that would not prejudice the recommencement of a proceeding making some claims in relation to the product disclosure statement. That, however, was a reference to the possibility that there may be a class capable of being constituted, which has a cause of action along the lines hinted at in the pleadings. There is no basis whatsoever, however, for Mr Byrnes having such a claim. Mr Byrnes' claim was always hopeless. The conduct of the proceeding in the initial days was extraordinary. The Court was put to considerable inconvenience in dealing with the matter as one of urgency, because it was said that interlocutory relief was required before the due date for the call on 29 April 2009. Mr Byrnes' announcement, on Monday morning, that he did not wish to proceed with any interlocutory relief whatsoever, involved considerable discourtesy to everybody. Either there was a change of heart somewhere or, alternatively, there never was any intention to seek interlocutory relief. Mr Byrnes has not seen fit to give evidence as to the circumstances in which the proceeding was conducted on his behalf. This proceeding should never have been commenced by Mr Byrnes. The Macquarie Companies have been put to significant inconvenience and very substantial cost. I consider that it is an appropriate case for an order to be made on the indemnity basis. There are no fixed or prescribed bases upon which such an order for indemnity costs is made. The Court will normally require some evidence of unreasonable conduct in the course or conduct of the litigation. I consider that the matters to which I have referred, being the four bases upon which the Macquarie Companies seek indemnity costs, justify such an order. The second question is whether or not it is appropriate in this case to order that costs be assessed on a lump sum by the Court, rather than to afford Mr Byrnes the opportunity of having the costs taxed. The power conferred by Order 62, rule 4(2)(c) is particularly suited to complex litigation, where the costs of taxing a bill might be quite considerable, and the delay and inconvenience involved might also be considerable. That is not necessarily this case, in that, while the issues raised by the pleading were complex and significant, the proceeding was snuffed at an early stage by summary dismissal. Alternatively, the Court might choose to fix a lump sum where the matter is more conveniently dealt with by reason of the relative simplicity of the matter. In a sense, that is this case. While the costs incurred have been quite significant, considerable further costs would be occasioned by the requirement to tax a bill. It has been clear that Mr Byrnes has had solvency difficulties in the past, although the precise state of his financial affairs at the present time is unclear. He chose not to assist the Court in any way in that regard. I consider that an inference is capable of being drawn from the evidence that is before me that Mr Byrnes would probably be unable to meet an order for costs in the order of $200,000, such as is foreshadowed by Freehills invoices. That is a reason why there should be no further costs thrown away in taxing a bill. The approach of Mr Rybak was to challenge some of the approaches taken by Ms Ward. Ultimately, Mr Rybak expressed the opinion that he accepted that some $283,690 in fees and disbursements had been incurred by the Macquarie Companies. His estimate of the proper and necessary fees and disbursements on a party and party or ordinary basis was between $114,751 and $134,751, without GST. His estimate of the proper and necessary solicitors' fees and disbursements on an indemnity basis was between $175,751 and $195,751, without GST. Counsel for Mr Byrnes contended, however, that that was on the basis of assumptions that were not necessarily accepted by Mr Byrnes. I did not entirely follow the submission, I must say. It seemed to be along the lines that there was some disparity between what was necessary in the circumstances of this case and what was actually done by Freehills. However, there was no evidence to support that contention and there was no cross-examination of Mr Betts to elicit the extent to which it might be said that, on taxation, notwithstanding what Mr Rybak said, the costs that would be allowed on an indemnity basis would be less than the estimate given by Mr Rybak. Ms Ward estimated that the costs that would be recoverable on an indemnity basis would be a figure discounted by between 10% and 17% from the amount actually charged by Freehills. However, counsel for the Macquarie Companies indicated that, in the light of Mr Rybak's affidavit, they would press for an order for costs on an indemnity basis in the lump sum of $185,000, which is midway between the two figures estimated by Mr Rybak. I, frankly, do not quite follow the contention advanced on behalf of Mr Byrnes that, in some way, Mr Rybak's assessment should not be accepted as his view as to what is likely to be allowed on taxation on an indemnity basis. The position, of course, may have been different had Mr Betts been tested as to the need to engage in the work that I have briefly described. Mr Betts' evidence described that work in considerably more detail but, as I have said, there was no attempt made to impugn its reasonableness or necessity in all the circumstances. I consider, therefore, that it is appropriate to order that costs be paid in a lump sum. Accordingly, I propose to order Mr Byrnes pay the costs of the Macquarie Companies in the lump sum of $185,000. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | application for indemnity costs on a lump sum basis original pleading struck out proceeding subsequently summarily dismissed whether unreasonable conduct in the course of the litigation on the part of the plaintiff costs |
The causes of action relate to breach of a licensing agreement with respect to patent rights in technology used in telecommunications. Claims for misleading or deceptive conduct are also made. The proceedings were commenced on 4 May 2004. It is unnecessary to canvass the pleadings in detail as they have been reviewed in previous interlocutory judgments. 2 The progress of this litigation has been punctuated by debate about the range of documents to be discovered, which is substantial, the pleadings and the involvement of a litigation funder, IMF (Australia) Limited (IMF). Directions hearings and case management conferences have been held. At this stage the parties are unlikely to be ready for trial before the beginning of 2008 and I have foreshadowed that I will be contemplating fixing trial dates at the next directions hearing. 3 At a case management conference held on 23 February 2007 two matters were stood over for decision. The sufficiency of particulars of the further amended statement of claim provided by the applicants pursuant to an earlier order of the Court. 2. Whether documents discovered by the Ericsson parties to the applicants should be made available to the applicants' litigation funder, IMF, for inspection. 4 For the reasons that follow I do not regard the particulars provided as sufficient to justify the conclusionary terms used in two paragraphs of the further amended statement of claim. Those words will be struck out of those paragraphs which can otherwise remain. The applicants have also failed to justify the general disclosure of discovered documents to their litigation funder. A more narrowly-based application, properly justified, will be entertained if made. The orders made on 31 October 2006, subject to a requirement that the parties propose a timetable for their implementation, were replaced by orders on 23 November 2006 which repeated, but added to them, and fixed dates for compliance. 6 The intellectual property in issue in this case includes patents referred to, in the further amended statement of claim, as the SAR Patents which relate to a method and apparatus for segmentation and reassembly technology in telecommunications. Another group of patents referred to as the QP Patents relate to a queuing protocol for a communications network for queued transmission of information in packets. Since 1988, the Distributed Queue Dual Bus technology has been an integral part of the international telecommunications standard approved by the Institute of Electrical and Electronics Engineers for metropolitan area networks known as IEEE 802.6. The method which is the subject of the SAR patents is a fundamental element of the ATM protocol and is incorporated into the international ATM standard set by the International Telecommunication Union known as ITU specification I.363.5. 9 The particulars were not provided until 15 January 2007. The first part of those particulars relate to the plea in [10]. They substantially repeat the facts set out in [8] and [9] of the further amended statement of claim and offer, as a conclusion based on those facts, the conclusion in [10]. In [3] of these particulars the applicants assert a common feature of the SAR Patents Distributed Queue Dual Bus Technology and the IEEE 802.6 standard. The common feature is that each outlines a segmentation and reassembly method involving the transmission of variable length messages on a network from a source to a destination in fixed length slots which include a header field and a message segment. The method which is the common feature is then described in [4] of the particulars. The presence of the common feature is said, in [5] of the particulars, to mean that "the method which is the subject of the SAR Patents is integral to the Distributed Queue Dual Bus technology, and that, in turn, the Distributed Queue Dual Bus technology is integral to the IEEE 802.6 Standard". In my view the logic of the proposition that one is an integral part of the other because of a common feature is not apparent. The significance of the word "integral" remains unexplained. 10 The particulars provided at [11] expand slightly upon those set out in the further amended statement of claim. They provide no intelligible basis for the description of the method the subject of the SAR Patents as "a fundamental element of the ATM protocol". Again, they identify a common feature of the SAR Patents and the AAL5 Standard, being the segmentation and reassembly method referred to in [1] of the particulars and further described in [2] of the particulars. 11 There is, in any event, an inherent vice in the use of the words "integral" and "fundamental" which lie at the heart of the Ericsson objections. They are evaluative and difficult to justify by the provision of particulars. They are certainly not justified by the particulars which have been provided. No basis has been disclosed for their inclusion in [10] and [11]. In my opinion I should strike out those two words from [10] and [11] on the basis that they are embarrassing. I will not strike out the balance of the paragraphs since the relationships described by the use of the words "part" and "element" are defined and limited by reference to the common features described albeit it is an awkward definition. The words" part" and "element" normally imply a greater whole in which they are incorporated. 12 I will not order further particulars of the paragraphs. They will stand or fall according to the evidence relevant to them which will have to be disclosed and identified in accordance with Order 3(b) of the Orders made on 23 November 2006. I will entertain no further debate about the particulars or this pleading. Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 304 (Lord Diplock). It forms part of English legal procedure because the public interest in securing that justice is done between parties is considered to outweigh the private and public interest in the maintenance of confidentiality. But the process should not be allowed to place upon the litigant any harsher or more oppressive burden than is strictly required for the purpose of securing that justice is done. 15 The majority in Harman 1 AC 280 applied the limitation even to documents which had been received or read in evidence. On the latter point, Lords Scarman and Simon dissented (at 313). The consideration which divided the dissenters from the majority is not material for present purposes and, in any event, has been overtaken by O 15 r 18 of the Federal Court Rules which provides, inter alia, that the implied undertaking ceases to apply to a document after it has been read to or by the Court or referred to in open court in such terms as to disclose its contents unless the Court otherwise orders. "Special" is one of those words which derive almost all their meaning from the context ... If all that is required is that, among the great number of cases in the court in which documents have been discovered, this one must evince some special feature which affords a reason for releasing or modifying the undertaking, there will be no difficulty. Circumstances in which there is a legitimate reason why documents discovered in one proceeding should be made available in another will, viewed in this way, be rare. The matter then becomes one of the proper exercise of the court's discretion, many factors being relevant. It is neither possible nor desirable to propound an exhaustive list of those factors. But plainly they include the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave and, perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding. On that basis they contend, in effect, that disclosure of discovered documents to IMF is consistent with the implied undertaking. There are circumstances in which a party has a legitimate interest in disclosing discovered documents to a non-party. Obvious examples include showing a discovered document to an actual or prospective witness or to an expert non-witness. Of course that is permissible; because in each case the document is being used for the action. There are also cases where a non-party has a legitimate interest in seeing discovered documents. ... The reason permission is not required is that the provision of the documents is not for an ulterior or foreign purpose. Another way of putting it is that the non-party is not a true stranger to the action. [7] The private interests of the opposite parties are not affected if the documents are handed over. It had a sufficient interest to be provided with the discovered documents or at least those it needed to assess the merits of the action. In my opinion the general disclosure of discovered documents and information derived there from to a party's litigation funder raises concerns which are not answered by saying that the litigation funder has an interest in the case. I note that Finkelstein J adverted to a possible limitation that disclosure to the litigation funder might go no further than was needed for it to assess the merits of the case. 20 IMF is not a legal practitioner. It is in the business of financing litigation for reward. A large international corporation involved in many commercial transactions might well be concerned that the general disclosure of its discovered documents to such an entity could give rise to a risk that information derived from them could be placed on a database and at some time in the future used for other purposes or other proceedings. I do not suggest that this is likely to happen in the present case. However, the generic risk associated with the wider disclosure of the discovered documents is something which the party discovering those documents is entitled to take into account and be concerned about. It is entitled to seek specificity as to the documents to be disclosed and the purpose for which they are to be disclosed. This is particularly so given that the litigation funder, as in this case, does not have an interest in the cause of action nor any right to direct or control the conduct of the proceedings. It has certain rights in relation to their settlement which were referred to in my earlier judgment in relation to the application for a stay. Its limited involvement was a basis upon which its support of these proceedings was found not to be an abuse of process. Conversely, the more room to intermeddle, the more likely is it that the litigation is an abuse of process. The second quotation in the above judgment came from that judgment. To the extent that general disclosure of documents to the funder increases the risk of "intermeddling" by the funder it undermines the basis upon which the proceedings were held not to involve an abuse of process. The rationale for the implied undertaking enunciated in Harman [1983] 1 AC 280, which also informs the "special circumstances" threshold, has relevance in this situation even if, which it is not necessary to decide, special circumstances would not be necessary to justify specific disclosures to the funder. 21 The application to disclose documents to IMF was supported by an affidavit sworn by Mr Rollnik, a senior associate employed with the solicitors for the applicants. Mr Rollnik deposed that under its funding agreement with the applicants IMF had paid a sum of money on account of their legal costs and disbursements. He asserted that in consideration of that payment IMF had earned "a legally enforceable interest in the outcome of the litigation". A copy of the funding agreement was attached. 22 There is a tension between that statement and the position taken by the applicants in opposition to the stay application made on the basis that they were in a champertous relationship with IMF. The contractual obligation to pay a percentage of the sum (if any) recovered in the proceedings does not, without more, amount to such an assignment. As to that the contractual obligations cannot, in my opinion, overcome the implied undertaking not to disclose discovered or similar documents and the contract should be so read. Any breach of that undertaking by the applicants would be a contempt to which no contractual obligation would be a defence. He referred to Cadence Asset Management Pty Ltd [2006] FCA 711. In a further letter dated 29 November 2006 he described IMF's purpose in accessing the discovery as being "to look after its interest in the litigation as set out in the Funding Agreement". 25 The Ericsson parties submitted that the Court should not entertain the applicants' application until they had had a reasonable opportunity to consider confidentiality issues with respect to specific documents the subject of the application. The broad brush approach of the applicants was said to place an unreasonable burden on them. Subject to the identification of specific documents the Ericsson parties might accede to the "release" of some or all of the documents identified. 26 I agree with the submission of the Ericsson parties. I am not prepared to accede to the applicants' application in the general terms in which it is made. I do not think a general licence to disclose documents to IMF on the broad basis that it has a legitimate interest in the proceedings is a sufficient basis for such disclosure in light of the considerations to which I have earlier referred. I will therefore refuse the application. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | discovery of documents implied undertaking proposed release of discovered documents by applicant to litigation funder litigation funder not empowered to control or direct proceedings contractual entitlement in relation to settlement of proceedings insufficient specificity of purpose or range of documents to be disclosed to litigation funder application refused pleadings particulars insufficiency of particulars parts of pleading struck out as embarrassing practice and procedure |
Since the proceedings commenced, an amended application under s 476A of the Migration Act 1958 (Cth) has been filed. The application concerns a decision of the Administrative Appeals Tribunal made on 5 April 2006: see SRYYY v Minister for Immigration and Multicultural Affairs [2006] AATA 320. The Tribunal affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs of 4 December 2002 to refuse to grant the applicant a protection visa. The delegate's refusal was on the ground that there were serious reasons for considering the applicant had committed crimes against humanity and war crimes. 2 This decision of the delegate was previously the subject of an unsuccessful application for review to the Tribunal: see SRYYY and Minister for Immigration and Multicultural and Indigenous Affairs [2003] AATA 927. In an appeal to this Court against the Tribunal's decision, Lindgren J found no jurisdictional error and dismissed the application as incompetent: see SRYYY v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1588. An appeal from that judgment was successful and the Full Court remitted the matter to the Tribunal for determination according to law: see SRYYY v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 42 ; (2005) 147 FCR 1. Section 3(1) of the Act provides that the principal object of the Act is to facilitate compliance with Australia's obligations under the Statute of the International Criminal Court done at Rome on 17 July 1998 (the Rome Statute) which is Schedule 1 to that Act. The Rome Statute is an international instrument of the type referred to in Art 1F(a): see SRYYY v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 42 ; (2005) 147 FCR 1 at [66] . Elements of Crimes shall assist the Court in the interpretation and application of articles 6, 7 and 8. They shall be adopted by a two-thirds majority of the members of the Assembly of States Parties. The Elements of Crimes and amendments thereto shall be consistent with this Statute. A person shall not be criminally responsible under this Statute unless the conduct in question constitutes, at the time it takes place, a crime within the jurisdiction of the Court. The definition of a crime shall be strictly construed and shall not be extended by analogy. In case of ambiguity, the definition shall be interpreted in favour of the person being investigated, prosecuted or convicted. This article shall not affect the characterization of any conduct as criminal under international law independently of this Statute. No person shall be criminally responsible under this Statute for conduct prior to the entry into force of the Statute. In the event of a change in the law applicable to a given case prior to a final judgement, the law more favourable to the person being investigated, prosecuted or convicted shall apply. Unless otherwise provided, a person shall be criminally responsible and liable for punishment for a crime within the jurisdiction of the Court only if the material elements are committed with intent and knowledge. For the purposes of this article, "knowledge" means awareness that a circumstance exists or a consequence will occur in the ordinary course of events. "Know" and "knowingly" shall be construed accordingly. For the purposes of this article, orders to commit genocide or crimes against humanity are manifestly unlawful. That is, it had to determine whether it was satisfied that "there are serious reasons for considering" that the applicant had committed a war crime or a crime against humanity. 6 The Tribunal set out the applicant's evidence at length. It was from a number of sources (including departmental interviews and a transcript of oral evidence given at the previous tribunal hearing) and spanned the years 2000 to 2006. The applicant joined the Sri Lankan Army in May 1997 as an ordinary soldier. At that time there was a civil war between the Sri Lankan government and the Liberation Tigers of Tamil Eelam (LTTE). After a year or so on the frontline in Trincomalee and then another year at Elephant Pass the applicant requested a transfer because he disliked witnessing innocent civilians and fellow soldiers being killed and injured. He was posted to Jaffna where he was assigned to a unit responsible for questioning suspects. This sometimes involved threatening and harming detainees. He would also beat them with his fists on their arms and legs (Exhibit A1 para 17). "I had no power to cut or make injuries to a person" (T p144). But some subjects were injured, sometimes seriously (T pp112, 144-146). There was no medical evidence that would enable the tribunal to form a clearer view of the precise nature of the injuries likely to have been inflicted, but plainly they must have been of a type that would have been accompanied by severe pain. The interrogation or assaults could last for an hour, or up to three to six hours each. There would usually be two or three other members of the interrogation group in the room where the applicant was involved in the questioning process, and when the applicant or another member became tired, another would take over (Exhibit R3 pp14-15; Exhibit A1, hearing March 2006). He pushed and shoved them, pulled their ears and slapped them (T p117, Exhibit R3 pp28-29). He would threaten to kill them (T p117, Exhibit R3 pp28-29). The younger children sometimes urinated in fear (T p117). He later said that he had protested to his superior about being required to assault children and that after the first two days of his activities at Jaffna he was involved only in assaulting older adolescents aged 16 to 19, some of whom were keen LTTE supporters (Exhibit R3 pp31, 41). These establish that there needs to be strong evidence of the commission of one of the relevant crimes or acts but that evidence need not be of such weight as to persuade a decision-maker of the guilt of the applicant beyond a reasonable doubt, nor need it be of such weight as to do so on the balance of the probabilities. 9 The Tribunal went on to consider the definition of "crimes against peace, war crimes and crimes against humanity". The Tribunal noted that the Full Court (in the judgment referred to at [2]) held that Art 7 and Art 8 of the Rome Statute provided definitions which were appropriate for the Tribunal to apply. Noting Wilcox J's reliance on the same (in SZCWP v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCAFC 9) , the Tribunal relied on Art 9 of the Rome Statute which provides for the adoption of a document titled "Elements of Crimes" (EoC). The Tribunal noted that Art 9 has been incorporated into domestic law (see s 3 of the International Criminal Court Act 2002 (Cth)). The Tribunal set out the five elements of the crime against humanity of torture under Art 7(1)(f) as defined in the EoC. The perpetrator inflicted severe physical or mental pain or suffering upon one or more persons. Such person or persons were in the custody or under the control of the perpetrator. Such pain or suffering did not arise only from, and was not inherent in or incidental to, lawful sanctions. The conduct was committed as part of a widespread or systematic attack directed against a civilian population. The perpetrator knew that the conduct was part of or intended the conduct to be part of a widespread or systematic attack directed against a civilian population. It noted that beating per se was sufficient to meet the requisite threshold of suffering to amount to torture. It also noted that factors to be considered in assessing the gravity of the harm inflicted included "the premeditation and institutionalization of the ill-treatment" which were factors "obviously present in this case". 11 The applicant had submitted that because he had not desired or intended to inflict severe pain, even though his acts may have had that consequence, he lacked the necessary mental element of intent required by Art 30 of the Rome Statute. Referring to the EoC, the Tribunal found that the crime against humanity of torture did not require a specific purpose and, referring to Art 30(2) of the Rome Statute, that intent would exist where, in relation to conduct, that person meant to engage in the conduct and in relation to a consequence, a person meant to cause that consequence or was aware that it would occur in the ordinary course of events. The Tribunal found the requisite intent existed. 12 The Tribunal noted that the crime of torture can also be committed by aiding and abetting or otherwise assisting in the commission of the crime by persons with a common purpose and noted that the applicant accepted his comrades had seriously injured detainees while he was present. The Tribunal found the first element proved. 13 In relation to element 2, the Tribunal concluded that the treaty language referred to a situation in which the victim was, for practical purposes, at the perpetrator's mercy, in some way physically restricted, confined or otherwise unable to move, take cover, escape or defend themself. As the detainees interrogated by the applicant were, for practical purposes, at the applicant's mercy and he was the one who bound them so as to make them helpless, the requirement of custody or control was satisfied. Possibilities include the applicant, the team of which he was a member, the sergeant, the lieutenant, the camp commandant or perhaps the Sri Lankan army. There is no self-evident legal limit on how far up the chain of command one should go to identify the official having custody or control. Prisoners serving lawful sentences have sometimes been described as being in the custody of the Queen. outline the route whereby the custody and control element came to be included in the EoC and see its purpose as being to establish "some link of power or control between the perpetrator and the victim" (supra, at p12). The term "under the control of the accused" is broader and would include any form of restraint by another, including enslavement ..." (Wilhelm Schabas, An Introduction to the International Criminal Court , 2 nd edn., p163 ). The emphasis on factual control rather than legal power accords with the statute's overall intention and orientation. It contemplates a person who is in some way physically restricted, confined or otherwise unable to move, take cover, escape or defend himself or herself. The provision seems intended to draw a contrast with a situation in which pain or injury is inflicted in the course of a street affray, a firefight or a running battle in the forest. The requirement of custody or control is thus satisfied. The Tribunal found the applicant knew he was assaulting innocent people and that the third element was satisfied. 15 In relation to element 4, the Tribunal found the applicant's conduct was largely directed toward Tamil civilians and non-combatants and plainly formed part of the widespread or systematic attack on that population. It relied on the applicant's own evidence that there was an established procedure he was instructed to follow. The Tribunal also referred to a number of third party reports concerning extrajudicial and arbitrary executions, numerous, frequent and serious human rights violations by middle and lower-rank officers, massacres, and targeting of Tamil civilians by security forces. 16 Article 7(2)(a) provides that "the attack" must involve "the multiple commission of acts against any civilian population, pursuant to or in furtherance of a state or organizational policy to commit such an attack". At the same time, the Sri Lankan security forces, including the army, during the relevant period committed acts of torture against Tamil civilians of such number and routine frequency as to constitute a widespread or systematic attack against the Tamil population, even if there was no formally stated army or defence ministry policy promulgated in that connection. As Article 7(1) stipulates that the attack must be "widespread or systematic", it is clear that if it is widespread it need not also be systematic. The Tribunal found the fourth element satisfied. 17 In relation to element 5, the Tribunal found that there was a considerable amount of evidence to show that the applicant knew that the conduct was part of a widespread or systematic attack, even if he did not intend it to be. He knew the conflict had been going on for 18 years. He had seen many dead bodies of civilians and had seen soldiers shoot innocent civilians which was to "create fear and terror in the Tamil race". He had explained that "questioning" of suspects was an "ongoing setup in any camp" and that there were several stages in the interrogation procedure and that his duties involved the first two steps. He admitted knowing that suspects might be sent away for further interrogation after he had finished with them. 18 The Tribunal noted discrepancies between his earlier and later statements regarding his understanding of his role. The Tribunal found the differences pointed to the conclusion that he had sought to alter his evidence so as to mislead the Tribunal. The Tribunal was satisfied that the applicant was aware that his acts took place in the broader context of a widespread attack against the Tamil civilian population and thus, the fifth element was satisfied. 19 Having found each element satisfied the Tribunal found that the applicant's conduct brought him within Art 1F of the Refugees Convention in that there were serious reasons for considering that he had committed the crime against humanity of torture as defined in Art 7(1)(f) of the Rome Statute. The Tribunal noted that the partial defence of superior orders created by Art 33 did not apply in the case of orders to commit crimes against humanity and was therefore not relevant and noted that the applicant had not sought to bring himself within the duress defence in Art 31(1)(d). The Administrative Appeals Tribunal ("AAT") made jurisdictional error in that it made errors of law in relation to the interpretation and application of the Rome Statute in relation to the issue of whether the applicant was excluded by Article 1F of the Refugees Convention to protection obligations under Article 1A(2) of the Refugees Convention. The AAT made jurisdictional error by failing to have regard to a defence of superior orders which was available to the Applicant prior to the coming into force of the Rome Statute of 1 July 2002 and the acts of the Applicant relied upon secured in 1999 and early 2000. 22 The applicant submitted that he should not be precluded from relying on the defence of superior orders and that the finding that he had committed the crime against humanity of torture was vitiated by jurisdictional error. In the latter respect he sought to impugn certain of the Tribunal's findings relating to elements 1, 2, 4 and 5. He also identified failures by the Tribunal to make findings. 23 The applicant submitted, in relation to ground 1(a), that the Tribunal misdirected itself in determining that the intent required for the commission of the crime against humanity of torture was simply that comprehended by the general description of "intent" in Art 30(2). He submitted that the definition in Art 7(2)(e) requires the intentional infliction of severe pain and suffering and that the definition was incorrectly referred to by the Tribunal as being in Art 7(1)(f). The applicant submitted that the Tribunal had not given consideration to the definition of torture in Art 7(2)(e) and had erred in failing to make a finding about whether the infliction of severe pain or suffering had been intentional. The applicant submitted that, as a matter of fact, he had not wished to injure detainees and only wanted to perform the minimum assault necessary for him to be seen to be doing his duties. 24 The respondent submitted that the Tribunal correctly applied Art 30(2) and that the definitions in Art 7(2)(e) and Art 30 of the Rome Statute were not competing definitions. The Tribunal had not overlooked the mens rea reflected in the definition in Art 7(2)(e). The Tribunal had observed, as noted in footnote 14 to the EoC, that the crime against humanity of torture does not require a specific purpose. The respondent submitted that it was unnecessary for the Tribunal to expressly refer to Art 7(2)(e) as the mens rea of the crime against humanity of torture was addressed comprehensively in the EoC and in Art 30 of the Rome Statute to which the Tribunal had recourse. At any rate, the finding that "the applicant intended to commit the acts of intimidation described" which involved inflicting severe physical pain satisfied the mens rea in Art 7(2)(e). The respondent submitted the general description of intent in Art 30(2) accords with the definition in Art 7(2)(e) and that the latter adds nothing to the former. 25 The applicant submitted that the Tribunal erred in finding that any physical or mental pain inflicted by him was "severe". He submitted that the Tribunal erred in finding that beating per se amounted to torture and that premeditation and institutionalisation of ill-treatment were relevant in determining the gravity of pain or suffering. The respondent submitted that the Tribunal did not purport to determine the issue in either of these ways, even though it may have adverted to them. 26 The applicant submitted that whether particular pain was severe in particular circumstances could not be determined by reference only to the nature of the act in question. He submitted that he had given no evidence that he had caused severe pain and that the Tribunal had not made findings that would warrant conclusions that the pain he had inflicted was often severe or that he had caused adolescents severe mental suffering. The applicant submitted that the Tribunal incorrectly found that pain he inflicted "must often have been severe" based on the finding that he was involved in inflicting pain on substantial numbers of people. He challenged the proposition that telling a child between the ages of 11 and 14 that they would be killed if they did not tell the truth would have inflicted severe mental pain or suffering on them. The respondent submitted that the findings regarding mental suffering in relation to the questioning of adolescents and children were clearly open on the evidence. 27 The respondent submitted that the Tribunal's finding that the pain inflicted was severe was not deduced from the fact that there were a substantial number of detainees. The respondent submitted that the Tribunal considered evidence of slapping, kicking, beating with batons (where lips were sometimes broken), continuous assault for longer periods and threats to kill (causing urination in fear) and, the Tribunal's assessment had included consideration of the nature, duration and intensity, as well as the consequences of such acts. The respondent contended that this assessment bore directly on the gravity of the pain and suffering inflicted by the applicant and that while the Tribunal had considered premeditation and institutionalisation of the ill-treatment as factors to be considered in assessing gravity, these factors did not determine the issue. In any event, the respondent submitted, the Tribunal was not precluded from having regard to this factor. The respondent submitted that threats of harm and death, especially combined with beating from a member of an organisation that has shown premeditation and institutionalisation of ill-treatment of detainees is more likely to increase the severity of the mental harm suffered. 28 The applicant submitted, in relation to ground 1(c) that the Tribunal's finding that element 1 was proved, that is to say that the perpetrator had inflicted severe physical or mental pain or suffering upon one or more persons, was incorrectly based on an irrelevant observation that torture could be committed by aiding, abetting or acting with common purpose where there was no finding that the applicant had aided or abetted other persons to commit the crime. The applicant submitted that SHCB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 229 , to which the Tribunal had referred, was irrelevant to this case. At the hearing the applicant acknowledged that the finding that the first element was proved was not solely referable to the above reasoning. 29 The respondent submitted that the Tribunal was entitled to rely on SHCB at [10] for its statement of principle. The respondent submitted that the Tribunal had found that the applicant was present as a member of the interrogation team while his comrades seriously injured detainees and that the evidence demonstrated that his presence was not inadvertent or extraneous to the purpose of interrogation and that he had a direct and substantial effect on the commission of the act insofar as his presence facilitated the commission of that act. The respondent submitted the observation that torture could "also" be committed by aiding, abetting or assisting those with a common purpose indicated that it was an additional and alternative basis for the Tribunal's ultimate finding (not disputed by the applicant) and that such an alternative finding was open to the Tribunal. The respondent submitted that it was open to the Tribunal to conclude that there were serious reasons for considering that the applicant, by assisting in the commission of crimes by persons with a common purpose, committed those crimes for the purposes of the Rome Statute and ultimately, Art 1F(a) of the Refugee Convention. 30 The applicant submitted in relation to ground 1(d) that he did not have the requisite custody or control of the detainees. He submitted that the requirement that victims must be in the custody or under the control of the perpetrator distinguishes persons who have no say in the decisions regarding the custody or control of the detainee. 31 The respondent noted that there was little authority on what was meant by custody or control in this context. The respondent submitted that the fact that the authority to detain derives from the organisation to which the perpetrator belongs does not detract from the fact of physical restraint of the victim by the perpetrator. The respondent noted the commentary on the Rome Statute addressing the terms "custody" and "control", indicating that custody includes any form of detention or imprisonment and that control is broader in meaning and includes any form of restraint by another. The focus is on factual control rather than legal power and, it was submitted, the question of authority to make decisions as to the detention of detainees is separate from the question of factual power or control. The respondent submitted that to suggest otherwise would exclude most officials or functionaries from individual criminal responsibility for crimes committed under the auspices of the state or organisation to which they belong. 32 The applicant submitted, in relation to ground 2, that because the Rome Statute was not in force at the time the applicant was alleged to have committed the crimes alleged, he ought not to be precluded from reliance on the defence of superior orders. He noted that the Full Court decision in SRYYY questioned whether Art 33 accurately reflected customary international law. The applicant submitted that to the extent that Art 33 excluded the defence of superior orders in relation to crimes against humanity, it ought not to be given retrospective effect. 33 The applicant relied on the Canadian decision of R v Finta [1994] 1 SCR 701 as authority for the proposition that the defence predated the Rome Statute and was available. The applicant submitted that the limited defence of superior orders which existed before the entry into force of the Rome Statute, required the consideration of the nature of the orders, whatever the crime and did not draw a distinction between orders to commit genocide, or crimes against humanity as distinct from other international crimes such as war crimes, as Art 33 of the Rome Statute does. 34 The applicant submitted that, in accordance with Art 22 and Art 24 of the Rome Statute and in order not to give Art 33 a detrimental retrospective effect, any other defence that was available prior to the coming into force of the Rome Statute must be considered. Art 24 would preserve any defence which was available prior to the coming into force of the Rome Statute which was consistent with Art 15 of the International Covenant on Civil and Political Rights which provides that no one will be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time it was committed. 35 Specifically, the applicant submitted that once the Tribunal "determined to make a finding" under Art 7 rather than Art 8, it was obliged to consider whether Art 24 would preserve the defence acknowledged in R v Finta . He submitted that under the 1948 United Nations General Assembly, Art 11, no one was to be "held guilty" of any penal offence on account of any act or omission which did not constitute a penal offence under national or international law at the time it was committed. 36 At the hearing an issue was raised about the effect of the applicant's failure to make a submission in the proceeding before the Tribunal about whether the defence of superior orders existed before the Rome Statute came into force. Specifically, the issue was whether jurisdictional error can be established when a Tribunal fails to address a matter that was not raised before it or, as a matter of discretion, whether the applicant is now precluded from raising it. 37 The applicant submitted that while the point raised in ground 2 was not raised at the hearing before the Tribunal, "the issue of superior orders under the Rome Statute was a live issue". The applicant submitted that Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 54 FLR 334; 35 ALR 186 and Ferriday v Repatriation Commission (1996) 69 FCR 521 were authority for the principle that failure to raise a matter before the Tribunal did not preclude it from being raised on appeal. 38 Referring to NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; (2004) 144 FCR 1, the applicant submitted that although it is not the duty of the decision maker to make out a case for the applicant, the Tribunal is obliged to correctly apply the law to the issues raised by the evidence and consider the claims expressly made, such as the claim in relation to superior orders. The applicant submitted that the failure by the applicant to raise the issue of the defence of superior orders based on the law existing prior to the coming in to force of the convention could have in no way prejudiced the respondent. The applicant also submitted that, as in Kuswardana , the consequences of not correcting the error of the Tribunal would be exceptionally serious to the applicant. 39 The respondent submitted that this was not a matter of retrospective application of criminal laws. Criminal responsibility was not being created pursuant to the Rome Statute. The respondent submitted that non-retroactivity ratione personae (Art 24 of the Rome Statute) is properly a matter that relates to the exercise of jurisdiction of the International Criminal Court. The respondent submitted that the issue was the appropriate source of the definition of the crimes listed in Art 1F(a) of the Refugees Convention and noted that the Full Court had held that the Rome Statute was one of the international instruments from which crimes mentioned in Art 1F(a) could be characterised. 40 The respondent submitted that the availability or otherwise of any conceivable defence was not an "essential statutory precondition" for the application of Art 7 or Art 8 so as to invoke the Kuswardana principle. Further, the Full Court held that what was required under Art 1F(a) included the availability of a defence under the Rome Statute only if it was relied on by the person (at [127]). The respondent submitted that there was no obligation on the Tribunal to consider a defence that was not relied upon by the applicant and that this situation was a fortiori in relation to defences said to exist not under the Rome Statute. The respondent submitted, relying on NABE (No 2) that a determination that the Tribunal has failed to consider a claim not expressly advanced is not to be lightly made. 41 The respondent noted that the Art 33 of the Rome Statute departed from provisions made in previous instruments where "superior orders" were not recognised as a defence, but rather a matter to be pleaded in mitigation of punishment. The respondent submitted that the applicant had not established that prior to the entry into force of the Rome Statute, there existed a defence of superior orders to a charge of crimes against humanity. The respondent submitted that the decision in Finta concerned what may be viewed as a complementary defence of compulsion or duress. The respondent submitted the applicant did not seek to bring himself within the duress defence in Art 31(1)(d). The respondent submitted that even if Finta did stand for the proposition that the defence of superior orders was available, that decision alone would "not go so far as to crystallise customary international law on the point". The respondent submitted that it was not necessary to discern a clear rule of customary international law with regard to the defence of superior orders for the purpose of determining the application of the defence in Art 33 to crimes against humanity, pursuant to Article 1F(a) of the Refugees Convention. 42 The respondent submitted that as the existence of a defence under customary international law had not been raised before the Tribunal, it had been under no obligation to consider it. It was not a matter squarely raised on the material before the Tribunal. The definition refers to the "intentional infliction of severe pain or suffering whether physical or mental". Clearly, Art 30(2)(a), which refers to the intent to engage in conduct, encompasses the conduct of "inflicting" pain or suffering and Art 30(2)(b), which refers to the intent to cause a consequence, picks up the consequences of "severe pain or suffering". It was open to the Tribunal to determine whether the applicant had intended to commit the crime defined in Art 7(2)(e) by reference to the test concerning the mental element articulated in Art 30(2)(a). It did so. Ground 1(a) is not made out. 44 As to ground 1(b), I do not accept the Tribunal failed to make findings that would warrant the conclusions that the pain the applicant had inflicted was often severe or that he had caused adolescents severe mental suffering and thus engaged in acts of torture. The evidence was that of the applicant regarding his conduct and its effect. However, that evidence detailed physical and emotional mistreatment of children and adults: see [7] above. It was not necessary for the Tribunal to make more specific findings on which to base the conclusions it reached. Those conclusions were open on the evidence of the applicant. 45 Having reached the conclusion that the Tribunal's finding in relation to the first element was open on the evidence referred to above, it is unnecessary to consider whether the applicant's mere presence during sessions where detainees were tortured constituted aiding, abetting or acting with a common purpose. 46 I turn to ground 1(d). As noted by the Tribunal and submitted by the parties, there is little authority concerning what is meant by custody or control in the current context. I agree with the Tribunal's observation that the emphasis in the commentary on factual control rather than legal control accords with the statute's overall intention. The interpretation contended for by the applicant would have the result of excluding from direct responsibility anybody who did not have power to make decisions in respect of victims. Potentially, where conduct which would otherwise be characterised as the crime against humanity of torture was carried out by people with no power to make decisions and none of the people with the power to make decisions ever executed the conduct themselves, a Court could never be satisfied that the torture had been proved. Article 25(3)(b) which provides that those who order the commission of a crime which is then committed are also criminally responsible and liable for punishment for that crime, would never be engaged unless the person inflicting the relevant harm also had authority over and power to make decisions with regard to the victim. I do not accept this construction. There was no error in the interpretation of "custody and control" adopted by the Tribunal. 47 The last issue concerns the contention that the Tribunal fell into jurisdictional error by failing to have regard to a defence of superior orders "which was available to the applicant prior to the coming into force of the Rome Statute on 1 July 2002". This ground concerns any defence of superior orders which may have been available as a matter of customary international law at the time the alleged crimes were committed by the applicant notwithstanding that under the Rome Statute, no such defence is, in effect, available in relation to crimes against humanity. There is a threshold question about whether this point can be raised to demonstrate jurisdictional error. 48 The ground articulated in the application appears to contain two or perhaps three elements. The first is the contention that under customary international law a defence of superior orders would have been available to the applicant at the time the alleged crimes were committed. An aspect of the first, or perhaps a second element, is that the defence, if made out, would have meant that the Tribunal could not have been satisfied that there were serious reasons for considering that the applicant had committed a crime against humanity as defined in, relevantly, the Rome Statute. The last element is that the Tribunal failed to address this contention and in so doing fell into jurisdictional error and perhaps, additionally, should have been satisfied that the defence was available and had been made out. 49 The applicant was represented by counsel in the proceedings before the Tribunal. It appears to be common ground in these proceedings that no submission was made to the Tribunal that a defence of superior orders arose under customary international law, or that it was a defence that the applicant could both rely upon and make good or that it was a defence which would defeat any claim that the applicant had committed crimes against humanity as defined by the Rome Statute notwithstanding that the Rome Statute provided no such defence in relation to such crimes. The alleged jurisdictional error is that the Tribunal failed to have regard to the defence. 50 The Tribunal's statutory task was to review the delegate's decision and answer the question posed by s 36(2)(a) which, in turn, required it to address Art 1F. It did so. What is now said is that it did not anticipate and deal with an argument which was not made by counsel representing the applicant. Circumstances can arise where a decision maker is bound to deal with a claim not expressly advanced but only if it clearly emerges from the material: NABE (No 2) . In my opinion, the proposition now advanced about the availability of the defence did not clearly emerge from the material. That conclusion is fortified by the fact that the applicant was represented by counsel and the submission was not made. 51 It is true that the defence of superior orders was obviously going to be a live issue having regard to the earlier litigation in this Court and, in particular, the judgment of the Full Court. But it was an issue arising in the context of the defence as identified in the Rome Statute. It is obvious that the identified defence is available in certain circumstances but not others. It was not available in relation to crimes against humanity having regard to Art 33(2) which has the effect of denying the defence to a person obeying an order to commit a crime against humanity because such an order is deemed to be manifestly unlawful. A precondition to the availability of the defence is that the order was not manifestly unlawful. That precondition cannot be met in relation to a crime against humanity. 52 It is clear from the Tribunal's reasons that counsel for the applicant was aware that the Tribunal might conclude that the applicant had committed crimes against humanity. In those circumstances one could reasonably expect the Tribunal to have believed (as, in fact, it did having regard to [132] of its reasons) that it was not necessary to consider a defence of superior orders if it was satisfied that the there were serious reasons for believing applicant had committed a crime against humanity. It was incumbent upon the applicant, through counsel, to raise the argument now sought to be agitated in this Court. His failure to do so means that the alleged failure of the Tribunal to have regard to a defence of superior orders arising under customary international law cannot give rise to jurisdictional error. It is unnecessary to consider whether the various legal propositions advanced by the applicant as to the availability of the defence, are correct. 53 The application should be dismissed with costs. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | where administrative appeals tribunal found serious reasons for considering that applicant had committed a crime against humanity where applicant raised as ground of jurisdictional error that defence of superior orders available under customary international law ground not raised before tribunal where applicant represented by counsel before tribunal whether applicant entitled to raise ground 'custody or control' migration words & phrases |
By a notice of motion filed on 18 April 2006, the applicants seek summary judgment against the second and fourth respondents (hereafter referred to as "the respondents"). The Court has already granted summary judgment against the first and third respondents. A copy of the settlement agreement was exhibited to Mr Jordan's affidavit. • The settlement agreement provided that the respondents would make undertakings to the Court. On 27 January 2006, the solicitor for the respondents gave these undertakings on behalf of the respondents. By these undertakings, the second respondent undertook to desist from infringing Gaps' registered trademarks and the fourth respondent undertook not to aid or to abet any such infringement. The respondents also undertook to deliver up to the applicants' solicitors within 30 days all products and promotional material bearing the applicants' marks and to verify the delivery up on affidavit at the time of delivery. The respondents have not delivered any material or provided an affidavit regarding delivery up. • The settlement agreement provided that the respondents will pay the first applicant $60,000 settlement monies in six instalments. Clause 5 of the agreement provided that, if any of these instalments were not paid, the applicants might re-list these proceedings and apply for summary judgment on "the claim for pecuniary relief for so much of the settlement amount ... that is outstanding at the date the proceedings are re-listed " . Clause 5 also provides that the applicants might provide a copy of the settlement agreement as "conclusive proof" of the consent of the respondents to such summary judgment against the respondents "on the claim and in respect of so much of the settlement amount as is outstanding". Clause 6 provided that the respondents would consent to the first applicant being awarded costs on an indemnity basis plus penalty interest. • The applicants' solicitors received the first two $10,000 instalments. The respondents paid the second instalment two days late. The third instalment was due on 6 March 2006. The respondents did not pay this amount and, as of 18 April 2006, the applicants had received no further settlement monies from the respondents. $40,000 remains owing under the settlement agreement. • On 9 March 2006, the applicants advised the respondents' solicitor that, unless they received payment of the third instalment, they would seek summary judgment, costs and interest. They also sought delivery up pursuant to the undertakings given to the Court on 27 January 2006. Ms Cashen also stated that her firm had served a copy of the notice of motion and Mr Jordan's affidavit of 18 April 2006 on the respondents by sending them to the respondents' solicitors and had informed the respondents' solicitors that the motion was to be heard on 2 June 2006. 4 The respondents did not appear at the hearing on 2 June 2006. The applicants' solicitors handed up copies of correspondence between them and the respondents' solicitor, Henry Magistrado. Please find hereto our Notice of Solicitor Ceasing to Act, a sealed copy will be served on you in due course. This notice said that Mr Magistrado and his firm have ceased to act as practitioner for the respondents as from 1 June 2006. We confirm your comment that you have received notice of tomorrow's hearing from our office and have passed this information onto Mr Parera. Please confirm that you have complied with Order 45 of the Federal Court Rules . Please also provide us with details of your clients' last known addresses. Accordingly, he remains the respondents' solicitor of record: see O 45 r 8. 7 At the hearing of the motion, the applicants submitted that they were entitled to summary judgment against the second and fourth respondents. They relied principally on the settlement agreement. They referred to s 31A(1)(b) of the Federal Court of Australia Act 1976 (Cth) and to O 20 r 1 of the Rules. However, by virtue of item 44 of Pt 2 of Schedule 1 of the Migration Litigation Reform Act 2005 (Cth), s 31A applies only to proceedings commenced after 1 December 2005. It does not therefore apply in this proceeding, which commenced in February 2005. The authorities made it clear that the jurisdiction to give summary judgment should be exercised with great care and only where the Court was satisfied that the respondent had no arguable defence to the claim made by the applicant: see, e.g., Dey v Victorian Railways Commissioners [1949] HCA 1 ; (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125 at 129-130; Geoffrey Inc v Luik (1997) 38 IPR 555 at 557 (" Luik "); Fancourt v Mercantile Credits Ltd [1983] HCA 25 ; (1983) 154 CLR 87 (" Fancourt ") at 99; and Webster v Lampard [1993] HCA 57 ; (1993) 177 CLR 598. Accordingly, the Court should apply these authorities in the disposition of this motion. 10 By its statement of claim the applicants alleged, amongst other things, that the respondents have contravened s 120 of the Trade Mark Act 1995 (Cth). Under this provision a trade mark will be infringed where a mark which is "substantially identical with, or deceptively similar to" a registered trade mark is used in relation to the same goods as the registered goods. The use complained of must be "use by the alleged infringer as a trade mark" and this requires consideration of the "purpose and nature of the impugned use": see Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd [1961] HCA 75 ; (1963) 109 CLR 407 at 426 per Kitto J as cited in Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 347 per Gummow J. It is clear from pleadings and affidavits previously filed in the proceeding that the respondents' use of the allegedly infringing marks has been for the purposes of trade. 11 Under O 20 r 1 the applicants are required to adduce evidence of such facts as are necessary for their cause of action: see Rourke v Victorian Finance Guarantee and Share Co Ltd (1894) 20 VLR 8 at 11 and Evans Deakin & Co Pty Ltd v Kaiser Engineers and Constructors Inc [1968] Qd R 379 at 382. By their Defence the respondents in fact admitted that the applicants were the owners of Gap's registered marks. There was no issue as to the applicants' or the second respondent's incorporation. Further, the respondents admitted that, at all material times, the fourth respondent was the sole director of the second respondent, acting as its servant or agent, and in effective control of the business of the second respondent. In an affidavit sworn by Mr Jordan on 16 November 2005, he deposed to an arrangement between the first applicant and United Garment (Vietnam) Co Ltd ("UGV"), pursuant to which UGV was authorized to manufacture garments and apply Gap's registered marks only to the garments ordered. Mr Jordan's affidavit contained evidence that UGV had supplied garments bearing Gap's registered marks to the second respondent without the applicants' authority. Further, there was evidence in another affidavit of Mr Jordan sworn on 25 November 2005 that the respondents had imported the garments. Since it is manifestly clear that the respondents have no arguable defence, I accept that the applicants have satisfied the requirement in O 20 r 1 to adduce evidence of the facts necessary for their infringement claim. Ultimately, as the High Court said in Fancourt at 99, whether or not the Court is satisfied that that there is no real question to be tried will depend entirely on the circumstances of the case. 12 In his affidavit of 18 April 2006, Mr Jordan deposed that he believed that the respondents have no defence to the applicants' claim. A further requirement of O 20 r 1 is therefore met. 13 The respondents have not filed any affidavits in opposition or at all in this proceeding. It was common ground at the hearing on 27 January 2006, when the respondents appeared by their solicitor, that they had entered into the settlement agreement (referred to earlier) with the applicants. Their solicitor gave the undertakings (referred to above) on their behalf pursuant to that agreement. By virtue of this agreement, the respondents are estopped from raising their defences to the applicants' infringement claim; alternatively they have waived such rights as they had to rely on those defences: see Commonwealth of Australia v Verwayen [1990] HCA 39 ; (1990) 170 CLR 394 at 407, 410 per Mason CJ, 459 per Dawson J and Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 at 883 per Lord Diplock. Accordingly, it is appropriate that the applicants should have summary judgment. 14 There are, however, some further observations I would make about the applicants' heavy reliance on the settlement deed as justifying the orders they seek. In support of their argument that the deed of settlement alone was sufficient to entitle them to summary judgment, the applicants relied on the decision of Hely J in Reid v Interarch Australia Pty Ltd [2000] FCA 1328 (" Interarch "), a case in which the applicants initially claimed damages for the respondents' allegedly misleading or deceptive advice in connection with the establishment of a business. In that case as in this, the parties compromised the proceedings by entering into a deed of settlement pursuant to which the respondents agreed to pay settlement monies by instalments. As in this case, the deed of settlement in Interarch provided that, if the respondents defaulted in making payments, then they would consent to summary judgment. The respondents failed to pay and the applicant brought a summary judgment application. Hely J considered the question whether the applicants should be required to institute fresh proceedings to enforce the compromise in the settlement agreement. After referring to Phillips v Walsh (1990) 20 NSWLR 206 (" Phillips "), his Honour noted (at [26]-[28]) that, in Interarch , there was only one "short issue of law" advanced on the summary judgment application, that there was no real virtue in fresh proceedings, and that there was "no substantive advantage to be derived from requiring the institution of fresh proceedings". These considerations led his Honour to order summary judgment. Interarch provides some support for the applicants' position in the present case that the deed of settlement alone is enough to entitle them to summary judgment. 15 When Phillips is examined, however, it is apparent that Interarch is of limited assistance. This is because after considering "the authorities which deal with the power of the court to enforce on motion in existing proceedings an agreement compromising those proceedings", McLelland J concluded, in Phillips at 210, that "[t]hese authorities present a confusing picture" and that he did not propose to analyse them since they were not dealt with in argument. 16 Plainly enough, notwithstanding that certain comments in Interarch might suggest otherwise, Phillips is not authority for the proposition that the Court can enforce a deed of settlement in existing proceedings although McLelland J does not rule out this possibility in an appropriate case. 17 The order for summary judgment in the present case flows from my view that the requirements of O 20 r 1 are in fact satisfied and that summary judgment is otherwise appropriate. The applicants have succeeded because of the particular terms of the respondents' Defence and because they have in fact placed sufficient evidence of the facts necessary to make out their cause of action before the Court, as well as because there is, manifestly, no arguable defence. This is so notwithstanding that I would reject the respondents' primary argument that the deed of settlement alone was sufficient to justify an order for summary judgment pursuant to O 20 r 1 of the Rules. 18 The applicants' evidence that the respondents have failed to comply with their undertakings is uncontradicted. The applicants are entitled to the orders they seek with regard to the undertakings. 19 Further, in all the circumstances, including the terms of the deed of settlement, I would make the orders for costs in the terms sought by the applicants. 20 As the applicants requested, I would also make orders dealing with the position of the respondents' solicitor. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | application for summary judgment trade mark infringement claim compromised by deed of settlement no arguable defence practice and procedure |
The product is a liquid cleaning product used as a cleaning agent when washing clothes. The substance of Unilever's comparative advertising claim is that the script on the Radiant micro Max bottle which states that it is "Proven to Outperform Omo Small & Mighty" ("the Radiant Statement") is misleading. "Omo Small & Mighty", which is produced by Unilever, is a product which performs a similar role to Radiant micro Max. Unilever also claims that Cussons engaged in misleading conduct as to the relative prices and values of the two products. In response, Cussons filed a cross-claim alleging that Unilever has engaged in misleading conduct in respect of certain statements and images used on its Omo Small & Mighty bottle and other products. It is prominently situated towards the top of the bottle. Following the Radiant Statement is an asterisk which directs attention to a qualification in very small print at the bottom of the label on the front of the bottle. The qualification reads: "* On most of the common and tough stain types. Based on recommended dosage". This qualification is very difficult to read and unlikely to be looked at with any great care or attention. Indeed, the type-face of the qualification is so small as to be ineffective as a communication, especially when viewed in comparison with the broad and emphatic type-face of the Radiant Statement. 3 Unilever submits that the Radiant Statement connotes, by its use of the word "Proven", that the truth of the allegation has been established on proper and reliable scientific evidence and testing, and it further contends that a key question at trial will be whether the tests carried out by Cussons are sufficient to establish the truth of the Radiant Statement. 4 Unilever says that the claim made in the Radiant Statement is misleading because the tests conducted and relied upon by Cussons were deficient in a number of critical respects and do not in fact establish the accuracy of the Radiant Statement. In order to resolve this dispute, it will be necessary to consider detailed scientific evidence as to whether the tests can be said to support the representation made by Cussons in the Radiant Statement, having regard to a range of variables such as type of stains, water hardness, temperature of water and amount of liquid wash used. Unilever also relies on the presence of the qualification on the bottle to support the inference that Cussons recognises the need to limit the meaning of the Radiant Statement, but it says that the qualification is inadequate to serve this purpose. 5 A number of observations are made by Unilever in relation to the presentation of Radiant micro Max and Omo Small & Mighty. First, it is said that Omo Small & Mighty is sold in a 475mL pack whereas Radiant micro Max is sold in a 500mL pack. The recommended retail price of Omo Small & Mighty is $5.99, whereas Radiant micro Max is sold for $4.99, which makes it the significantly cheaper product. Unilever observes that the recommended dosage for Omo Small & Mighty is one cap (which equals 33mL), whereas the recommended dosage for Radiant micro Max is one and a half caps (which equals 60mL) for a normal load of washing. For every wash, it is therefore said, significantly more Radiant micro Max is required than Omo Small & Mighty. In addition, a bottle of Omo Small & Mighty provides over 14 washes, while Radiant micro Max provides just less than nine at the recommended dosage. Accordingly, the Radiant micro Max is said to be 30% more expensive than Omo Small & Mighty on a "per wash" basis. It is on the basis of these comparisons that Unilever says Cussons had engaged in misleading conduct when representing that its product was "Proven to Outperform Omo Small & Mighty". 6 Unilever contends that Cussons' representations are misleading because the above matters and comparisons are not effectively brought to the notice of the consumer, and there is no practical or realistic means by which those matters can be ascertained by the consumer at the point of sale. It is said that the consumer is misled as a result of Cussons creating an impression that Radiant micro Max is of superior quality and available at a substantially lower price, when in fact the consumer will have to pay more on a "per wash" basis. For these reasons, Unilever says there is a strong prima facie case that Cussons is engaging in misleading and deceptive conduct, and the grant of an interlocutory injunction is appropriate. 7 In response, Cussons contends that the qualification was appropriately prominent because it appears on the front of the label and is connected by an asterisk to the Radiant Statement. However, without admissions, Cussons has offered to adopt as from 15 May 2008 a new form of front label for Radiant micro Max, which will enlarge and elevate the qualification to form part of the Radiant Statement at the top of the bottle's label. This, Cussons says, precludes any future assertion that the qualification is not sufficiently drawn to the customer's attention. Accordingly, Cussons submits, as a consequence of the use of the new label, the positioning of the stock on the shelves of retailers, the speed of movement of the stock, and the fact that the largest retailer in Australia (Woolworths Limited) is not stocking the version of the bottle with the Radiant Statement means that interlocutory relief should not be granted insofar as it is based on the size or prominence of the qualification. 8 For present purposes, I am satisfied that the relocated qualification will, to some extent, lessen the previous impression created when the Radiant Statement was accompanied by an asterisk and fine print which was difficult to read. However, that finding does not dispose of the issues between the parties because there may still be a final claim for damages on an account of profits and there are other aspects of the label which are said to be misleading. 9 The dispute remaining in relation to Unilever's application turns on (i) the correctness of the Radiant Statement in relation to the assertion that Radiant micro Max has been proven to outperform Omo Small & Mighty on most of the common and tough stain types at recommended dosages; and (ii) the comparisons in price to which I referred at [5] above. 10 Considerable evidence has been filed in relation to both these and a range of other issues. That evidence draws heavily on different scientific tests conducted on Radiant micro Max and Omo Small & Mighty. On the basis of this evidence, Cussons says that any prima facie case which Unilever may be able to raise is very weak and is insufficient to support its claims. It is said by Cussons that this weakness of Unilever's case as well as the balance of convenience should be taken into account and interlocutory relief should be refused. Cussons suggests that the most appropriate way of dealing with the matter is to obtain the earliest possible hearing on a final basis. 11 I will not repeat here the detailed evidence of the parties concerning the performance characteristics of the two products over a range of different stains and textiles. It suffices to say that it is not practicable at the present time to form any confident prediction as to the likely outcome or strength of the case brought by Unilever. To properly consider the detailed evidence filed (and any further evidence which may become available), it will be necessary to have the benefit of interlocutory processes, cross-examination and addresses by counsel. At this time, however, I am persuaded that the application brought by Unilever is sufficient to raise a prima facie case, as that term is defined by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill [2006] HCA 46 ; (2006) 227 CLR 57 at 82. The cross-claim relates to two of Unilever's laundry liquid wash products, namely, Omo Small & Mighty and "Surf Small & Mighty". Both of these products are marketed in bottles which display the words "3X Concentrate". Both bottles display these words under the name of the product and use a silhouette to demonstrate that each product is equivalent to older products marketed by Unilever which were 1.4L in size. In addition, in the case of Surf Small & Mighty, alongside the words "3X Concentrate", the words "As many washes as Surf 1.4L" appear. 13 Cussons contends that these words which appear on Omo Small & Mighty and Surf Small & Mighty represent that the liquids in those products are three times as concentrated as the liquids in Unilever's older laundry liquid wash products (which, being 1.4L, were also approximately three times the size). These words, it is said, have the effect of representing that, at recommended doses, the performance qualities of Omo Small & Mighty and Surf Small & Mighty are the same as the older and larger products, whereas tests conducted on the liquids demonstrate that their characteristics do not support this representation. Accordingly, Cussons claims that the representations are misleading. 14 On the present material and submissions, it seems to me that, as a matter of construction, the representations would be taken by a consumer not so much as indicating that the precise performance qualities of the liquids are identical or that the chemical composition or characteristics of the liquids are identical to the liquids in the larger containers, but rather go to the result that the same number of washes can be obtained from the smaller Omo Small & Mighty and Surf Small & Mighty as can be obtained from the liquids in the larger containers if the recommended dosages are used. For instance, Surf Small & Mighty describes its equivalence with the older and larger products not by reference to the inherent composition or concentration of the liquid, but by reference to the number of washes which a bottle will provide. In the case of Omo Small & Mighty, however, the way in which it is said to be equivalent to the older and larger products is less clear, and I think it unlikely that a consumer will closely study the back of the bottle to calculate the number of caps that are contained in the bottle, and the number of washes that it will produce. The emphasis for which Unilever contends relates to the end result of the use of the products, namely, the number of washes produced rather than on the character or concentration of the liquid. This, Unilever says, is what the consumer would really be interested to know. While Unilever's position on this point is arguable, in my view Cussons has raised a prima facie case within the meaning of Australian Broadcasting Corporation 227 CLR at 82. Whether Cussons' argument can be said to be strong or weak is not a matter which can be decided on the material filed to date. In my view, provided that an early date for final hearing is fixed, and even though the parties have established their respective prima facie cases, there is nothing in the balance of convenience which requires that the interlocutory relief sought by either party should be granted. 16 Omo Small & Mighty was launched in Australia in early February 2008 and national advertising commenced on 24 February 2008. It now has 9% of all Australian liquid wash sales. Unilever says that Cussons, having conducted its tests quite some time ago in February 2008, has delayed the bringing of its cross-claim for the tactical purposes of ensuring that its product, Radiant micro Max, had entered the market before any litigation commenced. Unilever says that Cussons' deliberate delay points to disentitling conduct which should be taken into account in assessing the balance of convenience of awarding interlocutory relief. Unilever submits that the grant of interlocutory relief against it will disrupt its marketing of an innovative product, will cause substantial loss as a result of any recall, and will damage their brand in intangible ways which cannot be satisfied by a pecuniary award on a final hearing (such as by damaging relations with suppliers and losing shelf space in retailers' stores). Accordingly, Unilever resists the grant of the interlocutory orders sought by Cussons on its cross-claim. 17 Cussons' position in respect of the balance of convenience is that the Court should not grant the interlocutory relief sought against it by Unilever. The reasons advanced to support this proposition are similar to those advanced by Unilever, except framed from the perspective of Cussons. In particular, Cussons says that interlocutory relief against Cussons would causes significant loss and damage to it, would undermine the extensive campaign of marketing and promotion it has conducted, and would be to some extent unnecessary, given that Radiant micro Max will be sold in Woolworths' stores only under its old (and unobjectionable) label. Cussons also says that the damage it would suffer would be unquantifiable, and it offers to cooperate to ensure that the matter progresses to an early final hearing. 18 I consider that the appropriate course in the present case is to not grant any interlocutory relief in respect of either the claim or the cross-claim and to set the matter down for hearing on a final basis as soon as possible so that the evidence can be thoroughly appraised. While I accept that both Unilever and Cussons could suffer some damage of an intangible and unquantifiable nature if subjected to an adverse order for interlocutory relief, I do not think that the balance of convenience falls sufficiently in favour of one party or the other to warrant the grant of such relief. Having regard to the detailed evidence which has been already filed, it is evident that the matter can be determined at an early stage. In such circumstances, interlocutory relief of the kind sought will likely be of little utility. Accordingly, I dismiss the application and the cross-claim for interlocutory relief. Costs will be costs in the cause. I direct the parties to send to my Associate in chambers Short Minutes of Order to enable the matter to be heard and determined at the earliest possible date. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | interlocutory injunction misleading and deceptive conduct prima facie case balance of convenience. practice and procedure |
The RRT had affirmed a decision of the delegate of the first respondent ('the Minister') not to grant a Protection Visa to the appellant. 2 The appellant was born in 1968 and is a citizen of Bangladesh. On 12 November 2004, she lodged an application for a Protection Visa which was refused by the Minister on 26 November 2004. The application to the RRT was made on 18 December 2004. The appellant gave evidence orally to the RRT on 15 March 2005. 3 The appellant claimed to fear harm from both the Awami League ('AL') and the Bangladesh National Party ('BNP') because of her sister's marriage to a member of the Jatiya Party in 1986. They had even attacked me one evening in the year 1998 when I was going for shopping with my mother. As a result, it [the RRT] did not consider whether she and her family had been targeted by either party. The approach of the RRT involved a failure to consider the Appellant's claim. It was open to the RRT to accept or reject her claim that she had been targeted by the AL. It was open to the RRT to accept or reject her claim that she had been targeted by the BNP. It was further open to the RRT to accept or reject her claim that she had been targeted by both parties. What was not open to the RRT was to refuse to consider her claims because of the irrelevant consideration that the BNP were themselves bitter rivals. This was jurisdictional error. As the Tribunal put to the Applicant at the hearing, the independent country information indicates that the two parties have been bitter rivals for many years and that there is frequent violence between them. The Applicant's response was that the two parties had not cooperated in persecuting her family but had acted individually and at different times. The Tribunal is, nevertheless, unable to accept the proposition that the real or imputed political opinion of the Applicant and her family can have caused both such strongly opposed parties to target them. The RRT, in the passage quoted above, was giving reasons for its lack of satisfaction that any particular political opinion would be imputed to her. The RRT rejected what the appellant said was the cause of the claimed harm. In my view, the RRT in the quoted paragraph was pointing to the improbability that the imputed political opinion of the appellant should cause harm to her and her family from both of the major political parties in Bangladesh, who were so strongly opposed to each other. She claims that because of this connection armed thugs from both the BNP and Awami League regularly visited the family house, made threats that they should leave and demanded money. She claims she and her mother were injured in 1998 when a car driven by an employee of the General Secretary of the Dhaka City Awami League struck their rickshaw. She claims threats were made to throw acid at her, causing her to cease her employment in 1999. She claims the family were illegally evicted from their house by corrupt politicians, judges and officials in September 2004 and her younger brother was beaten when they attempted to mount a legal challenge to the eviction. 13 The RRT did accept that the applicant had suffered harm because she and her family occupied part of a property which was targeted for redevelopment by corrupt political figures, and that ' she and her family have suffered because of this . The Tribunal is satisfied that this would have been sufficient motivation for a campaign of threats and intimidation against the family, including regular visits to the house to extort money, threats of acid throwing, the attack on the Applicant and her mother in a rickshaw in 1998, the beating of the Applicant's brother and the final forced eviction in September 2004. The Tribunal accepts that senior political figures may have directed this campaign but is not satisfied that they were motivated by anything other than a desire for monetary gain in doing so. The Tribunal is not satisfied that there are any grounds for believing she will suffer serious harm in the future in Bangladesh. The RRT is properly to be understood as saying that any harm that she or her family experienced was not as a consequence of the imputation of a particular political opinion. The campaign of threats and intimidation to which the RRT found she and her family were subjected was motivated by a desire for monetary gain alone. 16 On a fair reading of its reasons, the RRT did consider the appellant's claim that both she and her family had been targeted by both the AL and the BNP because her brother-in-law was a member of the Jatiya Party. The RRT rejected that the harm which it found the appellant and her family were caused was because her brother-in-law was a member of the Jatiya Party. It found the campaign of threats and intimidation was motivated by a desire for monetary gain alone. I am satisfied that the Tribunal comprehensively analysed the imputed political opinion claimed and that the Tribunal was satisfied that there was no ... persecution pursuant to a Convention reason. I am not satisfied that the single ground in this claim can be sustained. Consequently, the application should be dismissed. 19 In my judgment, when viewed in context, the claims of the applicant of suffering harm because of imputed political opinion were not rejected by the RRT for the reason that the Awami League and the BNP are strongly opposed parties. The RRT was not satisfied that any particular political opinion would be imputed to her. 20 In my view, the RRT did not make the jurisdictional error alleged, and the Federal Magistrate was right in his conclusion to that effect. 21 The appeal is dismissed with costs. 22 The name of the first respondent should be changed to Minister for Immigration and Citizenship. | jurisdictional error protection visa appeal from decision of federal magistrate dismissing application for judicial review of refugee review tribunal's decision whether tribunal considered irrelevant consideration no error demonstrated migration |
It is a representative action arising from a scheme under which a large number of, mainly elderly, couples were induced to "sell" their homes to the first respondent in return for a guaranteed regular income, assured tenure during their life times and other benefits. Various other parties were involved including financiers and third parties to whom the first respondent mortgaged some of the properties. 2 Following protracted negotiations a confidential settlement was reached between some of the applicants and the first and second respondents. The proceeding continued to be contested as between other parties. It will be necessary, under s 33V of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act ") for the Court to approve the settlement before orders can be made giving effect to it. Pursuant to s 87 of the Trade Practices Act 1974 , each of the contracts, transfers of land, deeds of agreements and leases [described in a schedule to the notice of motion] are void ab initio. 5 Having heard argument on 5 December 2007 I made the orders sought in paras 1 and 2 of the notice of motion. I advised the parties that I would publish my reasons at a later date. These are those reasons. 6 In order to deal with the motion it was necessary for the Court to have regard to certain of the terms of the confidential deed of settlement. Because he was continuing to deal with the contested proceeding it was not appropriate that Middleton J deal with the motion. It was, accordingly, referred to me. 7 The making of the orders sought was supported by the second and third applicants and by the first, second and fifteenth respondents. The fourteenth respondent opposed the making of proposed order 2. There was no dispute as to the Court's jurisdiction or power to make the order. It was accepted that the Court could make the order in its discretion under s 33ZF of the Federal Court Act . The dispute between the fourteenth respondent and the other parties centred on the means which should be adopted to secure the rectification of the Register upon the determination that the various contracts, transfers, deeds and leases covered by order 1 were void ab initio. The fourteenth respondent contended that this should be effected by what was referred to as "ordinary conveyancing procedure" rather than by Court order. 8 The fourteenth respondent is the Victorian Registrar of Titles. It will be convenient to refer to him hereafter as "the Registrar". In his written submissions, counsel for the Registrar contended that Victorian case law which had developed under s 51 of the Trustee Act 1958 (Vic) and s 103 the Transfer of Land Act 1958 (Vic) rendered a vesting order as a step of last resort for parties who had "no other ordinary conveyancing procedure available to them. " Section 51 provided for vesting orders to be made, inter alia, when a trustee, who was under a duty to do so, neglected or refused to convey any property. Section 103 provided for the Supreme Court to direct the Registrar to correct the record in the Register. Reliance was placed on Dotter v Evans [1969] VR 41; Casella v Casella [1969] VR 49 and Re Purkiss [1999] VSC 386 ; [1999] 3 VR 223. In argument counsel agreed that these cases were concerned with the exercise, by the Supreme Court of Victoria, of statutory discretions to direct the Registrar to amend the Register. In these proceedings supplementary orders are being sought to enforce a judgment for specific performance and it should be assumed that the defendant should and will obey the Court's orders on any directions given. At the initial stages these orders should involve simple conveyancing matters only. Although from the evidence before the Court one may believe that the defendants will prove recalcitrant and will not willingly co-operate to carry out the judgment of the Court, nevertheless at this stage of the proceedings, in asking for supplementary directions, it seems to me that the plaintiff should follow the ordinary practice, both in Court proceedings and in conveyancing. All remedies based on such practices should be exhausted before other extraordinary remedies are granted by the Court. Casella v Casella involved the failure by a husband to comply with a Court order to transfer certain land to his wife as part of property arrangements following a divorce. McInerney J refused to make an order under s 103 of the Transfer of Land Act because of a concern that it could lead to the continuance in existence of a duplicate certificate of title which did not reflect the terms of the Register and which might be misused (see at 59-60). 10 Gillard J gave further consideration to the exercise of the Court's discretion to make an order under s 103 of the Transfer of Land Act in Marshall v Williams [1974] VR 592. In that case he made an order under s 103 because the vendor could not be found and the duplicate certificate of title obtained from him. It seemed to me that such a situation was contrary to the intent and policy of the Transfer of Land Act . I think, however, that if one follows the order made by Lush J in Ritzos v Ritzos [1970] VR 150 to ensure the old certificate is cancelled and a new duplicate certificate issued, then some of the difficulties that I had foreseen in Dotter v Evans will be overcome. Her Honour referred to Marshall v Williams and held that, in the circumstances, the order which she made was a "step of last resort'. Her Honour did not hold that an order under s 51 could not be made unless all conveyancing processes had been exhausted. 12 As can be seen the principal reason advanced for the reluctance of the Court to order an amendment to the Register was the concern that duplicate certificates of title should not be in circulation thereby giving rise to the risk that a potential purchaser of a property might be misled as to the identity of the owner/vendor. This consideration does not arise in the present proceeding because it is accepted by all parties that the duplicate certificates of title relating to the relevant properties are held by the Registrar. Despite this counsel for the Registrar sought to support the "last resort" approach by reference to the need for normal practice to be followed. 13 The other parties emphasised the broad discretion conferred on the Court by s 33ZF of the Federal Court Act . The section is couched in broad terms. Moreover, the Court is given power to act on its own motion. The language, which is described in the Explanatory Memorandum, as "wide", doubtless reflects the drafter's perception that the new statutory procedure for representative proceedings was likely to throw up novel problems that would require close supervision by the Court. 15 The other parties submitted that, in the circumstances, it was both appropriate and necessary that the orders sought be made in order to ensure that justice is done. • Although ordinary conveyancing procedure could be adopted in order to restore the parties to their former position such a process would be discordant with the notion of rescission because it would involve the affirmation of the efficacy of the arrangements which were being displaced. • The adoption of ordinary conveyancing procedure would operate unfairly on some of the parties to the deed of settlement because it would mean that they were more likely to be required to pay imposts such as land tax and stamp duty than would be the case if the orders sought were to be made. • Resort to the ordinary conveyancing procedure would also occasion legal costs and delay which would not otherwise be incurred. • There is a risk that, unless the order is made, the settlement agreement may collapse. 17 In exercising my discretion I accept that it is appropriate to have regard to the considerations which underpin the "last resort" approach which has been adopted by the Victorian Supreme Court. However, that approach guides the exercise of different statutory discretions. Even then, it does not fetter the exercise of those discretions in any particular case. Indeed it would be improper for it to do so: see Dix v Crimes Compensation Tribunal [1993] 1 VR 297 at 302. The considerations which informed the excercises of discretion in the cases relied on by the Registrar do not apply in the present circumstances. It is also necessary to bear in mind that different and additional matters arise for consideration when the Court's discretion under s 33ZF is exercised. In particular the power can be exercised to facilitate settlement of class actions which can and do involve complicated issues which impinge on the parties who may be interested in pursuing settlement negotiations. It is relevant in the present proceeding that, if the proposed order is not made, there is a possibility that the settlement agreement will collapse. Moreover I can see no justification in imposing unnecessary costs on the parties who have already suffered greatly both financially and emotionally as a result of being induced to give up title to their homes. The process by which this occurred, in each case, involved a contravention of the Trade Practices Act such as to render the transactions null and void. Unlike the plaintiffs in the Victorian cases the class members are not disadvantaged by reason of the failure of a vendor to deliver up duplicate certificates of title or otherwise failing to facilitate a transfer of title. They are seeking an order which will restore the entry of their names in the Register. 18 The various considerations relied on by the parties who support the making of order 2 strongly justify a departure from the "normal" processes for rectification of the Register. The order should be made. 19 At the hearing I reserved consideration of the costs of the notice of motion until the publication of these reasons. I will now hear the parties as to costs. | notice of motion rectification of register maintained under transfer of land act 1958 (vic) where no dispute between parties that various contracts, transfers, deeds and leases were void ab initio order directing registrar of titles to alter register appropriate procedure to adopt to secure rectification of the register conveyancing |
The bankruptcy to which the application refers arises from a sequestration order made against Mr Tsekouras' estate on 14 June 2000 by an order of Hely J on the application of Mr Tsekouras' former solicitor, Ms Evangelinidis ('the sequestration order'). The application then contains a number of assertions and, in particular, an assertion that ' at the time of the proceedings ' Mr Tsekouras had paid the sum of $247,705.24 and that in November 1999 he paid further monies in an amount of $166,469.54. Mr Tsekouras claims that he has paid all monies owed by him and seeks compensation including ' compensation for the inconvenience of being declared bankrupt '. He says that the monies paid out of his bankrupt estate have, in effect, been paid twice. The respondent, Mr Olsen, is the Assistant Official Receiver of Insolvency and Trustee Service Australia. Mr Olsen points out that all dealings between himself and Mr Tsekouras were in his capacity as an employee and subject to the responsibility of the Official Trustee in Bankruptcy ('the Official Trustee') for the administration of Mr Tsekouras' bankrupt estate between 14 June 2000 and 21 August 2003. He says that he is not liable in respect of any decisions of the Official Trustee regarding the administration of the estate. Mr Olsen was not involved in any way in the proceedings in which the sequestration order was made. Mr Olsen has filed a notice of motion seeking, inter alia , summary judgment or dismissal of the proceedings with costs under s 31A of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act'). Mr Olsen also seeks an order in the notice of motion joining the Official Trustee who, he says, is the appropriate respondent. However, he does not press for any such order at this stage. In the alternative, Mr Olsen seeks an order pursuant to O 21 r 2 of the Federal Court Rules that Mr Tsekouras not institute or continue any proceedings against Mr Olsen or the Official Trustee without leave of the Court. This figure was reduced by 40% to $107,731.20 for contributory negligence. Mr Tsekouras appealed to the New South Wales Court of Appeal ('the Court of Appeal') both on liability and quantum. The Court of Appeal varied the verdict and judgment to correct errors in calculation and to allow for damages for lost tips as a component of future wages. The corrected award was $103,885.20. The finding of 40% contributory negligence was not disturbed and the Court of Appeal made no order as to costs. The claim was dismissed by Cripps ADCJ. Ms Evangelinidis was awarded costs in the amount of $73,251.84. His Honour was not persuaded that Ms Evangelinidis had acted negligently. An appeal to the Court of Appeal was dismissed by Mason P and Handley JA on the grounds that there was no real prospect of success in the foreshadowed appeal and leave to appeal was refused. Mr Tsekouras sought special leave to appeal to the High Court which was refused with costs. The proof of debt was the result of non-payment of the legal costs by Mr Tsekouras to Ms Evangelinidis in respect of the unsuccessful professional negligence proceedings. Mr Olsen says that, so far as it is possible to determine from the application, all of the amounts that Mr Tsekouras claims he has paid were incurred prior to the commencement of the professional negligence proceedings by Mr Tsekouras on 15 February 1999. The list of payments made by the Official Trustee annexed to Mr Tsekouras' application were all made between 7 September 2001 and 21 August 2003, that is, after the sequestration order was made. As far as it is possible to tell, a further list of payments annexed to the application that Mr Tsekouras insists he has paid, totalling $247,705.24, were all incurred prior to the commencement of the professional negligence proceedings. Mr Olsen says that it is not in dispute that Mr Tsekouras made the payments shown in Annexure A to the application totalling $247,705.24 but says that these payments relate to the personal injury proceedings. Mr Olsen says that the payments paid out of the bankrupt estate relate to costs incurred as a result of the professional negligence proceedings and that these costs were not paid by Mr Tsekouras prior to his bankruptcy. There is no dispute that all creditors of Mr Tsekouras' estate were paid in full and that the bankruptcy was annulled on 21 August 2003 pursuant to s 153A of the Bankruptcy Act 1966 (Cth). The saga concerning Mr Tsekouras' claim that all monies owing by him had been paid commenced with a notice of opposition to Ms Evangelinidis' creditor's petition that came before Einfeld J. Justice Einfeld noted that the subject of the debt was legal costs in respect of the unsuccessful action for damages for professional negligence. His Honour observed that an application to a Registrar to set aside the bankruptcy notice had been dismissed and an application for review of that dismissal was also dismissed by Gyles J. Justice Einfeld dismissed the motion before him with costs. Mr Tsekouras' appeals from Gyles J's refusal to set aside the bankruptcy notice and from Einfeld J were heard by the Full Court. Justice Drummond, with whom Whitlam and Nicholson JJ agreed, expressed the opinion that Gyles J had been correct in not attempting to go behind the judgment in respect of which the bankruptcy notice was issued and dismissed that appeal with costs. Justice Drummond agreed with Einfeld J's comments about the impossibility of understanding the relief sought in the notice of motion and, after hearing Mr Tsekouras, observed that it was apparent that the appeal against the dismissal of that motion had no prospects of success. Accordingly, leave to appeal from the decision of Einfeld J was refused with costs. The creditor's petition came before Hely J on 14 June 2000. His Honour dealt with the same claim by Mr Tsekouras: that he had paid all of the monies owed by him, relying upon the payment of $244,895.52 that had been paid in respect of the personal injuries proceedings, together with some payments made to his own lawyers in the professional negligence proceedings. The payments did not include any payments for costs awarded against him in the professional negligence proceedings. Mr Tsekouras' ground of opposition before Hely J was that he had a claim of $166,469.54 against Ms Evangelinidis, which he said exceeded the amount of her claim by a sum of about $93,217.00. It can be seen that this sum represents the difference between the $166,469.54 said to be owed by Ms Evangelinidis and the $73,251.84 claimed by her. Mr Tsekouras' evidence was that: ' The respondent (ie Ms Evangelinidis) claims that she has paid all of the following amounts, but this is not true. I, the applicant, have paid all of the following amounts totalling $244,895.52 '. It would appear from the judgment of Hely J that the $166,469.54 said to be owed by Ms Evangelinidis represented a portion of the $244,895.52 claimed to have been paid by Mr Tsekouras. Justice Hely considered in detail the sums involved and the payments that related to them together with Mr Tsekouras' claims of payment and of a liability in Ms Evangelinidis to Mr Tsekouras in relation to any of those sums. His Honour concluded at [15] that there was ' simply nothing which establishes any liability in Ms Evangelinidis to Mr Tsekouras in relation to these sums '. Having considered Mr Tsekouras' assertions and claims in respect of payments, his Honour was satisfied that Ms Evangelinidis was entitled to a sequestration order. Mr Tsekouras appealed that decision to the Full Court. Justice Goldberg, with whom Gray and Merkel JJ agreed, expressed himself satisfied (at [16]) that ' after carefully considering [Mr Tsekouras'] evidence and submissions it was plainly open for the primary judge to find that there was no sufficient cause why a sequestration order should not be made '. The appeal was dismissed and costs awarded to Ms Evangelinidis out of Mr Tsekouras' estate. Special leave to appeal from that decision was refused by the High Court on 6 April 2001. Mr Tsekouras then commenced a series of proceedings in the Supreme Court to which I shall return. It is clear that Mr Tsekouras cannot re-litigate the making of the sequestration order. Nor can he re-litigate his assertion that he had paid the monies that gave rise to the making of that order. The evidence establishes that the payments made by the Official Trustee upon lodgement of proofs of debt which totalled $163,521.00 were monies owed as a result of the professional negligence proceedings and were not monies in respect of Mr Tsekouras' personal injuries proceedings. It was the latter class of monies that Mr Tsekouras had paid, not the former, other than payments made by him to solicitors acting on his behalf in the professional negligence proceedings. This is clear beyond doubt and was carefully considered and explained by Hely J. The claim in (1) cannot be sustained, certainly not against Mr Olsen who had nothing to do with the making of the sequestration order. Further, if this is to be treated as an annulment claim, it is not available. The bankruptcy has already been annulled by operation of law and, in any event, there is no reason to doubt the correctness of Hely J's decision on the hearing of the creditor's petition, which has already been the subject of appellate review. It is clear that the payments made out of Mr Tsekouras' bankrupt estate as referred to in (2) were in respect of liabilities incurred as a result of the professional negligence proceedings and were not paid by Mr Tsekouras prior to his bankruptcy. It follows that there is no basis for (3) and (4). I am satisfied that Mr Tsekouras has no reasonable prospects of successfully prosecuting any part of his proceeding. The subject matter of this proceeding has been considered by numerous other courts. Accordingly, Mr Olsen is entitled to summary judgment pursuant to s 31A of the Federal Court Act. Further, I am satisfied that Mr Tsekouras' case is hopeless and bound to fail and Mr Olsen would have been entitled to summary judgment under the test under General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125. (b) The power to restrict that right of access exists to protect the Court's own processes against unwarranted usurpation of judicial time and resources and to avoid the loss and disruption caused to those who face actions which lack substance. (c) The terms of O 21 r 1 identify the jurisdictional criteria which must be established before the power to make any order will arise. (d) The expression "habitually and persistently" implies more than "frequently". "Habitually" suggests that the institution of proceedings is undertaken automatically and without due consideration to the merits of the proceedings. "Persistently" suggests determination and continuation in the face of difficulty or opposition, with a degree of stubbornness. (e) The test of whether a vexatious proceeding has been commenced "without any reasonable cause" is an objective one. The relevant inquiry is whether the legal proceedings in fact can be shown to have had no reasonable basis regardless of the subjective motive or point of view of Mr Tsekouras. Similar principles were stated by Roden J in Attorney-General v Wentworth (1988) 14 NSWLR 481 which considered the equivalent provision of the Supreme Court Act 1970 (NSW) ('the Supreme Court Act '). Mr Olsen has provided a useful chronology of proceedings in which Mr Tsekouras was involved, which is Annexure A to these reasons. After his lack of success in those proceedings, Mr Tsekouras turned to the Supreme Court. In a judgment of 27 July 2001, Master Harrison dealt with a statement of claim by Mr Tsekouras against Ms Evangelinidis in which he claimed that he had paid the amount of $247,705.24 and also claimed a sum of $750,000.00. On an application for dismissal of the proceedings, Master Harrison concluded at [15] that Mr Tsekouras had already litigated the issue as to how much he owed Ms Evangelinidis. She found the pleadings in the statement of claim ' hopeless ' and concluded that the proceedings were ' doomed to failure ' and could not be cured by amendment. Master Harrison declined to make an order preventing Mr Tsekouras from filing any further statement of claim in the proceedings as she formed the view that there was no utility in making that order when she was dismissing the proceedings. Mr Tsekouras then commenced a process of appeal. Justice Sperling found that the grounds of appeal were unsustainable and dismissed the appeal. In the absence of a cross-appeal or other process before the Court to provide a vehicle for an order that Mr Tsekouras not be permitted to file any further process in relation to his claim without prior leave of the Court, his Honour declined to entertain the application. Mr Tsekouras sought leave to appeal to the Court of Appeal. This application was dismissed with costs. Mr Tsekouras then sought special leave to appeal to the High Court. The application was dismissed by the High Court. The matter came before Palmer J. As Palmer J noted at [19], Mr Tsekouras' reaction to the refusal of special leave which disposed of the Common Law proceedings was to commence proceedings in the Equity Division in respect of exactly the same amounts for costs and for general damages. That is, his Honour found that it was abundantly clear that the claims which Mr Tsekouras sought to raise in the Equity Division proceedings were exactly the same as those brought in the Common Law proceedings, which had been found by Master Harrison to be the same as in the Federal Court proceedings. Justice Palmer concluded that the proceedings before him were vexatious and an abuse of process and must be dismissed under Pt 13 r 5(1) of the Supreme Court Rules . His Honour then considered whether an order should be made preventing Mr Tsekouras from commencing any further proceedings against Ms Evangelinidis without prior leave of a judge of the Supreme Court. Justice Palmer observed at [25] that it was evident from Mr Tsekouras' persistence in litigation that he would not be deterred by adverse judgments and costs orders from commencing and prosecuting litigation against Ms Evangelinidis for as long as his desires remained unsatisfied. His Honour was satisfied that unless an order was made pursuant to s 84(2) of the Supreme Court Act , Mr Tsekouras would continue to institute and prosecute litigation against Ms Evangelinidis. Accordingly, his Honour made an order that Mr Tsekouras cannot, without leave of the Supreme Court, institute any legal proceedings against Ms Evangelinidis in any court. This time Mr Olsen was the respondent. Mr Tsekouras claimed that Mr Olsen should not have allowed him to be declared bankrupt and that Ms Evangelinidis had been paid twice for her services. Mr Tsekouras sought the return of monies which he said had been paid out for a second time, as well as damages, interest and costs. Mr Tsekouras subsequently filed a notice of motion in the proceedings making similar claims. Master Harrison found that Mr Tsekouras' claim arose directly from the administration of the bankruptcy, that the Federal Court had jurisdiction and that the proceedings were incompetent. She continued to observe that, even if she were wrong on that point, it would seem that the matters were the same as those examined by Hely J. She dismissed the proceedings. That decision was appealed and Adams J found no error in Master Harrison's reasons. He refused Mr Tsekouras' appeal. Once more in the Court of Appeal, Mason P and Giles JA agreed with Master Harrison's conclusion that the claim was hopeless and should be dismissed. Special leave was refused by the High Court. The subject matter of the various proceedings, as set out in the judgment of Bryson AJ, was Mr Tsekouras' assertion that he had paid monies in the amount of $244,895.52 and a claim that he be reimbursed the amounts he had paid out directly. Again, Mr Tsekouras also sought damages in an amount of $750,000.00. Mr Olsen subsequently sued Mr Tsekouras for remedies under s 84(2) of the Supreme Court Act . Acting Justice Bryson acknowledged that to prevent a person from instituting legal proceedings was an extreme remedy and a serious thing. However, his Honour observed that, where the circumstances provided for in s 84(2) of the Supreme Court Act exist, a claim to be free of further proceedings which are ' habitual, persistent and vexatious ' is a very strong one --- stronger than a claim to institute vexatious proceedings ' habitually and persistently '. At [12], his Honour observed that Mr Tsekouras was dissatisfied with the way his bankruptcy was administered, that he sought recognition that he had paid some monies which were treated as debts in the bankruptcy and that he sought reimbursement of those amounts. It is clear from Bryson AJ's judgment that the subject matter with which he was concerned was identical with the subject matter of these proceedings. His Honour concluded at [13] that the claims were an attempt to raise, in substance, much the same claims against Mr Olsen as in the earlier proceedings in the Supreme Court. His Honour concluded at [43] that the ' vexatious character of the proceedings instituted by Mr Tsekouras is in my finding altogether clear '. His Honour then referred to the previous proceedings in the Supreme Court. After dismissing the summons summarily, Bryson AJ returned at [47] to the application of s 84(2) of the Supreme Court Act , commenting that the discretion in that section should be exercised with care having regard to the importance of the right to approach the Court and obtain adjudication. His Honour said that in Mr Tsekouras' case, ' he has used that right repeatedly though never appropriately '. Observing that the opportunity to approach the Court was not an opportunity of any value in the circumstances of the history of Mr Tsekouras' litigation, his Honour noted the effect of the continuing cost of the litigation and the obligation to defend such litigation on the part of Mr Olsen. His Honour concluded that he would put a stop to the requirement that Mr Olsen engage in ' futile proceedings ' by making the order sought under s 84(2) and did so. The Court of Appeal refused leave to appeal and Mr Tsekouras' application for special leave to appeal that decision was dismissed. Justices Gummow and Kiefel observed that the application to the High Court was entirely devoted to complaints about the administration of Mr Tsekouras' bankruptcy and did not address the judgment in the Court below. Mr Tsekouras then filed another summons in the Supreme Court seeking '[r] estitution for monies charged twice, i.e. costs paid direct in an amount of $166,469.54 '. Again he asserted that he had actually paid a sum of $244,895.52 and claimed $750,000 compensation. Annexed to that summons were Annexures A and B, the same or similar documents as are annexed to the application in this case. Mr Olsen again filed a notice of motion seeking dismissal of the proceeding pursuant to r 13.4 of the Uniform Civil Procedure Rules . Associate Justice McLaughlin noted that the complaints from Mr Tsekouras were in respect of his bankruptcy and that the subject matter had been heard not only at first instance but also by the Court of Appeal and, on two occasions, by the High Court. His Honour observed that the summons before him was filed less than two months after the High Court had dismissed Mr Tsekouras' application for special leave to appeal from the decision of the Court of Appeal, refusing leave to Mr Tsekouras to appeal from the decision of Bryson AJ. His Honour observed that Mr Tsekouras could not challenge further the orders that had been made by the Court of Appeal and by the High Court respectively in refusing leave to appeal to the Court of Appeal from the decision of Bryson AJ and special leave to appeal to the High Court from the decision of the Court of Appeal. His Honour also observed that no leave had been sought to bring the proceedings. Accordingly, they constituted an abuse of process of the Court and were vexatious. The proceedings were dismissed. Mr Tsekouras attempted to file a summons seeking leave to appeal against that judgment. Apparently the summons was accepted for filing. That summons was later dismissed as incompetent by Registrar Schell. At the hearing Mr Tsekouras, who appeared in person, made it quite clear that what he wished to say about these proceedings was that he did not owe any money to Ms Evangelinidis or anyone else to whom payments had been made out of his bankrupt estate and that he had paid out amounts of $247,705.24 and $166,469.54. These are the very matters that have been litigated repeatedly. I do not doubt that this is a clear case for the application of O 21 r 1 of the Federal Court Rules . I adopt, with respect, what was said by Bryson AJ as to the history of this matter and the balancing of Mr Tsekouras' right to bring proceedings with the effect on Mr Olsen and his right not to be continually harassed by the requirement to defend a never-ending series of futile applications. Importantly, the subject matter of these proceedings has been heard and determined on more than one occasion and Mr Tsekouras has availed himself of the avenue of appeal in respect of those decisions. As Mr Olsen submits, the Official Trustee and the public have been prejudiced by Mr Tsekouras' litigious history. From that history I conclude that it is inevitable that it will continue. Mr Olsen propounds two alternative orders. One is an order that Mr Tsekouras not be permitted to continue or institute any proceeding without leave of the Court. The other is that he be precluded from bringing any proceedings against Mr Olsen and/or the Official Trustee without leave of the Court. As Mr Tsekouras has a history of commencing proceedings against different parties concerning the same subject matter, I am inclined not to make the more limited order. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. Date Event Reference 1987 Personal injury litigation Tsekouras awarded damages by Badgery-Parker J in the District Court. Hely J in [2000] FCA 861 at [1] 14 July 1994 Court of Appeal slightly increased judgment sum in favour of Tsekouras. Hely J in [2000] FCA 861 at [1] Tsekouras v GIO [1994] NSWCA 323 Proceedings by Tsekouras against Evangelinidis 15 February 1999 District Court Negligence proceedings by Tsekouras against his former solicitor, Ms Vivieca Evangelinidis heard by Cripps J and dismissed with costs. Hely J in [2000] FCA 861 at [2] 11 October 1999 NSW Court of Appeal refused leave to appeal from judgment of Cripps DCJ, dismissing appeal as incompetent (Mason P & Handley J). [1999] NSWCA 382 14 October 1999 District Court Judgment entered in favour of Evangelinidis against Tsekouras for $73,251.84 for costs of proceedings before Cripps J. Hely J in [2000] FCA 861 at [3] 1 November 1999 Bankruptcy Notice served on Tsekouras by Ms Evangelinidis. Hely J in [2000] FCA 861 at [3] 7 December 1999 Act of Bankruptcy when Registrar refused application to set aside Bankruptcy Notice. Hely J in [2000] FCA 861 at [3] 8 February 2000 Gyles J confirmed refusal to set aside Bankruptcy Notice. Hely J in [2000] FCA 861 at [3] 10 February 2000 Creditor's Petition filed by Evangelinidis against Tsekouras (proceedings N7106 of 2000) Hely J in [2000] FCA 861 at [3] 17 March 2000 Special leave to appeal to High Court against decision of NSW Court of Appeal (11 October 1999) refused. S192/1999 transcript of proceedings 2 May 2000 Motion filed in bankruptcy proceedings (N7106 of 2000) by Tsekouras against Evangelinidis seeking: " 1. Evangelinidis solicitor dismissed all the costs The applicant wishes to renew the application for costs. " Motion dismissed by Einfeld J. [2000] FCA 587 30 May 2000 Appeal from decision of Gyles J (8 February 2000) dismissed by full Federal Court of Australia (Drummond, Whitlam and Nicholson JJ). [2000] FCA 734 14 June 2000 Sequestration Order made against Tsekouras by Hely J. Hely J in [2000] FCA 861 15 August 2000 Appeal (proceedings 651 of 2000) to Full Federal Court by Tsekouras against sequestration order (14 June 2000) of Hely J dismissed (Gray, Merkel and Goldberg JJ). [2000] FCA 1153 at [18] 7 November 2000 Application for expedition of special leave application in respect of appeal from Full Federal Court (15 August 2000) granted by Gummow J. S187/2000 transcript 7/11/00 6 April 2001 Application for special leave to appeal from Full Federal Court (15 August 2000) dismissed with costs (Gleeson CJ, Kirby J). S187/2000 transcript 6/4/01 22 May 2001 Tsekouras commenced proceedings against Evangelinidis in Common Law Division of NSW Supreme Court claiming that " The applicant has paid the costs to the amount of $247,705.24 plus interest . " [2003] NSWSC 139 at [12] 27 July 2001 Summary Judgment of Master Harrison dismissing Supreme Court of NSW Common Law proceedings as "doomed to failure". [2001] NSWSC 638 10 August 2001 Notice of Appeal lodged in Supreme Court of NSW Common Law Division against decision of Master Harrison. [2001] NSWSC 755 31 August 2001 Sperling J dismissed the appeal against judgment of Master Harrison with costs on indemnity basis as "the appeal was utterly with merit, there being no reasonably arguable support for any of the grounds of appeal. " [2001] NSWSC 755 7 December 2001 Tsekouras sought leave to appeal to Court of Appeal. Dismissed with costs. [2003] NSWSC 139 at [16] 17 May 2002 Plaintiff filed an amended Application for Special Leave to Appeal to the High Court. [2003] NSWSC 139 at [17] 19 April 2002 Application for special leave to appeal from decision of NSW Court of Appeal judgment (7 December 2001) adjourned. S291/2001 transcript 19/4/02 13 December 2002 Application for special leave to appeal to the High Court heard. Leave refused with costs. [2003] NSWSC 139 at [17] + [18]; S291/2001 transcript 13/12/02 9 January 2003 Proceedings commenced by Tsekouras against Evangelinidis in the Supreme Court of NSW (Equity Division) claiming: "1. That Vivieca Evangelinidis pay me costs to the amount of $247,705.24 plus interest; and Therefore I claim $750,000 in damages, interests [sic] and costs, and the superannuation income lost. " [2003] NSWSC 139 at [1] 5 March 2003 NSW Supreme Court Equity Division proceedings against Evangelinidis dismissed. Orders made pursuant to s84(2) Supreme Court Act that Tsekouras not, without leave of the Court institute proceedings against the Defendant (Ms Evangelinidis) in any Court. The Court (Palmer J) noted (at [251]): "The Plaintiff has made it clear in the course of his responses to the Court today that he intends to persist with the claim against the Defendant. He seems to take the attitude that he will not be satisfied unless he vindicates that claim and until the Defendant is compelled to appear personally in Court to answer his allegation...the Plaintiff will not be deterred by adverse judgments and costs orders from commencing and prosecuting litigation against the Defendant for as long as his desires remain unsatisfied. " [2003] NSWSC 139 at [20] to[29] Proceedings by Tsekouras against Olsen 21 August 2003 Bankruptcy of Tsekouras annulled pursuant to s153A following payment in full of all provable debts. Judgment of Master Harrison 14/03/05 at [7] 6 December 2004 Proceedings commenced by Tsekouras against Olsen in Common Law Division of Supreme Court of NSW 20436 of 2004. Statement of Claim included: "The Plaintiff claims that Peter Olsen... tried to have his home sold to pay monies to solicitors Sally Nash and Vivieca Evangelinidis to cover expenses when he had already paid the solicitors ... (see Appeal Book No. 651 of 2000 page 79 etc). The Plaintiff claims: Peter Olsen never accepted the Plaintiff's assets and should not have allowed him to be declared bankrupt. He should have recognised that the solicitors Sally Nash and Vivieca Evangelinidis have been paid twice for their services. The Plaintiff seeks monies returned that have been paid out in error by the Defendant to the Solicitors for a second time, plus damages and interest under section 94 as well as costs. " [2007] NSWSC 556 per Bryson AJ at [13] 25 January 2005 Notice of Motion filed by Tsekouras in NSW Supreme Court Common Law Division proceedings against Olsen: "1. Seeking all past, present and future costs for lost superannuation, damages and interest on claim. The Plaintiff seeks monies returned that have been paid out in error by the Defendant to the Solicitors for a second time, plus damages and interest. The same claims as the Notice of Motion dated 25 January 2005 The Plaintiff wishes the Court to recognise that Vivieca Evangelinidis and Sally Nash both knew each other very well and signed legal documents together (see documents attached N-7106/2000). 2 [2007] NSWSC 556 per Bryson AJ at [20] 14 March 2005 Judgment of Master Harrison in NSW Supreme Court Common Law Division proceedings 20436 of 2004 commenced by Tsekouras against Olsen dismissed as "hopeless" and noting that "these matters, of which Mr Tsekouras complains, have been examined by Hely J in the Federal Court on 14 June 2000". Judgment of Master Harrison 14/03/05 at [12] 18 April 2005 Adams J in NSW Supreme Court dismisses appeal by Tsekouras against judgment of Master Harrison in Common Law Division. Judgment of Adams J 18/04/05 at [4] 29 April 2005 Application filed by Tsekouras in NSW Court of Appeal from the decision of Adams J. [2007] NSWSC 556 per Bryson AJ at [26] 30 May 2005 Summons for leave to appeal filed by Tsekouras in NSW Court of Appeal proceedings seeking leave to appeal from decision of Adams J. [2007] NSWSC 556 per Bryson AJ at [26] 12 October 2005 NSW Court of Appeal (Mason P & Giles JA) dismisses appeal by Tsekouras against the judgment of Adams J and orders costs on an indemnity basis because the application was "quite hopeless" . Judgment of Mason P and Giles JA 12/10/05 at [4] 11 April 2006 Application for special leave to appeal to High Court by Tsekouras against the decision of Mason P & Giles JA. Application dismissed (Hayne & Crennan JJ). [2006] HCATrans 174 15 May 2006 Statement of Claim filed in NSW Supreme Court Equity Division by Tsekouras against Olsen, proceedings no. 2741 of 2006, seeking orders, inter alia, monies said to have already been paid totalling $244,895.22 together with $750,000.00 plus superannuation, interest, damages and out of pocket expenses. [2007] NSWSC 556 per Bryson AJ at [32] 26 June 2006 Tsekouras files application for default judgment in NSW Supreme Court Equity Division proceedings. [2007] NSWSC 556 at [34] 28 June 2006 Olsen files application for dismissal of NSW Supreme Court Equity Division proceedings. [2007] NSWSC 556 at [35] 28 July 2006 Orders made striking out Statement of Claim filed in NSW Supreme Court Equity Division and leave granted to Tsekouras to file a motion "seeking to file an Amended Statement of Claim" returnable on 25 August 2006 (Brereton J). [2007] NSWSC 556 per Bryson AJ at [37] 17 August 2006 NSW Supreme Court Equity Division motion by Tsekouras seeking orders in respect of amounts of $244,895.52, plus $750,000.00 as per proceedings 11541 of 2001. [2007] NSWSC 556 per Bryson AJ at [38] 25 August 2006 Motion dismissed by Registrar Walton. Transcript of proceedings by Registrar Walton 25/08/06 14 September 2006 NSW Supreme Court Equity Division motion by Tsekouras seeking same orders sought in 17 August 2006 Motion. [2007] NSWSC 556 per Bryson AJ at [40] 24 October 2006 NSW Supreme Court Equity Division motion dismissed by Registrar Walton. Transcript of proceedings by Registrar Walton 24/10/06 3 November 2006 Summons filed in NSW Supreme Court Equity Division by Tsekouras against Olsen seeking orders, inter alia, for the reimbursement of monies said to have already been paid totalling $244,895.22 together with $750,000.00 plus superannuation, interest, damages and out of pocket expenses. [2007] NSWSC 556 [1] 11 December 2006 Summons filed in NSW Supreme Court Equity Division by Olsen, proceedings no. 6274 of 2006, against Tsekouras seeking an order to have Tsekouras declared a vexatious litigant. [2007] NSWSC 556 per Bryson AJ at [3] 17 January 2007 Motion filed in NSW Supreme Court Equity Division Proceedings 5641 of 2006 by Olsen seeking orders that the proceedings be dismissed. [2007] NSWSC 556 per Bryson AJ at [2] 5 June 2007 Judgment handed down in NSW Supreme Court Equity Division by Bryson J declaring Tsekouras to be a vexatious litigant in proceedings no. 6274 of 2006 and dismissing proceedings no. 5641 of 2006 filed by Tsekouras. [2007] NSWSC 556 per Bryson AJ at [43] 8 November 2007 Tsekouras' application to appeal against Bryson J's decision was dismissed by the NSW Supreme Court of Appeal with costs. Ex tempore judgment by Beazley JA and Ipp JA [7] 08/11/07 15 May 2008 Application for special leave to appeal to the High Court by Tsekouras was dismissed. [2008] HCASL 234 10 July 2008 Tsekouras files Summons in NSW Supreme Court Equity Division proceedings no. 3717 of 2008 claiming the amounts of $750,000.00 and $244,895.52. 15 August 2008 Supreme Court of NSW dismisses proceedings no. 3717 of 2008. 3717 of 2008 transcript of proceedings --- McLaughlin J --- 15/9/08 23 September 2008 Tsekouras files Summons in NSW Supreme Court, Court of Appeal proceedings no. 40303 of 2008 claiming the amounts of $750,000.00 and $244,895.52. 17 November 2008 Directions hearing of Summons in NSW Supreme Court, Court of Appeal seeking leave to appeal filed by Tsekouras dismissed with no order as to costs by Registrar Schell. 40303 of 2008 transcript of proceedings --- Registrar Schell --- 17/11/08 8 December 2008 Tsekouras files Bankruptcy Application in Federal Court proceedings NSD1887 of 2008 against Olsen alleging his bankruptcy should never have been instigated by Olsen and seeking (inter alia) $750,000 compensation for reimbursement of out-of-pocket expenses, plus superannuation and interest on the amounts of $297,705.24 and $166,469.54 said to have been paid by Tsekouras and also paid by Olsen. | application for summary judgment under s 31a of the federal court of australia act 1976 (cth) no reasonable prospect of successfully prosecuting any part of proceeding vexatious proceedings whether applicant should be prevented from commencing or continuing proceedings without leave of the court pursuant to o 21 r 1 of the federal court rules practice and procedure |
In summary, pursuant to a financial agreement executed on 22 January 2002 by Mr Jensen and the respondent in accordance with s 90C of the Family Law Act 1975 (Cth) (Family Law Act), Mr Jensen agreed to transfer the interest he held as a joint tenant in the parties' matrimonial home at 640-646 Nerang-Broadbeach Road, Carrara ("the Carrara property") to the respondent. Mr Jensen became bankrupt on 14 February 2006. The applicant is his trustee in bankruptcy ("trustee"). In substantive proceedings in this Court the trustee has sought orders pursuant to s 120 and s 121 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) to set aside the transfer by Mr Jensen of his interest in the Carrara property to the respondent, and consequential orders in respect of the matrimonial home. In Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778 I dismissed the respondent's notice of motion seeking an order that the substantive proceedings be stayed as an abuse of process. At the same time I dealt in part with the trustee's amended notice of motion filed 31 March 2009, and ordered that the trustee have leave to amend his statement of claim. However that part of the trustee's amended notice of motion seeking an order that paras 10a to 10i of the Defence filed by the respondent be struck out has remained unresolved. This is because: The respondent now seeks leave to file an Amended Defence and Cross-Claim. In her Amended Defence and Cross-Claim the respondent has also sought to further amend para 10, the subject of the trustee's notice of motion. It was not in contention during the hearing before me that the trustee's application to strike out para 10 of the respondent's Amended Defence and Cross-Claim extended to the amended version of para 10. Accordingly before me now for determination are: para 2 of the trustee's amended notice of motion filed 31 March 2009 in which the trustee applied for an order pursuant to O 11 r 16(a) and (b) of the Federal Court Rules that para 10 of the Defence filed by the respondent on 6 November 2007 be struck out; and a notice of motion filed by the respondent on 22 September 2009. These paragraphs, like para 7e of the Amended Defence and Cross-Claim, plead material relevant to the family arrangements of Mr Jensen and the respondent and the question whether the respondent had provided consideration for the transfer of property by Mr Jensen. From the written submissions filed on behalf of the trustee, and oral submissions made by Mr McQuade for the applicant at the hearing, it became clear that the trustee's key concerns lay with paras 7e, 10 and 24 of the Amended Defence and Cross-Claim. The trustee does not take issue with other paragraphs in the Amended Defence and Cross-Claim. At the hearing before me it was common ground that the trustee's notice of motion in respect of the striking out of para 10 of the Amended Defence and Cross-Claim extended to para 7e and para 24 of the Amended Defence and Cross-Claim. In light of the position adopted by the trustee there are, in summary, three issues for determination in these proceedings. They are: Whether the Court should grant leave to the respondent to file an Amended Defence and Cross-Claim; If the Court does grant such leave --- whether paras 7e, 10 and 24 of the Amended Defence and Cross-Claim should be struck out as pleadings which are untenable; and Whether in any event the proceedings should be transferred to the Family Court. 1. SHOULD THE COURT GRANT LEAVE TO THE RESPONDENT TO FILE AN AMENDED DEFENCE AND CROSS-CLAIM? I put the substance of the objections of the trustee temporarily to one side. In relation to the proposed amendments to the respondent's defence I note that: In my view it is appropriate that the respondent have leave to file an Amended Defence in the terms annexed to the affidavit of the respondent sworn 22 September 2009. The Notice referred in paragraph (a) was a notice issued by the Official Receiver pursuant to s 139ZQ of the Bankruptcy Act on behalf of the trustee following application by the trustee. Such notices are alternatives to a trustee bringing an application to set aside an allegedly void transaction. The recipient of the s 139ZQ notice may bring an application to Court contesting the notice. It is not in contention that, on 30 October 2007, the trustee served a s 139ZQ notice on Mrs Jensen in relation to the transfer of an interest in a property at 12 Broadwater Avenue Hope Island from Mr Jensen to the respondent. The trustee opposes the respondent's Cross-Claim on the basis that: In relation to the Cross-Claim the respondent made detailed oral and written submissions through Counsel in support of her claim that leave to bring the Cross-Claim be granted. Following ordinary principles the trustee should bring all of his case at once. There would not be two separate proceedings between the same parties relating to similar issues, namely in relation to the Hope Island property and the matrimonial home. In relation to the Cross-Claim before me, there is no suggestion by the trustee that the respondent has unduly delayed her application to file a Cross-Claim, that it would be unjust to the trustee if I were to grant leave to the respondent to file the Cross-Claim, or that the Cross-Claim is designed as a calculated harassment of the trustee in the principal proceedings (cf National Mutual Holdings Pty Ltd v The Sentry Corporation (1989) 22 FCR 209 at 238). The s 139ZQ notice the subject of the Cross-Claim was issued on the basis of a claim that the transfer of the Hope Island property was made for no consideration at a time at which Mr Jensen was insolvent, and that it was void as against the trustee pursuant to s 120 of the Bankruptcy Act . Similar issues, as between the same parties, are raised by both the s 139ZQ notice and the principal proceedings. While, as submitted by Mr McQuade for the trustee, the issue of the s 139ZQ notice does not require the trustee to commence proceedings in relation to the property the subject of that notice, I consider that the submissions of the respondent I listed earlier in this judgment concerning the broader question of whether the Court should grant leave to file the Cross-Claim have merit, and I propose to adopt them. Accordingly, I consider it appropriate that the respondent have leave to file Cross-Claim in the terms annexed to the affidavit of the respondent sworn 22 September 2009. 2. SHOULD PARAGRAPHS 7e, 10 AND 24 AMENDED DEFENCE AND CROSS-CLAIM BE STRUCK OUT? Further, in para 24 of the Cross-Claim the respondent claims that consideration was given in relation to the Hope Island property the subject of the s 139ZQ notice. The trustee contends that paras 7e, 10 and 24 of the Amended Defence and Cross-Claim should be struck out because they plead as consideration for the transfer of property factors related to the marriage of Mr Jensen and the respondent, including non-financial contributions. The trustee submits that these factors do not constitute consideration or the value of the consideration within the meaning of s 120 or s 121 of the Bankruptcy Act , and that accordingly the pleadings are untenable. by operation of the terms of the Family Law Act 1977. child maintenance. I shall consider each of these issues in turn. The respondent claimed that her forbearance to sue and relinquishment of claims as pleaded in both the Amended Defence and the Cross-Claim constituted consideration in the circumstances of this case, and that accordingly those pleadings were not untenable as claimed by the trustee. Recital K to the Financial Agreement stated that the agreement was entered into in substitution for any rights for spousal maintenance and property under Pt VIII of the Family Law Act . Whitlam and Jacobson JJ in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at [97] - [102] rejected the proposition that valuation of consideration in the form of a forbearance to sue could be undertaken by assessing the non-financial and financial contributions to the marriage as if an application had been made under s 79 of the Family Law Act . The respondent's pleaded case is underpinned by the allegation of assessment of the value of the consideration, namely the relinquishment of causes of action on the basis of the factors set out in paras 10a to 10d and 10f to 10(ia) of the Amended Defence and Cross-Claim. For the reasons set out in Mateo [2003] FCAFC 26 ; (2003) 127 FCR 217 and Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 that is untenable. Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 is distinguishable because in that case the parties made an informal agreement which did not prevent the wife from applying for relief under s 79 of the Family Law Act , whereas in this case: the parties signed a formal agreement recognised under the Family Law Act ; the respondent expressly relinquished and forfeited any claims and entitlements to property in Mr Jensen's name as well as an entitlement to spousal maintenance; the respondent has, by entering into the financial agreement and by virtue of s 71A of the Family Law Act , lost the right to apply for relief under s 72 and s 79 of the Family Law Act in relation to spousal maintenance and alteration of property interests. Insofar as the decision in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 related to the meaning of the phrase "consideration of less than market value" it was obiter because: the primary judge in Lopatinsky found that a forbearance to sue under s 79 of the Family Law Act was consideration within the meaning of s 120 of the Bankruptcy Act ; the Full Court found that there was no agreement to compromise Mrs Lopatinsky's claims and if there had been an implied forbearance to sue it was worthless because there were no consent orders entered under s 79 of the Family Law Act nor was the agreement approved under s 87 of the Family Law Act ; the trustee in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 accepted that an implied forbearance to sue can constitute good consideration. The appeal in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 was allowed because the agreement of Mrs Lopatinsky not to sue was found to be unenforceable and therefore was not valid consideration. The outcome would have been different had the agreement been binding and enforceable. In any event the whole issue of consideration and forbearance to sue are matters of judicial debate, and the pleadings ought not be struck out on an interlocutory application. However in bankruptcy-related proceedings the forbearance must be for value. Such forbearance will, under the Act as proposed to be amended by the Bill, have to be looked at in the light of the likely value of the chose in action. The concepts of forbearance to sue and consideration sit uneasily with circumstances where property interests are altered in a matrimonial context and one of the spouses becomes bankrupt. This issue was considered in detail by the Full Court in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234. It is useful at this point to turn to that decision. The property was sold. Approximately eighteen months after the settlement of the sale Mr Lopatinsky became bankrupt. It appears that the Lopatinskys had agreed informally that, on settlement of the sale of the property, Mrs Lopatinsky would receive $81,387 more than she would have been paid out of the net proceeds if those proceeds had been equally divided between them. Mr Lopatinksy's trustee in bankruptcy claimed that Mrs Lopatinsky gave no consideration for the transfer to her of the $81,387 or alternatively that she gave consideration which was less than the market value of the sum transferred to her, and that accordingly the payment of that sum was void pursuant to s 120 of the Bankruptcy Act . It is to be recalled that the bankrupt told the applicant she could take whatever money was necessary to purchase something for her and the children to live in and that he believed she would be fair. I also infer from these remarks of the bankrupt, having regard to he context in which they were made, that his offer was in recognition of the applicant's contribution to the family and the property they jointly owned as well as her future needs in raising their children, and an acceptance that a fair distribution of that property would result in her receiving a disproportionately large sum of the proceedings. Before the Full Court the trustee contended that: The Full Court allowed the appeal against the decision of the primary judge. The majority judgment in the case was delivered by Whitlam and Jacobson JJ. Their Honours considered the earlier decision of the Full Court in Mateo [2003] FCAFC 26 ; (2003) 127 FCR 217 upon which the trial judge in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 relied, and in summary observed that: The trial judge in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 had found that there was implied in the settlement a forbearance on the part of Mrs Lopatinsky to make a claim against Mr Lopatinsky under the Family Law Act , and that an implied forbearance to sue constitutes good consideration. ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 245-246) Mateo [2003] FCAFC 26 ; (2003) 127 FCR 217 was not a case involving express or implied forbearance to sue --- rather consent orders had been made and entered pursuant to s 79 of the Family Law Act which provided for , inter alia, the transfer of the matrimonial home. ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 244) All the members of the Full Court in Mateo [2003] FCAFC 26 ; (2003) 127 FCR 217 were of the view that where a consent order is made under s 79 of the Family Law Act the transfer of property takes place pursuant to the order of the Court. Accordingly, as a matter of construction of s 121 , there can be no "transfer of property by a person who later becomes a bankrupt". ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 246) The purpose of s 120 of the Bankruptcy Act is to prevent properties, including the matrimonial home, from being transferred to related parties to the disadvantage of the bankrupt's creditors. Disadvantage will occur if the property is transferred for no consideration or for less than market value. ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 249) There is nothing in s 120(5) to suggest that Parliament intended that the term "consideration" in s 120(1)(b) is to be read in anything other than its legal sense. It would be inconsistent with the observations of Wilcox and Branson JJ in Mateo [2003] FCAFC 26 ; (2003) 127 FCR 217 to proceed upon the basis that "consideration" could be something less than the ordinary legal and commercial understanding of that term. ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 249) In applying s 120(1)(b) the first step is to identify the consideration which was actually given. If consideration was given, the second step is to determine whether its value was less than the market value of the property transferred. ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 249) As Wilcox J observed in Mateo [2003] FCAFC 26 ; (2003) 127 FCR 217 at [66] , the issue of the value of contributions is to be determined at a time when the marriage has come to an end and any contributions to the marriage were made in the past. Past consideration is, generally speaking, no consideration. The only significant exception to that rule arises where there is an earlier promise to pay (express or implied), an exception which is difficult to apply to matrimonial contributions unless for example there is a valid prenuptial agreement to that effect. ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 247) The primary judge acknowledged that there was no express agreement between the Lopatinskys that Mrs Lopatinsky would not maintain proceedings for an adjustment of her property rights under the Family Law Act. ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 250) The trustee accepted that an implied forbearance to sue can constitute good consideration. While the evidence of such a forbearance was slim, it was in any event unnecessary to decide whether the primary judge was correct in drawing the inference that Mrs Lopatinsky had so acted because the approach of the primary judge as to what constituted consideration and the value of it was contrary to the decision in Mateo [2003] FCAFC 26 ; (2003) 127 FCR 217. There was no evidence to support a finding that Mrs Lopatinsky promised to give up a claim under s 79 of the Family Law Act , in that there were no proceedings on foot in the Family Court and no mention by either party of the possibility of such a claim. ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 250) Further, even if the informal agreement between Mr and Mrs Lopatinsky was supported by consideration in the form of an implied promise not to sue, it would not amount to a legally binding agreement for a compromise of Mrs Lopatinsky's entitlement to make a claim for a further property adjustment. I have formed this view for the following reasons. 1. First, I accept Mr McQuade's submission that paras 10(ia), 10j, 24k and 24l of the Amended Defence and Cross-Claim are untenable to the extent that they do not reflect the terms of the financial agreement executed by the respondent and Mr Jensen on 22 January 2002 in accordance with s 90C of the Family Law Act . The financial agreement was annexed as an exhibit to the respondent's affidavit sworn 18 March 2009. They separated on 24 July 2001 when the Husband left the former matrimonial home at Carrara after informing the Wife about certain improper dealings with money of hers, other family members and clients of his legal practice. The Husband expects to be arrested and charged with criminal offences in relation to his conduct. The Husband is the registered proprietor of certain other real property associated with his former mortgage lending dealings, but only as Trustee. The Wife is not aware of those dealings. He has no beneficial interest in those properties. They have been excluded from consideration, as they are not relevant to the settlement between the Husband and the Wife. It is unclear whether these properties are the four properties at Tanah Merah, Eagleby and Parkwood I have listed above, and which are referred to in paras 10h, 10(ia), 10j, 24i, 24k and 24l. However even if they were, the financial agreement states that those properties were not relevant to the financial agreement of the respondent and Mr Jensen. In my view paras 10(ia), 10j, 24k and 24l of the Amended Defence and Cross-Claim in the Amended Defence and Cross-Claim do not accurately represent the claims relinquished or forfeited by the respondent as identified in the financial agreement. To the extent that the respondent pleads relinquishment and forfeiture of her claims in relation to the four properties at Tanah Merah, Eagleby and Parkwood the pleadings are untenable. 2. Second, even had such inconsistencies not existed between the terms of the financial agreement and the terms of para 10 and para 24 of the Amended Defence and Cross-Claim, I consider that the reliance by the respondent on her financial and non-financial contributions to the marriage as consideration for the transfer of the relevant properties is untenable. This is because the consideration pleaded by the respondent in para 10 and para 24 of the Amended Defence and Cross-Claim "depended on factors which cannot provide a basis for assessing the value of the consideration which was given" (Whitlam and Jacobson JJ in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 250). Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 is clear authority that previous financial and non-financial contributions to a marriage do not constitute "consideration" (within the meaning of s 120 or s 121 of the Bankruptcy Act ) for the transfer of property from a person who subsequently becomes bankrupt to his or her spouse. Specifically, paras 10a, 10b, 10c, 10d, 10f, 10g, 10h, 10i, 24a, 24b, 24c, 24d, 24g, 24h, 24i and 24j of the Amended Defence and Cross-Claim plead facts relevant to the circumstances of the marriage of the respondent and Mr Jensen and the financial and non-financial contributions they have each made. In my view: In light of these findings, I do not accept the respondent's submission that the facts pleaded in these paragraphs are directly relevant to support the respondent's allegation that the respondent provided consideration to Mr Jensen for the transfer, being either in the form of the consideration for the transfer of the relevant properties, or the consideration being in the form of the forbearance to sue for spousal maintenance and the respondent's abandonment of her interest in various specified assets. Accordingly these paragraphs in the Amended Defence and Cross-Claim are untenable. 3. Third, I do not accept the submission of the respondent that the decision in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 with respect to the meaning of the phrase "consideration of less value than market value" was obiter. The Full Court in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 accepted the general proposition that forbearance to sue could constitute good consideration, but found that the approach of the primary judge in endeavouring to "value" the alleged consideration provided by Mrs Lopatinsky upon the basis of Mrs Lopatinsky's financial and non-financial contributions to the marriage in accordance with the criteria referred to in the Family Law Act was incorrect (at [101]-[102]). In light of these clear findings I do not accept the submission by the respondent that Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 was distinguishable because no consent orders pursuant to s 79 of the Family Law Act had been entered in those proceedings. 4. Fourth, I do not accept the submission of the respondent that the decision in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 is distinguishable because in Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 there was only an informal agreement whereby the wife had relinquished her entitlement to sue, whereas in this case the respondent and Mr Jensen had executed a financial agreement pursuant to the Family Law Act in which the respondent had expressly relinquished and forfeited any claims and entitlements to property in Mr Jensen's name as well as an entitlement to spousal maintenance. (b) It is not in dispute that a binding financial agreement which is valid under the relevant provisions of Pt VIIIA of the Family Law Act has the effect of ousting the jurisdiction of the court in respect of certain matters covered by the agreement, including financial matters or financial resources to which a binding financial agreement applies: Black & Black [2008] FamCAFC 7 at [29] . However the simple fact of acknowledgment by one spouse in a financial agreement of the provision of consideration for the transfer of property does not mean that the alleged consideration is adequate for the purposes of s 120 and s 121 of the Bankruptcy Act if a transaction is subsequently challenged by a trustee in bankruptcy. As I noted earlier in this judgment, "consideration" in the context of the bankruptcy legislation has its ordinary legal and commercial meaning ( Lopatinsky [2003] FCAFC 109 ; (2003) 129 FCR 234 at 249). The fact that the movement of consideration is acknowledged in a financial agreement does not give the consideration validity it would not otherwise have. (c) Further, and in any event, as I have already found in Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778 , the transfer of property pursuant to a financial agreement does not equate to a transfer of property pursuant to Court order, as was the case in Mateo [2003] FCAFC 26 ; (2003) 127 FCR 217. The current legislative framework applicable to financial agreements contemplates that a trustee in bankruptcy may make application pursuant to both s 120 and s 121 of the Bankruptcy Act to set aside a transfer pursuant to a financial agreement executed by the parties. Similarly, it is open to the Court to review the nature of the consideration stated in a financial agreement. The Court is not in any way prevented from doing so by the fact that the financial agreement is enforceable as between the parties under the Family Law Act. It is often a matter of chance whether the family expenses are incurred and discharged or services are rendered in the maintenance of the home before or after the purchase. There is no occasion for equity to fasten upon the registered interest held by the joint tenants a trust obligation representing differently proportionate interests as tenants in common. The subsistence of the matrimonial relationship, as Mason and Brennan JJ emphasised in Calverley v Green [(1984) [1984] HCA 81 ; 155 CLR 242 at 259], supports the choice of joint tenancy with the prospect of survivorship. ...The range of financial considerations and accidental circumstances in the matrimonial relationship referred to by Professor Scott answers the second concern of equity, namely the disproportion between quantum of beneficial ownership and contribution to the acquisition of the matrimonial home. In these proceedings there is no dispute that the Carrara property, described in the financial agreement as the matrimonial home, was registered in the names of the respondent and Mr Jensen as joint tenants. The decision of the High Court in Cummins [2006] HCA 6 ; (2006) 227 CLR 278 supports an inference of joint tenancy with the prospect of survivorship as to the equitable interest held by the parties to the marriage. The pleadings of the respondent do not displace this inference, nor did the submissions at the hearing. In my view paras 7e, 10e, 10(ea), 24e and 24f of the Amended Defence and Cross-Claim are untenable. 3. In that decision I observed that no formal application for transfer had been made by the respondent and no opportunity provided to the trustee to answer such an application. The respondent has now specifically sought an order that these proceedings be transferred to the Family Court, and filed detailed submissions in support of her application. The trustee opposes such an order, in summary, on the following grounds: The question whether bankruptcy-related proceedings should be transferred from the Federal Court to the Family Court has been considered in a number of cases by this Court. So, for example, the respondent has drawn my attention to the following cases: After considering these authorities, the detailed submissions of the parties and the circumstances of the case I consider the appropriate order is that these proceedings now be transferred to the Family Court. I form this view for the following reasons. 1. First, Mr Griffin QC for the respondent submitted that if the trustee is successful in the substantive proceedings the respondent will make an application in the Family Court under s 79(1) of the Family Law Act seeking an order altering the interests of the trustee in the relevant property of Mr Jensen. As Besanko J observed in Macks v Edge [2006] FCA 1077 ; (2006) 156 FCR 302 at [42] , the Federal Court can hear and determine the trustee's claim, but it cannot hear and determine a spouse's claim under the Family Law Act should it become necessary to do so. Since judgment was delivered in Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778 it has become clear that: The respondent's submission at the hearing that all matters relevant to the claims between the trustee and the respondent be heard in one Court has merit. 2. Second, Mr Holt, the solicitor for the respondent, has deposed that the respondent's costs of defending the claim in these proceedings in the Federal Court will exceed $120,000 for a five day trial, and would constitute a similar amount in separate Family Court proceedings (affidavit of Richard Bruce Holt affirmed 24 September 2009). Mr Holt deposes further that the applicant's costs would be the same, and that in the circumstances both parties stand to save over $100,000 in costs each if the two actions are heard together in the Family Court. Although the trustee claims that if the proceedings are transferred to the Family Court he will have incurred wasted costs: 3. Third, there is no evidence to suggest that either jurisdiction would result in an earlier hearing of the matters in dispute. Although the Federal Court could accommodate a hearing in these proceedings early in 2010, the fact remains that the pleadings have not closed and, practically, it is unlikely that these proceedings will be ready for hearing early in 2010. 4. Finally, while the issue in these proceedings relates to bankruptcy in which this Court has clear jurisdiction, it is equally the case that, following the enactment of the Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth), the Family Court has jurisdiction to entertain these proceedings. The respondent have leave to file a Cross-Claim in the terms annexed to the affidavit of the respondent sworn 22 September 2009. Paragraphs 7e, 10 and 24 of the Amended Defence and Cross-Claim be struck out. These proceedings be transferred to the Family Court of Australia pursuant to section 35A of the Bankruptcy Act 1966 (Cth). I will now direct the parties to make submissions as to costs. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | application for leave to file amended defence o 13 r 2 federal court rules substantive proceedings concern transfers of property from bankrupt husband to respondent wife pursuant to financial agreement under family law act 1975 (cth) transfers allegedly to defeat creditors of husband s 120 and s 121 bankruptcy act 1966 (cth) application for leave to file cross-claim o 5 r 9(2) federal court rules cross-claim contests s 139zq bankruptcy act notice served on respondent by applicant trustee s 139zq notice alleges transfer of property not subject of current proceedings similar issues to substantive proceedings strike out application whether paragraphs of the amended defence and cross-claim refer to factors which do not constitute valid consideration under bankruptcy act whether forbearance to sue and relinquishment of claims identified in financial agreement are valid consideration under bankruptcy act past consideration inconsistency between financial agreement and pleadings in the amended defence and cross-claim whether non-financial contributions to marriage constitute valid consideration under bankruptcy act application for leave to transfer the proceedings to the family court s 35a bankruptcy act 1966 (cth) principles relevant to transfer respondent has commenced proceedings in the family court bankruptcy bankruptcy bankruptcy bankruptcy |
I dismissed the application. This judgment concerns the costs of that proceeding. 2 The third, fourth, fifth and sixth respondents (the Commonwealth respondents) seek costs of the proceeding, and that their costs be fixed under O 62 r 4(2)(c) of the Federal Court Rules in a gross sum. The second respondent, Mr Price, seeks similar orders. 3 The interests of the Commonwealth respondents, and of Mr Price, were not identical. They were separately represented by solicitors and counsel. Mr Dunstan has not suggested that was inappropriate. In my view, it was appropriate for them to be separately represented. To the extent to which they are entitled to costs of the proceeding, I consider that separate orders for costs should be made. 4 The first respondent did not participate in the hearing, and simply submitted to such orders as the Court may make save as to costs. It does not seek any order for costs. Mr Dunstan, by motion of 9 April 2006 applied for the hearing to be adjourned to a date to be fixed. In essence, he complained that he needed further time to prepare for the hearing of the costs applications, and would not be ready to proceed with that hearing for an indefinite time or at least for a time which he could not identify. The motion was heard before the commencement of the hearing of the costs applications. I refused it. This section of my reasons for judgment explains why I did so. 6 When judgment was delivered on 21 December 2005, the Commonwealth respondents and Mr Price applied for costs of the proceeding. They also indicated they sought an order that their costs be fixed in a gross sum. Mr Dunstan wanted time to consider their claims. I acceded to his request. I directed the respondents to file and serve the material upon which they relied in support of their respective costs applications by 3 February 2006, and fixed 16 February 2006 for further directions and tentatively fixed 16 and 17 March 2006 for hearing the costs applications. That timetable was fixed with Mr Dunstan's consent. 7 The Commonwealth respondents filed their material on time, and Mr Price a few days late. Mr Dunstan on 16 February 2006 sought an adjournment of the directions hearing as he said he had engaged solicitors and counsel to advise him on certain matters, including (he understood) in relation to the costs of this proceeding. The directions hearing was adjourned to 1 March 2006. It was by then clear that Mr Dunstan did not have legal representation in relation to the costs issues in this proceeding. Directions were given for him to file and serve any responsive material by 12 April 2006, and the hearing fixed for 1 and 2 May 2006. 8 Mr Dunstan is presently serving a term of imprisonment imposed in April 2000. The head sentence expires on 25 May 2008. Clearly, the fact of his imprisonment has caused Mr Dunstan considerable difficulty in the conduct of these proceedings (and no doubt the other proceedings to which he has referred). His imprisonment is managed by the Department of Corrective Services of New South Wales. He has complained that his imprisonment is illegal, that he has unlawfully been refused a minimum-security clearance including a rehabilitation program with day and weekend release, and that since 25 May 2004 (when the non-parole period expired) he has wrongfully been refused parole by the Sentence Administration Board of the Australian Capital Territory. He has taken various steps to rectify what he says are those injustices. 9 I accept that the circumstances of Mr Dunstan's imprisonment have led to him having delays and difficulties in accessing materials to which he has wished to have access in the conduct of these proceedings. I also accept he has been conducting litigation on several fronts from time to time, so it has been necessary to accommodate those circumstances as well. It is for those reasons that generous timetables were set for him to consider and respond to material relevant to the principal claims in this proceeding. I also accept such delays and difficulties have continued to be experienced in relation to the present costs applications. The same consideration of his circumstances has applied to the timetable set for the hearing of the costs applications. 10 However, in fixing the timetable for the hearing of the costs applications (which is the presently relevant timetable), it was also necessary to bear in mind the limited nature of the issues to which the costs applications give rise, and the limited nature of the material relied upon by the respondents. 11 The timetable has allowed Mr Dunstan some months to consider the claims of the respondents for costs, and nearly three months to consider and respond to their claims for gross sum orders for costs. I see no reason now to accede to the further and indefinite adjournment of the applications for costs made by the respondents in the proceedings. 12 Much of Mr Dunstan's material in support of his adjournment application concerned proceedings he has now instituted to challenge the validity of recent decisions of the Sentence Administration Board refusing him parole. I make no comment upon the merits of those proceedings. I do not consider their existence a reason to adjourn the hearing of the costs applications in these proceedings. Whilst Mr Dunstan may better be able to address the costs applications if he were not in custody, the fact of those proceedings does not itself weigh in the scales sufficiently to adjourn the hearing. There is insufficient material for me to know when that separate proceeding may be heard, or what its outcome may be. I am mindful of the desirability of having the costs applications resolved in a timely way. I have also had regard to Mr Dunstan's capacity, given a reasonable period of preparation time, to prepare for and address the issues arising on the costs applications. In my view, he has been given that time. 13 Mr Dunstan also sought to prove that the Commonwealth, or persons acting on behalf of the Commonwealth, had intervened in the processes of the Sentence Administration Board considering Mr Dunstan's parole. The next step was to assert that, because such conduct had been undertaken to keep Mr Dunstan in custody and so to impair his capacity both to conduct the principal proceedings and the costs applications, the Commonwealth respondents should not be permitted to have the advantage of that conduct by the hearing of their costs application. No such allegation was made against Mr Price. 14 I have carefully considered the material Mr Dunstan adduced in support of those factual contentions. I do not consider they are made out. The Australian Taxation Office in June 2003 caused itself to be registered on the Victims' Register of Mr Dunstan, maintained by the Sentence Administration Board. It contemplated making submissions about Mr Dunstan's then application for day or weekend leave. It decided not to do so. The evidence is unequivocal that neither the Australian Taxation Office nor the Australian Government Solicitor on its behalf have made any submissions about whether Mr Dunstan should be granted such leave, or about whether he should be granted parole. The coincidences in timing of certain directions given by the Court in this matter in 2004 with action taken by authorities in relation to the circumstances of Mr Dunstan's imprisonment do not give any reason, in my mind, to doubt the direct testimony to that effect. Given the procedural rate of progress in the principal proceedings, there would have been little point in doing so. There is nothing in the minutes of the Serious Offenders Review Council, the Pre-Release Leave Committee or the Sentence Administration Board or in the records of those entities, to the extent those records are in evidence, which support the factual claims. 15 I decline to find, as Mr Dunstan claimed I should, that but for the conduct of the Australian Taxation Office and its solicitors Mr Dunstan would have been released from prison on day leave by November 2002 and would have been released on parole by 20 January 2004. The evidence does not support that claim. What evidence there is suggests other reasons why Mr Dunstan was not released on day leave from November 2002 and was not paroled from January 2004. 16 In reaching that conclusion, I have taken into account Mr Dunstan's further submissions filed on 23 and 29 May 2006, and the additional evidentiary material filed on 29 May 2006, provided by leave given at the conclusion of the hearing on the costs applications. I will receive the additional material so filed as Exhibit AL, although the Commonwealth respondents object to its reception on the grounds of relevance. Mr Dunstan says it is relevant to his claim that the Commonwealth respondents have engineered his continued imprisonment in a manner which has impeded his ability to fairly prosecute his claims in this proceeding. I do not need to refer to that material (some of which was already in evidence). I have carefully considered it. It does not, in my view, tend to prove Mr Dunstan's assertion. 17 Mr Dunstan also suggested that the Commonwealth respondents sought a lump sum costs order in this matter so that they could apply for security for costs on the appeal which Mr Dunstan has instituted from the principal judgment given on 21 December 2005. Whether or not security for costs is ordered on that appeal is not presently an issue. The fact is that the principal judgment has been given, and the successful respondents have sought costs. As the further adjournment of the hearing of their costs applications has been refused, I will address those applications according to law. I have no reason to consider that the costs applications are being pursued for extraneous and improper reasons. If they happen to provide a foundation for some other application, so be it. That application can be addressed on its merits at the time. 18 The respondents are entitled to have their costs applications resolved. I did not see any sufficient reason not to proceed with the hearing of those applications. Mr Dunstan has, in my view, and in his circumstances, been given a proper opportunity to understand the nature of, and foundation for, the costs applications, and to respond to the material in support of them. He did not make out any grounds which would warrant, in the exercise of my discretion, the further adjournment of the hearing of those applications. They have successfully resisted Mr Dunstan's claims. There is no reason, in my view, not to apply the normal rule that costs should follow the event: Hughes v Western Australian Cricket Association Inc (1986) 8 ATPR 40-748. There were no significant issues upon which they did not succeed: cf Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166. Their conduct did not unreasonably prolong the hearing; the reverse is the case: cf Latoudis v Casey [1990] HCA 59 ; (1990) 170 CLR 534 at 544. There is no other conduct on their part which, in my view, would disentitle them from any of their party/party costs. 20 Mr Dunstan has made the more general assertion that the Commonwealth respondents prompted this proceeding by their conduct considered in the principal judgment of 21 December 2005. I have made findings about those assertions. The fact (if it be the case) that Mr Dunstan's relocation within the workplace from time to time, or his medical assessment and counselling, might have been handled differently does not, in my view, disentitle the Commonwealth respondents from recovering costs of this proceeding which they have successfully defended. Mr Dunstan chose to institute this proceeding based upon the causes of action alleged. Even if, in his own mind, he had no option but to do so, the Commonwealth respondents were confronted with very serious allegations of improper conduct. They were entitled to defend those allegations. They have done so successfully. 21 Mr Dunstan also argued that the Commonwealth respondents had failed to give proper discovery in the course of the conduct of the proceedings. He said that somehow disentitled them from recovering costs. The material shows that Mr Dunstan sought supplementary discovery by notices given on 12 and 20 June 2003. Directions were given on 1 August 2003 for the hearing on 14 November 2003 of the disputed issues about discovery. That application was not pressed on 14 November 2003, as Mr Dunstan was confronted with an application by the Commonwealth respondents to strike out the statement of claim. He was given further time to formulate the terms of his proposed pleading. Ultimately, on 19 March 2004, he was directed to provide further particulars of the pleading and was refused leave to amend it in certain respects: Dunstan v Human Rights and Equal Opportunity Commission [2004] FCA 284. Further directions were given for the preparation of the matter for trial; the issue of further discovery was not revived by Mr Dunstan. Those matters do not indicate any sinister conduct on the part of the Commonwealth respondents. Nor do they reveal any factors which, in my view, weigh in the scales either at all, or certainly not sufficiently, to decline to make the orders for costs which I propose to make. 23 There is no particular characteristic of a case which must exist before a gross sum costs order can be made: Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006. It is a power which may be exercised whenever the particular circumstances of the case warrant it: Beach Petroleum NL v Johnson (1995) 57 FCR 119 ( Beach ); Harrison v Schipp [2002] NSWCA 213 ; (2002) 54 NSWLR 738. where the financial capacity of the party liable to pay costs is such that the additional cost of taxation will impose a significant burden on the party in whose favour costs are ordered without real prospects of recovering those costs: Hadid v Lenfest Communications Inc [2000] FCA 628 ; Sparnon v Apand Pty Ltd (unreported, von Doussa J, 4 March 1998); Sony Entertainment (Australia) Ltd v Smith (2005) ALR 788. 25 In my view, the considerations referred to above apply to the present circumstances. 26 There will be considerable logistical difficulties in the taxing in the usual manner of the respondents' costs recoverable from Mr Dunstan. He is unlikely always to be able to attend taxation hearings in person, and if he attends by telephone there is scope for misunderstanding when referring to documents or parts of documents as they may not all be readily identifiable by description. There is also scope for the process to be unduly prolonged because it is difficult to anticipate all documents which may need to be examined or referred to in the course of the taxation. There will almost inevitably arise occasions when Mr Dunstan does not have to hand, or readily to hand, the documents being examined or referred to. It would place an improper burden upon the respondents that each of their files --- which are clearly very extensive --- should have to be copied and paginated in a way which facilitated that access, even putting aside questions of whether they should be required to do so in respect of those documents in which they enjoy legal professional privilege. 27 In addition, as the evidence shows, it is likely that the taxation will be prolonged by the difficulty in Mr Dunstan being available for substantial blocks of time. That has been the experience to date in the taxations involving Mr Dunstan in matters numbered ACD 31 of 1997 and 32 of 1997. Taxation sessions have been of two hours' duration only, and have been vulnerable to cancellation for unforeseen circumstances. Progress in taxation of those bills of costs has been very slow. The taxation of those bills of costs is likely to have been less complicated than taxation of the bills of costs in this matter, simply because this matter involved more extensive issues, lasted over a very long period, and proceeded to a lengthy trial. 28 Taxation of costs in the normal manner, in my view, would therefore be very prolonged, and expensive. The expense of taxation and delay occasioned to the respondents would be likely to be disproportionate to the amount of the costs recoverable. 29 I also consider that the expense of taxation in the normal way, which would be incurred by the respondents, is unlikely to be recoverable from Mr Dunstan: see e.g. Hadid v Lenfest Communications Inc [2000] FCA 628. He has now no interest in any real estate. There is nothing to suggest he has any other significant assets which might be available, even to meet any costs order. Mr Dunstan is presently imprisoned. He has no immediate prospects of employment, even if he secures release on parole shortly. The consequence of taxation is that the respondents would incur further significant expense to quantify their entitlement to those costs when that further expense is likely to be irrecoverable from Mr Dunstan. 30 Mr Dunstan's contentions focused on the need for the Court to be satisfied that a particular gross sum for costs represented only those costs which were necessary or proper for the attainment of justice or for maintaining or defending rights of the respondents (O 62 r 19). He then submitted that the evidence of Kim Chapman, a costs consultant, should be rejected, and that the Court should not fix a gross sum for costs because it should be satisfied that the bills of costs of the defendants in matters ACD 31 of 1997 and 32 of 1997 were both over-generous and unreliable, and that there was no reason to think the quantification of the costs applications in this matter were of a different character. 31 I have separately addressed the claims for gross sum costs orders by the defendants (some of the Commonwealth respondents) in matters ACD 31 of 1997 and 32 of 1997. I have made orders at the same time as this order, fixing the defendants costs in a gross sum: see Dunstan v Seymour [2006] FCA 917 The reasons for those orders indicate why I do not accept that the process of taxation of costs to date in those matters results in uncertainty about quantifying the necessary or proper costs so that gross sum orders for costs should be made. 32 Nor do I regard the process of taxation of those costs as indicating such uncertainty about quantifying a gross sum for costs in this matter. The evidence of Mr Chapman confirms that the primary records indicate the professional work carried out for the Commonwealth respondents, and for Mr Price. It indicates that the work properly attributable to this matter can be, and has been, identified. Allowance has been made for the fact that that identification may be difficult in some respects. The application of rates of charging, and the assessment of their disbursements, to that work in my view does enable a proper assessment to be made for the purposes of a gross sum for costs. 33 Mr Dunstan further submitted that any costs order now made might expose him to a debt which he presently could not meet, so that he was vulnerable to being declared bankrupt and so to being unable to control the prosecution of his appeal against the principal judgment. He therefore said no gross sum costs order should be made. Alternatively, he foreshadowed the possibility of applying for an order fixing a timetable for the payment of any gross sum costs order, so as to avoid that apprehended consequence. 34 I do not consider that such considerations are relevant to whether gross sum costs orders should be made. The real issue is whether costs orders in favour of the respondents should be made at all. I have decided they should recover costs of the proceeding. The possible consequences of a costs order --- a debt which cannot be met --- is not a reason not to make a costs order, in the proper exercise of the Court's discretion under s 43 of the Federal Court of Australia Act 1976 (Cth). Even if such a consideration were relevant to that decision, I would nevertheless order Mr Dunstan to pay the respondents their costs of the proceedings. The making of a gross sum costs order is only a means of quantifying the amount of the costs entitlement, alternative to the taxation processes otherwise provided for in O 62. It seems unlikely that the selection of the process for the quantification of costs should be influenced by such matters. It is, after all (and assuming the quantification of costs is a proper one), simply a matter of timing as to when the quantification occurs. Order 62 r 38(e) permits a taxing officer to issue interim costs certificates, so the timing for the fixing of some costs by the usual taxation method is not necessarily a prolonged one. From the other perspective, there is no apparent reason why a person liable to pay costs should be entitled to take advantage of one method of quantifying that liability so as to delay the timing of any bankruptcy proceedings. The two issues --- the means of quantifying the costs ordered, and the means of recovering the costs when quantified --- are not inter-related in the way Mr Dunstan contends. Even if Mr Dunstan were correct in his contention, I would nevertheless, taking those circumstances into account, fix costs in a gross sum. The reasons for doing so would far outweigh the matters put by Mr Dunstan. Even if Mr Dunstan were to be made bankrupt, his trustee would then have the responsibility of determining whether it was or was not appropriate to pursue the appeal; the appeal would not, by any bankruptcy, simply come to an end. 35 I am, of course, mindful that Mr Dunstan should not be disadvantaged by the fixing of a gross sum for costs. Mr Dunstan said that, in his present circumstances, he had difficulty in properly addressing the costs applications and that the Court should therefore give him as many safeguards as possible against excessive costs claims by requiring the respondents to tax their costs in the normal way. In fixing the gross sum, a conservative approach is necessary in this matter, having regard to the evidence about the costs allowed and disallowed in the taxation thus far in matters ACD 31 of 1997 and 32 of 1997. Such consideration can be addressed in fixing the amount of the gross sum. I do not think that there will be any unfairness to Mr Dunstan by determining, as I do, that the costs of the respondents should be fixed in a gross sum. That is based upon the evidence of Mr Chapman. I accept Mr Chapman is a legal practitioner with experience in the taxation of costs. 37 Mr Dunstan cross-examined Mr Chapman, in essence, only about his views concerning costs in matters ACD 31 of 1997 and 32 of 1997. There was no cross-examination directly challenging or testing his views on any particular aspect of the costs which, in his opinion, would be recoverable on party/party taxation in this matter. He did in a general way question him about his expertise in legal costing, but I do not think he made any inroads into my preliminary assessment of his experience and expertise. I therefore generally accept him as a person qualified to have given the evidence he gave about the likely outcome on a party/party taxation of the respondents' costs, and about an appropriate amount to be awarded by way of gross sums for costs of the Commonwealth respondents and of Mr Price in this matter. 38 I am also satisfied that Mr Chapman had made the inquiries necessary to properly form an opinion as to the appropriate amount which should be allowed on a gross sum basis for the costs of the Commonwealth respondents and for Mr Price, that he has had access to all the necessary records to form his opinion. 39 Mr Chapman has allowed for the work done at the hourly rate in force from time to time under item 31 of the Second Schedule to the Rules. Mr Chapman says that, in his experience, fixing costs on that basis not uncommonly results in a sum about equal to or less than that which would result from the taxation of costs on an itemised basis. I must, however, recognise that that is not always the case, and be alert to ensure the gross sum for costs does not expose Mr Dunstan to a liability which, on the evidence, would be greater than would result from taxation in the normal way. 40 Mr Chapman also appears to have weeded out those items of work which involved duplication (for example, caused by a solicitor new to the matter needing to be brought 'up to speed' on its status, and where two legal practitioners were working on the file together). He points out that, in his view, in some circumstances it was appropriate for there to be two legal practitioners working together on the file or to attend on particular occasions. He has excluded time spent on considering questions of law and fact; he considers that such work should come within the allowance for general care and conduct. He has also excluded work done on other matters involving Mr Dunstan, including in matters ACD 31 of 1997 and 32 of 1997. Where the attendance involved more than one matter, for example an attendance at a directions hearing involving several matters, he has allowed an amount for the attendance and apportioned that amount to the matters then being considered. The adjustment for work done in respect of matters AcD 31 of 1997 and 32 of 1997 was made by deducting $20,390 from the costs he would otherwise have calculated. That deduction reflects the total professional costs claimed in the bills of costs lodged for taxation in those matters, except for the costs of taxation, less $7619 which the defendants in those proceedings acknowledged should not be included in the taxed costs. 41 Mr Chapman then made an adjustment or reduction of 20 per cent on the amount he had arrived at. He did so firstly to reflect that some of the work carried out might not be regarded as recoverable on a party/party basis although it would properly be recoverable as solicitor/client costs. He used the figure approved in Charlick of 15 per cent as a guide. Secondly, the reduction was to reflect his caution that he may not have detected all work done for other related matters and that there may be further work done by various solicitors on the file which may not be regarded as recoverable on a party/party basis. There is no direct evidence in this matter that the 'usual' or common difference between party/party costs and solicitor/client costs on taxation is 15 per cent. Mr Chapman has not addressed that. The difference sometimes arises because there are different chargeable rates allowed on taxation on different bases. That does not arise here, as the scale hourly rates have been applied. Allowance should nevertheless be made for the fact that some work properly carried out for the purposes of solicitor/client taxation may be excluded for the purposes of party/party taxation. I have reached the view that Mr Chapman's reduction of 20 per cent is a proper one. No matters were put to him in cross-examination to suggest some other overall reduction should be made. Nor was any submission made by Mr Dunstan that some other specific deduction should be made on this aspect. That reduction represents a conservative approach, in Mr Dunstan's favour, as the weeding out process by Mr Chapman should have excluded most of the items which should not be included in party/party costs on this matter. I propose, however, to increase that reduction to 30 per cent to allow, again in Mr Dunstan's favour, for the possibility that calculating costs on an hourly scale rate might result in the costs being higher than those which would be allowed on normal taxation. The 30 per cent reduction covers that contingency, as I consider the 20 per cent deduction proposed by Mr Chapman for the other factors he has referred to is generous to Mr Dunstan. 42 Mr Chapman has added an allowance for the general care and conduct of the matter, pursuant to item 41 of the Second Schedule to the Rules. In my view, some allowance for general care and consideration should be made in respect of the costs to be allowed for the Commonwealth respondents. They were confronted with claims for three separate causes of action requiring extensive documentary review and proofing of witnesses. The factual issues extended over a lengthy period. Mr Dunstan's allegations in his pleadings and affidavits were very detailed, descending into the minutiae of communications and relying often upon subtle nuances of meaning of communications. That is not said as a criticism of him; that was in part the foundation of his claims. It nevertheless required extensive and very careful investigation and consideration of the responses of the various persons involved, the preparation of their affidavits of evidence, and of course the mastering of all that material for the purpose of briefing counsel and giving instructions at the hearing, as well as for giving advice to the Commonwealth respondents from time to time. 43 I do not think the amount of the care and consideration allowance should be determined by benchmarking against other cases. The comparison is too difficult. It may be unreliable without a detailed knowledge of the respective cases. Mr Chapman has allowed 17.5 per cent in this matter, but by a benchmarking process. I think that allowance is an appropriate one, but for the reasons I have given rather than simply by a form of benchmarking. 44 The solicitors' costs of the Commonwealth respondents, applying the scale hourly rate in this matter only, are $285,233. After deducting 30 per cent for the fact that those costs should avoid any overlap with costs of other proceedings and because there may nevertheless still be some solicitor/client costs items still included and, allowing 17.5 per cent for care and consideration, the gross sum comes to $234,604. 45 In my judgment, that is an amount which the Commonwealth respondents are likely to recover on a party/party basis for professional costs on taxation. 46 I regard $37,637 as the amount they would be allowed for the disbursement for counsel fees. That includes, as Mr Chapman suggests is appropriate, 15 hours pre-trial preparation. That was time well spent as counsel for the Commonwealth respondents (and counsel for Mr Price) were efficient in their presentation including their cross-examination of Mr Dunstan. The fee on brief, and refresher fees, are below the recommended rate for counsel in the Supreme Court of the Australian Capital Territory schedule of counsel fees, used as an indicator by Taxing Officers. The daily rate included hearing times, conferences and daily preparation. Those fees do not include fees charged in relation to other matters. 47 The other disbursements which Mr Chapman would allow are relatively small, apart from transcript and photocopying. I agree with his opinion that all the disbursements he has allowed (totalling $12,704) would be recovered on taxation. Mr Dunstan did not make a contrary submission. I am satisfied they relate to this matter and that they have been properly incurred. The photocopying disbursements have been incurred at rates less than those provided for in the Second Schedule. 48 Accordingly, I propose to fix the gross sum of $284,945 for the costs of the Commonwealth respondents, including disbursements. 49 Mr Chapman's evidence discloses that he took a similar approach to assessing the taxable costs of Mr Price. In his case, the work Mr Chapman has excluded from the recoverable party/party costs assessment includes not only work which may have been duplicated by the involvement of more than one solicitor, and work in researching and considering questions of law and fact, but also work involving reporting to his insurer and work considering and advising about the availability of insurance protection to him. In addition, the general reduction for the risk of including work which might be allowed only on a solicitor/client basis, applied by Mr Chapman, is 15 per cent. The issues confronting Mr Price were less complex, and he was not a party to any other proceedings involving Mr Dunstan. I also think that figure should be increased to 20 per cent to include allowance for the risk that the costs calculation based on the scale hourly rate may produce a higher figure than costing in the normal way. That reduction would be conservative in favour of Mr Dunstan as I think the 15 per cent proposed for Mr Chapman's reasons is somewhat generous. 50 For the same reasons, Mr Chapman has allowed the care and consideration element of his claim at the lesser percentage of 15 per cent. As Mr Price's representation concerned issues over a lesser period of time, involving only a defamation claim arising out of several publications, I think that figure is a little high. In my view, the appropriate uplift for general care and conduct is 10 per cent. 51 Mr Chapman considers that the taxable costs on a party/party basis allowed at the scale hourly rate would be $53,740. After allowing the reduction of 20 per cent for the fact that some of those costs might not be allowed on a party/party basis only, and for 10 per cent uplift for general care and conduct, in my judgment the appropriate gross sum for solicitor fees for Mr Price should be fixed at $47,291. 52 I accept as a starting point the opinion of Mr Chapman that disbursements for counsel fees of $19,155 should also be included in that gross sum. The charged rates are within the recommended rates of the Supreme Court of the Australian Capital Territory. The allowance of 2.5 days for preparation is reasonable. The fee for the first hearing day inclusive of conferences and preparation is less than the recommended fee on brief for counsel, and the daily fee then allowed was adjusted to two thirds of the recommended daily rate for all days after the first day of hearing, and for preparing submissions. I have however not allowed for counsel's travel and accommodation. I accept it was desirable for Mr Price to retain counsel experienced in defamation. Mr Chapman has allowed travel and accommodation costs for counsel on the basis of information from Christopher Davis that the Canberra bar was 'very limited' in such counsel. Mr Davis gave evidence by affidavit of certain matters relating to the costs applications, but did not cover that point. I am in the circumstances not prepared to act on the understanding of Mr Chapman. I have therefore reduced the allowed disbursement for counsel fees by an allowance for accommodation and travel of $2800. There is no science to that figure. That is because counsel's fee note was not included in the evidence. It represents an estimate for nine days accommodation and two return flights to Sydney. I therefore allow the disbursement for counsel fees at $16,355. As a cross check, I have roughly calculated the amounts which Mr Chapman allowed for the individual items and the result approximately reconciles with that figure. 53 I accept Mr Chapman's evidence that other disbursements of Mr Price for courier/delivery, photocopying, transcript and STD and facsimile expenses totalling $6816 would be allowed upon a normal party/party taxation. I propose to include them in a gross sum allowance for his costs. 54 Accordingly, I fix Mr Price's costs in the gross sum of $70,462 including disbursements. I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | lump sum order for costs order 62 rule 4(2)(c) costs |
631891 consisting of the words THE HUNCHBACK OF NOTRE DAME. Crennan J dismissed the claim, holding that Disney's use of the words was not use as a trade mark: Christodoulou v Disney Enterprises Inc [2005] FCA 1401. 2 Mr Christodoulou appealed. On Disney's application, Merkel J made an order for security for costs in the amount of $10,000: Christodoulou v Disney Enterprises Inc [2006] FCA 38. Mr Christodoulou duly paid that amount into court. 3 On 30 May 2006 Mr Christodoulou filed a notice of motion (the first motion) seeking orders that he "be permitted to discontinue" the appeal and that the $10,000 be returned to him. On the same day he filed a document headed "Notice of Discontinuance Order 22 rule 2" which stated that he "pursuant to the leave of the Court granted on 31 May 2006 [the return date of the first motion] (if leave is obtained) discontinues" the appeal. 4 If a notice of discontinuance is filed by an appellant before the hearing of the appeal, no leave is needed. The appeal is taken to be abandoned and the appellant becomes liable to pay the respondent's costs: Federal Court Rules O 52 r 19 (O 22 r 2 referred to in Mr Christodoulou's document applies to discontinuance of proceedings at first instance, not appeals). However, the Court would have a broad discretion, arising from s 43(2) of the Federal Court of Australia Act 1976 (Cth), to make some other order as to costs. 5 On 6 July 2006, the day before the adjourned return of the first motion, Mr Christodoulou filed another notice of motion (the second motion) seeking orders that he "be permitted to withdraw the 'Notice of Discontinuance' and notice for return of Security of Costs" and that he be "permitted to continue" the appeal. 6 I raised with Mr Christodoulou, who appeared in person, as he did at the trial, and Mr Bova of counsel for Disney, whether a single judge had jurisdiction to deal with either motion. Having further considered the matter, I am satisfied that I do not have such jurisdiction. 7 Section 24(1) of the Act confers jurisdiction on the Federal Court to hear and determine certain appeals including, by par (a), appeals from judgments of the Court constituted by a single judge. 8 Section 25(1) provides that the appellate jurisdiction of the Court shall, subject to that section and to the provisions of any other Act, be exercised by a Full Court, that is to say three or more (or, in certain limited circumstances, two) judges, sitting together: s 14. 9 Subsections (1A), (1AA) and (1B) of s 25 make certain provisions, not relevant here, for appeals from the Federal Magistrates Court. Subsections (2), (2A), (2B) and (2C) deal with the circumstances in which a single judge may deal with matters relating to appeals. These are the exceptions, contemplated by subs (1), to the rule that the appellate jurisdiction must be exercised by a Full Court. Mr Bova suggested that subs (2)(b) might be relevant since if Mr Christodoulou obtained leave to withdraw his notice of discontinuance he would presumably need leave to file a fresh notice of appeal out of time. But that is not one of the orders sought by the motions in question. Any question of extension of time would not arise unless and until Mr Christodoulou obtained the orders sought in the second motion. 11 Mr Bova also submitted that I should conclude that the Court had no power to set aside the notice of discontinuance because Mr Christodoulou had not satisfied either of the two possibly applicable criteria. The first requires it to be shown that the withdrawal is a nullity; the Court needs to be satisfied the discontinuance was not the result of a deliberate and informed decision such as where (to take some non-exhaustive examples) it is the result of fraud or mistake: R v Medway [1976] 1 All ER 527 at 543. The second, more liberal, view is that the Court has power to set aside the discontinuance as part of its inherent power to prevent injustice: Applicant NACT of 2001 v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 316 at [4] , Applicant A26 of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1050 at [5] . 12 Mr Bova says that Mr Christodoulou's failure to satisfy either test means there is no jurisdiction, appellate or otherwise, to exercise. 13 The problem with this argument is that it would require me to embark on a consideration of the substance of Mr Christodoulou's applications. While it is true that no circumstances are raised by him which would suggest that the discontinuance was a nullity, he vigorously asserted that it would be unjust, and indeed contrary to the public interest, were he not allowed to resume his appeal. To decide on the merits or otherwise of his arguments I would be exercising the very jurisdiction which s 25 seems to say I do not have. 14 The question has been touched on in two decisions of judges of this Court. In NACT (supra) Jacobson J, as already mentioned, held that there was power in the Court to set aside the notice of discontinuance, but dismissed the application. However, the question whether the jurisdiction could be exercised by a single judge was not raised before his Honour and was not mentioned. 15 In NACU v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 1444 the appellant was the wife of the appellant in NACT . In the husband's case an application for special leave to appeal to the High Court had taken the point that the application should have been heard by a Full Court. In NACU Hill J at [8] expressed "some misgivings" about jurisdiction, but apparently on the basis that following a discontinuance the proceedings were at an end and there is nothing that could go before a Full Court. If there was power to set aside a discontinuance, to his Honour it was "not immediately apparent how the application (was) one that really resides in the Full Court". If it did, his Honour did not think that s 25 would permit the Full Court jurisdiction to be exercised by a single judge. In any event, his Honour decided to follow Jacobson J, partly because the husband was seeking special leave from the High Court and that the two cases "should be kept together" (at [10]). • If yes, can that jurisdiction be exercised by a single judge? However, as FAI Insurance shows, particular rules of court may produce a different result. 18 In the present case what terminates the appeal is not non-compliance with a particular order, but the operation of O 52 r 19(1A), which provides that upon filing and service of the notice of discontinuance "the appeal is abandoned". Whether this makes any difference is, in my view, a matter that should be considered by a Full Court. One matter to be considered is whether Mr Christodoulou's "Notice of Discontinuance", which purports to be under the wrong rule and which is expressed to be conditional on the (unnecessary) permission of the Court, is a notice of discontinuance within the meaning of O 52 r 19(1). But the jurisdiction, if it exists, is a matter for exercise by a Full Court, since it is not within the statutory exceptions to s 25(1). If there is jurisdiction to allow withdrawal of a (valid) notice of discontinuance of an appeal, that is part of the appellate jurisdiction of the Court. It concerns the interlocutory management of appeals, just like the matters dealt with in subss (2) and (2B). It is not a matter within the original jurisdiction. 19 I will therefore order that the two motions be referred for hearing by a Full Court. To the extent that I have power to do so, I will reserve the costs. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. | motion seeking permission to discontinue appeal and recover security paid into court second motion seeking leave to withdraw discontinuance appeal |
They arise out of concerns about the means by which the Commonwealth wishes to improve the living conditions in the Alice Springs town camps. As long ago as 5 May 2006 the then Commonwealth Minister for Aboriginal Affairs and the then Northern Territory Chief Minister, announced a joint $30 million (subsequently in 2007 increased to $80 million) commitment to improve living conditions in those town camps. On 17 August 2007, the Northern Territory National Emergency Response Act 2007 (Cth) (the NTNER Act) came into force. Pursuant to that Act, in September 2007, the Alice Springs town camp areas were declared "prescribed areas". On 17 September 2007, the Commonwealth and the Northern Territory entered into a "Memorandum of Understanding between the Commonwealth Government and the Northern Territory Government: Indigenous Housing, Accommodation and Related Services September 2007" (the MOU). That enabled, and led to, the Strategic Indigenous Housing and Infrastructure Program (the SIHIP), which was subsequently subsumed into the National Partnership Agreement on Remote Indigenous Housing (the National Partnership Agreement) entered into between the Commonwealth, the States and the Northern Territory. In June 2008, substantial funds were proposed to be made available from the SIHIP for the development of the Alice Springs town camps. It was a condition of the availability of those funds that the Commonwealth be granted subleases over the town camp areas for a minimum period of 40 years, to obtain appropriate security for that investment. Extensive negotiations then followed primarily between the Tangentyere Council Inc acting as agent for the Housing Associations (lessees in perpetuity of the town camps) and the Commonwealth. In May 2009, the commitment under the SIHIP to improving housing and infrastructure on the Alice Springs town camps was increased to $100 million. By 24 May 2009, it was apparent that negotiations on the proposed 40 year subleases had stalled. The prospect of compulsorily acquiring the Alice Springs town camps land under s 47 of the NTNER Act was ventilated. That apparently prompted a renewal of negotiations about the proposed 40 year subleases. Ultimately, on 29 July 2009 16 Housing Associations (the fourth respondents) agreed to sign the proposed 40 year subleases. The applicants in both proceedings are not merely interested in driving a hard bargain. Fundamentally, their concern is that the Alice Springs town camps are effectively owned by Aboriginal people or their entities, and that they should not, and cannot, alienate their interests in that land either absolutely or by a 40 year sublease, so that they are giving away control of their land. The general history of the town camps is set out in the judgment of Kearney J in Mpwetyerre Aboriginal Corporation v Alice Springs Town Council (1996) 132 FLR 1 at 4-5, and by Angel J in Tangentyere Council Inc v Commissioner of Taxes (NT) (1990) 99 FLR 363 at 366-70. It is not necessary to espouse fully the accuracy of those descriptions. The first and second respondents do not accept that they are fully accurate. It is sufficient to accept that the applicants in each proceeding see their tenure in the Alice Springs town camps as of great significance, and as the product of the claim for land rights by Aboriginal people. The applicant in the first proceeding (VID 547/2009), Barbara Shaw (Ms Shaw), is a resident of one of the town camps under a "permanent tenancy agreement" with the Housing Association which leases the town camp land from the Northern Territory Minister for Lands and Housing. She is concerned about the proposed decision by the Commonwealth Minister for Families, Housing, Community Services and Indigenous Affairs (the Minister) to give a notice pursuant to s 47(1) of the NTNER Act to the Northern Territory in relation to the Alice Springs town camps, including the town camp of which she is a resident, which notice would have the effect of the Commonwealth compulsorily acquiring the town camps land (the proposed decision). I shall call that proceeding "the Section 47 proceeding". Ms Shaw is concerned that the Minister intends to make the proposed decision without giving the residents in the Alice Springs town camps "reasonable, proper or appropriate" notice of the proposed decision, or affording them the opportunity to be heard in respect of how their rights and interests may be affected by the proposed decision. Ms Shaw claims that a breach of the rules of procedural fairness has occurred or is likely to occur in connection with the conduct of the Minister leading up to the proposed decision. She says that the proposed decision, if implemented, would remove her rights to enjoy the benefits of her tenancy agreement, and remove her legal right to continue to live in her house. The Section 47 proceeding was commenced as a representative party proceeding pursuant to the provisions of Part IVA of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). For the reasons set out below, I ordered that the Section 47 proceeding no longer continue as a representative party proceeding. That does not diminish the significance of Ms Shaw's claim or of her concerns. Ms Shaw relies upon the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act), and ss 39B(1) and (1A)(c) of the Judiciary Act 1903 (Cth) to support her action. If the Minister makes a decision under s 47(1) of the NTNER Act, it will be a decision to which the ADJR Act applies. Section 6(1) of the ADJR Act allows a person aggrieved by a person proposing to engage in conduct for the purpose of making a decision to apply to this Court for an order of review in respect of the conduct on several grounds, including the ground relied on in this instance, namely, that a breach of the rules of natural justice has occurred, is occurring or is likely to occur, in connection with the conduct: s 6(1)(a) ADJR Act. Ms Shaw seeks orders pursuant to s 16(2) of the ADJR Act, and further or alternatively pursuant to ss 39B(1) and (1A)(c) of the Judiciary Act 1903 (Cth), directing the Minister to refrain from making the proposed decision until such time as the Minister has given "reasonable, proper and appropriate notice of the proposed decision to each of the group members and afforded each of them the opportunity to be heard in respect of how their rights and interests may be affected by the proposed decision" or alternatively, an order directing the Minister "personally to refrain from making the proposed decision", as well as now a more refined declaratory order. In essence, Ms Shaw seeks to have determined the issue of whether the power of the Minister to give a notice under s 47(1) of the NTNER Act is conditioned upon affording procedural fairness to the residents of the Alice Springs town camps, and specifically, the giving of "reasonable, proper and appropriate" notice to the occupants of land the subject of the notice. She also claims that the Minister up to the time of the Section 47 proceeding has failed to give reasonable, proper and appropriate notice to her of the proposed decision, or to give her the opportunity to be heard in respect of how her rights and interests may be affected by the proposed decision. Other issues earlier raised by Ms Shaw are no longer pursued, in part because in any event the Minister proposes to give her, and other residents of the town camps, further opportunity to be heard on those matters. The applicants in the second proceeding (VID 558/2009) (the Residents) are residents of a number of the Alice Springs town camps. They include Ms Shaw. Each is a member of a Housing Association, and lives on one of the town camps under a tenancy agreement with that Housing Association. The fourth respondents, the Housing Associations, are the various incorporated bodies which have a leasehold interest in town camps. It is over that land that each of the Housing Associations proposes to grant to the Executive Director of Township Leasing (the Executive Director) a 40 year sublease relevantly in common terms. The lawfulness of the proposed subleases is challenged. I shall call that proceeding "the Sublease proceeding". The Residents allege that the Minister has required each of the Housing Associations to grant, and the Housing Associations have agreed to grant, 40 year subleases of the Alice Springs town camps to the Executive Director for a nominal figure. The Residents further allege that, if the Housing Associations do not enter into the subleases, the Minister has threatened to give a notice to the Northern Territory under s 47 of the NTNER Act, effectively compulsorily to acquire the Alice Springs town camps, and to vest the land in the Commonwealth free and discharged of all rights and interests in the land including all rights of the Residents to live in the houses they occupy on the land under their tenancy agreements. The Residents allege further that the Minister has given, or intends to give, a notice to agree to the subleases under s 20CA(3) of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) (the ALR Act). The Residents now claim that the proposed 40 year subleases are contrary to the interests of the members of the Housing Associations; that by giving effect to the subleases the Housing Associations will be breaching their Constitutions or their Rule Books and their Executive Committees will be breaching their fiduciary duties and contractual duties owed to the members and the Residents; and that the Minister by requiring the Housing Associations to enter into the subleases will engage in the tort of procuring or inducing those breaches. Some earlier claims were not pursued at the hearing. The Sublease proceeding was also commenced as a representative party proceeding pursuant to the provisions of Part IVA of the FCA Act. The group members to whom the Sublease proceeding relates are occupants of houses in the Alice Springs town camps, who have each entered into a tenancy agreement with a Housing Association. If the proposed 40 year subleases are entered into, they claim that the tenancy agreements under which the Residents and group members occupy their present homes in the Alice Springs town camps will be terminated and extinguished. More fundamentally, they claim that the Housing Associations in the circumstances cannot agree to enter, and cannot enter, into the 40 year subleases because that would effectively alienate them from their interest in the town camps land. For reasons set out below, I ordered that the Sublease proceeding no longer continue as a representative party proceeding. That ruling does not diminish the significance of the Residents' claims or their concerns. All the Residents, including Ms Shaw, are members of one of the Housing Associations. All live in one of the Alice Springs town camps. Each has entered into a tenancy agreement with the Housing Association holding the lease over the relevant town camp, under which the Residents pay rent to the Housing Associations and pay bills such as electricity, telephone and excess water. The terms of the tenancy agreements is a matter to which it will be necessary to refer later in these reasons. There are 18 Alice Springs town camps that are controlled by 15 different Housing Associations. Each of the Housing Associations is an incorporated body. Three are incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (the CATSI Act), namely, Ilparpa Aboriginal Corporation, Karnte Aboriginal Corporation and Mpwetyerre Aboriginal Corporation. The remainder are incorporated under the Associations Act (NT). The Housing Associations have perpetual succession pursuant to the terms of the Acts under which they were incorporated: s 11 Associations Act (NT) and s 42.1 CATSI Act. The Housing Associations have each been granted either a Special Purposes Lease or a Crown Lease in perpetuity over the particular Alice Springs town camp that it respectively manages by the third respondent, the Northern Territory. Those leases were granted either under the Special Purposes Leases Act (NT) (the SPL Act) or the Crown Lands Act (NT) (the CL Act). It will be necessary to refer to the Constitutions, Rule Books, and the Leases of each Housing Association later in these reasons. Three of the town camps are not involved in the Sublease proceeding. They are the Irklancha Atwacha town camp, which is under the control of a Housing Association independent of the Tangentyere Council Inc, and the Whitegate and Namatjira town camps that are "unofficial" and operate on Northern Territory Crown land. Ms Shaw is a member of the Mount Nancy Housing Association Inc. The Mount Nancy Housing Association Inc was granted a Special Purposes Lease on 23 August 1976 over the whole of the land described in Certificate of Title Volume 622 Folio 358 being Lot 5135 Town of Alice Springs from plan S75/104 (known as "Mount Nancy town camp"). Ms Shaw lives with her two daughters in House 5 at the Mount Nancy town camp. The second applicant in the Sublease proceeding, George Robertson Jampitjinpa, is a member of the Anthelk Ewlpaye Association Inc. The Anthelk Ewlpaye Association Inc was granted a Special Purposes Lease on 12 August 1977 over the whole of the land described in Certificate of Title Volume 622 Folio 183 being Lots 1733, 3702 and 3704 Town of Alice Springs from plan S72/098 (known respectively as "Hoppy's Camp town camp", "Charles Creek town camp" and "The Village town camp"). Mr Jampitjinpa lives with his wife in House 12 at Hoppy's Camp town camp. The third applicant, Gwen Gillen, is a member of the Karnte Aboriginal Corporation Inc. The Karnte Aboriginal Corporation was granted a Crown Lease for the purpose of "Aboriginal Residential Housing Area" on 22 January 1993 over the whole of the land described in Certificate of Title Volume 622 Folio 184 being Lot 7850 Town of Alice Springs from plan S87/059 (known as "Karnte town camp"). Ms Gillen lives with her husband at House 3 at the Karnte town camp. The fourth applicant, Warren Tonkin, is a member of the Ilyperenye Association Inc. The Ilyperenye Association Inc was granted a Special Purposes Lease on 10 July 1981 over the whole of the land described in Certificate of Title Volume 192 Folio 020 being Lot 5708 Town of Alice Springs from plan S80/018 (known as "Old Timers town camp"). Mr Tonkin lives at House 2 at Old Timers town camp. The fifth applicant, Melissa Brown, is a member of the Ilperle Tyathe Association Inc. The Ilperle Tyathe Association Inc was granted a Special Purposes Lease on 28 December 1978 over the whole of the land described in Certificate of Title Volume 623 Folio 349 being Lot 5149 Town of Alice Springs from plan S77/036 (known as "Warlpiri town camp"). Ms Brown lives at House 7 at Warlpiri town camp. Ilperle Tyathe Association Inc also has control over an unofficial camp known as "Whitegate town camp" on that land. That camp has not been involved in the negotiations giving rise to the Sublease proceeding. The sixth applicant, Marlene Hayes, is a member of the Akngwertnarre Association Inc. The Akngwertnarre Association Inc was granted a Special Purposes Lease on 22 December 1977 over the whole of the land described in Certificate of Title Volume 622 Folio 176 being Lot 5150 Town of Alice Springs from plan S77/035 (known as "Morris Soak town camp"). Ms Hayes lives at House 5 at Morris Soak town camp. The "Namatjira town camp" is an unofficial camp also on that land that has not been involved in the negotiations giving rise to the Sublease proceeding. The seventh applicant, Keven Wirri, is a member of the Mpwetyerre Aboriginal Corporation. The Mpwetyerre Aboriginal Corporation was granted a Special Purposes Lease on 3 April 1981 over the whole of the land described in Certificate of Title Volume 622 Folio 185 being Lot 2664 Town of Alice Springs from plan A000556 (known as "Abbotts town camp"). Mr Wirri lives with his wife, two children and one grandchild at House 6 at the Abbotts town camp. The eighth (former) applicant, Vanessa Kruger, is a member of the Aper-Alwerrknge Association Inc. The Aper-Alwerrknge Association Inc was granted a Special Purposes Lease on 30 January 1979 over the whole of the land described in Certificate of Title Volume 622 Folio 260 being Lot 5180 Town of Alice Springs from plan S78/058 (known as "Palmers town camp"). Ms Kruger lives at House 1B at Palmers town camp. By consent order dated 23 September 2009, Ms Kruger was removed as an applicant. The fifteenth applicant, Janice Palmer, is a member of Aper-Alwerrknge Association Inc, and lives at House 5 at Palmers town camp. She was added as an applicant by consent order dated 23 September 2009. The ninth applicant, Maureen Williams, is a member of the Inarlenge Community Inc. The Inarlenge Community Inc was granted a Crown Lease for the purpose of "Aboriginal residential living area and ancillary" on 29 October 1993 over the whole of the land described in Certificate of Title Volume 333 Folio 116 being Lot 3701 Town of Alice Springs from plan S72/84 (known as "Little Sisters town camp"). Ms Williams lives at House 6 at Little Sisters town camp, with her sister's two daughters and their families. The tenth applicant, Rachel Jurra, is a member of the Ilparpa Aboriginal Corporation. The Ilparpa Aboriginal Corporation was granted a Special Purposes Lease on 23 July 1980 over the whole of the land described in Certificate of Title Volume 622 Folio 259 being Lot 5713 Town of Alice Springs from plan S80/079 (known as "New Ilparpa town camp"). Ms Jurra lives at House 1 at New Ilparpa town camp. The eleventh applicant, Rosemary Rubuntja, is a member of the Anthepe Housing Association Inc. The Anthepe Housing Association Inc was granted a Special Purposes Lease on 8 November 1976 over the whole of the land described in Certificate of Title Volume 622 Folio 178 being Lot 5146 Town of Alice Springs from plan S75/103 (known as "Anthepe town camp"). Ms Rubuntja lives at House 7 at Anthepe town camp. The thirteenth applicant, Pamela Lynch, is a member of the Yarrenyty Arltere Association Inc. The Yarrenyty Arltere Association Inc was granted a Special Purposes Lease on 27 January 1981 over the whole of the land described in Certificate of Title Volume 191 Folio 062 being Lot 5195 Town of Alice Springs from plan S79/098 (known as "Larapinta Valley town camp"). Ms Lynch lives at House 15 at Larapinta Valley town camp. The fourteenth applicant, Cheryl McMillan, is a member of the Ewyenper-Atwatye Association Inc. The Ewyenper-Atwatye Association Inc was granted a Special Purposes Lease on 14 February 1980 over the whole of the land described in Certificate of Title Volume 622 Folio 177 being Lot 5189 Town of Alice Springs from plan S79/070 (known as "Hidden Valley town camp"). Ms McMillan lives at House 36 at Hidden Valley town camp. On 12 August 2009, I gave leave to the applicants in the Sublease proceeding to discontinue that proceeding as against the ninth, fourteenth, sixteenth and seventeenth fourth respondents, namely Nyewente Association Inc, Ilpeye Ilpeye Aboriginal Corporation, Anhelke Aboriginal Corporation and Lhenpe Artnew Aboriginal Corporation. The Minister is the first respondent in the Sublease proceeding, and the respondent in the Section 47 proceeding. The Executive Director is the second respondent in the Sublease proceeding. The Executive Director is an officer of the Commonwealth, who has the statutory function of administering the proposed subleases, under s 20C(ac) of the ALR Act. The Northern Territory is the third respondent in the Sublease proceeding. The Tangentyere Council Inc (the Council) is not a party to either proceeding. It acted as agent for the Housing Associations in the negotiations giving rise to the Sublease proceeding. The Council is incorporated under the Associations Act (NT). The Council is governed by its Constitution as amended on 6 March 2001. alleviating the plight of Members of Member Communities, their families and visitors by improving their housing, living conditions and general standard of living. Clause 4 of the Constitution of the Council sets out the powers that the Council may exercise in order to achieve the central objects of the Council, and includes: to do all such other lawful things as are considered by the Executive or the Members at a Council Meeting or Annual General Meeting incidental or conducive to the attainment of the objects and purposes of Tangentyere. The Council has 18 members, being the Housing Associations that control the Alice Springs town camps (see clause 6.1 of the Constitution ). The residential population of the town camps, including visitors, sometimes rises to about 3,500 people. Each town camp comprises a largely distinct Aboriginal community based on language and kinship groups. The Council manages some 198 houses on the town camps. It is not in issue that the housing and infrastructure on the town camps is poor, and that permanent house occupancy on average is about 10 per house or somewhat higher in certain of the town camps. Those applications were heard by Goldberg J on 30 July and 4 August, and were brought to preserve the status quo (in relation to the giving of a notice under s 47(1) of the NTNER Act) until the proceedings could be heard. The applicant sought that the Minister, the Northern Territory and various Housing Associations be restrained, whether by themselves, their servants or agents, from entering into or giving effect to a sublease of any part of the town camps land. His Honour granted the interlocutory relief on 6 August 2009, pending the hearing of the trial, effectively preserving the status quo until this matter could be heard: see Shaw v Minister for Families, Housing, Community Services and Indigenous Affairs [2009] FCA 844. The applicant in the Section 47 proceeding is Ms Shaw. The group members were defined in the amended application at paragraph 2 as the persons who have been granted rights of occupancy of houses in the Alice Springs town camps under agreements entered into by them with the Housing Associations, which in turn have been granted Special Purposes Leases or Crown Leases in perpetuity over the town camps land. The applicants in the Sublease proceeding are set out above. They are collectively referred to as the Residents. Ordinarily, proceedings under Part IVA of the FCA Act require notification of certain matters to be given to the group members in relation to the proceedings pursuant to s 33X of the FCA Act. Pursuant to s 33X(2) the Court may dispense with compliance with any or all of the notification requirements where the relief sought in a proceeding does not include any claim for damages. There is no claim for damages in either of the proceedings. It was common ground that, if the proceedings were to continue as representative proceedings, the Court should make an order under s 33X(2). The Minister made an application pursuant to s 33N of the FCA Act for orders that both proceedings no longer continue as representative proceedings. The Minister accepted that, if successful, both proceedings would result in orders applying equally to areas of land beyond that parcel of land over which Ms Shaw has a tenancy agreement with the Mount Nancy Housing Association. The Minister accepted that she would be bound, if final relief in terms of the orders sought in the Section 47 proceeding were granted, not to compulsorily acquire any of the land listed in the Schedule to the application being the town camps land (subject to the land leased by Ilpeye Ilpeye Aboriginal Corporation and Irklancha Alwacha Association, who have expressed their wish to have the land they currently lease from the Northern Territory acquired by the Commonwealth) without according procedural fairness to the Residents of the town camps. There was, in a practical sense, no need for either the Section 47 proceeding or the Sublease proceeding to be representative proceedings. It was not suggested that any particular tenancy arrangement between a resident of a town camp and a Housing Association was so different as to require separate consideration. Nor was it suggested that the leases of the Housing Associations were so different as to require separate consideration in that context. The Minister accepted that the Section 47 proceeding, if confined to Ms Shaw as the applicant, would apply generally to all residents of the town camps. She accepted that Ms Shaw had standing to bring that proceeding. She also accepted the standing of the Residents to bring the Sublease proceeding. On the other hand, the timing of the hearing meant that the right of a group member to opt out of either of the proceedings under s 33J could not be extended to the group members. There was no time to comply with s 33X(1) to give them that opportunity. Whilst I have no reason to doubt that Ms Shaw's concerns or the Residents' concerns may be widely shared by the residents of the town camps, I did not think it was appropriate to assume that their claims had the informed consent of all of them, or indeed to assume that all of them necessarily agreed with those claims. I was also mindful of the entitlement of any resident of a town camp who wished to do so to apply to be joined as an applicant in either or both of the proceedings. There was also no reason to think that the potential evidence to be adduced in the proceedings would in any way be less available or less admissible if an order under s 33N(1) were to be made. Hence, on 12 August 2009, I ordered pursuant to s 33N, that the Section 47 proceeding and the Sublease proceeding should no longer continue as a representative proceedings. On that date, I also gave leave to Ms Shaw and the Residents to apply under O 6 r 13 for an order that the applicants in either proceeding represent other concurrent interests. It is not intended to convey any commentary upon those events. Consequently, it is also quite comprehensive, as editing of the history of events might accidentally imply such a commentary. I have not, however, included all the correspondence between Gilbert + Tobin on behalf of the Council and the Commonwealth concerning the detailed terms of the proposed subleases. Between April and May 2007, discussions took place between the Commonwealth, the Northern Territory and the Council representatives on behalf of the Housing Associations concerning the joint government commitment of funds to improve living conditions in the Alice Springs town camps, referred to at [2] above. On 18 April 2007, the then Commonwealth Minister for Aboriginal Affairs wrote to Mr Tilmouth, the Executive Director of the Council, and confirmed that, under the Commonwealth's offer for the provision of funding, the Northern Territory would manage the Alice Springs town camps' housing as public housing, and that he had agreed to the current holders of town camp leases retaining those leases, subject to their agreement to sublease residential areas to the Northern Territory for no less than 99 years without conditions. On 20 April 2007, Mr Tilmouth wrote to that Minister welcoming the offer, including allowing the Housing Associations to retain their leases over the town camps. On 4 May 2007, he wrote to that Minister that the Executive of the Council, as the representative of the Housing Associations, agreed in principle to subleasing their lease areas to the Northern Territory for 99 years, on the basis of $70 million being spent over five years on the housing and infrastructure upgrades of the town camps. On 18 May 2007, Mr Tilmouth sent, via email, a statement from the then President of the Council, advising that after three days of deliberation, the Council had resolved to decline the Government's "$60 million conditional offer" and indicating that the Council would not sign a Memorandum of Understanding. In that email, the Council welcomed the commitment of $60 million to the Alice Springs town camps, and appealed to that Minister to reconsider a proposed amendment to the Memorandum of Understanding as to how that commitment would be effected. A deadline for the Council to sign the proposed Memorandum of Understanding of 23 May 2007 was imposed, with the comment that otherwise the $60 million would be re-allocated to other areas of need. On 21 June 2007, the Commonwealth announced a "National Emergency Response" for the protection of indigenous children in Northern Territory communities. The catalyst for that announcement was the "Little Children are Sacred" Report of the Northern Territory Board of Inquiry into the Protection of Aboriginal Children from Sexual Abuse. It gave rise to what has been called "the Intervention" or "the Northern Territory Intervention". The Australian Government will act in this area if the NTG fails to do so. It relevantly came into effect the following day. Section 4(3) of the NTNER Act empowered the Minister to declare the Alice Springs town camp areas to be "prescribed areas" for the purposes of the NTNER Act. By the Northern Territory National Emergency Response (Town Camps) Declaration 2007 (No 1), the Alice Springs town camps were declared "prescribed areas" by the Minister. It will be necessary to consider the consequences of the town camps being given that status later in these reasons. In September 2007, the MOU referred to at [4] above was entered into. It enabled and led to the SIHIP, which was subsequently subsumed into the National Partnership Agreement, as set out at [5] above. Following the 2007 federal election, on 12 December 2007, the Council wrote to the Minister to request urgent discussion on aspects of the Northern Territory Intervention, and to restate the proposal presented by the previous government. On 18 March 2008, a meeting was convened between the Minister and the Council representatives (including their solicitors) to discuss the options for resuming negotiations for the development of the Alice Springs town camps. On 17 June 2008, the Minister wrote to the Council offering up to $50 million from the SIHIP to be used for infrastructure and housing in the Alice Springs town camps on the basis that the government be granted subleases for a minimum of 40 years over the town camps. In that letter, the Minister also noted that she would support the release of up to $5.3 million to the Council as a "transitional payment while SIHIP is established and prior to the grant of subleases". On 25 June 2008, the Council wrote to the Minister informing her that the Council Executive had passed a resolution on that same day agreeing to negotiate subleases within the framework set out in the Minister's letter of 17 June 2008. On 10 July 2008 a meeting took place in Alice Springs at which an Agreed Work Plan was signed by the Minister, the (then) Northern Territory Minister for Housing, and the President of the Council, who signed for and on behalf of 15 Alice Springs town camp Housing Associations, and in his capacity as President of the Council. The Agreed Work Plan provided for 40 year subleases to be granted by the Housing Associations to the Executive Director within six months (that is, by 10 January 2009). The Agreed Work Plan provided for a Working Group to be formed constituting representatives of each party to the Plan, and for that Working Group "to meet from time to time to check how this Work Plan is going and to review the Work Plan after 12 months to see what should happen next". The Council nominated its members of the Working Group, including those from the Housing Associations. The first Working Group meeting took place on 18 August 2008 in Alice Springs. Thereafter a number of meetings were held to implement the Agreed Work Plan. On 26 August 2008, the Commonwealth provided a draft of the proposed subleases to the Working Group members, including Council representatives. On 5 September 2008, a funding agreement between the Council and the Northern Territory was signed for a transitional payment of $5.3 million to address urgent house upgrades (and as envisaged in the letter of 17 June 2005, referred to in paragraph [75] above). As at the date of these proceedings, $2.915 million had been released as part of that stage 1 instalment. The second Working Group meeting was held in Alice Springs on 17 September 2008. At that meeting, the Council presented an issues paper regarding the proposed subleases drafted by the Commonwealth, and requested a formal response to that issues paper. On 22 October 2008, the Minister wrote to the Council in response to the Council's issues paper. On 27 October 2008, a meeting took place between the Minister and Council representatives in Alice Springs. On 31 October 2008 an email was forwarded to the Council with responses to questions asked of the Minister at that meeting. On 3 November 2008, the Council released a media statement entitled "Lease Negotiations Continue", in which it confirmed the Council's commitment to grant 40 year subleases to the Executive Director in accordance with the Agreed Work Plan. On that same day, the Branch Manager of the Land Reform Branch of the Indigenous Remote Service Delivery Group in the Commonwealth Department of Families, Housing, Community Services and Indigenous Affairs (Ms Edwards) wrote to the Working Group proposing the setting of a timeframe in order to meet the 10 January 2009 negotiation deadline. Thereafter negotiations ensued in relation to settling the terms of the proposed subleases. On 21 November 2008, Gilbert + Tobin, solicitors on behalf of the Council, wrote to Ms Edwards setting out the Council's concerns. On 5 December 2008, Ms Edwards wrote to Gilbert + Tobin in response to their letter of 21 November 2008. ... [T]he Agreed Work Plan anticipates that Alice Springs town camp residents, the Housing Associations and Tangentyere Council will have a role in the implementation of the Agreed Work Plan by four separate mechanisms ... However, the Minister was clear that these roles do not extend to the governance of SIHIP, nor to control of housing policy and tenancy management. At that meeting an extension of the negotiation period was discussed. There were no meetings of the Working Group after that meeting. On 17 December 2008, Gilbert + Tobin sent a "marked-up" draft of the proposed subleases, and a bundle of documents, including a proposed timeline for consultations with the Housing Associations regarding the proposed subleases. That proposed timeline indicated that the signing of the subleases would occur during June 2009 at the earliest. On 18 December 2008, Ms Edwards responded. On 31 December 2008, Gilbert + Tobin sent a further document setting out their understanding of the proposed terms of the subleases, and an indication of the parties' positions on each of the terms. That document was proposed to be used during their consultations with the Housing Associations. In the meantime, on 29 November 2008, the National Partnership Agreement (referred to at paragraph [5] above) was entered into between the Commonwealth and the States and the Northern Territory, to take effect on 1 January 2009. The Commonwealth fixed that date as the deadline in order to enable construction under the SIHIP to commence in 2009. On 9 January 2009, the Minister wrote a letter to each of the Housing Associations urging them to progress consideration of the proposed subleases as soon as possible, so that construction could commence as soon as possible. Territory Housing would undertake these functions in consultation with each of the Housing Associations. Territory Housing has also agreed to subcontract Tangentyere Council as an agent, subject to Tangentyere meeting strict performance requirements. After the initial three year period, a competitive tender process would be held to allow other service providers to compete for housing services. This proposal was set out in the Agreed Work Plan which was signed on your behalf in July 2008. On 27 January 2009, the Council's housing officer, David Donald, sent a request to Ms Edwards that Commonwealth representatives be present at each of the Housing Association consultation meetings to discuss the proposed subleases. Ms Edwards responded on 30 January 2009 that Commonwealth representatives would be made available to attend. Between 2 February 2009 and 5 March 2009, consultation meetings were conducted with representatives of the various Housing Associations in relation to the proposed subleases. Mark Coffey, the Executive Director --- Alice Springs Transformation Plan, attended with his staff on behalf of the Commonwealth. Northern Territory Government officers also attended. Detailed fact sheets were distributed in simple English. A summary of the meetings was prepared by the Commonwealth. Ms Shaw attended the meeting held at the Mount Nancy town camp on 4 March 2009. On 5 February 2009, a further draft of the proposed subleases was sent to Gilbert + Tobin by the Commonwealth. On 24 February 2009, the Council Working Group members wrote to the Minister, requesting an extension of the negotiation period beyond the 28 February 2009 deadline, but without nominating a specific date. On 3 March 2009, Ms Edwards wrote to the Council Working Group members indicating that an extension of time was being considered. Between 11 and 14 March 2009, Commonwealth and Northern Territory Government officers visited the Alice Springs town camps and provided information to residents about the Commonwealth's proposal. The officers also distributed detailed fact sheets in simple English to residents. On 20 March 2009, the Minister wrote to the Council agreeing to a further extension of the negotiation period for the purpose of agreeing on the terms of the proposed subleases until 4 May 2009, to allow for a second round of consultations with the Housing Associations. In the letter the Minister expressed disappointment at the lack of progress in the negotiations and the impact the delays had on the ability of works to be included in the SIHIP's 2009 work program. The Minister proposed a meeting between the Council's Executive, Housing Association representatives and interested town camp residents on 24 March 2009 (which was subsequently rescheduled to 23 April) to assist with the progress of the negotiations. Officers from my Department and from the Northern Territory Government attended each of the consultation meetings and in addition have been distributing information and discussing the proposed agreement with residents of the various town camps. Reports of this activity indicate that information about the proposed subleases and related arrangements is new to many town camp residents notwithstanding that the Agreed Work Plan was signed on their behalf in July 2008 and that Tangentyere Council has been negotiating the subleases on behalf of the Housing Associations for more than eight months. It is essential that we move quickly on land tenure to ensure that SIHIP can proceed quickly. This extension would be on the basis that a final and definite response on the proposed sublease be provided in writing by close of business on 4 May 2009. In order to assist with these further consultations, I again offer the assistance of my officials and pass on a similar offer from the Northern Territory Government. In addition, Minister Anderson and I propose to be available for a meeting with the Tangentyere Council Executive, Housing Association representatives and any other interested town camp residents on Friday 24 April 2009 so that we may explain in person the benefits of agreeing to the subleases. On 27 March 2009, the Commonwealth and the Northern Territory finalised an Implementation Plan for the National Partnership Agreement. Between 30 March and 22 April 2009, the second round of Housing Association consultations took place, and on 31 March 2009, Ms Edwards responded to certain inquiries of Gilbert + Tobin. As occurred with the first round of consultations, Commonwealth and Northern Territory Government representatives attended and detailed fact sheets in simple English were again distributed to residents. A further document responding to questions asked during the first round of consultations with the Housing Associations was also prepared and distributed during the second round of consultations. This is called a Sub-Lease Agreement . This will mean that the Town Camps will still own that Town Camp Lease but the Australian Government will take responsibility for all the infrastructure and houses and community land. The Council noted that at the conclusion of each Housing Association consultation, the Housing Association representatives had been asked by the Council to vote on acceptance of the Commonwealth's offer, and that none of the Housing Associations had agreed to sign the offer to date. On 23 April 2009, a Special General Meeting took place at the Council's offices in Alice Springs. On 24 April 2009, the Council wrote to the Minister, stating again that the Housing Associations consulted with to date had declined the Government's offer. The Council also outlined in that correspondence the key "sticking points" in the offer. We clearly hope that you reconsider this position. Our advice is that it would be extremely rare for a lease to be effectively granted with no conditions. Retaining a select band of key decision making responsibilities with the underlying Housing Associations we believe would not undermine the integrity of the sub-lease, but would in fact continue to empower residents to take responsibility for their own lives, something which is lacking in the public housing model that you are proposing. The Minister also referred to her decision to commence an Alice Springs Transformation Plan to address broader issues affecting Aboriginal people in the region. This mechanism would comprise a tripartite forum comprised of an Australian Government, a Northern Territory Government and a Tangentyere Council representative. This forum would be required to meet quarterly to advise tenancy management issues. This approach would ensure that the Australian Government and Tangentyere Council work cooperatively with the Northern Territory to address any issues arising out of the new tenancy arrangements. On 2 May 2009, the Commonwealth and the Northern Territory issued a joint press release announcing the commencement of the Alice Springs Transformation Plan, including the commitment of up to $125 million. During the week beginning 11 May 2009, Commonwealth officers conducted a fact sheet drop throughout the Alice Springs town camps in relation to the Commonwealth's revised offer. This fact sheet was headed "The NEW Leasing Offer from the Australian Government" and relevantly stated: The Australian Government would still like to lease the Town Camp land area from the Housing Associations for 40 years. The lease is so that the Government can look after the houses properly for people. ... This leasing offer is not about kicking people out of their homes in Town Camps. The Government wants to make the houses in Town Camps better and safer for the people who are living there. We don't want people to end up living in the scrub or the river. The Australian Government has given the Housing Associations more time to think about this new offer. But the Minister is asking for an answer by Thursday 21 May 2009. On 12 May 2009, the Minister wrote to the Council inviting them to nominate a representative for the Alice Springs Transformation Plan Joint Steering Committee. On 13 May 2009, the Council wrote to the Minister to address their remaining concerns prior to a meeting scheduled on 14 May 2009 in Canberra. On 14 May 2009, a meeting occurred between Council representatives, the Minister and Ms Edwards to discuss the remaining concerns in an effort to finalise the negotiations before the deadlines. On that same day, Ms Edwards sent to Gilbert + Tobin a further draft of the proposed subleases. On 18 May 2009, Gilbert + Tobin sent a proposal to Ms Edwards to revise the proposed subleases in the light of the issues raised in the Council's letter of 13 May 2009 and as discussed at the meeting of 14 May 2009. On 20 May 2009, Ms Edwards responded to Gilbert + Tobin, addressing the key elements of the Council's concerns. On 21 May 2009, the Council wrote to the Minister noting that Ms Edwards' letter of 20 May 2009 made clear that further concessions on these key points would not be made, and that the Council would not endorse the Commonwealth's offer. The Council also noted that the Housing Associations had rejected the Commonwealth's offer, and attached an "All Camps Resolution" document which outlined the decisions of the respective Housing Associations to reject the offer. On 24 May 2009, the Minister announced the Commonwealth's consideration of the compulsory acquisition of the Alice Springs town camps under s 47(1) of the NTNER Act by a media release. The letter was headed "Proposal to give a notice under section 47 of the Northern Territory National Emergency Response Act 2007 ". By the letter, the Minister gave notice that she was considering giving the Northern Territory Government a notice under s 47(1) of the NTNER Act in respect of the Alice Springs town camps land. The further content of the letter is set out in [144] below. The letter included an invitation for the recipients "and any other persons who may be affected" to be heard on the proposal by way of written submissions to be submitted by 29 June 2009. The letter also stated that the Minister would be available to meet with interested persons in Alice Springs at 10:30 am on 29 June 2009 to hear views on the proposal. The letter indicated that the Minister would take into account any views expressed at this meeting. The Minister attached to the letter the factors and material she considered to be relevant to her consideration of the proposal. The Minister's letter of 24 May 2009 was of considerable significance in Ms Shaw's contentions in the Section 47 proceeding. On 4 June 2009, the Minister sent a further letter to the Council and the Housing Associations in which she revised the timetable of her consideration of possible compulsory acquisition to ensure that all affected parties would have sufficient opportunity to consider the proposed acquisition and to provide the Minister with their views. The deadline for the written submissions was extended to 28 July 2009. The Minister also proposed to have a second meeting to receive views about it in Alice Springs on 20 July 2009. During May and June 2009, Commonwealth officials conducted an information drive and leaflet drop in the Alice Spring town camps regarding the Minister's consideration of compulsory acquisition. Ms Edwards gave evidence about that process and produced a document summarising the consultations with residents. It is apparent from that document that only some, but by no means a large number of, residents in some of the town camps were spoken to. No-one was available to speak to the officials in a number of the town camps. It does not appear from the document that in the oral discussions which were held with the tenants that any specific details about the consequences of the Minister's exercise of power under s 47 of the NTNER Act, namely that the leases in perpetuity would be extinguished as would the rights of the tenants to occupy their houses under the existing tenancy agreements, were discussed. The evidence was that leaflets or fact sheets were distributed, and that posters were displayed at the Council premises. The flyers and posters were in evidence. The fact sheet was headed "A possible compulsory acquisition --- what does this mean for people on Town camps? " The fact sheets said: Because the Australian Government is worried about the people in Town Camps the Australian Government has now said that if the Housing Associations don't agree to the lease offer then the Australian Government may decide to go ahead with an acquisition. The Housing Associations can still say yes to the lease offer. On the last page of the fact sheet it was stated that the Minister was sending a departmental staff member to the Alice Springs Indigenous Coordination Centre on 20 July 2009 to meet with town camp residents and that people could come and tell this person their story. She will not make a decision before 4 August 2009 at the earliest about whether the Australian Government will work with the Northern Territory Government to go ahead with the acquisition. The email also advised that Government officials were available to provide further information at a free call telephone number or by email. From 23 to 29 June 2009, the Central Australian Aboriginal Media Association radio in Alice Springs aired a community service announcement on behalf of the Commonwealth to inform the public that people affected by the Minister's consideration of compulsory acquisition of the town camps leases would be able to meet with the Minister on 29 June 2009 at Alice Springs, and gave details for that meeting. On 29 June 2009, the Minister attended the meeting in Alice Springs. Interpreters were provided at the meeting, and parts of the meeting were conducted in Aboriginal local language. A transcript of that meeting was in evidence. So if there are questions of detail there will be people from the department who will answer them if you have any questions but more than anything it is about me wanting to come to listen to your point of view of what we have proposed as you know we have been having many discussions over more than 12 months ... But we have come to the point where I am now considering compulsory acquisition of the leases and in the process of thinking about that I want to hear directly from you about your views in that regard. If the Minister were to go ahead, with the proposal, current residents would be able to stay in their houses and if the Minister were to go ahead, reasonable compensation would be paid to the Housing Associations who hold the current leases. A number of persons at the meeting asked questions of the Minister and the departmental officials, and those questions were answered. People can stay. Ms Shaw does not recall having been told either during the meeting with the Minister or at any other time, that if the Minister gives the proposed notice under s 47(1) of the NTNER Act it will terminate her current right of occupancy of her house. According to her sworn statement, Ms Shaw is not aware of, and has never been told, what the content of the terms and conditions of "any new residential tenancy arrangements" referred to in the Minister's letter might be. (It is not necessary to resolve any factual dispute about what she said or was told at that meeting; the different versions of Ms Edwards and Ms Shaw are readily explained by Ms Shaw not having fully understood what she was told and so not recalling it. ) On 3 July 2009, Gilbert + Tobin sent Ms Edwards a "marked-up" copy of the proposed subleases which the Council was prepared to recommend to the Housing Associations for execution. On 17 July 2009, the Executive Director of the Council sent a letter to the Minister seeking the opportunity to have further negotiations in relation to the terms of the proposed subleases, and expressing concern that an agreement had not been reached, referring to matters that had no longer been pressed in the marked-up subleases and providing further explanation of matters contained in the marked-up subleases. On 20 July 2009, Commonwealth officials conducted a further meeting for affected persons at the Alice Springs Indigenous Coordination Centre. Two persons attended the meeting. On 24 July 2009, the Minister wrote to the Council (copied to Gilbert + Tobin) rejecting the request for further negotiations in relation to the terms of the proposed subleases. The Minister stated that the time for negotiations was now over and that there would be no further revisions to the proposed subleases. In the letter, the Minister observed that if the proposed subleases could not be finalised, this would be part of her consideration regarding the possible acquisition of the town camps. I have been consistently clear that the time for negotiations is now over. As such there will be no further revisions to the lease. To accept the Australian and Northern Territory governments' proposal, Tangentyere Council should accept the current version of the lease without revision. The numerous matters raised in the "marked up" lease go well beyond technical drafting matters, raise entirely new issues which had not been the subject of the negotiations and revisit issues which have been previously ruled out as contrary to the lease arrangements required to support major new investment. You should bear in mind that the Housing Association will require prior Ministerial approvals in order to execute the subleases and this process may take a few days. Negotiated leases remain the preferred outcome for government. However, if, after the lengthy negotiations that have been held, the proposed subleases cannot be finalised, this will be part of my considerations regarding the possible acquisition of the town camps. This is the final date for correspondence or representations on this matter. On 29 July 2009, the solicitor for the Council informed Ms Shaw's solicitor that he had received instructions from the Council to accept the alternative offered by the Minister, and that he was in the process of arranging execution of the subleases. He also said that he had instructions to deliver the executed documents to the Minister by 31 July 2009. On 29 July 2009, the Minister announced in a media release that 16 of the Alice Springs town camps under the umbrella of the Council had agreed to the 40 year sublease agreement. The press release noted that the two remaining Housing Associations and their respective town camps, Nyewente Association Inc (Trucking Yards town camp) and Iliyepe Iliyepe (Golders town camp) were in separate discussions with the Commonwealth, and that Lhere Artepe (the organisation representing the Traditional Owners) preferred compulsory acquisition to proceed. In the meantime, Ms Shaw on about 17 July 2009 became so concerned about what was happening that she prepared with some assistance an open letter, and a document headed "Background to the threatened Commonwealth acquisition of Alice Springs town camps". Those documents were widely circulated. They sought support for opposition to the proposed decision to compulsorily acquire the land on which the town camps existed. Obviously, the point had been reached where Ms Shaw and the Residents felt the need to institute these two proceedings. In essence, they want to preserve the power of the Aboriginal people who presently reside on town camps and are members of their respective Housing Associations through the Housing Associations to retain control over the use and development of the town camp lands. By virtue of s 47(3) of the NTNER Act, the land specified in a notice under s 47(1) is vested in the Commonwealth. Note 2: The notice may specify rights, titles and interests that are to be preserved under section 48. Note 3: For the effect of Commonwealth and Northern Territory laws in relation to rights, titles and interests vested under this section, see Division 3. A brief recap of the full communications on the topic is probably helpful. On 24 May 2009 the Minister gave notice that she was considering giving to the Northern Territory Government a notice under s 47 of the NTNER Act to compulsorily acquire the Alice Springs town camps land. The Minister wrote a letter to the Council and to the 15 Housing Associations to that effect. The letter was headed "Proposal to give a notice under section 47 of the Northern Territory National Emergency Response Act 2007 ". The letter first noted the Minister was considering giving the Northern Territory Government a notice under s 47(1) of the NTNER Act in respect of land covering 16 of the Alice Springs town camps. The letter invited the Council and "any other persons who may be affected to be heard on this proposal". It is possible that the Commonwealth may lease or transfer the Land to the Northern Territory or a Northern Territory authority to enable it to be primarily responsible for providing and improving the housing and infrastructure. The non-extinguishment principle (within the meaning of the Native Title Act 1993 ) would apply to any native title affected by the vesting, by operation of s 51 of the NTNER Act. The vesting would not include rights, titles and interests in relation to minerals, petroleum or gas, by operation of s 47(9) of the NTNER Act. Existing registered easements or statutory easements would be preserved, by operation of s 48 of the NTNER Act. The letter also stated that the Minister would be available to meet with interested persons in Alice Springs at 10.30 am on 29 June 2009 to hear views on the proposal. The letter indicated that the Minister would take into account any submissions received at this meeting. The Minister attached to the letter the factors and material she considered to be relevant to her consideration of the proposal. There was, in that letter, no reference to preserving the rights of the residents of the town camps under their tenancy agreements under s 48 of the NTNER Act. I accept that the reference to the current residents, after acquisition, being able to continue to reside on the land subject to any new residential tenancy arrangements does not amount to an intention to preserve the existing rights of the residents under s 48. Did the residents have a right to procedural fairness before any decision under s 47 of the NTNER Act was made? To a degree, this question is now somewhat hypothetical. The Minister says, and I accept (as now does Ms Shaw), that she has not yet made a decision under s 47 to compulsorily acquire the town camps. Moreover, the Minister's evidence shows that she is undertaking further consultations with Ms Shaw and the residents before making any decision under s 47 to compulsorily acquire the town camps. Of course, it is not possible, nor would it be appropriate, to finally determine at this point whether --- on the basis that the Minister consults further as she proposes to do --- that would satisfy any obligation to accord procedural fairness before making such a decision (assuming there is an obligation to accord procedural fairness to Ms Shaw and to the tenants). However, the submissions on behalf of Ms Shaw did not indicate that, in the particular circumstances, the content of any obligation to accord procedural fairness would extend beyond that which is proposed to be done by and on behalf of the Minister. That matter was not formally in issue in the Section 47 proceeding. However, the parties agreed that the issue remained a live one, and so it is desirable to address it. The submissions expose the significantly different starting points of Ms Shaw on the one hand and the Minister on the other. From the point of view of Ms Shaw, there was an obligation to be accorded procedural fairness upon conventional legal principles concerning administrative decision-making under the NTNER Act which may adversely affect a person's rights or interests. From the point of view of the Minister, the NTNER Act generally (including s 47) reflects a policy decision by the Commonwealth in response to a very significant public policy issue, highlighted by the "Little Children are Sacred" Report, namely the need to address serious and widespread child sexual abuse to Aboriginal children in Aboriginal communities in the Northern Territory, and both by implication and expressly it excludes the requirements of procedural fairness in policy decision-making or implementation of the policy, including under s 47. It is easy to understand the respective starting points for the competing contentions. The correct starting point is the NTNER Act itself. Whilst the NTNER Act and, broadly speaking, what it (and other legislative provisions) authorised as part of the Intervention in response to what is described in the long title to the NTNER Act as a "national emergency", is a matter of legislative policy, it does not routinely follow that each and every administrative decision made under the NTNER Act is thereby immune from the obligations of according procedural fairness to those whose rights or interests may be adversely affected by such decisions: see eg South Australia v Slipper [2004] FCAFC 164 ; (2004) 136 FCR 259 at 280 per Finn J, with whom Branson and Finkelstein JJ agreed. The Minister's contention was not as broad or as coarse as that. The starting point for the exercise of a power such as that contained in s 47, when its exercise is likely to affect the rights and interests of a particular group of persons, is that its exercise is to be conditioned on the observance of the principles of procedural fairness: unless they are excluded by plain words or necessary intendment: see Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 per Mason J at 584; and per Brennan J at 620; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22 ; (2001) 206 CLR 57 per McHugh J at 93 [126]. However, it is necessary to consider the construction of the NTNER Act, including s 47, to determine whether the exercise of the power under s 47 is one which is attended by the obligation to accord procedural fairness to Ms Shaw (and the other residents): see Salemi v MacKellar (No 2) [1977] HCA 26 ; (1997) 137 CLR 396 at 400-1 per Barwick CJ; at 419-20 per Gibbs J; and at 451 per Jacobs J. There are some general features of the NTNER Act which provide the context for the particular issue, as well as the general context in which it came to be enacted. Its object under s 5 is to improve the well-being of certain communities in the Northern Territory. It specifies by s 4 and Schedule 1 the "prescribed areas" to which it applies; they expressly include the Alice Springs town camps: cl 69 of Part 4 of Schedule 1. It is therefore clear that the NTNER Act reflects the legislative view that improving the well-being of the residents of the town camps, including by improving their living conditions, is a significant element of the response to the "national emergency". The events leading to these proceedings, set out above, show that the Minister had the desire to bring the accommodation and other infrastructure and services in the town camps to the level available to all Australians. Division 2 of Part 4 of the NTNER Act deals specifically with the acquisition of rights, titles and interests relating to the town camps. Subdivisions A and B deal with resumption and forfeiture of leases or land under the SPL Act and the CL Act respectively. In each instance, the Minister is given the powers of the Northern Territory Minister or Administrator in relation to resumption and forfeiture of such leases or land. Section 47 is in Subdivision C, dealing with vesting of rights, titles and interests in the Commonwealth. Section 47(1) empowers the Minister to give to the Northern Territory a notice specifying (relevantly) the town camps. Section 47(3) specifies the effect of such a notice. It is set out above at [141]. The vesting takes effect at the time specified in the notice, by force of s 47(4). Its only express prerequisite is that the notice must specify a time which is not earlier than the day on which it is given to the Northern Territory. As noted earlier in these reasons, s 48 enables the notice under s 47(1) to specify a right, title or interest to be preserved in the acquired land. There is no indication that, if the Minister makes the proposed decision, the notice will specify the tenancy rights of Ms Shaw or the residents under s 48; indeed, the evidence tends to suggest, in the event of compulsory acquisition, that there is an intention not to do so, but to maintain or restore to them occupancy rights under some new tenancy arrangement. In the case of a right, title or interest preserved by s 48, s 49 empowers the Commonwealth subsequently to terminate that right, title or interest by notice to the person who holds the right, title or interest. Like s 47(4), the termination takes effect at the time specified in the notice, by s 49(3), and the only express prerequisite is that the notice must specify a time of the termination which is not earlier than the day on which the notice is given to the person who holds the right, title or interest. Hence, both the vesting under s 47(3), and the termination under s 49(3) of a preserved right, title or interest, are structured in the same way. Each may occur on the day of, or the day after, the notice by which the vesting or termination takes effect. In either event, there is no process specified for notice of the proposed vesting or termination being given (other than on the day of or the day before the notice takes effect) so that persons whose rights, titles or interests may be affected may have an opportunity to be heard as to whether the notice should be given. In the case of a termination of preserved rights, titles or interests, moreover, s 49 clearly recognises that that process inevitably will affect the persons whose rights, titles or interests are to be terminated. As the Minister points out, that process contrasts sharply with the process specified for the compulsory acquisition of land under the Lands Acquisition Act 1989 (Cth). Under that process, persons whose interests are affected are given an opportunity to be heard before the decision to acquire the land is finally made. Indeed, section 50(2) of the NTNER Act provides, inter alia, that ss 47 and 49 have effect despite anything contained in the Lands Acquistion Act 1989 (Cth). Section 50(1) more generally provides, inter alia, that ss 47 and 49 have effect despite any other law of the Commonwealth or of the Northern Territory, whether written or unwritten. The express reference in s 50(1) to "written or unwritten" laws is, in my view, an expression of the intention that the provisions in (relevantly) Division 2 of Part 4 of the NTNER Act, including s 47, are not to be taken to carry within them the rules of procedural fairness in the face of the meaning of, for example, s 47 as construed in its terms and in its statutory content. Whilst s 50 does not, in express terms, exclude the obligation to give procedural fairness when a decision under s 47 is contemplated, in conjunction with the other provisions to which I have referred that is, I think, the necessary intention of the legislature. See also Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6 ; (1999) 46 NSWLR 78 per Spigelman CJ at 91 [50]. In my judgment, s 47 in its terms and in its context demonstrates an intention that the rules of procedural fairness (relevantly here at least reasonable notice of a decision proposed to be made under s 47 and an opportunity to be heard before the decision is made) be excluded. It is apparent that the legislature was aware of the procedures under the Lands Acquisition Act 1989 (Cth) requiring notice of a decision proposing to acquire land, and requiring then an opportunity to be heard, to be given to the person whose land is proposed to be acquired. Such procedures have been expressly eschewed. So too, by reference to the written or unwritten law referred to in s 50(1) , have the procedural fairness requirements which were given effect to in cases such as Annetts v McCann [1990] HCA 57 ; (1990) 170 CLR 596 and Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 been considered by the legislature. The wording of the provisions in Subdivisions A, B and C of Division 2, and Division 3 of Part 4 of the NTNER Act indicate that the legislature was aware that s 47 may lead to the compulsory acquisition of the Alice Springs town camps, and was aware by s 48 that necessarily rights, titles and interests of persons such as the residents may thereby be lost. Nevertheless, s 47 requires only notice to the Northern Territory before it takes effect. That cannot have been by oversight. The particular interests of persons such as the residents may be catered for, in the Minister's discretion, by s 48. But, even then, s 49 shows that such preserved rights may be terminated on effectively no notice. In Jarratt v Commissioner of Police for New South Wales [2005] HCA 50 ; (2005) 224 CLR 44 , Gleeson CJ at 56 [25] referred to the "very breadth of the statutory power" as an argument in favour of inferring the intention to preserve procedural fairness in the making of the decision then under challenge, under s 51 of the Police Service Act 1990 (NSW). In the case of s 47 of the NTNER Act, however, I think there are clear words indicating a legislative intention necessarily to exclude such processes. Ms Shaw also contended that s 47 of the NTNER Act should be read as requiring procedural fairness to be given to the residents, including Ms Shaw, before a decision is made because s 132(1) declares the provisions of the NTNER Act and actions taken under it for the purposes of those provisions as "special measures" for the purposes of the Racial Discrimination Act 1975 (Cth). As explained in Gerhardy v Brown (1985) 159 CLR 70, s 8(1) of that Act has the consequence that other provisions of that Act (in particular, those that prohibit racial discrimination in various forms) do not apply to "special measures" as described in Art 1 paragraph 4 of the International Convention on the Elimination of All Forms of Racial Discrimination (defined in s 3 of that Act). Relevantly, special measures are ones "taken for the sole purpose of securing adequate advancement of certain racial or ethnic groups ... as may be necessary in order to ensure such groups ... equal enjoyment" of human rights and fundamental freedoms. It was argued that Indigenous wishes about their lands and their participation in such decision-making as may occur under s 47 is of great importance, and so s 132 supports the preservation of procedural fairness when such a decision is to be made. I do not think that s 132 supports the contention in that way. It is a legislative confirmation that the NTNER Act, in its terms as properly construed, and acts which it authorises, will not breach the Racial Discrimination Act 1975 (Cth) because what is authorised by and under the NTNER Act are "special measures". In other words, I consider s 132 is a legislative declaration that the NTNER Act, and the conduct it authorises, has each of the characteristics described by Brennan J in Gerhardy v Brown 159 CLR at 133. In respect of the town camps, that view is also evidenced also from the Second Reading Speech of the Northern Territory National Emergency Response Bill 2007 (Hansard, House of Representatives, 7 August 2007, pages 26-7). Further, and more fundamentally, s 132(2) of the NTNER Act specifically excludes the operation of Part II of the Racial Discrimination Act 1975 (Cth). Did the Minister give procedural fairness to the residents in the circumstances? My conclusion on the first issue means that it is not necessary to determine this issue. However, as the evidence on this aspect of the case was quite extensive, it is appropriate at least to record my findings on what the Minister and her officers did do in relation to Ms Shaw and the residents and to express my views about it. Before doing so, there is one additional matter to comment upon. At [148] above, I noted that in substance there was common ground about the content of the obligation on the part of the Minister to accord procedural fairness to the residents including Ms Shaw when deciding whether to exercise the power under s 47 of the NTNER Act, assuming that obligation existed. Its content, I noted, was to give the residents reasonable notice of the proposed decision and then to give them an opportunity to be heard in relation to it. It is also clear that the particular content to be given to the requirement to accord procedural fairness will depend upon the facts and circumstances of the particular case. No doubt through oversight at that point in the submission there was not added that she be given the opportunity to make representations about the proposed decision before it is made. It was not suggested that those residing in the town camps as visitors had any entitlement to procedural fairness in respect of the proposed decision. The dispute between Ms Shaw and the Minister in part focused upon the content of the (assumed) obligation itself. The Minister contended that, in the circumstances, it required that the Council and the Housing Associations be notified of the proposed decision, because they were representative of the residents directly as members of the Housing Associations, and then giving the residents the opportunity to make submissions to the Minister. It was reasonable, it was argued, that the Council and each Housing Association would notify each of the residents of the respective town camps of the proposed decision. The nature and extent of the Commonwealth's communications with the residents, including Ms Shaw, both directly and (if it was appropriate) through the Council and the Housing Associations are set out above. The Minister gave notice of the proposed decision to the Council by letter of 24 May 2009. That letter said that, after any acquisition, the residents would be able to continue to reside on their particular town camp (and, by inference, the particular area currently tenanted by them) "subject to any new residential tenancy arrangements". It noted that the Commonwealth would be liable to pay reasonable compensation under s 60 of the NTNER Act in respect of the acquisition of any property from any person. It did not in its terms confine the entitlement to compensation to the Housing Associations only. It invited written submissions from the Council and any other persons who may be affected by 29 June 2009, or at a meeting with the Council and other interested persons on that date. The letter included an attachment setting out at some length the "relevant factors and material under consideration" and an attachment setting out in detail the "Agreed Work Plan" for improving housing and infrastructure in the Alice Springs town camps. No criticism was made about the adequacy of the content of those attachments. The same letter was sent to the Housing Associations, addressed to the Housing Association (Executives and Members), to Gilbert + Tobin, and to the Northern Territory Minister for Planning and Lands. A media release about the proposed decision was issued by the Minister on the same day. The Minister on 4 June 2009 sent out a further letter to the same recipients, extending the time for written submissions to 28 July 2009, and fixing a further meeting at Alice Springs to receive oral views on 20 July 2009. Any decision under s 47 was not to be taken before 4 August 2009. From late May and during June 2009, officers of the Commonwealth conducted an information and consultation drive, and a leaflet drop in the town camps. The Executive Director of the Alice Springs Transformation Plan in the Minister's Department endeavoured to notify and explain to as many of the residents (and others) as possible about the proposed decision and of the opportunities to make submissions about it. He was aware that six main Indigenous languages are spoke in the town camps, and that some of the residents are illiterate or barely literate. He did not have access to a list of the residents. He was aware of the difficulty of distinguishing the residents from visitor-residents of the town camps. He had a plain language fact sheet prepared for distribution. Subject to the two matters referred to below, the submissions of Ms Shaw made no adverse criticism of its content. He spoke on a number of occasions about the proposed decision to elected members of the Council, and its staff. He provided the Council with copies of the fact sheet for distribution. He consulted with the Central Australian Aboriginal Congress, Lhere Artepe (which represents the traditional owners for Alice Springs) and Ingkerreke Outstation Resource Services and gave them copies of the fact sheet for distribution. Officers under his direction visited some town camps and did "door knocks", but decided that it was more appropriate and respectful to first consult the relevant Housing Association president, and then to speak to other residents so far as practicable. It is clear that by no means all of the residents were directly spoken to. Nor is it likely that each directly received a fact sheet from those officers. On 23 June 2009, the Council and each of the Housing Associations, and other bodies, received further notification of the Minister being available to meet and hear the views of the residents on the proposed decision. The notification to each Housing Association was addressed to "The Executive and Members". The meeting was to take place on 29 June 2009. Bus transport was made available to the residents, as proffered by that notice. Despite the pick-up points being notified at the Council and through the Housing Associations, only one resident used that service. It also gave contact details for any resident to speak to a Commonwealth officer about the proposed decision. Notice of the meeting was also given by posters displayed at the Council. That is the place where the residents collect and send mail, access Centrelink and other government services, and where the majority of them do their banking. It was also displayed in the community centres of those town camps that had them. Ms Shaw, in her submission, made no adverse criticism of the contents of that notification or of the poster, save for the two matters discussed below. Between 23 and 29 June 2009, the Department caused the Central Australian Aboriginal Media Association radio in Alice Springs to air community service announcements about the proposed decision and the meeting on 29 June 2009. The announcements were made twice hourly during broadcasting hours. Again, no adverse criticism was made about the content of that announcement, save for the two matters discussed below. The meeting took place on 29 June 2009. The convenors were independent. One spoke several local Indigenous languages. Interpreters were made available. An "open mic" session was conducted. There were 61 persons present, including about 40 of the residents, including Ms Shaw, who asked a number of questions. She also spoke separately to Ms Edwards about the tenancy management arrangements once (and if) the Commonwealth obtained a long sublease or tenure over the town camps. There were further meetings between Commonwealth officers and the Executive of the Council on 16 July 2009, and with such interested persons who wished to attend in a public forum on 20 July 2009. Despite publicity about the latter meeting, only two persons attended. The evidence is that the Commonwealth intends that the residents, including Ms Shaw, will "retain" all their rights under their existing tenancy arrangements, and that the only legal change will be the substitution of a new landlord, the Commonwealth or its nominee, which will have no greater rights than the Housing Associations as the existing landlord. The rights will not, strictly speaking, be "retained" but as noted above will be reflected in and (on the evidence which I accept) equal to the existing tenancy rights in all respects. There is also evidence of further steps the Minister proposes to take to ensure the residents are aware of the proposed decision and its consequences, before deciding whether to make the proposed decision. That further action followed the commencement of the Section 47 proceeding. On 7 August 2009, Ms Shaw's solicitors sought from the Council (through its solicitors) details of all the current residents, that is those holding a tenancy agreement from a Housing Association and sought access to the town camps to deliver any further information considered appropriate. The Council refused that request because it opposed compulsory acquisition and so could not "reasonably be asked to participate in a process" which it opposed. The Minister then decided to issue a further notice to "everyone in the Alice Springs town camps and other interested persons" alerting them to the proposed decision and its consequences. No submissions were made critical of its content, except so far as it deals with the right to compensation. This means that a person may be entitled to compensation for the termination of any right they have over the land of the town camps (including under any sublease, tenancy agreement, licence or other agreement). It invited the recipients to "have your say" by 27 October 2009. They were told how to do so. Those steps were all to be taken promptly. There was no cross-examination of Ms Edwards to challenge her evidence that those steps had been, or would be, taken. I accept that they have been taken by now or will be taken if the Minister continues with considering the proposed decision. As I have indicated, it is not necessary to finally decide whether in all the circumstances, and assuming that in making the proposed decision the Minister is obliged to accord procedural fairness to the residents including Ms Shaw, she has done so. However, in my view, upon the whole of the evidence, the residents including Ms Shaw have: been given the opportunity of knowing about the proposed decision; have been told about the consequences of the proposed decision, that is how their rights and interests might be affected and the practical and legal consequences of such a decision; and have been given the opportunity to make submissions about the proposed decision and how it might affect them and why, if it was their view, it ought not be made. There were, ultimately, two particular matters upon which Ms Shaw made submissions. One concerned the literacy levels and language skills of some of the residents. I find that, by the extensive processes referred to, each of the residents must have known of the proposed decision. Notice of it was given directly, through the Housing Associations of which they were members, through the Council, and through other means. It is not really conceivable that any of the residents did not know about it. Their opportunities then to understand its consequences, even accepting that some were of low literacy or with little English skills, were also extensive. They were not living in isolation from each other, but within each town camp, with a Housing Association representing them and the more pervasive focus of the Council. Those bodies through their officers, as well as the informal discussion among the community members and the other means of publicity referred to, provided ample opportunity for any resident to know of the proposed decision (as I find each did) and to understand the clear information provided about its consequences by the Minister. There were levels of information, depending upon the requirements of the particular resident. It is likely, as in any community, that some residents were more interested in the issue than others, and some required a greater degree of information than others. The information provided by the Minister was sufficient to satisfy whatever reasonable expectations there were. The opportunity was given to any resident to understand, to the extent that resident required, the consequences of the proposed decision. Finally, either directly at the public meetings or to officers of the Commonwealth at other times, or through spokespersons, or through the Council or the Housing Associations or their officers (or their lawyers, as was done), there was an ample opportunity to make submissions about the proposed decision. The public meetings also provided the opportunity for those who spoke better, or only, in an indigenous language to communicate in that language. The evidence shows that some residents took up that opportunity. The written submissions on behalf of Ms Shaw point out, correctly, that the residents were not told what the detailed terms of any new tenancy agreement with the Commonwealth would be, including the rental. They were told that they would be able to continue to occupy their dwellings (subject to temporary removal whilst they were replaced or upgraded) and would have a new tenancy agreement with the Commonwealth. I do not consider procedural fairness required more than that. The other matter referred to on behalf of Ms Shaw was the question of compensation under s 60 of the NTNER Act. In my view, the residents were given adequate notice that the proposed decision, if implemented, would entitle them to reasonable compensation for the acquisition of their rights and interests. As noted above, there is a dispute as to whether the tenancy agreements between the residents and the Housing Associations are terminable on 42 days' notice or are some form of permanent tenancy agreement, terminable only for breach. That issue is discussed below. The quantification of any compensation is a separate process under s 60(3) of the NTNER Act. The letter of 24 May 2009 to the Council and to each Housing Association (addressed to the "President and Members") referred to the right to compensation. It was not confined in terms to the Housing Association. That letter was read aloud at the public meeting on 29 June 2009. The communications after the commencement of the Section 47 proceedings explained to the residents that they had a potential entitlement to compensation. Indeed, in the course of oral submissions, senior counsel for Ms Shaw acknowledged that fact. I do not consider that it was necessary for the Minister, to accord procedural fairness, to go beyond that on the topic of compensation. The application should be dismissed. In this proceeding, the Residents allege that: It is obviously important to set out the terms of the Constitutions and Rule Books of the Housing Associations, the terms of membership of the Housing Associations and the terms of the Special Purposes Leases and Crown Leases. The Constitutions of the Housing Associations incorporated under the Associations Act (NT) set out the objects and purposes of the Housing Associations. Clause 2.2 says the objects and purposes are set out in Item 1.3 of the Schedule. Item 1.3 of the Schedule to the Constitutions sets out a non-exhaustive range of measures by which the Housing Associations are obliged to advance their objects. In broad terms, as the submission of the Residents expressed it, the Housing Associations by their Constitutions are to provide housing for Aboriginal communal living and housing services in a manner that furthers the Aboriginal communal cultural interests of the members. For example, the Constitution of the Mount Nancy Housing Association Inc is dated 30 November 2006. The objects and purposes of Housing Associations incorporated under the CATSI Act (Ilparpa Aboriginal Corporation, Karnte Aboriginal Corporation and Mpwetyerre Aboriginal Corporation) are expressed in their Rule Books. Section 69.1 of the CATSI Act provides that the constitution of a Housing Association is the constitution that is registered in respect of the Housing Association. Operate and maintain a Gift Fund to be known as "The Ilparpa Aboriginal Corporation Gift Fund" in accordance with the requirements of the Australian Taxation Office". It is necessary, however, to make a finding about whether its Rule Book was changed at a later point in time. That is addressed at [213] to [215] below. Clause 3 of the Rule Books of Karnte Aboriginal Corporation and Mpwetyerre Aboriginal Corporation are virtually identical, except obviously with respect to the final dot point referring to the particular Housing Association. Clause 4 of the Rule Books of Karnte Aboriginal Corporation and Mpwetyerre Aboriginal Corporation also are virtually identical. The replaceable rules set out in the CATSI Act apply to these Housing Associations. The members of Housing Associations are required to be Aboriginal persons who are residents in the particular Housing Association's town camp, or have a strong connection with the particular town camp. The CATSI Act sets out some further requirements for eligibility for membership of those Housing Associations in Chapter 4, Part 4.2, Division 141, such as an "indigeneity requirement" (section 141.10) and a minimum age of 15 years (section 141.20). It is not in dispute in these proceedings that each of the Residents is a member of a particular Housing Association. The Minister points out that the Constitutions and Rule Books of the Housing Associations are somewhat wider than that. In particular, she says that each also has the objective of relieving "the poverty, sickness, destitution, distress, suffering, misfortune or helplessness of Aboriginal people in Central Australia", and that none specifically require the Housing Associations to provide accommodation for Aboriginal persons only by means of tenancy agreements under which the Housing Associations, are necessarily the landlord. I note that submissions of the Residents and of the Minister referred to and relied upon versions of the Rule Books of the three Housing Associations incorporated under the CATSI Act as set out above. An affidavit filed in Court by the Housing Associations on the first day of the hearing of these proceedings indicated that those versions of the Rule Books were replaced on 29 June 2009 by the Registrar of Indigenous Corporations imposing a standard Rule Book, in circumstances where the Housing Associations were in the process of adopting new Rule Books, but had not yet formally endorsed the new Rule Books. I accept that evidence. It was not challenged. I find that the relevant versions of their Rule Books are those from 29 June 2009. The Karnte Aboriginal Corporation's Rule Book's "Objectives" clause is slightly different to that of the Ilparpa Aboriginal Corporation and Mpwetyerre Aboriginal Corporation. The current version of the Rule Books is similar to the objects clauses of the Constitutions of the other Housing Associations incorporated under the Associations Act (NT). Senior counsel for the Housing Associations did not submit that the changes so made had any particular significance. Ms Shaw has a tenancy agreement with the Mount Nancy Housing Association which is entitled "Tenancy Agreement Permanent" and is dated 27 August 2003. The Minister does not accept that the title of the tenancy agreement accurately describes the rights conferred pursuant to it. Nor do the Housing Associations. Ms Shaw pays rent to the Mount Nancy Housing Association Inc of $123 per fortnight. I will look after the house, also look after things like the stove, light fittings, taps and other fittings for the whole time I live in the house. In addition to clause 3, clause 15 provides: If I break any of the rules of the Association I can be made to leave the house after a " NOTICE TO QUIT' letter from the Association or Housing Office. Hence, although the tenancy is apparently unlimited in point of time, the Mount Nancy Housing Association can give Ms Shaw notice to quit the premises is if she breaks any rules of the Housing Association (pursuant to clause 15), and her occupancy may also be terminated for non-payment of rent (clause 3). On the evidence, I find that about 200 people have entered into tenancy agreements similar to Ms Shaw's agreement relating to other dwellings in the Alice Springs town camps. A bundle of the other applicants' tenancy agreements were tendered in the course of the hearing. There was nothing put in submissions to suggest other tenancy agreements had differences material to the present proceedings. The Housing Associations, as well as the Minister, take the view that tenancy agreements such as are held by Ms Shaw are periodic tenancies terminable on 42 days' notice by reason of s 89 of the Residential Tenancies Act (NT). However, Ms Shaw and the Residents contend that, when the proper matrix of facts is considered, the tenancy agreement is only terminable without the agreement of the tenant for breach. Under s 90, a fixed term tenancy that is due to terminate on a particular day may be terminated on 14 days' notice. Under s 89 a periodic tenancy may be terminated at any time on 42 days' notice. The Minister contends that Ms Shaw's agreement is in the nature of a periodic tenancy since it is not for a fixed period, and says that the Residents' contention that the lease is a permanent one is inconsistent with the position at common law, which does not recognise the concept of a lease in perpetuity. Further, the Minister says that no statutory power to enter into a "permanent lease" has been identified, and the fact that Ms Shaw's rent (and, I infer, other Residents' rent) has increased from the time that it was entered into as indicating that the agreement is a periodic lease, and, absent any other explanation, is inconsistent with the contention that the lease was permanent. The Minister put a further proposition, at least in respect of those Housing Associations which hold Special Purposes Leases. Section 9A of the SPL Act provides that a lessee "shall not subdivide, or make an application under Part 5 of the Planning Act (NT) for consent to subdivide, the lands comprised in a lease". The term "subdivide" is not defined in that Act. In the Planning Act (NT), "subdivision" is defined in s 5 to include the division of land into parts available for separate occupation or use by an agreement, if the term of the right to use thereby granted is more than 12 years. Consequently, such a lease to the Housing Associations did not permit any permanent tenancy agreement. In the case of the CL Act leases, any lease longer than 12 years would require Planning Act (NT) processes to be followed to avoid the subdivision being void by reason of s 63(2) of the Planning Act (NT). In my view, the submission of the Housing Associations and of the Minister is correct. The Residential Tenancies Act (NT) applies in its terms to a "tenancy agreement" (subject to inapplicable exclusions) and the tenancy agreements fall within the definition of that term in s 4 of that Act. Section 20 prohibits a tenancy agreement that is inconsistent with that Act. The tenancy agreements are not for a fixed period. They simply do not provide for a fixed term. Consequently, by definition they must be agreements for a periodic tenancy. Such agreements, under s 89 of the Residential Tenancies Act (NT), are terminable on 42 days' notice. There is no scope under that Act for the type of tenancy for which Ms Shaw and the Residents contend. Nor could a tenancy of the type for which they contend lawfully be granted under either a Special Purposes Lease, or under a Crown Lease without following the procedures prescribed by the Planning Act (NT), for the reasons identified by the Minister. I note for the sake of completeness that, because the tenancy agreements are understandably quite brief, the Residential Tenancies Act (NT) prescribes additional terms; they are not of significance to the present issue. Clause 69 of that Part is headed "Alice Springs". The land comprising all the Alice Springs town camps the subject of these proceedings are listed in that clause. For example, the Special Purposes Lease for the Mount Nancy Housing Association Inc includes the covenant: That the lessee will use the land only for the purposes for which it is leased; viz: Establishment, Development [sic] and maintaining a communal settlement for the use of the Mount Nancy Housing Association. By way of further example, the Crown Lease granted to Inarlenge Community Inc has a purpose of "Aboriginal Camp Buildings and ancillary". The purpose of the Crown Lease granted to Karnte Aboriginal Corporation is "Aboriginal Residential Housing Area". The Minister pointed out that not all the leases are in identical terms, and in particular that only the Mount Nancy Housing Association Inc lease limits the use to the purposes of the particular Housing Association. However, nothing was really made of those distinctions. For present purposes, I am satisfied that all the Special Purposes Leases and Crown Leases to the Housing Associations imposed restrictions to the effect that the leased land was to be used for the purpose of Aboriginal community living and ancillary activities. Section 9 of the SPL Act provides that the land over which a Special Purposes Lease is granted may not be used for any other purposes. The Minister may by notice in writing to the lessee, in the manner specified in subsection (2) of section 12, forfeit the lease. In essence, the proposed subleases would involve the Commonwealth being granted a sublease over the land comprising the Alice Springs town camps by each of the Housing Associations, such subleases to be administered by the Commonwealth, for a period of 40 years. Pursuant to s 20CA of the ALR Act, if the Housing Associations are considering granting subleases of the Alice Springs town camps to the Commonwealth, they may request the Minister to direct the Executive Director to enter into subleases on behalf of the Commonwealth and administer the subleases. It is common ground that, by the proposed subleases entered into by the Housing Associations, s 20CA has been enlivened. The expression "town camp" is defined in s 20CA(5) to mean land leased primarily for residential, community or cultural purposes for Aboriginal people under either the SPL Act or the CL Act. Each of the leases from the Northern Territory to the Housing Associations in respect of the Alice Springs town camps falls within that definition. The Executive Director is a Commonwealth office, established under s 20B of the ALR Act. Each proposed sublease from a Housing Association is in the same template form. The proposed subleases commence, after describing the parties, with a section headed "Background". They provide as follows: The Association is the registered proprietor of a lease in perpetuity of the Living Area. The parties acknowledge that the residents living on the Alice Springs Living Areas are living in very poor conditions and it is very important to improve the health and standard of living of those residents. The Australian Government and the Northern Territory Government have stated their intention to undertake a capital works program to assist in improving the standard of living of those residents. On 10 July 2008, the Association signed the Agreed Work Plan with the Tangentyere Council, the Australian Government and the Territory Government which described the key terms agreed by the parties in relation to the grant of the Sublease. The Australian Government has stated its intention to "close the 17 year gap" in life expectancy between Indigenous and non-Indigenous Australians, and that this Sublease opens the way for substantial government investment in improved Infrastructure and housing on the Alice Springs Living Areas as a step to achieving this goal. The Association has requested that the EDTL enter into the Sublease on behalf of the Commonwealth and administer the Sublease. The Parties have agreed that, on the terms and conditions set out in this Sublease, the Living Area (including all Improvements and Services) will be leased to the EDTL by the Association pursuant to * section 46 of the Crown Lands Act / section 6 of the Special Purposes Leases Act * [delete inapplicable]. The Association has received consent from the Northern Territory Minister as required by * section 46 of the Crown Lands Act / section 6 of the Special Purposes Leases Act * [delete inapplicable] for the grant of this Sublease. The Commonwealth Minister has agreed to the Association's request in accordance with section 20CA of the Land Rights Act. The EDTL is capable of receiving a grant of a sublease pursuant to section 20C of the Land Rights Act. The initials EDTL in the proposed subleases refer to the Executive Director. I note the definitions in clause 1 of the proposed subleases include definitions of the "Alice Springs Living Area" to encompass the Alice Springs town camps, and tie the area to that referred to in the NTNER Act by subclauses 69(1) to 69(10) and 69(12) to 69(17) of Part 4 of Schedule 1 of the NTNER Act. Clause 1 also includes definitions of "Housing Authority" to include the Council and any entity which provides community or public housing; of "Housing Management Agreement" to mean a Living Area Underlease or other contract or agreement granted by the Executive Director to a Housing Authority "to manage or provide community or public housing services and related Infrastructure (and all purposes incidental thereto)"; and of "Living Area" to refer to the land described in Item 1 of the Schedule, which is to refer to the Housing Association's particular town camp land. "SIHIP" refers to the Strategic Indigenous Housing and Infrastructure Program referred to above. There are other definitions in clause 1 of the proposed subleases to which it will be necessary to return. However, as the proposed subleases are so critical a document to the Sublease proceeding, it is helpful to return to their overall structure. The expression "appropriate tenure arrangements" in clause 2.1(a)(ii) is not defined, but nothing turns on that because the condition in clause 2.1(a)(i) has been met. Clause 5(a) provides that "EDTL must pay the Association $1 if demanded by the Association ( Sublease Payment )". The direct payment to the particular Housing Association is therefore a nominal one. The real financial commitment emerges from clause 6 of the proposed subleases. The Parties acknowledge and agree that $100,000,000 inclusive of SIHIP Project Costs represents the entire amount that the Territory must expend pursuant to the Alice Springs Living Area Subleases (including this Sublease), regardless of how many Alice Springs Living Area Subleases are entered into. The SIHIP Annual Report must include details of expenditure under SIHIP on the upgrade and Construction of houses and Infrastructure in the Alice Springs Living Areas during the previous Sublease Year. It is a commitment to expend $100 million on the Alice Springs town camps collectively. I note also clause 6(d), ensuring the Northern Territory adheres to the "SIHIP consultation processes" in relation to the expenditure of the $100 million. The SIHIP consultation processes are not defined in the proposed subleases. Clause 7.2 of the proposed subleases deals with existing tenants of the Alice Springs town camps. The Parties agree that such persons have the right to continue to occupy and use that land, and the Improvements on it, on the same terms and conditions as at the Commencement Date but subject to the terms of this Sublease ( Tenant's Right of Occupation ). They refer to clause 6(b), which makes the expenditure of $100 million conditional upon access to the town camps to upgrade or construct dwellings and infrastructure. In effect, if the Northern Territory cannot gain the access necessary to carry out particular work, the expenditure of the $100 million will not be made in that area and, in theory, if it cannot gain access to any of the areas of the town camps it will be relieved of the obligation to incur that expense. To make the incurring of expenditure conditional in that way does not change the extent of the grant in clause 2.2(a). I reject the Residents' contentions below at [260] to [266]. The implementation of the overall plan to improve housing and facilities in the town camps is built into the proposed subleases. Clause 10 provides for a Housing Management Agreement, to enable a Housing Authority to provide housing services to the Aboriginal people in the town camps. The separate obligation of the Housing Authority to consult with a Housing Association (clause 10.1(c)(i)) might suggest that a Housing Association may not become a Housing Authority, although the Housing Associations are not specifically precluded from becoming Housing Authorities. I do not think that is the case. Clause 10.1(c)(i) clearly has work to do by requiring such consultation during the first three years and consultation by a Housing Authority which is not a Housing Association after that time. The tender process prescribed by clause 11, to commence before the first three years has expired, would permit a Housing Association to tender to be a Housing Authority after that time. The term "Housing Authority" is also defined in clause 1.1. It means a body which provides community or public housing and, for the avoidance of doubt, includes the Northern Territory, the Council, and Central Australian Affordable Housing Corporation. It does not exclude the Housing Associations. Under clause 10.3(a), the Executive Director may grant "Living Area Underleases". For the first three years, the Executive Director is restricted to granting a Living Area Underlease to the Northern Territory, Territory Housing, a "Services Provider" (defined in clause 1.1 to mean a person who provides Services in the Living Area) or the Housing Association or its nominee (clause 10.3(a)(i)). After the first three years, no such restriction applies so that it is in the discretion of the Executive Director. In my view, clauses 10.4 and 10.5 are permissive and operate in respect of community land and vacant land. They do not confine the scope of clause 10.3. In other words, for example, a Living Area Underlease of Community Land could be held by the Housing Association, but could also be granted to the Northern Territory. They do not confine the Executive Director's powers to grant such underleases to entities other than the Housing Association, but they direct a focus to the Housing Association when the Executive Director considers what to do. In addition, it should be noted that the Executive Director's powers under clauses 10.3, 10.4, 10.5 and 10.6 are permissive only. Under clause 10.6(a), the Executive Director may grant "Living Area Licences". Again, for the first three years, the Executive Director is restricted to granting a Living Area Licence to the Northern Territory, Territory Housing, a Services Provider or the Housing Association or its nominee (clause 10.6(a)(i)). After the first three years, no such restriction applies so that it is in the discretion of the Executive Director. Clause 2.2(a) (set out above) makes the proposed subleases "subject to and concurrent with any Registered Interests and any Rights of Occupation ... for a term of 40 years". "Registered Interest" is defined in clause 1.1 to mean any interest registered on the certificate of title. "Right of occupation" is defined to include "a Tenant's Right of Occupation", which in turn is defined to have "the meaning given to that term in clause 7.2(a)". Hence, the grant under the proposed subleases is a limited one. The Residents submit that clause 7.2(a) (set out above) appears to reverse the effect of clause 2.2(a) and purports to make the tenants' rights of occupancy subject to the subleases. The Minister, in my view rightly, submitted that when clause 7.2 is read as a whole, and in the broader contractual context, including clause 2.2, its effect is clearly to preserve the rights of existing tenants whilst at the same time giving effect to the altered administrative arrangements. Clause 7.2(b) results in the rent or other monies payable by a tenant under a tenancy agreement to become payable to the Executive Director. Although clause 7.2(c) might appear at first glance to empower the Executive Director to terminate an existing tenancy agreement, the power to do so is expressly made subject to the rights of the tenants recognised in clause 7.2(a). In my view, when viewed in the context of all of the terms of the proposed subleases, the words "subject to the terms of this Sublease" at the conclusion of clause 7.2(a) merely reflect the substitution of the Executive Director as the "landlord" under the existing tenancy agreements. The Residents further submit that clause 22.1 purports to give superior rights of quiet enjoyment to the Executive Director, even though the tenants have rights of quiet enjoyment of their dwellings. Consequently, if as I have tentatively concluded, the grant is subject to existing tenancy agreements between a Housing Association and a tenant, including the rights to quiet enjoyment under the tenancy agreement, those rights are not diminished by clause 22.1 of the proposed subleases. The Residents further refer to clause 8.1(b) which contains an undertaking by the Housing Association and the Executive Director to "do all things reasonably necessary to enable ... persons holding Rights of Occupation to enjoy and exercise their rights, title and other interests under their ... Rights of Occupation". The Residents submit that, as this clause is made "Subject to the terms of this Sublease", it is inconsistent with the tenants' existing rights of quiet enjoyment. For the same reasons, and as submitted by the Minister, that contention should be rejected. The words "Subject to the terms of this Sublease" ensures that clause 8.1(b) does not prevent the Executive Director from terminating a tenant's Right of Occupation, in accordance with the terms of that Right of Occupation, and in accordance with clause 7.2(c). Further, the Minister notes that clause 9.1(b) provides that existing improvements subject to a Right of Occupation are included in that Right of Occupation, for the period of the Right of Occupation. That confirms that existing tenancies are preserved under the proposed subleases. Consequently, I do not consider the Residents' legal position as tenants of Housing Associations is adversely impacted by the proposed subleases. Although the documents referred to when discussing the sequence of events above do not, of course, operate as an aid to construction of the proposed subleases, with one qualification, that is consistent with the material provided from time to time to the Residents by or on behalf of the Minister. The one qualification is the reference to there ultimately being a need for the Residents to enter into new tenancy arrangements with a new landlord. Whether or not that reference is a little inaccurate or simply concerned their status in the event of compulsory acquisition, I think the legal position of the Residents under the proposed subleases is clear: their position as tenants under their existing tenancy agreements is preserved. And that was the general import of the Minister's communications to them. It is obvious, as Ms Edwards said in her evidence, that the upgrading or replacement of a dwelling may require its residents to be temporarily located. There are few who would not tolerate a temporary relocation to secure improved homes or services. But, on its proper construction, the right of a tenant not to accept such facilities remains. In my judgment, under the terms of the proposed subleases (as acknowledged by the Minister), the legal effect of the proposed subleases is that there is no alteration of any existing right of the pre-existing tenants, the proposed subleases will not alter any rights conferred by the tenancy agreements between the Housing Associations and the tenants, and the interests granted by the proposed subleases will remain subject to the tenancy agreements and other rights of occupation. The Residents submit that, under the proposed subleases, the rights of the Housing Associations are virtually non-existent for at least 40 years. That is because the Executive Director controls who is a Housing Authority, the parties to any Housing Management Agreement and to the Living Area Underleases and Licenses. For the first three years, the Housing Authority must be the Northern Territory or Territory Housing, and even if thereafter a Housing Association becomes a Housing Authority, it "would be acting as the agent under the direction of the Executive Director". It is necessary to determine how accurate that submission is. By the proposed subleases, each Housing Association has granted a sublease over its town camp area effectively to the Executive Director for at least 40 years. The direct benefits of the proposed subleases are not insubstantial. It is not simply the $1 specified, if claimed. The Executive Director receives the rental payable under the tenancy agreements and assumes the obligations of the Housing Association under its tenancy agreements, including the repair and maintenance of existing dwellings and other improvements, and has the obligation to comply with the terms of the head leases and any planning and like laws relating to the town camps: clauses 9.2, 9.4, 17.2 and 17.3 of the proposed subleases. The "indirect" benefits ("indirect" in the sense that they do not as a matter of strict legal entitlement flow to any particular Housing Association), are the commitment by the Northern Territory to spend $100 million in the Alice Springs town camps within five years: clause 6(a). In addition, during the negotiation process, the Agreed Work Plan has led to the Council being given direct funding of $5.3 million, and funding of up to $200,000 has been provided for the establishment of the Central Australian Affordable Housing Company. The latter benefits are not commitments undertaken by reason of the proposed subleases. Each Housing Association is substantially, but not totally, alienated from the prospect of participating in what happens in its town camp area. It has no right to control the grant of Living Area Underleases and Licences; they are a matter for the Executive Director. The Living Area is to be managed by a Housing Authority which, for the first three years is to be the Northern Territory or Territory Housing. In that period, the Housing Associations may (but has no right to) be granted an underlease of community land: clause 10.4, and may request and be granted (but has no right to be granted) an underlease of vacant land: clause 10.5. It may also be granted an underlease or licence in respect of other areas in the town camp: clauses 10.3 and 10.6. After three years, the Housing Association may become a Housing Authority, but there is no right to be given that status and no legally binding assurance that it will be given that status. In addition, it retains its status under the relevant Special Purposes Lease or Crown Lease. Apart from what the Housing Associations have ceded by the proposed subleases, they may and no doubt will continue to perform their functions under their Constitutions and Rule Books. I will return to that issue later in these reasons. The Housing Associations are given a consultative role under the proposed subleases. Each Housing Management Agreement must require the Housing Authorities to consult with the Housing Associations in relation to housing and tenancy management policies and procedures, at least six monthly: clause 10.1(c). That does not extend to a right to be consulted by the Executive Director about the terms of the Housing Management Agreement itself. The Housing Associations have a role in developing Home Ownership Guidelines to enable Aboriginal people to acquire long-term secure tenure of houses: clause 13, and in negotiating appropriate arrangements with Service Providers: clause 7.3(f). More generally, under clause 20 there is to be a Consultative Forum comprising the Executive Director and five nominees of the Housing Associations who have granted a sublease. The Forum does not have power to bind the parties to the proposed subleases. As a matter of law, I do not consider that is so. I have dealt with that issue above. There are a few additional matters which should be noted. On the evidence, the rent payable from time to time under the tenancy agreements with the Housing Associations was increased. There is the prospect that over time, through the Executive Director, the rents might further increase. That can only occur to the extent that the tenancy agreements in force permit. There is a loss of control as members of the Housing Association of the selection, from the members, of who gets a tenancy of new dwellings in the town camp, but the subleases are subject to the head lease, and so only members of the Housing Associations are eligible. There was no dispute that the proposed subleases would be subject to the terms of the head leases, entitled to the benefits and subject to the burdens of their covenants: Stewart v Goldman & Co Pty Ltd (1947) 64 WN (NSW) 155 at 158. There is also a loss of control as members over the income and expenditure of the Housing Associations, and over what action is taken in the event of non-payment of rent or of other breaches of the terms of a tenancy agreement, because those matters become the function and responsibility of the Executive Director, the Northern Territory or Territory Housing, and then through the Housing Authority. Those decisions may only be made after the consultation with the Housing Associations imposed by clause 10.1(c). As a matter of strict interpretation, despite the consultation provided for, the Executive Director or a Housing Authority may adopt a stricter or different view of what is appropriate on those matters than the Housing Associations have done in the past. Thus, whilst I have concluded that the existing tenancy rights and obligations are preserved by the proposed subleases, there is some scope for those rights and obligations to be enforced in a somewhat different way than has occurred in the past. There is some evidence that, in the past, Territory Housing where it has had such a role has adopted a less tolerant attitude to tenants' contraventions of the terms of the tenancy agreements than have the Housing Associations. The Northern Territory has pointed out that, if the Northern Territory or Territory Housing is the relevant Housing Authority, any new tenancy agreements will comply with the requirements of the Housing Act (NT) and the Housing Regulations (NT). They are not requirements which in any material way differ from the terms of the existing tenancy agreements. It has also pointed out that, where it has performed or is performing that role in other Aboriginal Communities, it has established a Housing Reference Group to assist in the selection of new tenants from amongst the eligible persons and to ensure its awareness of cultural concerns and issues which might affect its management of such housing. Consultation processes for such purposes are built into the proposed subleases. There is no reason to think that, despite the concerns of the Residents, the Northern Territory or Territory Housing (or any entity) appointed as a Housing Authority under one of the proposed subleases would act inappropriately or unreasonably or inconsistently with the shared intention of improving the housing and support facilities in the town camps. I, therefore, do not consider that the concerns of the Residents discussed in the preceding paragraph of these reasons provide a sound reason for upholding the Residents' primary contentions. The executed subleases are currently held by the Council, pending the outcome of these proceedings. Clause 10.1 of the Constitutions of the Housing Association deals with the common seal of the Housing Associations and its use. The current version of the Rule Books do not affect the ability of the Housing Associations incorporated under the CATSI Act to execute documents in accordance with that Act. The execution of the proposed subleases by the Housing Associations has been done in each case by affixing the common seal of the respective Housing Association and signing and countersigning the proposed sublease. Before turning to the particular contentions, it is necessary to consider the authority of the Housing Associations to decide to enter into the proposed subleases through their respective Management Committees or directors. That issue arises because the decisions in each instance were made by a "members" meeting, including (I find) the Management Committees, but not by a properly convened special general meeting of the members. On 16 July 2009, the Executive of the Council considered the stage of negotiations. It noted the deadline imposed by the Minister. It decided to organise meetings of the members of the Housing Associations, so they could decide whether to agree to the proposed subleases. In the next few days meetings of the members of each of the Housing Associations were arranged. Notices were distributed which gave only several days' notice of what was called in the Notices a "Special General Meeting". Between 17 July 2009 and 28 July 2009, each of the Housing Associations listed below convened a "meeting" of its members at which resolutions were passed authorising members of each respective Management Committee to enter into a sublease. I infer that the Management Committee of each Housing Association was present at those meetings. There is no suggestion to the contrary. They would each have been acutely aware of the issue, both through the Council and the lengthy process of negotiation. The Ilparpa Aboriginal Corporation unanimously passed a motion on 23 July 2009 authorising two members of the Management Committee to sign, on behalf of the Corporation, "all necessary Legal Agreements, including a Sublease, with the Australian Government and the Northern Territory Government, as recommended by Tangentyere Council". The Aper-Alwerrknge Association Inc unanimously passed a motion on 21 July 2009 in virtually identical terms. The Mount Nancy Housing Association Inc passed a motion on 17 July 2009 in virtually identical terms, with all agreed with the exception of Ms Shaw who voted against the motion. The Anthelk Ewlpaye Association Inc unanimously passed a motion on 22 July 2009 in virtually identical terms. The Akngwertnarre Association Inc unanimously passed a motion on 20 July 2009 in virtually identical terms. The Ewyenper-Atwatye Association Inc unanimously passed a motion on 27 July 2009 in virtually identical terms. The Yarrenyty Artlerre Association Inc unanimously passed a motion on 24 July 2009 in virtually identical terms. That motion was, according to the document in evidence, seconded by Ms Lynch, the thirteenth applicant in the Sublease proceeding. The Anthepe Housing Association Inc unanimously passed a motion on 27 July 2009 in virtually identical terms. The Inarlenge Community Inc unanimously passed a motion on 22 July 2009 in virtually identical terms. The Ilyperenye Association Inc unanimously passed a motion on 24 July 2009 in virtually identical terms. The Mpwetyerre Aboriginal Corporation unanimously passed a motion on 22 July 2009 in virtually identical terms. That motion was, according to the document in evidence, moved by Mr Wirri, the seventh applicant in the Sublease proceeding. The Karnte Aboriginal Corporation unanimously passed a motion on 23 July 2009 in virtually identical terms. That motion was, according to the document in evidence, seconded by Ms Gillen, the third applicant in the Sublease proceeding. The Ilperle Tyathe Association Inc unanimously passed a motion on 20 July 2009 in virtually identical terms. Although of no legal significance, I note that the Executive of the Council then on 31 July 2009 resolved formally to endorse the proposed subleases, and recommended them for execution by the Housing Associations in accordance with their individual resolutions. Each of the Housing Associations has signed the proposed subleases in the manner required by its respective Constitution and, in the case of those incorporated under the CATSI Act, in accordance with Rule 99.5 of that Act. The Residents submit that on the evidence the members of the Housing Associations did not pass effective resolutions under their respective Constitutions or Rule Books. It is plain from the provisions of the Constitutions and Rule Books of the Housing Associations set out above, however, that both in respect of the Housing Associations established under the Associations Act (NT) and those established under the CATSI Act, that the Constitutions and Rule Books do not require a resolution of the members to be passed in order to enter into the proposed subleases. The business of a Housing Association incorporated under the Associations Act (NT) must be managed by or under the direction of the Management Committee, and the Management Committee may exercise all the powers of the Association except those matters that the Act or the Constitution requires the Housing Association to determine through a general meeting. Subject to the primary attack on the powers of the Housing Associations to have entered into the proposed subleases at all, there are no provisions in the Constitutions requiring a general meeting of Members to approve the Housing Associations entering into arrangements with respect to the land leased by them, nor is there any provision requiring a general meeting of Members to approve any arrangements or transactions entered into by the Management Committees. In respect of the Housing Associations incorporated under the CATSI Act, the directors of those Housing Associations have broad powers to manage the business of the corporation (s 274.1 CATSI Act), and there is no requirement for a general meeting to approve entry by the Housing Associations into arrangements or other transactions involving the Housing Associations' property. The Residents submit alternatively that Management Committees were not convened to authorise the use of the common seal, and so there was no proper authorisation for the Housing Associations to purport to execute the proposed subleases. I do not accept that submission. The lack of convening of a Management Committee may have affected the Housing Association's ability to use the common seal, but it does not mean that there was no proper authorisation for the Housing Associations to execute the proposed subleases. As noted above, there is no requirement in either the Constitutions or Rule Books or in the Associations Act (NT) or the CATSI Act for the Housing Associations to have convened a meeting of the Management Committee in a particular way in order to agree to enter into the proposed subleases. In any event, I am not persuaded that the Management Committee, or the directors, of the Housing Associations did not together decide to request pursuant to s 20CA(2) of the ALR Act, and then to grant, the proposed subleases. To the contrary, I find that they have done so. Indeed, in their application it was the Residents' position that they had done so, albeit without power to have done so, or in breach of duty for having done so. That is why the Housing Associations were joined as respondents to the Sublease proceeding. Indeed, paragraph 4(b) of the Further Amended Application asserts that the resolutions of the Management Committees, or the directors, to do so were in breach of their duties to the Housing Associations and their members, and it seeks declaratory orders to that effect. There was, in the light of that assertion, no reason to adduce detailed evidence about how those resolutions or the authority they gave came about. Their authority to do so may have been given at the "members" meetings convened by the Council or on some other occasion or in some other way. The evidence did not explore that issue. As I have concluded that resolutions of the special general meetings of members of the Housing Associations were not necessary for the Housing Associations to agree to grant the proposed subleases, I reject the contention of the Residents (subject to considering their principal contentions) that there has been no valid decision of the Housing Associations to enter into the proposed subleases. It is also appropriate to note that the Council and the Housing Associations each in fact engaged in extensive consultations with their members, including their tenants, and over a lengthy period of time. This is not a case where it can be suggested that the Management Committees, or the directors, acted without the opportunity of making themselves fully aware of the views and concerns of the members of the Housing Associations. The Residents also submitted, that as the relevant transactions have not been completed (in that the executed proposed subleases are currently being held by the Council), and the counter-parties to the proposed subleases are now on notice of the deficiencies in the execution of those proposed subleases, namely that they were not approved by a properly convened special general meeting of the members, then provisions such as s 104.1(4) of the CATSI Act operate, in conjunction with the common law. Similar powers exist in ss 166.1, 166.5 and 166.10 of the CATSI Act. In addition, it is not contentious that the Constitutions and Rule Books of the Housing Associations constitute a contract between the Housing Associations and their members and between their members. Nor is it contentious that the Management Committees or directors of the Housing Associations owed a fiduciary duty to the Housing Associations. There was no submission that in any way material to the outcome of the Sublease proceeding the content of those several obligations was different. There is no challenge to the standing of the Residents to bring the Sublease proceeding. A Stark Choice? The Residents' submissions recognised that the Housing Associations were faced with a difficult choice. They were confronted with the proposed decision, that is that the Minister might decide to compulsorily acquire each of the town camps under s 47 of the NTNER Act. That would result in the alienation of the town camps land (even if it remained available for their use), which would be most confronting given the recognition of their interests in it by the head leases to the Housing Associations. Those interests were described as "hard-won land rights". The Housing Associations' submission is that, if they did not agree to enter into the proposed subleases, compulsory acquisition was inevitable and they (and their members and tenants) would lose their legal rights and interests in the land forever. They chose to maintain their hard-won land rights comprised by the perpetual leases, and to avoid "above all" the dispossession and extinguishment of those rights by compulsory acquisition. They and their members and tenants have strong familial, spiritual and cultural ties to the land. They hold the view that, to the greatest extent possible, they have protected and safeguarded the interests and rights of their members and their tenants by the negotiations to the end of July 2009. As an additional insight into the decisions of the Housing Associations, they also recognise the great benefits to their members and tenants collectively from the proposed injection of $100 million funding. They submit that there had been years of inadequate funding leading to substandard housing conditions for their members and tenants, including the elderly, women and children. They had negotiated with the Commonwealth over some 12 months or so, and had secured not insignificant changes to what became the proposed subleases. It was apparent no further concessions about its terms could be extracted. In the face of those realities, they submit, they had no choice but to agree to enter into the proposed subleases. Far from involving any breach of duty or of contact to their members or tenants, it was "overwhelmingly in the best interests of their members" to make the decisions they did. It is, from a practical and pragmatic viewpoint, easy to understand their decision to enter into the proposed subleases. The Residents do not accept that the choice of the Housing Associations was so stark. In the course of submissions, they said that there were other alternatives, including that there would be no compulsory acquisition, because the Minister might not make the proposed decision under the NTNER Act in any event, or might confine any compulsory acquisition to the vacant land only in the town camps, or because the Minister might be prepared to further negotiate the terms of the proposed subleases to reflect more directly and immediately the interests of the Housing Associations through their members in the town camps if the Housing Associations stood firm. In any event, the Residents contend, the Residents' position as members of the Housing Associations is so little advanced by the proposed subleases compared to compulsory acquisition as to make the decision of the Housing Associations unjustifiable at law. Indeed, their submission went so far as to say that in any event the decision of the Housing Associations to enter into the proposed subleases was not legally justifiable, however stark the choice or choices perceived by their Management Committees or directors was. Will each Housing Association be Acting Contrary to the Interests of the Members as a Whole by Entering into and Perfecting the Proposed Subleases? The submissions did not distinguish between the position of the Housing Associations incorporated under the Associations Act (NT) or under the CATSI Act, even though their respective Constitutions and Rule Books are a little different. Their Constitutions and Rule Books, including their purposes and their membership are addressed at some length above. Another way of describing those steps might be to ask whether the grant of the proposed subleases is beyond the express or implied power of the Housing Associations under their Constitutions and Rule Books, whatever organ of the Housing Associations might have made the decision to do so, and secondly whether their grant, although within the express or implied power of the Housing Association under their Constitutions and Rule Books, was not within the powers of the Management Committees or the directors to undertake. In Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] 1 Ch 246 , Browne-Wilkinson CJ at 302-5 described the distinction as between ultra vires in the "narrow sense" and ultra vires in the "wider sense". In the present circumstances, the answer to the first question may answer the second. That is because the Residents' position was pitched at two levels. The first was that the Housing Associations could not agree to enter into the proposed subleases simply because they effectively alienated them from any right to control what happens on the town camps for at least 40 years, irrespective of the benefits that might ensue to their members. The second was that, even if they could do so, by the particular terms of the proposed subleases, the assured benefits to their members by each proposed sublease were not such that the proposed subleases could reasonably be said to be in the interests of the members of each Housing Association as a whole. It is important to note that this is not a case where the good faith of those persons who attended the meetings of the Housing Associations in late July 2007, and who resolved that the particular Housing Association should sign the proposed subleases, or of those who signed the proposed subleases, is in issue. Clearly, it is not. There was no suggestion by the Residents to the contrary. It is appropriate to accept, as I do, that those who supported those resolutions and those who then executed the proposed subleases did so in good faith. In my view, it is also not a case where the commercial judgment of those persons, on a pragmatic basis, can be subject to question. It is self-evident that, once it is assumed that the only two realistic outcomes are that the proposed subleases be signed alienating control of the town camp areas for 40 years (but subject to the consultative roles of the Housing Associations and possibly more significant roles for them, as discussed above) or alternatively that the town camp areas be compulsorily acquired by the Minister, it was an appropriate commercial judgment on a pragmatic basis to choose the option of the lesser evil of granting the proposed subleases and ultimately retaining the interest in the town camps through the Special Purposes Leases or Crown Leases, unencumbered by the proposed subleases. Although, as the Residents submitted, there may in fact have been other possible outcomes if the Housing Associations did not agree to grant the proposed subleases, in the light of the communications from the Minister in July 2009, I consider that those who supported the grant of the proposed subleases, and those who signed them for the Housing Associations, cannot be reasonably criticised for assessing the available options as they did. The Council itself reached the same view about the options. In my view, the first critical question is, therefore, whether it was within the power of each of the Housing Associations to agree to grant the proposed subleases, having regard to the extent to which an interest in the land comprising the town camps was retained. That does not involve any assessment of the value of the monetary consideration for the grant of the proposed subleases, because the proposition is that, whatever that consideration, the decision to grant the proposed subleases is beyond the power of the Housing Associations. To answer that question, it is, I think, a distraction to look to the alternative of compulsory acquisition. The fact of that being, or being seen to be, the only alternative should not inform what each Housing Association is empowered to do. It is relevant to the quality of the commercial judgment of each of the Housing Associations by those acting on its behalf, assuming they could enter into the proposed subleases. I note on that issue (to be addressed below) that as a matter of law, there was no obligation legally enforceable by a particular Housing Association that a particular (or any) part of the $100 million referred to in clause 6(a) of the proposed subleases should be spent on the town camp of the particular Housing Association. However, as a matter of reasonable and realistic commercial judgment, a significant part of that sum would be spent on each of the town camps of the Housing Associations. I discuss that issue later in these reasons. However, if the Constitutions and Rule Books of the Housing Associations do not permit them to grant the proposed subleases to the Executive Director for 40 years, on their terms, then the commercial benefits of doing so will not create the power to do so. And if they do permit the Housing Associations to grant the proposed subleases, then the assessment of the quality of the commercial benefits for doing so (whether legally enforceable or merely or soundly based expectation) will not limit or confine that power. In that case, it will be necessary to separately consider whether the proposed conduct of perfecting the grant of the proposed subleases is, in fact, within the scope of that which is authorised; the focus turns more to the second of the two questions I have identified in [319] above. The Residents say that each Housing Association was established for the purpose of becoming the lessee of its particular Special Purposes Lease or Crown Lease for the purpose of Aboriginal communal living. That is really an oversimplification of their purposes. In the case of the Housing Associations incorporated under the Associations Act (NT), their objects set out in clause 2.2 of the Constitutions and Item 1.3 of the Schedule to the Constitutions are firstly "to relieve the poverty, sickness, destitution, distress, suffering, misfortune or helplessness of Aboriginal people in Central Australia" and secondly, having regard to the circumstances of those people, to advance those objects by means which include the six enumerated means in Item 1.3(b) of the Schedule. They are set out in [198] above. Clause 3.1 authorises the doing of "all such lawful things as seem to the Association to be necessary or desirable to advance the objects and purposes of the Association" in order to achieve its objectives. That power is limited as specified in Item 1.5 of the Schedule. No submission was made by any party that Item 1.5 had any significance to the present issue. The definitions in clause 1.1 include "Town Camp" to mean any land leased by the Association, including the land described in Item 1.2 of the Schedule: that is the land comprising their respective town camps [my emphasis]. Membership under clause 4 is confined to eligible persons admitted to membership. Item 1.7 says that the membership comprises adult Aboriginal persons who apply for, and are admitted to, membership and who are residents of the particular specified town camps. The objects of those Housing Associations do not expressly state, or confine, their purposes to acquiring the Special Purposes Lease or the Crown Lease of the particular town camp and managing that town camp. However, that state of affairs underlies the existence of each of those Housing Associations. That is apparent from the definition of "Town Camp" and the fact of the relevant Special Purposes Lease or Crown Lease. It is apparent that the Constitutions of the Housing Associations incorporated under the Associations Act (NT) are recent. Item 1.6 in each instance gives a commencement date of 2006 or thereabouts. Clause 3.6 says that the Constitutions replace all previous constitutions from that date. The various Special Purposes Leases and Crown Leases were granted between 1976 and 1981 and in 1983. Consequently, I am satisfied that, under their Constitutions, the holding of the head lease and the provision of housing and other services to the members at the town camp covered by the particular head lease is an important role of the Housing Associations. On that basis, however, it does not follow that the Housing Associations must personally procure and provide the housing and services. Their Constitutions do not prevent them from subcontracting the provision of services to their members to fulfil its objects. The expressed means of fulfilling their objects are not exclusive. Clause 2.2 and Item 1.3(b) says the means of doing so include the specified means. The sub-item most applicable does not confine the means by which obtaining land housing and community facilities are to be achieved for their members. In particular, it does not require the housing and community facilities be provided directly by the Housing Associations. And clause 3.1 is also not restrictive in any relevant way. In fact, the Council has apparently been given the role of managing the various tenancy agreements by the Housing Associations. It is obvious that the building of new dwellings and the maintenance and repair of existing dwellings may be contracted out. Many other examples may be given. It is clear enough that (for example), a Housing Association, in managing the housing stock or maintaining it, could contract with others to provide the services necessary to do so. Once that step is taken, there is no apparent reason why that contract to do so should be confined to an ad hoc arrangement, and should not include a contract with a third party to do so for a fixed period of time. That is, it is open to a Housing Association, to decide how it fulfils its objects. It is the objective of fulfilling those purposes and aims which is the limiting factor in what it may do, or arrange for others to do. The effect of the proposed subleases is summarised above. They will remove from the Housing Associations the right to control the nature of any housing improvements or new housing on the town camps for its term. They give that right to the Executive Director and to the Housing Authority. The same is true of any infrastructure improvement or new infrastructure. They remove the right of the Housing Associations to deal with existing tenants or to decide upon and deal with any new tenants for the same lengthy period, although the pool of eligible persons must be its members. They do provide the opportunity for consultation, and in some respects the opportunity for a more active role for the Housing Associations in respect of vacant land and community land and, after three years, as a Housing Authority, but there is no assurance that that more active role will be granted by the Executive Director. In substance, in my view, they operate to cede from the Housing Associations to the Executive Director or the Housing Authority the power to address those things in relation to the particular town camp. Clearly, the proposed subleases are seen by the Housing Associations as an opportunity to meet their primary objectives. They will result in great improvements in the housing and other community facilities available to their members, and so will relieve the distress, suffering and misfortune of their members. The "price" is the grant under the proposed subleases. An analysis of the terms of the proposed subleases however, in my view, reveals that the proposed subleases, if granted, may effectively exclude the Housing Associations from other than the consultative roles referred to above. For the period of 40 years, they will not have a direct role or responsibility of providing Aboriginal community living or ancillary activities. The area of the leased land under the head leases is co-terminous with the grant under the proposed subleases. During the period of the proposed subleases, the Housing Associations will not be entitled to take steps to provide housing or infrastructure in the town camps. That role and responsibility is ceded by the proposed subleases. The covenant of quiet enjoyment in clause 22.1 precludes the Housing Associations from doing anything in the areas of the town camps which may disturb or interrupt the Executive Director or any entity performing functions under the proposed subleases from performing those functions. Their opportunities to perform those functions are dependent upon the preparedness of the Executive Director to accommodate them; they have no legal right to do so. They may do so only through the direct and indirect (Forum) consultations provided for under the proposed subleases or with the consent of the Executive Director, so as not to contravene the covenant of quiet enjoyment. Consequently, if the sole or principal objective of the Housing Associations was to hold the head lease and to provide and manage the housing and tenancies for their members, and supporting facilities on their particular town camps, I would be inclined to conclude that the grant of the proposed subleases was so inconsistent with that objective as to be beyond power. It is necessary to consider whether that is the sole or principal objective of those Housing Associations or whether their objectives are different or more extensive in a relevant way. I have indicated that I accept that the "context" of the Housing Associations is that each was formed to hold the relevant Special Purposes Lease or Crown Lease from the Northern Territory. Although not grants of freehold title, their terms show that they are the next best thing: permanent and, in a practical sense, unconstrained title to the town camps land. Their terms also show that the obligations which the Housing Associations thereby assumed are consistent with the objects of those Associations. The leased land was to be used for Aboriginal community living and ancillary activities. The Residents contend that the proposed subleases, for such a lengthy period, removes the sub-stratum for the creation and continuing operation of the Housing Associations as their objects contemplate. However, it is necessary to pay proper regard to the current Constitutions and Rule Books of those Housing Associations. Although the name is "town camp specific", the objectives now contemplate each of those Housing Associations serving their objectives beyond that town camp. The definition of "Town Camp" extends to any land owned or leased by an association, and includes the particular town camp. Item 1.3(b) includes serving the objectives in Item 1.3(a) and generally by "obtaining land" for its members. There is no provision now which specifies the only, or primary, objective to operate the particular town camp. Item 1.2, under the heading "Town Camp governed by the Association (clause 1.1)" has the name of the Housing Association itself --- I take it to be designating the town camp itself --- but clause 1.1 is a reference to the definitions in the Constitution , and the only relevant definition is that of "Town Camp". Separately, clause 2.2 has the heading "Objects and Purposes" and refers to Item 1.3. The heading to Item 1.2 in that light cannot be the defining purpose or object of those Housing Associations. There is now no expression of the object or the principal object of the Housing Associations being to control the provision and maintenance of housing and other facilities on the land held under their head leases. The objects are more expansive. Item 1.3(a) of the Objects and Purposes is general in its expression. It is not confined to particular Aboriginal people in Central Australia. Item 1.3(b), as pointed out above, does not confine the means by which those objects may be fulfilled. It says that those objects shall be advanced by means which include the specified means. Thus, for example, providing housing for its members is a means, but not the only means, by which its objects may be advanced. It may be consistent with its objects if housing were to be provided to other Aboriginal persons who are not, or are not eligible to be, members. That housing, it contemplates, may be provided on land obtained by a Housing Association which is not the land the subject of its particular head lease. Similarly, the provision of programs which advance the well being of its members is clearly within the means of advancing its objects, but the provision of programs which advance the well being of other Aboriginal persons may also be advanced consistent with its objects. Ultimately, the control of what they do is within the control of the members, who must reside on its particular town camp to be eligible to be members, or the Management Committee elected from the members. But that does not itself limit the objects of the Housing Associations themselves or how they may be advanced. The powers in clause 3.1 are not restricted in any relevant way. The limitations on those powers in clause 3.2 and Item 1.5 also do not indicate that, in any way relevant to the present issue, the objects of those Housing Associations are confined: they may not engage in trade or commerce; and they may not grant security over assets so as to expose those assets to being lost by default under the terms of the security instrument. In addition, even if those Housing Associations were to cede control of their particular town camps (as I have found they do under the proposed subleases) the advancement of their objects by the means specified in Item 1.3(b)(i) and (ii) even in respect of their members will not be entirely redundant: other community facilities for members need not be on the particular town camp; or the programs which advance (for example) the health or education of members need not be provided on the particular town camp. And the means specified in Item 1.3(b)(iii), (iv), (v) and (vi) would also be able to be carried out. In my judgment, for those reasons, on the proper construction of the Constitutions of those Housing Associations, I consider that the entry into the proposed subleases is within the objects and purposes of those Associations, even though it effectively cedes control of the particular town camps for 40 years. It is a way of obtaining significant housing and facilities and benefits to its members in a manner which, upon the proper reading of their objects, is not alien to them. It is not necessary to determine the alternative argument put on behalf of the Minister that, assuming the objects of those Associations are confined to obtaining housing and other facilities on the particular town camp of each Housing Association, the grant of the proposed subleases is not inconsistent with those objects because their Constitutions do not direct that the control of the provision of housing and other facilities must lie with the Housing Associations, so the provision of housing and other facilities --- to a much greater degree than would otherwise have been the case --- through the grant of the proposed subleases in any event is within their power. The objects of the Housing Associations constituted under the CATSI Act are a little different. They are relevantly set out in [214] to [215] above. They also encompass the provision of housing and facilities for Aboriginal people who are not members: see clause (b) of the "Objectives" clause. The Karnte Aboriginal Corporation's "Objectives" are a little more confined in one sense but they are otherwise quite general. Accepting that it is an underlying, but not express, foundation for those Housing Associations that each has an interest in its particular town camp, I reach the same conclusion as in the case of the Housing Associations incorporated under the Associations Act (NT), that it was within their objects to agree to enter into the proposed subleases. The significance of the terms of the Constitutions or Rule Books is, perhaps, evident from their earlier Rule Books as set out at [203] above in which there is more of a focus on direct control of the town camp and direct management of its houses by the use of the active verbs: to manage the housing stock and tenancy; to look after our Town Camp now and for future generations; to keep our housing in good repair; to develop and improve our housing. In my judgment, in the case of those Housing Associations also under their current Rule Books, there was power to agree to the proposed subleases. In my judgment, on a fair reading of the present Constitutions and Rule Books of the Housing Associations, it is not so integral to their purposes that they directly control the provision of housing and other facilities on their respective town camps that their agreement to enter into the proposed subleases is simply beyond their power as incorporated associations. Simply to show that it has not been overlooked, there is one ancillary matter I should mention. The common law "narrow" ultra vires rule which restricts an incorporated entity to doing only what its constitution authorises and to exercising only those powers which are expressly or implicitly conferred upon it has long been qualified in the case of corporations: see now s 125, Corporations Act 2001 (Cth) and see the discussion in Gower, Modern Company Law , (4 th ed 1979, Stevens) at 161-74. Gower says at 171 that the rule was designed to protect the incorporated entity "against itself (or rather against its organs) so as to safeguard its members and creditors". That rule continued to apply to other incorporated associations. At least in respect of partially executed contracts, the absence of power may not have precluded their enforcement: In Re K.L. Tractors Ltd [1961] HCA 8 ; (1961) 106 CLR 318. That is not this case. There may also be circumstances where, notwithstanding that the corporation has acted ultra vires, relief may be available: see Ford's Principles of Corporations Law (Butterworths Looseleaf Service) at [12,060]. However, the rule was in any event ameliorated by provisions similar to that in the Corporations Act 2001 (Cth) in most, if not all, of the States' Associations Incorporation Acts: see s 17 Associations Incorporation Act 1981 (Vic); s 26 Associations Incorporation Act 1981 (Qld); s 27 Associations Incorporation Act 1985 (SA). There was no such provision in the Associations Incorporation Ordinance 1963 (NT) or in the Associations Incorporation Act 1978 (NT). Those enactments were repealed and replaced by the Associations Act (NT), enacted in 2003. There is also no such provision in the Associations Act (NT). Part 6 of the Associations Act (NT) deals with the transfer of property of an incorporated non-trading association. Each of the Housing Associations is not permitted to trade: Item 1.5 of the Schedule to their Constitutions. Section 54 Associations Act (NT) permits the transfer of real property by one association only to another body formed for promoting objects similar to its own or charitable objects, or to a council for the area in which the property is situated. That section also imposes procedural requirements. It is not necessary to refer to them. It is not suggested the grant of the proposed subleases is authorised by s 54 independently of the Constitutions of the Housing Associations. Nor, on the other hand, is it suggested that the grant of the proposed subleases is unlawful so as to prevent the Housing Associations from agreeing to enter into them. Section 54 is expressly subject to s 110. Section 110(2) restricts a Housing Association from disposing of, or charging, prescribed property, which appears to include a lease under the SPL Act or the CL Act (see the definition of prescribed property in s 4), except with the consent of the Minister administering that Act (and, by the NTNER Act, that would include the Minister) without the Minister's consent. It is also not necessary to further discuss those provisions as they were not relied upon, or referred to, either by the Residents or by any of the respondents, as informing the proper construction of the Constitutions of the Housing Associations either to grant or not to grant the proposed subleases. There is no doubt good reason for that. The CATSI Act does have a provision similar to that in s 125 of the Corporations Act 2001 (Cth). That may be simply because there are only three of them, and the condition precedent to the activation of each proposed sublease in clause 2.1(a)(i) referred to above would not be satisfied. It may also be because, notwithstanding its apparent effect, there is some authority to suggest its role is confined to validating corporate dealings with outsiders despite deficiencies in corporate capacity, but not to abrogating restrictions on the exercise of shareholders' or directors' powers: see eg per McPherson J (with whom Lee and McKenzie JJ agreed) in ANZ Executors & Trustee Co Ltd v Qintex Australia Ltd (receiver and managers appointed) (1990) 8 ACLC 980 at 988. There may be other reasons. It may be that such a provision does not inhibit a member of such an association from asserting that the common understanding of the members and their general intention was for the association to control the use and development of those town camps, and seeking to enforce that position. That sort of contention has been used to support the winding up of a corporation or the just and equitable ground: see Ford's Principles of Corporations Law (13 th ed, 2007, Butterworths) at [12.130] p 744 and the cases there cited. As the issue was not raised, it is not necessary to go beyond those comments. Consequently, it is necessary to consider the second of the questions I have identified above. That is, it is necessary to determine whether the particular terms of the proposed subleases mean that the agreement to enter into them is contrary to the interests of the members as a whole. The Residents as members put their contention quite brutally: for $1, the Housing Associations have given up all rights, functions and representative activities in relation to their town camps so they cannot discharge their responsibilities to their members under Item 1.3 of their Constitutions and under their Rule Books. There is "an equation of $1 for no rights for at least 40 years". In support of the submission, they draw an analogy with the accountability of a corporation to the "interests of its members as a whole". Reference was made to Gambotto v WCP Limited [1995] HCA 12 ; (1995) 182 CLR 432 ( Gambotto ) as supporting the proposition that a company can act bona fide and fairly, and for the benefit of the company as a whole, but cannot do so if that overrides the rights of existing shareholders. I do not think that decision takes the Residents' position that far. In that case, a small minority shareholder challenged the validity of a proposed meeting to consider amending the company's constitution to enable a member entitled to 90% of the issued shares to compulsorily acquire the balance. The Court therefore had to address the limits of the power to alter the constitution of the company to enable the appropriation of the shares of a minority. Clearly, it is a very different type of case. The proposed resolution was not shown to be for a proper purpose, nor was it shown to be one which did not operate oppressively in relation to minority shareholders: see per Mason CJ, Brennan, Deane and Dawson JJ at 445 and 448. Their Honours pointed out also at 445 that the position may have been different if the right to expropriation had already existed in the company's constitution. Senior counsel for the Residents made the submission that the "interests of the members as a whole" was somehow different from the interests of the Housing Associations themselves. In cross-examination of a solicitor from Gilbert + Tobin (the solicitors for the Council) he elicited that their advice to the Council, and to a working group including certain Housing Association representatives, did not separately address the interests of the members of the Housing Associations as distinct from those of the Housing Associations themselves. The significance of the distinction, if legally there is one, was not made clear. It is argued that the Housing Associations could not alienate their interests in the town camps under the respective Special Purposes Leases or Crown Leases either absolutely or for 40 years. That was said to flow from the proper construction and understanding of the objects and purposes of the Housing Associations. I have already addressed that contention. No reason was put why those objects and purposes should impose restrictions on the powers of the Housing Associations which preclude their capacity to agree to the proposed subleases as Housing Associations, and different restrictions on their powers because of the interests of their members as a whole. The plurality judgment in Gambotto 182 CLR pointed out at 444 that the observations of Lindley MR in Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656 at 671 that the power of the majority to alter the articles of association of a company must be exercised in a lawful manner and "bona fide for the benefit of the company as a whole" was inappropriate where the proposed resolution involved a conflict of interests and advantages. There is no submission in this matter that the Housing Associations' entry into the proposed subleases would in any way affect the rights of their members inter se. Clearly it would not do so. If their rights as existing tenants were relevant, the proposed subleases would again not affect those rights as tenants differentially. The interest of the Residents as tenants of the Housing Associations is, as I have found, preserved by the proposed subleases. The benefit of the rent payments, and the repair and maintenance obligations of the landlord, pass to the Executive Director, but the right of occupancy granted under the tenancy agreements is maintained. If their rights as members to be eligible in the future for a tenancy of available accommodation in a town camp were separately considered, again those rights as members would not be altered inter se, although the proposed subleases (clause 10) would impose a different decision-making structure for granting new tenancy agreements. The membership eligibility rules will be unchanged, and the Housing Associations will continue to determine in accordance with their Constitutions or Rule Books who becomes members of them. The proposed subleases do not extend the eligibility of persons to be granted a new tenancy agreement in respect of a dwelling in a particular town camp beyond those presently eligible for such an agreement. An appeal to the High Court was dismissed: Wayde v New South Wales Rugby League Inc [1985] HCA 68 ; (1985) 180 CLR 459. No comment was made upon the view of the Court of Appeal on that topic, although Brennan J in agreeing with the result of the plurality judgment at 471 made some additional comments upon it. Besanko J in Millar v Houghton Table Tennis & Sports Club Inc [2003] SASC 1 at [135] appears to have adopted the same view. Szencorp Pty Ltd v Clean Energy Council Limited (2009) 69 ACSR 365 , was also an "oppression" case brought in reliance upon the current statutory equivalent, s 232 of the Corporations Act 2001 (Cth), in relation to the conduct of the affairs of an unlisted not-for-profit public company limited by guarantee. It was an entity formed to effect a merger of two existing sustainable energy industry associations. The manner in which a company is being administered and in which its affairs are conducted may fall within the category of conduct contrary to the interests of the company's members as a whole although it may not be described as oppressive, unfairly prejudicial to, or unfairly discriminatory against members of the company: Turnbull v National Roads & Motorists' Association Limited [2004] NSWSC 577 ; (2004) 50 ACSR 44 at 52, 57; Campbell v BackOffice Investments Pty Ltd [2008] NSWCA 95 ; (2008) 66 ACSR 359 at 400. (See also Re Spargos Mining NL (1990) 3 ACSR 1 at 42; Shelton v NRMA Limited (2005) 51 ACSR 278. ) An example of such conduct may be found where a company is formed for the purpose of undertaking particular activities but the directors and management disregard those activities and direct the company into different commercial areas. That is uncontentious, so long as their interests as a whole are in broad terms synonymous with the interests of the Housing Associations. Goldberg J did not suggest to the contrary. My analysis of their Constitutions and Rule Books is intended to reflect that approach. Senior counsel for the Residents also referred to Pettit v South Australian Harness Racing Club Inc (2006) 95 SASR 543 , a case concerning applications for membership of the association. Reliance was place on certain remarks of White J in [26] as follows: The constitution of an association binds the association and all of its members. This means that the Committee was bound to apply the relevant provisions of the Club's constitution in its consideration of the membership applications. The requirement that an exercise of an association's powers be for the benefit of the members as a whole is to exclude their exercise for "ulterior special and particular advantages", that is, it negatives "purposes foreign to the association's operations, affairs and organizations". [The supporting references were Wayde 180 CLR and Peters' 61 CLR]. Conduct may be contrary to the interests of the members as a whole even though a committee does not act in bad faith. This is because of the importance which the law attaches to adherence to the provisions of an association's constitution. ... [citations omitted]. Again, there is no suggestion in that case that the interests of the members as a whole is significantly different from the interests of the Association itself. The principle is necessarily a stronger one where it is applied to a not-for-profit association established for the purpose of providing benefits and services to its members as its raison d'etre. There is, in my view, some mixing of concepts in them. In the first place, as the High Court pointed out in Gambotto 182 CLR, these particular considerations arise where the proposed conduct of the entity expropriates or is intended to facilitate the expropriation of the interests of particular members at the expense of others. That is not this case. The rights of the members of the Housing Associations inter se are unchanged. Secondly, the measure in fact of what is in the interests of the entity itself and its members as a whole will necessarily depend upon the constitution of the entity: a company formed "for profit" is likely to have a constitution which permits conduct which may not be permitted in the case of a not-for-profit association; in fact, each of the Constitutions and Rule Books of the Housing Associations prohibits them from trading for profit. But it does not follow that, somehow, the measure of what is "oppressive or unfair ... is necessarily" applied more rigorously in the case of not-for-profit associations. The measure will still be the objects and purposes of the association. Thirdly, the second proposition set out in the preceding paragraph is really axiomatic. If a particular course of action is not authorised by the constitution, it may not be undertaken. On the second issue, it is necessary therefore that the Residents show that the agreement to enter into the proposed subleases is contrary to the interests of the members as a whole, or effectively to the interests of the Housing Associations. Inevitably, on such issues, there are matters of judgment. Different members will make different commercial judgments about what is, or is not, in the interests of the Housing Associations. The Residents' submission is that their rights as members of the Housing Associations to have the Housing Associations "separately conduct its activities at the town camps for the benefit of its existing members" have been sold for 40 years for $1, without any other return provided as of right for the benefit of the members. I do not accept that contention. It mis-describes their entitlements under the proposed subleases. The general effect of the proposed subleases is set out above. If there is power under the Constitutions or Rule Books of the Housing Associations to enter into arrangements such as the proposed subleases, the aspirational objectives of the Housing Associations may be fulfilled or served by the Housing Associations arranging for another entity, such as the Executive Director, to engage in or conduct activities at the town camps to fulfil or serve those objectives for the benefit of the members. Having taken that step, that the proper approach is to determine whether those persons acting on behalf of the Housing Associations are acting for proper purposes and could reasonably have engaged in that conduct. Barwick CJ, McTiernan and Kitto JJ said in Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Co N.L. I have referred above to the finding that each Housing Association, although having no legally enforceable right to any particular part of the $100 million, could reasonably expect and assume that a significant proportion of that sum would be spent on housing and facilities at its town camp. They were aware of the fundamental importance of the town camps land to their respective members. They had negotiated with the Minister for over 12 months. They could reasonably conclude that no "better deal" could be reached. They could reasonably conclude that, if they did not agree to the proposed subleases, the town camps would be compulsorily acquired. They understood the very strong desire of their members to avoid alienation of their land (the land held under the Special Purposes Leases or Crown Leases), and so were making the decision which would ultimately preserve their lands rather than have them compulsorily acquired. They had secured some consultation rights, both directly and through the Forum. They were aware that the $100 million was a package for all the Housing Associations, and its allocation would follow consultation through the Forum. They were aware that the $100 million was required to be expended over a period of five years, and so would provide promptly benefits to existing members, as well as to future generations. They had consulted widely with their members. They had the support of the Council in their decision. They were aware that, under the terms of the proposed subleases, they could be given a significant and direct ongoing role (as recognised in Recitals I and J of the proposed subleases, and in respect of community land, vacant land and after three years potentially as a Housing Authority). As senior counsel for the Housing Associations argued, the Housing Associations were aware that there was no other realistic opportunity available to secure the potential benefits to the town camps which the expenditure of $100 million would bring; they knew of the past "years of inadequate funding leading to substantial housing and conditions for the members and tenants"; and they believed that that funding to the Housing Associations through clause 6(a) of the proposed subleases would directly serve their primary function of relieving the poverty, sickness and suffering and helplessness of Aboriginal people in Central Australia, including their members. Finally, they were aware that the proposed subleases would not preclude them from continuing to engage in activities directed to the six "means" set out in Item 1.3(b) of the respective Constitutions and Rule Books, save to the extent that certain of those activities would be subject to the role and obligations and activities of the Executive Director under the proposed subleases, and they were also aware of the ongoing important role of the Council. All of those considerations lead me to the view that, if it is assumed that for appropriate consideration the Housing Associations had power to grant a 40 year sublease to the Executive Director ceding the degree of control of the lands of the town camps which it did, the decisions of the Housing Associations to grant the proposed subleases were for proper purposes and were reasonably in the interests of their respective Housing Associations and their members as a whole. The submissions for the Residents did not suggest that, in practical terms, the content of the duties of the Management Committees or directors of the Housing Associations, whether founded in contract or equity or otherwise, were different. Consequently, on that assumption, I would have refused relief in the Sublease proceeding. On the conclusion I have reached on the first question set out above, there was no contractual provision which has been breached by agreeing to enter into the proposed subleases. That is, in essence, a consequence of how the members of the Housing Associations have chosen to express the objects and purposes of those Associations in their Constitutions and Rule Books. I will give the parties the opportunity to make written submissions as to costs of those proceedings or to apply to make oral submissions on costs. I certify that the preceding three hundred and seventy-nine (379) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | s 47 northern territory national emergency response act 2007 (cth) whether the power of the commonwealth minister to give a notice under s 47 to compulsorily acquire prescribed areas is conditioned upon affording procedural fairness to the residents of the land the subject of the notice when they occupy parts of the land under tenancy agreements with the principal lessor whether the commonwealth minister had afforded procedural fairness in the circumstances associations incorporated under associations act (nt) whether the associations will breach their constitutions, contractual duties owed to members and whether the executive committees will breach their fiduciary duties owed to members by entering into a transaction under which the land leased by the associations will be subleased to the commonwealth for a period of 40 years (the proposed subleases) whether execution of the proposed subleases is contrary to the interests of the associations question of a fair reading of the constitutions of the associations whether, upon a fair reading of their constitutions, it is an integral object of the associations that they continue to have direct control and management of particular lands leased by them in perpetuity, so that they may not enter into the proposed subleases corporations incorporated under corporations (aboriginal and torres strait islander) act 2006 (cth) whether the corporations will breach their rule books, contractual duties owed to members and whether the executive committees will breach their fiduciary duties owed to members by entering into a transaction under which the land leased by the corporations will be subleased to the commonwealth for a period of 40 years (the proposed subleases) whether execution of the proposed subleases is contrary to the interests of the corporations question of a fair reading of the rule books of the corporations whether, upon a fair reading of their rule books, it is an integral object of the corporations that they continue to have direct control and management of particular lands leased by them in perpetuity, so that they may not enter into the proposed subleases representative proceedings whether expedited proceedings would provide an efficient and effective means of dealing with the claims of group members whether it would be in the interests of justice to order that proceedings no longer continue as representative proceedings tenancy agreements granted other than for specific fixed term whether periodic tenancies administrative law associations and clubs corporations practice and procedure landlord and tenant |
A "continuation-in-part" (CIP) application was also made in the United States in respect of the Invention, and the subsequent patent granted was United States Patent No 7,163,914 (the CIP US Patent). Each of the Patent, the US Patent and the CIP US Patent are held by the third respondent (Novapharm). The Invention is an antiseptic cleansing composition. I will refer collectively to the Patent, the US Patent and the CIP US Patent as "the Patents". I will refer collectively to the US Patent and the CIP US Patent as "the US Patents". 2 Novapharm is in the business of developing and "commercialising" disinfectant and antiseptic technology. Novapharm was incorporated in about 1986, at which time Mr Glueck and the first respondent (Mr Stang) became directors of, and shareholders in, Novapharm. The business relationship between Mr Stang and Mr Glueck was dissolved in September 1997 when the second respondent (Mr Kritzler) purchased the shares held in Novapharm by Mr Glueck and Mr Glueck's daughter. 3 Mr Glueck claims that he was the inventor of the Invention, and that Novapharm applied for and obtained the Patents without his knowledge. 4 Mr Glueck has discontinued the proceeding against the fourth and sixth respondents. However, for convenience, I will refer to the remaining four respondents as "the respondents". 5 Mr Stang and Mr Kritzler are directors of Novapharm and the fifth respondent (Ms Ditterick) is employed by the company. 6 There are three motions before the Court. 7 The respondents move by notice of motion filed also on 15 August 2007 for an order dismissing the proceeding insofar as it relates to certain paragraphs of the application and certain paragraphs of the statement of claim. 8 The respondents also move by notice of motion also filed on 15 August 2007 for an order pursuant to O 27 r 4 of the Federal Court Rules that certain subpoenas issued on 8 August 2007 at the request of Mr Glueck be set aside. 9 Mr Glueck moves the Court by notice of motion filed on 25 October 2007 for leave to file an amended application and an amended statement of claim in the forms annexed to his notice of motion. 10 The respondents' motion for summary dismissal relates to the existing application and statement of claim. The respondents filed and served submissions in support of their motions. As noted above, Mr Glueck's notice of motion was filed subsequently. Sensibly the respondents have addressed their submissions in support of summary dismissal to the proposed amended application and the proposed amended statement of claim. It would have been futile simply to deal with the existing application and statement of claim which Mr Glueck seeks to amend. 11 At one time Mr Glueck was represented by Rhodes Legal, but they have ceased to represent him and he appeared in person on the hearing. 13 Section 138 of the Patents Act provides, relevantly, that any person may apply to a prescribed court for an order revoking a patent. This Court is a prescribed court (see the definition of "prescribed court" in the Dictionary in Schedule 1 to the Patents Act ). Under s 138 the Court may make an order of revocation on one or more of the grounds set out in s 138(3) but on no other ground. 14 Mr Glueck did not comply with O 58 r 14(1) of the Federal Court Rules by serving a copy of the application and statement of claim on the Commissioner of Patents. 15 Mr Glueck does not suggest that the Invention was not a patentable invention. His contention is that Novapharm was not entitled to the Patents and that Novapharm obtained the Patents by "fraud, false suggestion or misrepresentation". 16 The proposed amended statement of claim begins by pleading, in paras 13-25 and 28, claims in relation to the Patent. Mr Glueck pleads that Novapharm, in trade or commerce, engaged in conduct that was misleading or deceptive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the TP Act ) by misrepresenting to the Australian Patent Office (APO) that Mr Glueck had consented to Novapharm's applying for and obtaining a grant of letters patent in relation to the Invention and that it was entitled to such a grant, when he had not so consented and it was not so entitled. The contraventions of s 52 of the TP Act are pleaded in paras 14, 16, 18 and 22 of the proposed amended statement of claim. It is alleged in para 28 that in reliance on the representations the APO issued the Patent, in consequence of which Mr Glueck has suffered loss and damage. 17 Paragraphs 26 and 27 plead the claims of lack of entitlement to the Patent and the obtaining of the Patent by fraud, false suggestion or misrepresentation, relying on the conduct pleaded in paras 1-25. 18 Second, in paras 29-37 Mr Glueck pleads a claim in relation to an application filed by Novapharm with the APO under the Patent Cooperation Treaty (the PCT International Application). Again, misleading or deceptive conduct in trade or commerce in contravention of s 52 of the TP Act is pleaded (in paras 30 and 32). 19 Third, in relation to the application for the US Patent, generally similar allegations are made of misrepresentations to the United States Patent and Trademark Office (USPTO). The allegations of contravention of s 52 of the TP Act in relation to those misrepresentations are made in paras 39, 41 and 43 of the proposed amended statement of claim. It is alleged in para 47 that in reliance on various representations by Novapharm, the USPTO issued the US Patent to Novapharm in respect of the Invention, in consequence of which Mr Glueck has suffered loss and damage. 20 Fourth and finally, there is an allegation in respect of a CIP application made to the USPTO in or about February 2003 by Novapharm. Mr Glueck pleads (in paras 48-57) that Novapharm made various representations to the USPTO in relation to the application for the CIP US Patent, thereby engaging in conduct that was misleading or deceptive in contravention of s 52 of the TP Act . The pleading of contravention of s 52 occurs in paras 49 and 54. In para 57 Mr Glueck pleads that in reliance on the representations, the USPTO, pursuant to the CIP application, issued the CIP US Patent to Novapharm in respect of the Invention, in consequence of which Mr Glueck has suffered loss and damage. 21 Associated with the four groups of misrepresentations are allegations of fraud and forgery, and allegations of accessorial liability, in various combinations, on the part of Mr Stang, Mr Kritzler and Ms Ditterick. 23 First, they say that the pleaded representations made to the APO and to the USPTO were not made "in trade or commerce" for the purposes of s 52 of the TP Act . Accordingly, they submit that all claims founded on each alleged contravention by Novapharm of s 52 of the TP Act , including the claims of accessorial liability founded upon those alleged contraventions, cannot succeed. 24 The respondents refer to the authoritative construction of the expression "in trade or commerce" in s 52 of the TP Act given by the High Court in Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17 ; (1990) 169 CLR 594 ( Concrete Constructions ). In support of their submission that representations to government authorities pursuant to the requirements of legislation lie outside the notion of conduct in trade or commerce, the respondents cite Village Building Co Ltd v Canberra International Airport Pty Ltd (No 2) [2004] FCA 133 ; (2004) 134 FCR 422 ( Village Building) at [57]-[58], affirmed on appeal at Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCAFC 240 ; (2004) 139 FCR 330 at [50] - [55] ; and my own decision in RGC Mineral Sands Ltd v Wimmera Industrial Minerals Pty Ltd (No 2) [2000] FCA 22 ( RGC v Wimmera ). 25 In Concrete Constructions , the High Court held that an internal communication from one employee to another in their ordinary activities in building work was not conduct engaged in by their employer company in trade or commerce (at 605). The High Court held that what is required is that the relationship between the corporation and the representee be of a trading or commercial character, and that the conduct of the corporation have taken place in the course of that relationship. As well, the forecasts were published on the company's website and were used in public debate concerning, inter alia, an application to rezone land south of the airport and under the flight path as residential. 29 The applicant for relief was a developer of land in the area south of the airport. 30 Finn J held that the conduct alleged against CIA was not conduct in trade or commerce for the purposes of the TP Act , and an appeal against his Honour's decision was dismissed by the Full Court. 31 Similarly, in RGC v Wimmera , I held that representations made to the Commissioner of Patents in an opposition proceeding were not made in trade or commerce for the purposes of s 52 of the TP Act . 32 The course of authority outlined above requires me to hold that the alleged representations by Novapharm to the APO and to the USPTO were not made in trade or commerce. They were not made in the course of a trading or commercial relationship between Novapharm on the one hand, and either the APO or USPTO on the other hand. Novapharm had no trading or commercial dealings with the APO or the USPTO. Nor were they made in the course of the negotiation of contracts; cf Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389. The alleged representations were made to a government instrumentality pursuant to legislation for the purpose of obtaining an exclusive right or bundle of rights made available by that legislation. 33 No doubt the alleged representations were made by Novapharm in trade or commerce in a broad non-s 52 sense. However, in Concrete Constructions the High Court (at 603) rejected the view that the expression "in trade or commerce" in s 52 referred to "the "immense field of activities" in which corporations may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business, and held that it bears the narrower meaning to which I referred above. 34 Mr Glueck responded to Novapharm's first ground of attack by submitting that Novapharm did not make representations in trade or commerce to the APO or to the USPTO because all representations made to them were made by Novapharm's Australian and US patent attorneys respectively. His submission must be that the representations that were made by those patent attorneys were not in law representations by Novapharm. In making this submission, Mr Glueck was accepting, in effect, that in suing Novapharm for having made the representations, he had sued the wrong entity, since it was the patent attorneys alone who were responsible for the alleged misrepresentations. It is necessary for Mr Glueck to appreciate that it is possible for a company to make a representation through its agent. In any event, allegations that Novapharm had made the representations in trade or commerce permeate the proposed amended statement of claim and lie at the heart of Mr Glueck's claims. 35 In the result, the proposed amended application and the proposed amended statement of claim should not be allowed to be filed because the former would claim relief, including accessorial relief, based on alleged contraventions of s 52 of the TP Act , and the latter would plead claims for such relief. 36 I turn now to the respondents' second ground of attack. This is based on the proposition that the proceeding impugns title to foreign property, namely, the US Patents. 37 In The British South Africa Company v The Companhia de Moçambique [1893] AC 602 ( Moçambique ), the House of Lords held that the Supreme Court of Judicature had no jurisdiction to entertain an action to recover damages for a trespass to land situate abroad. Moçambique recognised a distinction between "transitory" and "local" actions. The English courts would exercise jurisdiction in respect of the former but not the latter. Actions in which title to land or infringement of rights and interest in real property were in issue were prime examples of local actions. 38 The " Moçambique rule" has been held to apply to intellectual property rights. In Potter v The Broken Hill Pty Co Ltd [1906] HCA 88 ; (1906) 3 CLR 479 ( Potter ), the High Court held that a cause of action for infringement in New South Wales by a Victorian company carrying on mining operations in New South Wales, of the plaintiff's patent issued under the Patents Act 1899 (NSW), was not justiciable in Victoria. 39 In Tyburn Productions Limited v Conan Doyle (1990) 19 IPR 455, the High Court of England held that an issue as to the existence or non-existence of rights under United States copyright, unfair competition and trademark laws was not justiciable in the English courts. 40 In Tritech Technology Pty Ltd v Gordon (2000) 48 IPR 52, Finkelstein J recognised that the Moçambique rule was subject to exceptions. However, as I understand the proposed amended application and the proposed amended statement of claim, I would be asked to determine that Novapharm obtained the grant of the US Patents by knowingly making false representations to the USPTO. I am not favoured with submissions as to the implications that such a finding would have for the title to the US Patents. 43 In view of my conclusion on the respondents' first ground for attacking the proposed amended application and the proposed amended statement of claim, the s 52 argument, I do not need to reach a final decision in relation to the respondents' second basis for its attack. I think it desirable not to do so in the absence of submissions on behalf of Mr Glueck addressing the legal issues involved, which are somewhat complex. 44 I note, in passing, that the existing application is more vulnerable to the respondents' second ground of attack than the proposed amended application. It seeks, for example, a declaration that Novapharm was not entitled as patentee to the US Patents and an order that Novapharm assign its interest in the US Patents to Mr Glueck. In the first place, it would be possible for him simply to pursue his application in this Court to have the Patent revoked under s 138 of the Patents Act . This remedy, however, may not satisfy him. Such a reduced proceeding would not, for example, touch the US Patents. Moreover, it would not give Mr Glueck damages for Novapharm's alleged contravention of s 52 of the TP Act , and it would not give him any remedy based on the alleged accessorial liability of the individuals. 46 It may be that Mr Glueck would be entitled to pursue the remaining general law causes of action in this Court, notwithstanding the non-pursuit of those based on alleged contravention of s 52 of the TP Act . Whether he would be entitled to do so would depend upon a consideration of principles of the kind discussed in Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212, Post Office Agents Association Ltd v Australian Postal Commission (1988) 84 ALR 563 and Petrotimor Companhia de Petroleos SARL v Commonwealth of Australia [2003] FCAFC 83 ; (2003) 128 FCR 507. Whether Mr Glueck's general law claims can survive in this Court is better determined after he has filed any amended application and amended statement of claim. Mr Glueck would, in any event, be entitled to pursue relief in a State Supreme Court based on general law causes of action, such as fraudulent misrepresentation, against Novapharm and the individual respondents. 47 I note that I advised Mr Glueck to seek legal advice and representation. The proceeding promises to raise complex legal and factual issues, as it has already done. 48 The existing statement of claim should be struck out with leave to re-plead. The position in relation to the existing application is less straightforward. It is not practicable at this stage to distinguish between those parts that should survive and those that should not. In addition, many of the declarations sought are inappropriate. The best course is to let the existing application survive only in so far as it seeks revocation of the Patent. I make it clear, however, that in ordering that the proceeding be otherwise dismissed, I am deciding at this stage no more than that Mr Glueck will not be entitled to seek relief based on a contravention of s 52 of the TP Act in any amended application which he files. 49 The subpoenas were issued by reference to the existing application and statement of claim. In view of my conclusion in relation to those documents, the subpoenas should be set aside. 50 The orders will be that Mr Glueck's motion be dismissed, that the existing statement of claim be struck out, that the proceeding be dismissed in so far as it seeks relief other than revocation of the Patent, that leave be granted to file an amended application and an amended statement of claim within a limited time, that the subpoenas be set aside, that Mr Glueck pay the respondents' costs of the three motions, and that the proceeding be listed for directions. | application for summary dismissal substantive application based on alleged contravention of s 52 of the trade practices act 1974 (cth) alleged contravention consisting of misrepresentations made to australian patent office and united states patent and trademark office, leading to grant of australian patent and us patents respectively applicant alleging that it had been misrepresented that third respondent was entitled to the grants of the patents and that applicant had consented to such grants whether making of alleged misrepresentations was conduct "in trade or commerce" within s 52 whether attack on title to foreign patent if so, whether such attack justiciable within the court. held : (1) alleged misrepresentations not conduct "in trade or commerce"; (2) question whether proceeding amounted to an impugning of title to foreign property discussed. trade practices |
Especially is this so where the person concerned is an Australian citizen and the information is provided in the course of a request being made by the AFP for assistance from that other country's police force. This said, the application to this Court must be rejected. It reveals no basis for a reasonable cause to believe that the applicants may have a right to obtain relief in this Court. Any later proceedings brought on the bases foreshadowed in this application would be purely speculative in character or else would have no prospects of success. 2 The four applicants, Scott Rush, Renae Lawrence, Michael Czugaj and Martin Stevens, are members of a group of Australian citizens known as the "Bali nine". All were arrested in Bali for alleged involvement in heroin trafficking to Australia, the arrests resulting from action taken by the Indonesian police in consequence of precise details provided to that police by members of the AFP. Each of the applicants is now exposed to death penalty if convicted of the offences with which they respectively have been charged. It is the action of AFP members in providing that information to the Indonesian police and its foreseeable consequence that has prompted the bringing of this application. I am empowered by our Rules to order identity discovery where (i) an applicant, having made reasonable inquiries, is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in this Court against that person; and (ii) it appears that some other person has, has had, or is likely to have knowledge of facts or possession of any document tending to assist in ascertaining who that person is. 4 Information discovery in contrast is discovery against the very person against whom relief may be sought. It is tightly circumscribed in the requirements to be met before discovery may be ordered. Inherent in this possibility are the requirements that the proceeding will be (a) within federal jurisdiction and (b) in respect of a cause of action known to law which is not purely speculative in character and which is not devoid of prospects. There is no difficulty in this matter in relation to the former of these requirements, some at least of the prospective causes of action being said to arise under Commonwealth legislation: see Judiciary Act 1903 , s 39B(1A)(c). It is the latter requirement, which requires the identification of a possible cause of action (in this case a legal wrong done to the applicants), that is problematic. 6 It is unnecessary for me to refer in detail to the growing body of case law on preliminary discovery. It is sufficient for present purposes to refer to the following. The O 15A r 3 power to order identity discovery is not to be used in favour of a person who intends to commence merely speculative proceedings. A material factor in the exercise of the Court's discretion is the prospect of the applicant succeeding in proceedings against the person wished to be sued: Hooper v Kirella at [33]. Information discovery under O 15A r 6 is significantly limited by the conditions imposed in subpars (a), (b) and (c) of that rule. Subpar (a) requires that there be reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court. While the threshold test under this subrule may be set at quite a low level: see Gull Petroleum (WA) Ltd v Tah Land Pty Ltd [2001] FCA 1531 at [59] ; the test for determining whether the applicant has a reasonable cause to have the requisite belief is an objective one: see Hooper v Kirella at [39]. Though it is not necessary to demonstrate a prima facie case, it is not enough merely to assert that there is, or is the mere possibility of, a case against the prospective respondent: Hooper v Kirella at [39]. Belief is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application insofar as it is based on that cause of action: John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 ; BC200403021 at [13], [14], [17] and [73]. Preliminary discovery cannot itself be used to remedy deficiencies in the satisfaction of the conditions themselves: Airservices Australia Ltd v Transfield Pty Ltd [1999] FCA 886 ; (1999) 92 FCR 200 at [5] . 8 Before outlining the factual setting of this matter I should indicate that it has undergone a significant transformation since the hearing of the application. I gave the applicants leave to file supplementary submissions directed primarily to the prospective causes of action they might wish to pursue. They have acted upon this leave and, in quite some degree, have recast their cases for present purposes. This explains why matters which received some attention at the hearing are only dealt with cursorily in these reasons. As will become apparent, the cases of the other three applicants arise from their involvement in events in which Scott Rush as well was implicated. The evidence in this matter was given by way of affidavit and without cross-examination. In relation to Rush's case I should also indicate that a number of affidavits have been read which expose significant conflicts of evidence between witnesses. I should indicate that I have not been asked in the circumstances to make findings in relation to contested issues of fact in the material before me, the respondent being prepared to accept that their resolution is for another day, if at all. 10 The annexures to several of the affidavits contain documents derived from the Dossier (or book of documents) relied upon by the prosecutor as evidence in the prosecution of the second applicant, Renae Lawrence, in the criminal proceedings in the Denpasar District Court in respect of an offence under Art 82(1) of the Law of the Republic of Indonesia No 22 of 1997 concerning Narcotics. The Dossier contained documents obtained by Indonesian Police as part of their investigation and has been made a public document by order of the Indonesian Court. Reference will be made below to translations of a number of these documents. 11 The four applicants are Australian citizens. On 6 April 2005, Renae Lawrence and Martin Stephens travelled to Bali. Scott Rush and Michael Czugaj travelled to the same destination on 8 April 2005. 12 Prior to Rush's departure from Australia, his father, Lee Rush, became aware he may have been travelling to Indonesia. Lee Rush was concerned that Scott might have been travelling to Bali to be involved in illegal activity and, according to his evidence, he was determined to help save him from committing any offence in Bali. 13 Lee Rush contacted a barrister and family friend, Robert Myers, to seek advice. Myers had acted for Scott Rush on a number of minor criminal prosecutions concerned, in the main, with dishonesty offences. Myers in turn contacted a friend of his, Damon Patching, a member of the Queensland Police Service who was at the relevant time seconded to the AFP. Before referring to the evidence of Mr Myers and Mr Patching, I foreshadow that there are important differences between each's account of their several conversations particularly in relation to what Mr Patching is alleged to have said would be done, and had subsequently been done, by the AFP at Sydney Airport in relation to Scott Rush. 14 Myers' evidence is that he requested that Rush be detained at Sydney airport and prevented from leaving Australia. He referred to Rush's prior convictions. It was the case that Rush was on bail at the time. Myers went on that if the AFP could not detain Rush he should be stopped at his point of exit and be advised that the AFP were aware he was "up to no good", that he would be watched in Bali and that it would be foolish for him to participate in illegal activity there. 15 Patching, according to Myers, said the AFP would talk to Rush if a passport alert ("a PACE alert") was activated. He was later told by Patching that this had occurred and that Rush had been spoken to at the airport. Myers then spoke to Lee Rush and told him that, given what the AFP had done, he and Lee Rush had done all they could conceivably do and there was no necessity for Lee Rush to go to Bali to stop Scott. 16 Lee Rush's evidence of his conversations with Myers corroborated Myers' accounts and it was because of those conversations that he desisted from going immediately to Bali to stop his son committing any offence. 17 Mr Patching's evidence was that in one of his conversations with Myers he indicated he would contact Ashley Durre, another Queensland Police Service Officer on secondment with the AFP. It was agreed with Durre that Patching should arrange for a PACE alert to be placed on Scott Rush. Patching contacted Federal Agent Osseily who handled PACE alert matters at Sydney Airport, who activated the alert. Osseily, Patching said, informed him he did not think "it was a goer" for the AFP to approach Scott and to warn him he was of interest to the police. Patching said he knew at the time it would be unusual for police to make such an approach. When he later rang Robert Myers and was asked whether Scott Rush would be approached and spoken to by the police, Patching deposed he said that "may be looked at as a possibility ... depending on the circumstances". He denied he gave any assurance that Rush would be approached. The next day Patching received a call from Federal Agent Collins at Sydney Airport. Collins asked him whether Rush's bail conditions would prevent him leaving the country. After enquiries in Queensland, Patching informed Collins they would not. He also told Collins that Lee Rush wanted Scott to be approached. Collins commented this was not usual practice. Patching denied he gave Myers an assurance or undertaking at any stage that Scott Rush would be approached. 18 Mr Durre's affidavit corroborated Patching's evidence in his recall of conversations with Patching to the extent he was present at and overheard telephone conversations Patching had with others including Myers. 19 Mr Osseily's evidence described the PACE alert system. It is maintained by the Australian Customs Service. It is used by particular Federal and State agencies both as a means of gathering intelligence on persons entering or leaving Australia and also as a means of preventing certain targeted individuals from entering or leaving the country. 20 Mr Osseily said he created the PACE alert on Scott Rush on the basis of information that his bail conditions prevented him from departing Australia. He derived this information from Patching. 21 Mr Collins, who was on duty at the AFP office at Sydney Airport on 8 April, gave evidence that he was informed that morning of the alert on Scott Rush and that the basis of it was that Rush's bail conditions stipulated he was not allowed to depart Australia. He spoke to Patching and was told of Lee Rush's concern about Scott's visit to Bali. Collins then contacted the relevant Queensland State Police and ascertained that there were no bail conditions preventing him leaving the country. This evidence is not consistent with Patching's. By that time the passengers would have commenced boarding the flight to Bali. My conclusion at this stage was that there was no reason for Scott Rush to be detained and that he should be allowed to leave without being disturbed. My view was that despite the concerns of Lee Rush, Scott Rush was an adult and there was no basis for detaining Scott Rush. I recall running my decision past my supervisor after outlining the results of my investigations and that my supervisor agreed with my decision. I then contacted the Customs and advised the officer on duty that the AFP would be taking no further action. The group travelled to Bali in December 2004 but the importation was cancelled because there was not enough money to buy 'the stuff' and that they would be travelling again in 3-6 months. The group returned to Australia. They were to carry body packs (containing white powder) back to Australia by using packs on both legs and the back supports. They were also supplied back supports. The packs were to be tightly taped to the person's body. Members of the group were given expense money and told to change the money into local currency to allow them to buy oversized clothes and thongs. The clothes and thongs were not to have any metal on them to avoid the metal detectors at the airports. The couriers received pre-paid mobile telephones. On return through Customs they were told to be carried [sic] a wooden carving for declaration to Quarantine to by-pass Customs. Travel movements show that CHAN has travelled previously to Bali in August 2004 (11 days) and October 2004 (7 days). His travel itinerary indicates that he is booked to stay at the Hard Rock Café Kuta and is due to return on Friday 15 April 2005. At this stage it is unknown who is the source of the narcotics in Bali. If identified by INP it is strongly requested that no action is taken until interdiction commences in Australia as early interdiction will hamper the identification of the organiser/recipients in Australia. Also until the possible narcotics are located on the couriers it is possible that the syndicate is still in the organisational phase. Return date not confirmed at this stage. We would also like to gain evidence of association between CHAN and the suspected couriers . That the suspected couriers due to arrive this date be oversighted to identify their intended address in Australia. INP obtain as much evidence/intelligence as possible to assist AFP identify the organisers in Australia and source of narcotics in Indonesia. We request surveillance to be carried out on CHAN and the couriers (if possible) until departure . should they suspect that CHAN and/or the couriers are in possession of drug at the time of their departure that they take what action they deem appropriate . Could INP make enquiries to establish if CHAN is staying at the Hard Rock Hotel and to identify any associates, especially meetings with the above mentioned or the identity of other possible couriers. Could copies of all passenger arrival cards be obtained. Request photos to be taken of any meetings for possible use in proceedings here. If possible obtain phone records of any numbers being called in Australia by either CHAN or the couriers. This may assist AFP identify the organisers in Australia and possible telephone interception:" emphasis added. Intelligence suggests that CHAN may not be in possession of narcotics but will possibly act as oversight on the flight. It is also suspected that CHAN would take possession of the narcotics after they arrived in Australia. Intelligence suggests that NGUYEN may also not have narcotics in his possession and may only oversight/organise the couriers. I therefor [sic] request that you consider searching NYUYEN [sic] , CZUGAJ and RUSH soon after the first group are intercepted :" emphasis added. Quite apart from the PACE alert placed by Senior Constable Patching, prior to Scott Rush's departure overseas on 7 April 2005 he (i.e. Scott Rush) activated another PACE alert, which was handled by the AFP's case officer (Federal Agent Hingst) who had carriage of the AFP's extant investigation into members of the so-called 'Bali 9'. It was the triggering of this alert which connected Mr Rush with eight other already identified persons of interests. It was information obtained in the course of this extant AFP investigation (including as a result of the activation of the PACE alert handled by Federal Agent Hingst) which caused Mr Rush's details to be included in the AFP letters of 8 and 12 April. 26 Between 9 pm 17 April 2005 and 2 am 18 April 2005, the four applicants were among the nine Australians who were detained by the INP. They were found in possession of what was alleged to be significant quantities of heroin. A process of investigation had previously been initiated by the INP on 13 April in consequence of the 8 April letter. 27 On 17 April 2005 the INP issued a formal "Investigation Order". This was done "in the interests of a criminal investigation". I have in evidence the order that relates to Renae Lawrence. Similar orders, apparently, were issued in respect of the other applicants. Conduct a criminal investigation concerning narcotics under the name of the suspect RENAE LAWRENCE, in accordance with Primary Article 82, Clause (1) sub-clause (a) and Supplementary Article 78, Clause (1) sub-clause (b) of Republic of Indonesia Law No 22, 1997 on Narcotics. Prepare a Plan of Investigation. Report every development in the implementation of the criminal investigation at the first opportunity. 28 On 18 August 2005, the INP wrote to the Australian Consul in Bali formally informing the consulate that Renae Lawrence had been arrested and detained. The arrest warrant of 17 April and the Detention Order of 18 April were enclosed. The letter went on to state that Ms Lawrence's arrest was made because it was strongly suspected that she was involved in a narcotics matter. The heroin was referred to. And it was stated that she was arrested in accordance with Primary Art 82(1)(a) and Supplementary Art 78(1)(b) of Republic of Indonesia Law No 22 of 1997 on Narcotics ("the Narcotics Statute"). Seemingly, like letters were sent to the consulate concerning the other applicants. 29 It would appear from Mr Watson's evidence that the INP completed its investigation into the applicants on 15 August and on that day delivered the Dossier of evidence to the office of the Prosecutor for consideration of the evidence. On 27 September 2005 the Prosecutor delivered the Dossier to the Denpasar District Court for consideration by the judge. Beginning with Scott Rush on 13 October 2005, the applicants were brought before the Court and each was charged upon the Court's reading of the charges against him or her. 30 It is an agreed fact for the purposes of this application that no request has been made by the Indonesian Government to the Australian Government or by the Australian Government to the Indonesian Government in relation to any investigation, arrest or prosecution of the persons now known as the Bali nine under the provisions of the Mutual Assistance in Criminal Matters Act 1987 (Cth). 31 After referring below to statutory and other materials relevant to this case which do or are said to govern the conduct of the AFP in this matter, I will refer to what are agreed facts as to Australian Federal Police practice in relation to police to police cooperation particularly in matters which could expose a person to the death penalty. This Act abolished capital punishment in respect of offences under the laws of the Commonwealth and the Territories and, within the limits of Commonwealth legislative power, under Imperial Acts. For present purposes I would emphasise the following features of this legislation. First, it constituted the Australian Federal Police: s 6; and defined its functions and powers: ss 8 and 9. Amongst its functions are the provision of police services in relation to laws of the Commonwealth and the safeguarding of Commonwealth interests: s 8(1)(b)(i) and (iii); and to do anything incidental or conducive to the performance of these functions: s 8(1)(c). The Act created the position of Commissioner of Police: s 6 and s 17; it conferred on the Commissioner, subject to the Act, the general administration of, and the control of the operations of, the AFP: s 37(1); it empowered the Commissioner to issue orders, in writing, in the exercise of his or her s 37 powers and AFP employees were obliged to comply with such orders, as they were with any lawful direction given by (inter alia) the Commissioner: ss 38, 39 and 40. 34 The Minister administering this Act was likewise empowered to give written directions to the Commissioner with respect to the general policy to be pursued in relation to the performance of the functions of the AFP: s 37(2). The Commissioner was obliged to comply with such directions: s 37(4). On 31 August 2004 such a direction was given. Put shortly, they related to matters that would require either Australia (in respect of a foreign request) or the foreign country (in respect of an Australian request) to exercise coercive powers: see ss 5, 7, 10 and 11 and Parts II to VIIA of the Act; see also Second Reading Speech, Mutual Assistance in Criminal Matters Legislation Amendment Bill 1996, House of Representatives, Wed 26 June 1996, 2831-2832. 38 Though the applicants initially placed considerable reliance upon the Mutual Assistance Act at the hearing, it is clear that (a) no request for assistance was made by the Governments of either Australia or Indonesia under this Act in this matter and (b) the assistance sought and given was not "of a kind that may be provided or obtained under this Act": s 6. The applicants in consequence cannot rely directly on the Act in their search for a possible cause of action. 39 It is also clear that the Mutual Assistance Act was not intended to prevent the provision or obtaining of international assistance in criminal matters other than assistance of a kind specified in the Act: s 6. Nonetheless, the Act within its scope does address the giving of assistance at a foreign country's request in death penalty contexts. 42 The Regulations applied the Act to Indonesia "subject to the Mutual Assistance Treaty": reg 4. That Treaty was done at Jakarta on 27 October 1995. A copy of the English text was a schedule to the Regulations. The Commissioner has indicated that this MoU would not be produced on this application first, because it is information of the type the application is designed to elicit if an order for information discovery was made and secondly, because its disclosure would be resisted on grounds of public interest privilege. 45 The Mutual Assistance Treaty also contemplated (in Art 4.2(d)) that assistance might be refused if the request related to "the prosecution or punishment of a person for an offence in respect of which the death penalty may be imposed or carried out". 46 Amongst the criminal matters in which the Treaty contemplated assistance could be granted was "an offence against the law relating to dangerous drugs or narcotics". 2. 48 The applicants also rely in this application upon Australia's ratification both of the International Covenant on Civil and Political Rights on 13 November 1980 ("the ICCPR") and, more importantly for present purposes, of the Second Optional Protocol to that Covenant on 2 October 1990 ("the Protocol"), it coming into force on 11 July 1991. Under the Protocol, Australia agreed that no one within its jurisdiction would be executed: Art 1. Under the Covenant, Australia agreed (inter alia) that "Every human being has the inherent right to life": Art 6.1; see also Art 3, Universal Declaration of Human Rights. 3. In their original submissions and at the hearing considerable reliance was placed by the applicants on the "AFP Practical Guide on International Police to Police Assistance in Death Penalty Charge Situations" ("the Death Penalty Charge Guide"). It is now acknowledged in the applicants' supplementary submissions that this Guide is not directly relevant in this proceeding. In the exercise of that discretion, assistance may be refused in the absence of an assurance from the requesting country that the death penalty would not be imposed or carried out. The Attorney-General has decided that this policy will also apply to police to police requests. the AFP may provide such assistance as requested, provided it meets existing policy guidelines, irrespective of whether the investigation may later result in charges being laid which may attract the death penalty. All such requests are to be notified to the Director International and Operations as soon as possible after receipt. Following consultation with the Attorney-General's Department, the General Manager National Operations will provide the Commissioner and Deputy with such advice as considered necessary in order that advice may be provided to the Minister for Justice and the Attorney-General:" emphasis added. The Death Penalty Charge Guide replicates government policy in relation to how the AFP goes about investigating offences that may attract the death penalty. It clearly sets out what information the AFP will pass over to foreign law enforcement agencies, the stages it will do so and what the AFP will not pass to foreign law enforcement agencies. 2. The Guide does not apply where the assistance requested is in relation to a person who has not been charged. Once the person has been charged then under the Guide, the AFP requires the authorisation of the Attorney-General and/or the Minister for Justice and Customs to be able to hand over that information. Any police assistance given prior to the laying of the charge ceases after the person has been charged and does not continue unless the necessary authorisation is given. 3. In relation to the Bali 9 case, the Guide did not apply to the assistance provided because no charges had been laid. The Guide does refer to arrangements for police-to-police cooperation where the suspect has not been charged. In such cases the AFP would continue to supply information as required, provided it meets existing policy guidelines, irrespective of whether the investigation may later result in charges being laid which may attract the death penalty. 4. Police to police information may be provided pursuant to an MoU with the requesting country or an existing treaty between Australia and the requesting country. In the absence of an MoU or a treaty the AFP may still provide assistance at its discretion. The AFP relies generally on the provisions of the AFP Act as a basis for providing the information. 5. The Guide applies in relation to common law countries as well as civil law countries. In relation to civil law countries where a charge is usually laid only after a dossier is prepared, evidence is gathered and a case is made, the AFP will cooperate up to the point a charge is laid irrespective of whether the dossier is being prepared for a likely charge which will eventuate in the death penalty. 6. Any information handed over to foreign law enforcement agencies is recorded on the AFP internal systems and there is a very strict audit trail. 7. Not all requests for assistance prior to a suspect being charged can be provided. For example, where assistance requires coercive powers to be exercised here in Australia. Such requests would need to fall under the Mutual Assistance Act. 8. The Guide is the only internal policy guideline which applies in relation to international police-to-police assistance in death penalty charge situations. 9. The Attorney-General and Minister for Justice and Customs are not aware or notified as a matter of course, of the documents that the AFP provides to a foreign law enforcement agency prior to a charge being made involving the death penalty unless the Attorney-General requests a briefing. The decision to provide assistance is an operational decision for the AFP. Briefings of the Minister are not normally done prior to the AFP making an operational decision. That additionally sought by Scott Rush is the identity of the member or members of the AFP who made the operational decisions (a) not to inform him prior to his departure from Australia that he was under surveillance and being monitored by the AFP and (b) not to advise his parents or Mr Myers of the decision not so to inform him. 55 In their written submission, the applicants point to communications with an officer of the Australian Government Solicitor ("the AGS") in which inquiries as to the identity of the relevant persons were made but note that as a result of those inquiries and of the affidavits filed by the respondent, they are still unable to identify the members of the AFP, other than Mr Hunniford, who have been involved in making decisions or taking actions that have exposed the applicants to the risk of the death penalty in Indonesia. 56 The information discovery sought is of documents of the AFP which relate to operational and other decisions which led to the arrest and detention of the applicants on 17/18 April 2005 in Bali. The written submissions indicate non-exhaustive categories of such documents. They refer also to the same correspondence with the AGS noted above and claim that the information so acquired from the Commissioner is insufficient to enable the applicants to make a decision whether to commence a proceeding in the Federal Court. In particular the submissions point to the insufficiency of the information in relation to ascertaining whether there is a valid legal basis for the apparent decision or course of action which exposed the applicants to the death penalty. 57 I have already indicated that the manner in which the applicants cast their possible causes of action has changed significantly subsequent to the hearing, as is evident from their supplementary written submissions. Notwithstanding these changes to which I will refer below, their possible causes of action fall under three rubrics. The first two can be described as involving applications for declaratory and possibly other relief against AFP officers (yet to be identified), they having (i) acted without lawful authority in making decisions and taking actions which exposed the applicants to the death penalty in Indonesia; or (ii) failed to satisfy the applicants' substantive legitimate expectations as Australian citizens that the Australian Government and its agencies and public officers would not act in such a way as to expose them to the risk of the imposition of the death penalty. The third rubric is that of tort law. First, it is asserted that Lee Rush's provision of information to the AFP concerning the possible activities of his son gave rise to a relationship creating a duty on members of the AFP not to use that information in a way that would expose at least Scott Rush to the foreseeable risk of the death penalty in Indonesia. Further, in the circumstances surrounding the provision of the information to the AFP, the AFP assumed responsibility for Scott Rush. The possible tort claim in this is said to be in negligence. Distinctly, it is asserted that there is potentially a claim for misfeasance in public office. 58 I will consider each of these three possibilities in turn. The requests in consequence were made unlawfully. 60 To the extent that this contention was premised on the proposition that the requests made were for assistance of a kind that could be obtained under the Mutual Assistance Act it is demonstrably untenable. The Hunniford requests were not for the exercise in Indonesia of any of the coercive powers specified in that Act and for that reason they could not be requests for assistance under the Act: cf s 10(1). I need not repeat here what I have earlier said in relation to the limited scope of the Mutual Assistance Act. 61 To avoid this conclusion the applicants now seek to construe the Act in such a way that any request for international assistance in a criminal matter, whether or not of a kind that may be made under the Act, must be made by the Attorney-General. Section 10(2) is relied upon to that end. This is not what the sub-section says. Section 10(1) prescribes that the Attorney-General alone must make any request for assistance of a kind that Australia is authorised to make under the Act. Subsection (2) of the same section, though, makes plain that subsection (1) does not prevent the Attorney-General on behalf of Australia from requesting assistance beyond what can be obtained under the Act. What the subsection does not say is that the Attorney-General is to be the exclusive channel for such other requests. It is permissive not prescriptive. 62 Other provisions both of the Mutual Assistance Act and of the Mutual Assistance Treaty with Indonesia make plain that no such limitation on the making of other requests was so intended. Section 6 of the Act expressly states that the Act does not prevent the provision etc of international assistance in criminal matters other than assistance of a kind that may be provided under that Act. Section 5 (the objects provision) states the purpose of the Act to be (inter alia) to facilitate the obtaining by Australia of international assistance in criminal matters: s 5(c). The interpretation of s 10(2) proposed by the applicants impedes rather than advances that purpose especially in light of s 6. Distinctly, the Mutual Assistance Treaty (the provisions of which limit the applicability of the Mutual Assistance Act to requests between Australia and Indonesia: see s 7(3)(a)) expressly provides that the Treaty does not derogate from obligations subsisting between the contracting parties, nor does it prevent them from providing assistance to each other: Art 2. Finally, if Parliament had intended through s 10(2) to impose such a fetter on obtaining international assistance in criminal matters as the applicants submit, thereby precluding the taking of such action as would otherwise be mandated by other legislation (e.g. the AFP Act : see below), one would have expected it to have spoken with far greater clarity than it has, the moreso given the purpose of the Act noted above: see Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 137 ALR 47 at 63-64. 63 I am in consequence satisfied that, on the proper construction of the Mutual Assistance Act, any foreshadowed cause of action founded on that Act must fail. In the circumstances it provides the applicants with no basis for any reasonable cause to believe they may have a right to obtain relief in this Court. 64 In supplementary submissions, the focus of the applicants' prospective ultra vires case turned to the provisions of the AFP Act . The relevant provisions of this Act and of directions given under it are set out at [33] to [35] above. It is now contended that the functions and powers set out in ss 8 and 9 of that Act, when read in context, do not include, authorise or justify any act or decision made by an AFP member which exposes an Australian citizen to the death penalty, whether in Australia or overseas. The context referred to in this submission is said to be provided by the Death Penalty Abolition Act 1973 ("the Abolition Act "), the provisions of s 8(1A) and (1B) of the Mutual Assistance Act, unambiguous Australian Government policy which is opposed to the death penalty (at least for its citizens) and Australia's signing of the Second Optional Protocol to the ICCPR. 65 What this proposed claim would ask for would be a significant reading down of what on its face is the unambiguous meaning of s 8 of the AFP Act . As the 8 and 12 April letters make plain, the provision of information by members of the AFP to the INP related to a suspected importation of heroin contrary to the "laws of the Commonwealth". In consequence it fell squarely within the lawful functions of the AFP: s 8(1)(b) and s 8(1)(c). It was, moreover, an activity within the scope of what was envisaged in the ministerial direction made under s 37(2) of the AFP Act . It involved cooperation with the INP "to support effective action against multi-jurisdictional crime"; it related to "illicit drug trafficking"; and it reflected the active fostering of a relationship with the INP involving "the provision and exchange of information ... consistent with AFP functions": Ministerial direction of 31 August 2004. Nonetheless, it is said that context requires this reading down. 66 It is now well accepted that the modern approach to statutory interpretation requires that "context" be considered at the first instance, not merely at some later stage when ambiguity might be thought to arise. "Context" here is used in a wide sense and includes legal and historical context: see CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2 ; (1997) 187 CLR 384 at 408; Braverus Maritime Inc v Port Kembla Coal Terminal Ltd [2005] FCAFC 256 at [36] ; see also Allsop, "Statutes: Context, Meaning and Preenactment History", Jo of NSW Bar Assoc, Winter 2005, 19 ff. It is questionable whether any of the matters relied upon are relevantly contextual for the purposes of interpreting s 8 of the AFP Act . 67 The international treaties and instrument that have been ratified by Australia and on which the applicants rely have not as such been incorporated into Australian law by express enactment. The Abolition Act pre-dated Australia's signing up to the Second Optional Protocol to the ICCPR. Neither the Abolition Act nor the Protocol addresses action taken by Australian public officers or agencies vis-à-vis foreign law enforcement agencies in connection with offences in their jurisdiction which can there attract the death penalty. Neither expressly or impliedly prohibits taking such action as, for example, the provision of information of the type contained in the Hunniford letters. Neither expressly betrays an intent in relation to such action. The Abolition Act cannot thus properly be used to read down s 8 of the AFP Act . The Second Optional Protocol only came into effect for Australian purposes years after the enactment of s 8. It provides no contextual aid to the section's interpretation. In any event it imposes no obligation on a Contracting Party vis-à-vis a non-contracting party in respect of the former's dealings with the latter in relation to offences in the latter jurisdiction which can attract the death penalty. Even if s 8 was relevantly ambiguous, the Second Optional Protocol could not assist in resolving that ambiguity: see Dietrich v R [1992] HCA 57 ; (1992) 177 CLR 292 at 306; Minister for Foreign Affairs and Trade v Magno (1992) 37 FCR 298 at 303-304. 68 The Mutual Assistance Act (which again post-dates the AFP Act ) neither provides context for the construction of the AFP Act nor reveals any intent to amend s 8 so to effect a reading down of the AFP's functions as suggested by the applicants. In the circumscribed discretions reserved to the Attorney-General to provide assistance in death penalty cases, ss 8(1A) and (1B) expressly acknowledge there is no absolute prohibition of the type propounded by the applicants. 69 Moreover, when one has regard to the Death Penalty Charge Guide (see [50] above) with which AFP officers must comply, it is contemplated that police to police cooperation, as here, is to occur on the basis that the AFP may provide the assistance requested irrespective of whether the investigation to which it relates may later result in charges being laid which may attract the death penalty. 70 It may be possible to discern in Australian legislation, treaties, official guides, etc a declared antipathy to the death penalty. That antipathy, though, has not been pursued unqualifiedly in our legislation and guides in relation to dealings with foreign countries in respect of matters which could attract the imposition of the death penalty: cf the Mutual Assistance Act ss 8(1A) and (1B) and the Extradition Act 1998 (Cth) s 22(3)(c). It is unsurprising that it has not. In particular contexts, the call of other public interests may be the more powerful. As was said in Rodriguez v United States 480 US 522 (1987) at 526: "Deciding what competing values will or will not be sacrificed to the achievement of a particular objective is the very essence of legislative choice". 71 I do not consider that the applicants have made out any reasonable cause to believe they have an arguable case for the reading down of s 8 of the AFP Act . I should add for the sake of completeness that it may be the case that, even if the AFP Act were to be read down as contended for, it would not prevent members of the AFP from making the request they did in the absence of legislative authority: cf Barton v The Commonwealth [1974] HCA 20 ; (1974) 131 CLR 477 at 490. It is unnecessary to express any view on this. 72 A distinct way in which the applicants had proposed challenging the propriety of the AFP members' conduct in making the two requests was to contend that that conduct did not comply with the requirements of the Death Penalty Charge Guide such that, arguably, those members committed disciplinary offences under reg 4 of the Australian Federal Police (Discipline) Regulations 1979. It was not made at all apparent how, even if such disciplinary offences could have been made out, this would have availed the applicants. 73 As I understand the applicants' supplementary submissions they no longer rely upon breach of the Guide and Discipline Regulations. However, I should make the following comments in any event. First, and subject to what I later say, the Guide, on its face, may well be only of indirect relevance in this matter in that its substantive content is directed to how AFP members are required to act in relation to requests for assistance made of it by a foreign country. It is silent on requests made by the AFP of an overseas law enforcement agency. Secondly even if the standards prescribed in the Guide (with appropriate adaptation) be taken as the operative ones when a request is made by the AFP --- and I consider this was probably their intendment --- the conduct of the officers concerned in this case (whoever they may have been beyond Mr Hunniford) could not properly be said to have been relevantly in breach of the Guide as it related to "police to police" cooperation. The requests made and the information provided pre-dated the INP investigations and the arrests and detention of the applicants. In consequence it pre-dated any "charges being laid which may attract the death penalty" irrespective of how the term "charges" should be interpreted in the Guide as it applied to the formalities of the Indonesian legal system. Finally there was, as I have indicated, authority for the AFP members to make their request under the AFP Act and that in turn was translated into a practical arrangement with Indonesia in the Police Cooperation MoU under which, according to Mr Watson, the actual requests were made. The MoU is not in evidence before me for the reasons I earlier gave. Nonetheless, counsel for the applicant was provided with the opportunity to inspect the MoU or to have the Court inspect it, but declined to take either course. Counsel for the Commissioner has nonetheless indicated to the Court that the terms of the MoU contemplated the very provision of information by the AFP in circumstances such as in this matter and it could properly be said of the MoU that there was a standing request by Indonesia for such assistance. In the above circumstances, I am prepared to accept (a) that the applicants cannot claim reasonably to believe that the information provided to Indonesia was totally unsolicited and (b) that, possibly, the AFP in providing the information was acting upon a general request by Indonesia. However, for the reasons I gave above, I do not consider it to be of any consequence whether the request was made by the AFP or by Indonesia. The AFP members acted in conformity with the Death Penalty Charge Guide. 74 Despite their various and varying formulations of a potential cause of action based on what compendiously I have called acting without lawful authority, I am not satisfied that the applicants have been able to identify or articulate any reasonable cause to believe that they are or may be entitled to obtain relief in this Court under this rubric. 2. The invitation held out to me is to embrace the law on "substantive legitimate expectation" as adumbrated in decisions of the Court of Final Appeal in Hong Kong in Ng Siu Tung v Director of Immigration (2002) 5 HKCFA 1 and of the House of Lords in R v Secretary of State for the Home Department; ex parte Zeqiri [2002] UKHL 3. The impediments to my so doing are substantial. As Sir Anthony Mason recently observed: "It would require a revolution in Australian judicial thinking to bring about an adoption of the English approach to substantive protection of legitimate expectations": (2005) 12 Aust Jo of Admin Law 103 at 108. 76 The applicants initially sought to contend that they had in Australian law an enforceable right to life and not to be executed. The ICCPR and the Second Optional Protocol were invoked to this end. This was later abandoned, as it had to be. The provisions of an international treaty do not form part of Australian law merely because Australia is a ratifying party to it. For that reason neither the ICCPR nor the Second Optional Protocol of itself "operate[s] to give rights to or impose duties on members of the Australian community: Minogue v Human Rights and Equal Opportunity Commission [1999] FCA 85 ; (1999) 84 FCR 438 at [35] ; see also Dietrich v The Queen [1992] HCA 57 ; (1992) 177 CLR 292 at 305-306. 77 Scott Rush sought as well to allege a denial of procedural fairness in that he was not advised prior to his departure from Australia that he was under surveillance and being monitored, after assurances were allegedly given by a member or members of the AFP to Scott Rush's parents (via Mr Myers) that he would be so advised. 78 The alleged expectation of procedural fairness that was said to have so arisen resulted from (on the evidence in Scott Rush's case) communications made directly or indirectly to his father and not to him. It was not suggested that Scott Rush had any awareness of those communications or that he ordered his conduct in consequence of them. This prospective cause of action had no prospects of success at all. 79 Even if (a) an obligation of procedural fairness could arise in the setting of present concern (see below) and (b) the alleged duty to be advised could properly be described as being procedural and not substantive in character: see Attorney-General (NSW) v Quin [1990] HCA 21 ; (1990) 170 CLR 1 at 22; Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20 ; (1995) 183 CLR 273 ("Teoh") at 291; the particular expectation in question, arising as it allegedly did, was not one entertained by Scott Rush: see Re Minister for Immigration and Multicultural and Indigenous Affairs; ex parte Lam ; [2003] HCA 6 ; (2003) 214 CLR 1 ("Lam") at [36], [90]-[93], [95] and [145]. In consequence, Scott Rush would have been unable to show practical injustice done to himself: Lam , at [36]. As I understand it, from the applicants' supplementary written submissions, no reliance is now being placed by Scott Rush on a possible claim so framed. 80 It is now the applicants' position that each of them, in their capacity as Australian citizens, has a substantive legitimate expectation that the Australian Government, its agencies and public officers will not act in such a way as to expose them to the risk of the imposition of the death penalty. The supplementary written submissions, though, do not go on to indicate how, in this matter, this expectation provides a reasonable cause to believe that the applicants may have a right to relief in this Court. Generally speaking, a legitimate expectation arises as a result of a promise, representation, practice or policy made, adopted or announced by or on behalf of government or a public authority. 82 In light of the decisions of the High Court in Teoh and in Lam it is clear that the doctrine of substantive legitimate expectation is for the present not part of Australian law. This gives the doctrine a substantive, as distinct from procedural, operation. In none of the cases was the individual held to be entitled to substantive protection in the form of an order requiring the decision-maker to exercise his or her discretion in a particular way. The prevailing view in this Court has been, as Stephen J observed in Salemi [v MacKellar [No 2] ], that: '[t]he rules of natural justice are "in a broad sense a procedural matter"", echoing the words of Dixon CJ and Webb J in Commissioner of Police v Tanos . 3. In Scott Rush's case a possible claim in negligence is foreshadowed; and in the cases of all of the applicants, claims for misfeasance in public office. On the facts in this case, the relevant question to be asked is this: did the provision of information by Mr Lee Rush concerning the possible activities of his son (the First Applicant) to a member or members of the AFP, give rise to a relationship creating a duty on members of the AFP not to use that information in a way that would expose the First Applicant and/or others to the (foreseeable) risk of the death penalty in Indonesia? [T] his case is concerned with the reasonable expectation on the part of Mr Lee Rush and, by implication, the First Applicant, that information provided by Mr Rush would not be used by the AFP in a way that would expose the First Applicant to the risk of the death penalty, and with positive acts done by a member or members of the AFP which did so. It is submitted that, in the circumstances surrounding the provision of information to the AFP concerning the possible activities of the First Applicant, the AFP impliedly undertook not to use, or act upon, the information in such a manner as to put the First Applicant at risk of exposure to the death penalty in Indonesia, and so, at least to that extent, assumed responsibility for the First Applicant. Rather, it addresses the question whether the circumstances of Lee Rush's providing information to the AFP founded a reasonable expectation in Lee Rush that the AFP would not use, and an implied undertaking (though to whom is not stated) not to use, that information in a particular way. While that inquiry may be a step in the fashioning of an action for breach of confidence by Lee Rush, or a possible duty of care to Lee Rush (if, hypothetically, the unauthorised disclosure of the information would expose Mr Rush to a reasonably foreseeable risk: cf Swinney v Chief Constable of Northumbria Police [1997] QB 464), it does not lead necessarily or obviously to potential relief for Scott Rush in a negligence action by him. At best it hints at Lee Rush's having put the AFP in a position of power over Scott Rush, a position which carried with it an obligation not to exercise that power adversely to him. What I should emphasise as well is that whatever claims, if any, Lee Rush might be able to mount against an officer or officers of the AFP in consequence of their dealings --- and I do not suggest that the present circumstances suggest he might have any such claims --- he is not a party to this application. 87 I referred above to the absence of reference to the context in which the duty allegedly owed Scott Rush is said to arise for this reason. Such a duty would appear to be inconsistent with the police officer's duty, ultimately based in the statutory framework and anterior common law by which the relevant police service is established and maintained, fully to investigate the conduct in question. Similar views were expressed in Tame by McHugh J at [125]-[126]; Hayne J at [298] and by Callinan J at [335]-[336]. 88 Understandably, the respondent's submissions focus (a) on the impossibility of there being such an obligation in this matter given its incompatibility with the actual investigation being conducted by the AFP at the time; (b) on the alleged false premise of the supposed obligation given that the AFP had, on Mr Watson's evidence, derived the relevant information connecting Scott Rush with the eight other members of the group from an extant AFP investigation; and (c) on Scott Rush being the author of his own harm. 89 Before I express my own views on this, I should emphasise the following. Bearing in mind that this is an application for preliminary discovery where information about the possible commission of a tort is being sought, exceptional caution must be exercised before reaching a conclusion that, whatever the information that might be disclosed as a result of an order for information discovery, that information could make no difference for the reason that the duty contended for could not even arguably be imposed on AFP members when conducting the drug trafficking investigation in question: cf the observations of Lord Bingham in Brooks v Commissioner of Police for the Metropolis [2005] UKHL 24 ; [2005] 1 WLR 1495 at [4] . 90 As noted earlier, there are conflicting versions as to the substance of the conversations between Robert Myers (on behalf of Lee Rush) and Mr Patching of the AFP. The alleged duty of care is premised upon acceptance of Myers' version of what transpired. For present purposes, and dealing with the matter on the basis most favourable to the applicants, I am prepared to assume the correctness of that version for the purposes of this application. Nonetheless, I am satisfied from what is already known about the circumstances surrounding Myers' communications with Patching, that the negligence claim as it has been framed would in any event be unarguable irrespective of any further information relevant to it that might conceivably be forthcoming if an order for information discovery were to be made. Accordingly, I am satisfied for the purposes of O 15A r 3 that no such proceeding for negligence could properly be brought in this Court and, for the purposes of O 15A r 6, there is no reasonable cause to believe that Scott Rush may have a right to obtain relief on the basis proposed. 91 It is widely accepted in common law jurisdictions that, at common law, police officers owe to the general public a duty to enforce the criminal law and, correspondingly, that latitude necessarily must be given to those responsible for the conduct of police operations in the judgments required to be made to that end: see generally Hinchcliffe v Commissioner of Australian Federal Police [2001] FCA 1747 ; (2001) 118 FCR 308 at [33] - [35] . As Lord Denning observed in R v Chief Constable of Devon and Cornwall; Ex parte Central Electricity Generating Board [1982] 1 QB 458 at 472: "It is of the first importance that the police should decide on their own responsibility what action should be taken in any particular situation". 92 It equally is well recognised that to impose common law duties of care on police officers to a particular member or members of the public in addition to their duty to the general public can, on occasion, be "inconsistent with the proper and effective discharge of [their public] responsibilities": cf Sullivan v Moody , at [62]; (whether those responsibilities arise under a statute such as the AFP Act or at common law) and to be impermissible for that reason. As the observations of Gummow and Hayne JJ in Tame illustrate, this inconsistency is often revealed where, in a setting in which injury is foreseeable if care is not taken in the conduct of a police investigation, a suspect, a victim, or a third party injured by acts or omissions of the police seeks to raise a claim in negligence against the police: Hill , above; Thompson v Vincent [2005] NSWCA 219 at [152] - [154] ; Batchelor v State of Tasmania [2005] TASSC 11 ; Cran v State of New South Wales [2004] NSWCA 92 ; (2004) 62 NSWLR 95; see also D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 214 ALR 92 at [101] ; State of New South Wales v Paige [2002] NSWCA 235 ; (2002) 60 NSWLR 371 at [115] - [117] . Save in exceptional circumstances: cf Hill at 62; Batchelor , above; and in North America see e.g. Doe v Board of Commissioners for Municipality of Metropolitan Toronto (1990) 72 DLR 4 th 580 ("Doe"); Eaton, "Liability of Municipality or Other Governmental Unit for Failure to Provide Police Protection from Crime" 90 ALR 5 th 273 at SS4 ; 57 Am Jur 2d, "Municipal, County, School and State Tort Liability", SSSS407-418; such attempts have been unsuccessful. 93 Primary concerns manifest in English and, in some degree, Australian case law have been to maintain the effectiveness of particular police functions (and notably the conduct of investigations and the suppression of crime) and to avert their compromise or undermining by the imposition of a duty to an individual (or individuals) over and above that owed to the public. In English law this has led to the adoption of an exclusionary principle (or immunity) which is often cast in broad terms. After concluding that, in the circumstances of that case, the ordinary principles of negligence would not admit of a duty of care to a victim of crime, Lord Keith went on to indicate (at 63) that there was "another reason" why an action for damages in negligence should not be against the police in the circumstances of that case and that was "public policy". From time to time they make mistakes in the exercise of that function, but it is not to be doubted that they apply their best endeavours to the performance of it. In some instances the imposition of liability may lead to the exercise of a function being carried on in a detrimentally defensive frame of mind. The possibility of this happening in relation to the investigative operations of the police cannot be excluded. Further it would be reasonable to expect that if potential liability were to be imposed it would be not uncommon for actions to be raised against police forces on the ground that they had failed to catch some criminal as soon as they might have done, with the result that he went on to commit further crimes. While some such actions might involve allegations of a simple and straightforward type of failure --- for example that a police officer negligently tripped and fell while pursuing a burglar --- others would be likely to enter deeply into the general nature of a police investigation, as indeed the present action would seek to do. The manner of conduct of such an investigation must necessarily involve a variety of decisions to be made on matters of policy and discretion, for example as to which particular line of inquiry is most advantageously to be pursued and what is the most advantageous way to deploy the available resources. Many such decisions would not be regarded by the courts as appropriate to be called in question, yet elaborate investigation of the facts might be necessary to ascertain whether or not this was so. A great deal of police time, trouble and expense might be expected to have to be put into the preparation of the defence to the action and the attendance of witnesses at the trial. The result would be a significant diversion of police manpower and attention from their most important function, that of the suppression of crime. Closed investigations would require to be reopened and retraversed, not with the object of bringing any criminal to justice but to ascertain whether or not they had been competently conducted. I therefore consider that Glidewell LJ, in his judgment in the Court of Appeal [1988] QB 60, 76 in the present case, was right to take the view that the police were immune from an action of this kind on grounds similar to those which in Rondel v Worsley [1967] UKHL 5 ; [1969] 1 AC 191 were held to render a barrister immune from actions for negligence in his conduct of proceedings in court. Sullivan v Moody at [57]; Tame at [231], [335]; see also Thompson v Vincent at [153]-[154]; Cran v State of New South Wales , at [33] ff; but cf contra Zalewski v Turcarolo [1995] 2 VR 562 a decision which pre-dated Sullivan v Moody . 96 I will return below to whether such an exclusionary principle based on public policy accurately reflects the law in this country; see Thompson v Vincent at [153]-[154]; or whether the "principle" does no more than represent the usual or predictable, but not invariable, consequence of the evaluation of whether the relationship between the police and an individual in a given instance imports a duty of care in the context of a police investigation: cf Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54 ; (2002) 211 CLR 540 at [149] . Before so doing, it is important to emphasise that police officers are not as such and in all circumstances immune from the law of negligence for acts or omissions in the course of official duty that occasion foreseeable harm. The contrary is clearly the case, as a large case law in common law jurisdictions, including England, attests: Zalewski v Turcarolo ; Costello v Chief Constable of the Northumbria Police [1999] 1 All ER 550; see also Grubb (ed), The Law of Tort , "The Police" 16.73 ff (2002); Linden, Canadian Tort Law , 286, 625 (7 th ed 2001); Todd (ed), The Law of Torts in New Zealand , 204, 212 ff (3 rd ed, 2001); Eaton, above 90 ALR 5 th 273. Brooks v Commissioner of Police at [22] and [29]; Costello v Chief Constable of the Northumbria Police esp per May LJ; in US jurisdictions the "special relationship" exception is well recognised in a range of otherwise negligence exempt areas of police activity, see e.g. Eaton, above at SS4 ; see also 57 Am Jur 2d, above, at SS410 ff. What equally is notable is the varying significance given to the particular "operational" context in which the relationship giving rise to a duty of care is said to exist. Hence the ready imposition of a duty of care to persons in police custody: Hall v Whatmore , above; and the corresponding reluctance to impose such a duty in the context of the conduct of a criminal investigation D'Orta Ekenaike v Victoria Legal Aid at [101]-[102]; see also Cran v State of New South Wales , above; or in preventing a breach of the peace: Thompson v Vincent , above. 99 Australian case law, while generally conforming in its results with particularly comparable English decisions, has not unreservedly committed itself to the public policy immunity prevailing in England. The Court of Appeal of New South Wales on a number of occasions --- and most recently in Cran v State of New South Wales --- has adopted an approach to cases involving investigative conduct that reflects the immunity principle found in English decisions and particularly Hill's case. In Cran v State of New South Wales it was noted by Santow JA that in Tame's case, "there are strong dicta suggesting that the English authorities would be followed in Australia" (at [35]) and that "on present authority [in New South Wales] the greater public interest accorded unimpeded investigation by the police ... preclude[d] any duty of care to the appellant" (at [63]) in that case where a prisoner claimed damages for post-traumatic stress disorder resulting from unnecessarily prolonged imprisonment because of delay in a police investigation. 100 In contrast, the 1995 decision of the Appeal Division of the Supreme Court of Victoria and the recent Tasmanian decision of Batchelor v State of Tasmania are more questioning of whether the immunity principle (at least in the scope given it) is part of Australian law. 101 It is, in my view, unnecessary in this matter to express a concluded view on whether, as in England, a special though not unqualified, immunity rule applies to police activities "in the investigation and suppression of crime": Costello's case at 563; or whether the duty of care question is to be answered by applying to police those principles now generally applied to public authorities in the discharge of their statutory and, if relevant, common law functions: see Graham Barclay Oysters Pty Ltd v Ryan . I am of this view because both binding and persuasive authority lead inevitably to the conclusion that this application must fail. However, I would respectfully suggest that more recent English authority demonstrating "reluctance to endorse the full breadth of what Hill v Chief Constable of West Yorkshire ... has been thought to lay down" on the immunity of police: cf Brooks v Commissioner of Police , at [3], [6] and [28]; and the difficulty in providing criteria to mark out exceptions to that immunity: see e.g. Costello ; Cowan v The Chief Constable for Avon & Somerset Constabulary [2001] EWCA Civ 1699 ; tell in favour of avoiding any special rule applicable to police, while still acknowledging that the police function can have distinctive characteristics and purposes which in many settings may exclude the concurrent operation of a duty of care at common law: cf Doe , 72 DLR 4 th at 584-586. 102 Sullivan v Moody did not involve an allegation of negligence against police officers. Its concern was with whether medical practitioners and social workers who had examined children for evidence of sexual abuse by their fathers in the setting of a statutory regime containing provisions for the protection of children (including mandatory reporting to a government department of reasonable suspicion of child abuse), owed a duty of care to protect such fathers in the conduct of their examinations, investigations and reporting. It was held unanimously by the High Court that they did not. The plaintiff fathers had alleged that, as a result of negligent examination, diagnosis and reporting, they had suffered shock, distress, psychiatric injury and consequential personal and financial loss. Unsurprisingly, given the opinions expressed by the Court, Sullivan v Moody has been influential in this country in later decisions and judicial commentary on police liability for negligence in the conduct of investigations. ... A duty of the kind alleged should not be found if that duty would not be compatible with other duties which the respondents owed. How may a duty of the kind for which the appellants contend rationally be related to the functions, powers and responsibilities of the various persons and authorities who are alleged to owe that duty? A similar problem has arisen in other cases. The response to the problem in those cases, although not determinative, is instructive. In Hill v Chief Constable of West Yorkshire , the House of Lords held that police officers did not owe a duty to individual members of the public who might suffer injury through their careless failure to apprehend a dangerous criminal. Lord Keith of Kinkel pointed out that the conduct of a police investigation involves a variety of decisions on matters of policy and discretion, including decisions as to priorities in the deployment of resources. To subject those decisions to a common law duty of care, and to the kind of judicial scrutiny involved in an action in tort, was inappropriate. The circumstance that a defendant owes a duty of care to a third party, or is subject to statutory obligations which constrain the manner in which powers or discretions may be exercised, does not of itself rule out the possibility that a duty of care is owed to a plaintiff. People may be subject to a number of duties, at least provided they are not irreconcilable. A medical practitioner who examines, and reports upon the condition of, an individual, might owe a duty of care to more than one person. But if a suggested duty of care would give rise to inconsistent obligations, that would ordinarily be a reason for denying that the duty exists. Similarly, when public authorities, or their officers, are charged with the responsibility of conducting investigations, or exercising powers, in the public interest, or in the interests of a specified class of persons, the law would not ordinarily subject them to a duty to have regard to the interests of another class of persons where that would impose upon them conflicting claims or obligations . The statutory scheme that formed the background to the activities of the present respondents was, relevantly, a scheme for the protection of children. It required the respondents to treat the interests of the children as paramount. Their professional or statutory responsibilities involved investigating and reporting upon, allegations that the children had suffered, and were under threat of, serious harm. It would be inconsistent with the proper and effective discharge of those responsibilities that they should be subjected to a legal duty, breach of which would sound in damages, to take care to protect persons who were suspected of being the sources of that harm. The duty for which the appellants contend cannot be reconciled satisfactorily, either with the nature of the functions being exercised by the respondents, or with their statutory obligation to treat the interests of the children as paramount. As to the former, the functions of examination, and reporting, require, for their effective discharge, an investigation into the facts without apprehension as to possible adverse consequences for people in the position of the appellants or legal liability to such persons. As to the latter, the interests of the children, and those suspected of causing their harm, are diverse, and irreconcilable. That they are irreconcilable is evident when regard is had to the case in which examination of a child alleged to be a victim of abuse does not allow the examiner to form a definite opinion about whether the child has been abused, only a suspicion that it may have happened. The interests of the child, in such a case, would favour reporting that the suspicion of abuse has not been dispelled; the interests of a person suspected of the abuse would be to the opposite effect:" emphasis added. Sullivan equally was invoked by Hayne J and Callinan J to the same end in Tame . In its apparent endorsement of Hill at [57] in the above quotation, Sullivan along with Hill and D'Orta-Ekenaike v Victoria Legal Aid above, have been treated by the New South Wales Court of Appeal as recognising that there is "an area in which it has been held that the public law duties of police are not consonant with recognition of a private law duty of care in favour of a particular member of the public": Thompson v Vincent at [153]-[154]. Again, as I have already noted, Tame and its debt to Sullivan and Hill were relied upon again by the New South Wales Court of Appeal in Cran v State of New South Wales in privileging the greater public interested accorded unimpeded police investigation over the interest of a person suffering foreseeable harm as a result of an allegedly careless omission in the conduct of an investigation. 105 In light of the above cases, and putting to one side the effect if any of the communications between Mr Myer and Mr Patching, there would be no arguable basis at all for any contention that AFP officers had a legal responsibility to warn any of the applicants either that they were under police surveillance or that they were exposing themselves to the foreseeable risk of the death penalty especially given the information acquired about the applicants in the ongoing AFP investigation. Having been prepared for whatever reason to engage in criminal activity, the applicants would properly be regarded as the authors of their own harm: cf Emanuele v Hedley [1998] FCA 709 esp in its reliance on State Rail Authority of New South Wales v Wiegold (1991) 25 NSWLR 500 at 517. And the police would have been entitled to have treated them as no more than subjects of an ongoing criminal investigation which fell clearly within the mandated functions of the AFP. Given the police's function in the matter, the applicants would not have been objects of rescue (as they would have been if there was a duty to warn). 106 Did the Myer-Patching communications, as I am assuming them to be, give such a different complexion to the relationship of AFP officers with Scott Rush and/or with the other applicants as to establish an arguable case that a duty such as is proposed by the applicants was owed to him or to them? In my view they did not. 107 First, it needs to be emphasised that the AFP was performing a statutorily mandated function, i.e. the provision of legal services in relation to laws of the Commonwealth. The particular subject of the inquiry --- transnational crime and illicit drug trafficking - fell within areas of "special emphasis" in the direction given to the Commissioner by the Minister on 31 August 2004. As the 8 April 2004 letter to the INP reveals, the AFP was already possessed of a considerable body of information relating to past and likely prospective moves of (inter alia) the applicants. That letter indicated the AFP's purpose in making its request was that "[t]he AFP would like to identify the source of the drugs and the organisers (other than CHAN) in Australia". In other words there was a rational and proper police purpose for the making of the request. If there was to be a concurrent common law duty of care, this was the statutory and operational setting with which it had to be compatible: cf Graham Barclay Oysters Pty Ltd v Ryan at [147]. 108 Secondly, there was no contact between the AFP and any of the applicants at all let alone contact that could lead Scott Rush or any of the others to reasonably believe or expect that the AFP had assumed some tutelary responsibility for him or her on which each could rely. 109 The Myer-Patching communications were directed to Lee Rush, not to the applicants generally or to Scott Rush in particular. I assume for the purposes of this application, that those communications led Lee Rush reasonably to believe that AFP officers would and did speak to Scott Rush at Sydney airport and because of this he did not go to Bali to save his son from committing any offence. I equally assume that Scott Rush was to have been the beneficiary of the police action Lee Rush believed had occurred and that the police failure to speak to him before his departure to Bali denied him the opportunity to abandon his participation in the trafficking operation given its predictable consequence. However, it is not the failure to warn as such that underpins the alleged negligence of the AFP officers. Rather it appears to be said that, having regard (a) to the alleged provision of information by or on behalf of Lee Rush to Patching about the apprehended criminal activity by Scott Rush, and (b) the request for assistance in relation to Scott Rush's departure from Sydney and the alleged representation that it had been given, the AFP's failure to act against this background may have authored a duty not to use the information in a way that put Scott Rush at risk of exposure to the death penalty in Indonesia. Hence it is said there is reasonable cause to believe that he may have a right to obtain relief from the relevant AFP officers in a negligence action in this Court. 110 It is unnecessary to enlarge here on the question whether this Court would have jurisdiction in any event to entertain such a suit in negligence in the Northern Territory against members of the AFP as Commonwealth officers. I simply adhere to the affirmative view I expressed on a similar question arising in the Australian Capital Territory in O'Neill v Mann [2000] FCA 1180 ; (2000) 101 FCR 160. My reasoning in that case is "equally applicable to the Northern Territory": ALRC Report 92, The Judicial Power of the Commonwealth, 652 (2001). 111 The proposed negligence claim could well be described as a mutated form of breach of confidence action with the important difference that the duty said to be owed by the AFP officers was not owed to the supplier of the information, i.e. Lee Rush, but to the subject of it, i.e. Scott Rush. Furthermore the limitation on the use of that information proposed by the applicants is a narrow one. It is not that the AFP could not use the information supplied at all. Rather it could not be used in a way that would put Scott Rush at risk of exposure to the death penalty in Indonesia. 112 It need hardly be said that the disclosures of information about Scott Rush made by or on behalf of Lee Rush to AFP officers could not give rise to a duty of confidence to Lee Rush such as would prevent its use by the AFP in its investigations into drug trafficking into Australia. The disclosures related to apprehended serious criminal misconduct: cf Corrs Pavey Whiting & Byrne v Collector of Customs (1987) 14 FCR 434 esp at 456. And a court would not enforce any contractual or equitable obligation relating to such information, the effect of which would have been to obstruct the administration of the criminal law: A v Hayden [1984] HCA 67 ; (1984) 156 CLR 532. 113 Recasting the matter in terms of a duty of care owed to Scott Rush does not advance the matter. While it is said that the AFP had assumed a responsibility for Scott Rush in the circumstances surrounding the Myer/Lee Rush provision of information to AFP officers, the basis for such an assumption of responsibility has not been explained. Neither has any possible justification been advanced for there being a concurrent duty of care to Scott Rush alongside the public law duties of the AFP officers concerned. 114 There is a short answer to the alleged duty. Even if it be the case that AFP officers said they would act, or had acted, in a particular way towards Scott Rush at the airport and failed to do so, neither their representations and their failure to act nor the circumstances of the Myer-Patching conversations could give rise to a duty such as is alleged. The proposed duty would be inconsistent with the duty owed by the AFP to the public at large in the conduct of its investigations into the Bali drug trafficking operation: cf Sullivan v Moody at [60]. 115 I have already indicated that the AFP officers concerned did not act in contravention of the AFP Act in deciding to, and in making, the 8 and 12 April 2005 communications to the INP. They were acting in performance of their functions under the AFP Act and consonantly with ministerial directions. The communications made had a proper and rational purpose in the furtherance of that police investigation. The proposed duty would only qualify and impede the conduct of the investigation embarked upon by the AFP. It would elevate the interests of Scott Rush over the public interest that the AFP was serving under its legislation to the extent that the two collided, as it did in the making of the request to the INP. 116 If, as the other applicants seem to suggest albeit faintly, a like duty was owed them its obvious effect would have been to compromise the investigation itself in an important respect. No assistance of the type sought could have been asked of the INP notwithstanding that the investigation involved transnational criminal activity and that the assistance in fact sought, as I have noted, was for a proper purpose in furtherance of the AFP's statutory functions. 117 In the cases of Scott Rush and of the other applicants the duty contended for cannot be reconciled with the nature and purpose of the functions being exercised by the AFP officers concerned, the discretions conferred on them in virtue of the task they were involved in, and the policy directive they were, apparently, implementing: cf Sullivan v Moody at [62]. Accordingly, to adopt Santow JA's observations in Cran v State of New South Wales at [63], the greater public interest accorded unimpeded investigation by the AFP precludes in this case any duty of care owed to Scott Rush or to the other applicants. Such is the current law in this country and the policy informing it, that the interests of the applicants were subordinated to the public interests served by the AFP in their conduct of the investigation in question. 118 I should add for the sake of completeness that I do not consider that it would make any difference to this conclusion if it was the case that the AFP officers concerned had knowingly misled Lee Rush for the purposes of securing the Bali investigation from potential compromise (given its purpose as revealed in the 8 April 2001 request) and the stage reached in the AFP's own investigations. Whatever the moral wrong to a caring parent that may have been involved in so doing, it could not have authored a duty of care such as has been proposed in this application. 119 No order for either identity discovery or information discovery will be made in relation to the intended cause of action based on the alleged possible negligence of AFP officers. That proceeding would have no prosects of success. They were recently essayed by the Full Court of this Court in Sanders v Snell (No 2) [2003] FCAFC 150 ; (2003) 130 FCR 149. I would note, though, that the tort can take two forms. In one form (that of "targeted malice") it must be shown that the public officer in question has acted as such with an actual intent to cause injury to a person or persons. In its alternate form it must be shown either that the officer has actual knowledge both that his or her action was beyond power and would cause or be likely to cause injury or else that the officer has acted with reckless indifference both to the possibility his or her action was beyond power and to the possibility that that action would cause or be likely to cause injury: see generally Sanders v Snell (No 2) at [95]-[100]. 122 The applicants' contentions in relation to this tort require that close attention be given to the requirements of O 15A r 6 in particular. I emphasise this for this reason. 123 The essence of the misfeasance tort in either of its forms is the "dishonest abuse of power": L (a child) v Reading Borough Council [2001] EWCA Civ 346 ; [2001] 1 WLR 1575 at 1588. I am in complete agreement with the submissions of the respondent that there is no basis at all in the material before me to suggest any reasonable cause to believe that Mr Hunniford or other AFP officers acted with the reckless indifference asserted in the applicants' supplementary written submissions. What is being advanced is at best "a mere possibility". The evidence does not "incline the mind" towards assenting to the proposition asserted: cf St George Bank Pty Ltd v Rabo at [26]. 124 I have already indicated that the actions of the AFP officers concerned with the decisions and actions which led to the applicants' arrest were not of themselves ultra vires. There is no reasonable cause to believe that the decisions or actions were invalid because they were improperly motivated or that the officers were recklessly indifferent to the possible lack of power or validity in making those decisions or actions. Rather, on the evidence, they were referable to the Police Cooperation MoU with Indonesia. And while it was a foreseeable and likely consequence of the 8 and 12 April letters to the INP, that the applicants would be arrested in Indonesia and in that sense be exposed to harm in the sense of being put at risk of the death penalty, there is again no material at all which could objectively incline me to the proposition that the likelihood of that harm was other than a possible consequence of what was in the circumstances a valid exercise of official power. 125 Accordingly, I am not satisfied that the applicants have met the limiting conditions of O 15A r 6(a) for the purposes of information discovery in respect of the potential tort of misfeasance in public office. Equally I am not satisfied for the purposes of O 15A r 3 identity discovery that the prospective proceedings intended to be commenced would be other than speculative: Hooper v Kirella , at [33]. Hence this form of discovery will not be ordered. I certify that the preceding one hundred and twenty-six (126) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | preliminary discovery 0 15a rr 3 and 6 federal court rules prospective claims against members of the australian federal police police disclosure to indonesian authorities of information putting applicants at risk of exposure to the death penalty whether the prospective claims are speculative or devoid of prospects of success. principles to be applied s 8 of the australian federal police act 1979 (cth) extent to which s 8 can be read down in light of other domestic legislation and international instruments allegation that police acted without lawful authority in providing information concerning applicants to the indonesian police whether the afp acted in accordance with requirements of relevant legislation procedural fairness claim that the applicants have a substantive legitimate expectation that police would not act in such a way so as to expose them to the risk of the death penalty whether the doctrine of substantive legitimate expectation is part of australian law negligence allegation that assurances allegedly given by the afp to father of one applicant gave rise to a duty of care to that applicant nature of duty of police in conducting a criminal investigation whether a duty to an individual member of the public can exist concurrently with police's duty to the public at large whether alleged duty inconsistent with public duty in performing their statutory functions potential claim for misfeasance in public office no reasonable cause to believe that the commission of this tort was other than a mere possibility application statutory construction administrative law administrative law tort tort |
" His Honour also ordered that Mr and Mrs Scott pay the costs of the Commonwealth of Australia which was the Second Respondent to the proceeding in which the application was made. On 5 March 2009 Mr and Mrs Scott filed an application for leave to appeal to this Court from the Federal Magistrate's orders. The application was made because Mr and Mrs Scott accepted that the Federal Magistrate's orders were interlocutory in nature: see s 24(1A) of the Federal Court of Australia Act 1976 (Cth) ("the Act"). It is to be noted that, by the time the application was made, the 21 day period within which applications for leave to appeal must be filed had expired: see O 52 r 5(2) of the Federal Court Rules . Mr and Mrs Scott also applied for an order that compliance with this time limit should be dispensed with. Payment was ultimately made later that year. Mr and Mrs Scott harbour a deep sense of grievance arising from the failure of the relevant Commonwealth agency to pay special benefit to Mrs Scott in the three month period in 1995. They assert that this failure jeopardised their ability to obtain food and shelter and constituted a fundamental attack on their human rights. They have alleged that the failure was the result of a deliberate decision which was intended to cause them harm. At various stages they have alleged that the relevant officers had acted in contravention of applicable legislation and were liable in deceit and for misfeasance in public office. These allegations have been tested and rejected in a series of decisions: The nature of these proceedings is explained in greater detail in the reasons of the Federal Magistrate: see Scott v Human Rights and Equal Opportunity Commission [2009] FMCA 65 at [6] - [17] . In the course of this litigation, which has now gone on for over a decade, members of this Court have commented on its futility. In Scott v Human Rights and Equal Opportunity Commission [2007] FCA 2055 at [23] Kenny J, for example, was moved to observe that "[t]he time has come for Mr and Mrs Scott to turn away from their dispute with Centrelink over the Special Benefit payment. " Earlier, the Full Court in Scott v Pedler [2004] FCAFC 67 characterised the attempt, by Mr and Mrs Scott, in Scott v Pedler [2003] FCA 650 , as, in substance, constituting an abuse of process of the Court. It was effectively doomed to failure by the decision of Heerey J in Scott v Secretary, Department of Social Security [1999] FCA 1774. Undeterred by these observations Mr and Mrs Scott lodged their complaint with the Human Rights and Equal Opportunity Commission which led to the proceedings which were dealt with by Phipps FM and Kenny J. Their complaint relied on substantially the same material on which the two previous proceedings in this Court were founded. " He also characterised all proceedings in this Court and the High Court from Scott v Pedler [2003] FCA 650 to have been so manifestly groundless as to be utterly hopeless: see Attorney General v Wentworth (1988) 14 NSWLR 481 at 491 (per Roden J). In these proceedings the Scotts sought to re-litigate issues which had already been decided and which they had no hope of reopening. This constitutes habitual and persistent behaviour. He determined that the discretion should be exercised in favour of making the order because "the Scotts have not been deterred from pursuing hopeless proceedings by costs orders or by statements from judges of the Federal Court of Australia that their cause [was] hopeless": at [21]. It contains two grounds. Federal Magistrate's decision is plainly unjust that there has been a failure to properly exercise the discretion. Federal Magistrate should have held that the proceeding instituted by the appellants were not vexatious and that appellants are not vexatious litigants. Federal Magistrate should have taken these factors into account and held that there was no re-litigation of issues which had already been decided. " The application for leave to appeal was supported by an affidavit sworn by both Mr and Mrs Scott. It is plain from this affidavit and from the written and oral submissions advanced by Mr and Mrs Scott that they are dissatisfied with the Magistrate's order because they consider that the earlier cases in the High Court, this Court and the Federal Magistrates Court were all wrongly decided. It is not necessary, in these reasons, to record all of the contentions advanced by Mr and Mrs Scott. Some illustrations will suffice. 7 of the International Covenant on Civil and Political Rights ("ICCPR"), incorporated into the HREOC Act, has been breached by Centrelink; Art. 26 of the ICCPR has been breached by Centrelink; Centrelink committed the tort of conspiracy to intimidate (to create working force) by the use of the unlawful means (withdrawal of food and shelter); Centrelink committed the tort of intentional injury under the principle Wilkinson v Downton [1897] 2 QB 57 at 59 by the intentional use of injuring force from the withdrawal of food and shelter; there are about 32 actions of Centrelink/SSAT diminishing my --- the Second Applicant's --- physical impairment. Repetition of actions proves intention for the tort of misfeasance in the public office; the previous Federal Court proceedings were flawed and contrary to the documentary evidence; the Court below prejudged the motion M112/00 to the High Court. Some seven pages are then devoted to identifying what are said to be the errors in each of the decisions which are identified above at [4]. The decision of the Court below at [21] that the applicants' case is hopeless and at [20] that at least three court proceedings instituted by Applicants were vexatious is attended with sufficient doubt to warrant its reconsideration on appeal. That question is answered by determining whether the legal effect of the judgment is final or not. If the legal effect of the judgment is final, it is a final order; otherwise, it is an interlocutory order. It was therefore an interlocutory decision: see Kay v Attorney-General for the State of Victoria [2000] VSCA 176 ; (2000) 2 VR 436 at 447-451. Mr and Mrs Scott have, in my view, failed to identify any error in the Federal Magistrate's decision. The proposed grounds of appeal do no more than advance the bald assertion that the Magistrate should have held that Mr and Mrs Scott were not vexatious litigants and the contention that he failed to take into account their assertion that the decisions in the previous proceedings were flawed and contrary to the documentary evidence. It was not open to the Federal Magistrate to treat the decisions of the High Court and this Court as having been wrongly decided. He made his decision after he had rejected the attempt by Mr and Mrs Scott to re-agitate their grievances under human rights legislation. Mr and Mrs Scott were refused leave to appeal from the Federal Magistrate's decision by Kenny J. Although the applicants now formulate their claims before HREOC as violations of their human rights, there is no doubt that they continue to attack (though by another route) the conduct of Centrelink in refusing to grant Mrs Scott a Special Benefit. It was plainly open to him to conclude that the human rights case which he had determined was a vexatious proceeding and that Mr and Mrs Scott had "habitually, persistently and without reasonable grounds instituted other vexatious proceedings" in this Court over many years. Each of the proceedings, commencing with Scott v Pedler [2003] FCA 650 , was vexatious in the sense that it involved attempts to argue questions which had authoritatively been determined against Mr and Mrs Scott in earlier proceedings: see Jones v Skyring [1992] HCA 39 ; (1992) 109 ALR 303 at 309. It may be that a proceeding may be vexatious even though it is not "utterly hopeless": see Ramsey v Skyring [1999] FCA 907 ; (1999) 164 ALR 378 at 390. In using this expression, which he drew from Attorney General v Wentworth (1988) in NSWLR 488, the Federal Magistrate might have been intending to do no more than adopt what the Full Court had said in Scott v Pedler [2004] FCAFC 67: that the subsequent cases were effectively doomed to failure by the decision of Heerey J in Scott v Secretary, Department of Social Security [1999] FCA 1774. Nothing, however, turns on this point. The test to be applied by the Federal Magistrate was an objective one: see Jones [1992] HCA 39 ; (1992) 109 ALR 303 at 310; Ramsey [1999] FCA 907 ; (1999) 164 ALR 378. The fact that Mr and Mrs Scott strongly believed that their arguments in the earlier proceedings had merit and that the decisions in those cases were wrong was of no relevance. In oral argument, Mr and Mrs Scott sought to introduce an additional argument with a view to persuading the court that the Federal Magistrate was in error in holding that their arguments were utterly hopeless. They drew my attention to an order made by Connolly FM on 3 December 2008 in another proceeding between them and the Human Rights & Equal Opportunity Commission, in which his Honour ordered that, pursuant to s 39(1) of the Federal Magistrates Act , all extant applications in that court be transferred to his Court. When I enquired about the circumstances in which the order came to be made, I was told that, after Kenny J made her decision, Mr and Mrs Scott made a further complaint to the Commission about the same decisions of Centrelink between 1993 and 1996, which were the subject of the earlier proceedings in this Court, and the first complaint to the Commission. More evidence was provided to the Commission, but it still declined to investigate this second complaint. Mr and Mrs Scott then commenced another proceeding in the Federal Magistrates Court. It was in the context of that proceeding that Connolly FM made his orders. Mr and Mrs Scott argued that his Honour would not have referred the matters to the Federal Court had they been hopeless. Having been referred to the court, those matters are awaiting hearing before North J. Thus far, two directions hearings have been held. In my view, there is no basis on the material before me for making the assumption that Connolly FM would not have referred the matters were he not satisfied that they had some merit. In the first place, there are no written reasons for his Honour's decision. Secondly, his decision is consistent with him making a purely administrative decision in order to ensure that matters that have already been considered by this court should be referred to this court for determination. In any event, the decision of Connolly FM was not considered or relied on by Phipps FM. Even if Connolly FM took a different view of the merits of Mr and Mrs Scott's claims, this would not have any bearing on the question of whether there existed sufficient doubt to warrant Phipps' FM decision being reconsidered. His decision is not attended by sufficient doubt to warrant it being reconsidered by this court. On the contrary, in my view it was a proper exercise of the discretion conferred on him by r 13.11. The application for leave to appeal should be dismissed with costs. In these circumstances there is no need to deal with Mr and Mrs Scott's application that the time limit imposed by O 52, r 5(2) of the Federal Court Rules be dispensed with. It is to be hoped that Mr and Mrs Scott will now heed the advice of Kenny J and others and put their long dispute with Centrelink behind them. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | leave to appeal from federal magistrates court whether claim is vexatious whether order made under s 13.11(1)(b) of the federal magistrates court rules 2001 is interlocutory in nature practice and procedure |
Delegate Bruhn refused to grant an extension of Petty Patent No 662284 (PP2) on the grounds that the applicant was not entitled to the grant of PP2. The decision is reported: GS Technology Pty Ltd v Davies Shephard Pty Ltd & Another (2000) 50 IPR 202. The decision of Delegate Bruhn largely followed the reasoning of Cooper J in proceedings which related to an earlier provisional patent, Petty Patent No 645740 (PP1). Both PP1 and PP2 are divisionals of Application No 85236/91. 2 These reasons are concerned with three Notices of Motion filed in the appeal from Delegate Bruhn's decision. 3 Section 160 of the Old Act conferred extensive powers on the Court in relation to appeals from a decision of the delegate concerning the extension of Petty Patent 2. The proceedings are in the nature of a rehearing: Karen Aluminium Corp and Coal and Kaiser Aluminium and Chemical Corporation v Reynolds Metal Co [1969] HCA 7 ; (1960) 120 CLR 136 per Kitto J at 142 --- 143. On the hearing of the appeal, the Court may, amongst other things, admit further evidence and give such judgment or make such order as it thinks fit in all the circumstances. 4 On 16 January 2006, GS Technology Pty Ltd (the applicant or GST) filed and served a Notice of Motion seeking that leave be granted pursuant to O 13 r 2 of the Federal Court Rules to file an Amended Statement of Claim. 5 On 5 December 2005, GSA Industries (Aust) Pty Ltd (the second respondent) filed an Amended Notice of Motion seeking that the proceeding be dismissed pursuant to O 20 r 2 of the Federal Court Rules and that Australian Petty Patent No 662284 be revoked. The Notice of Motion also sought costs of the proceeding and of that Notice of Motion. 6 On 13 December 2005, Elster Metering Pty Ltd, formerly Davies Shephard Pty Ltd, (the first respondent) filed an Amended Notice of Motion seeking the same relief as was sought by the second respondent in its Notice of Motion. 7 Both respondents seek summary dismissal of the proceeding on the basis that the proceeding is an abuse of process of the Court: O 20 r 2(1)(c) of the Federal Court Rules . Each respondent claims that there is an issue estoppel binding the applicant which is a complete bar to the proceeding. 8 In Wong v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 242 ; (2004) 146 FCR 10, the Full Court (Emmett, Conti and Selway JJ) said at [36]. It would be an abuse of process to allow parties to litigate repeatedly matters that have been finally determined by the Court. Also, quite apart from any psychological detriment that might flow from an individual having to undertake litigation of the same issue a second time, the State has an interest in ensuring that, once an issue has been determined according to law and all rights of appeal have been exhausted, that should be an end of the matter. The resources of the community ought not to be expended in the litigation, more than once, of the same issue. Notwithstanding the complexity of that background, the three motions really turn on whether there is an issue estoppel preventing the applicant from seeking an extension of PP2. If there is no such estoppel, as the applicant asserts, the applicant seeks to rely on an affidavit of Alan Joseph Grieves, which annexes a Deed of Agreement dated 22 October 1996, to argue that, in the light of the terms of that document, the applicant is entitled to the favourable exercise of discretion, having regard, amongst other provisions, to sections 15(1)(a) , (b) and (c), s 28(1)(a), s 33 , s 69 , s 105 and s 138 of the Old Act. Both respondents argue that there is no power to amend the patent request pursuant to s 105 of the Old Act, and even if there were power, there are good reasons, including discretionary considerations, why that power should not be exercised. 12 The respondents contend that the applicant is not entitled to seek an extension of the term of PP2, with the consequences that any amendment to the Statement of Claim in these proceedings would be futile. The applicant's Notice of Motion seeking leave to amend should therefore be dismissed. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second for, the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. In the phraseology of Coleridge J in R v Inhabitants of the Township of Hartington Middle Quarter (1855) 119 ER 288 at 293, the judicial determination concludes, not merely as to the point actually decided, but as to the matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous . In the instant case, each of the declarations was appealed to the Full Court of this Court and special leave to appeal in respect of them was refused by the High Court of Australia. Further, the fact that the proceedings were in respect of preliminary issues does not deny that they were capable of creating issues estoppel binding the parties to the proceedings: Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 at 642. See also Day v Commissioner of Taxation v Day [2007] FCAFC 193. 16 So as to put these issues in context, it is necessary to refer to the extensive litigation history that underpins the current three Notices of Motion. The applicants claimed against the BCC a declaration that the BCC, as an authority of State, had exploited the petty patent within the meaning of s 163 of the Patents Act 1990 (Cth) ("the Act ") and sought orders fixing the terms for such exploitation pursuant to s 165 of the Act . The applicants sought against DS and DSQ, injunctive relief to restrain an alleged infringement by them of the petty patent and damages or an account of profits for such infringement. In their particulars of objection filed with the defence and cross-claim, DS and DSQ alleged that Stack was not entitled to be granted the petty patent (paragraph 1), that the claimed invention was not novel (paragraph 2), that the claimed invention was obvious and did not involve an inventive step (paragraph 3), that the complete specification of the petty patent did not comply with s 40(2) or s 40(3) of the Act (paragraph 4), and finally, that the claimed invention was not a "manner of manufacture" within the meaning of s 6 of the Statute of Monopolies (paragraph 5). The application was made pursuant to s 69 of the Act . On 20 December 1994, DS and GSA Industries (Australia) Pty Ltd ("GSA") each filed a notice pursuant to s 28 of the Act notifying grounds upon which they contended the petty patent was invalid. On the basis of a priority date of 30 August 1990 he held that Claims 1 and 2, and on the basis of a priority date of 30 August 1991 for claim 3, were novel, involved an inventive step and that the invention was a "manner of manufacture" within the meaning of the Statute of Monopolies. Notwithstanding registration on 23 October 1995 of GST as patentee by deed of assignment dated 16 March 1994, the Deputy Commissioner was not satisfied that Stack was originally entitled to the petty patent. Over objection, the Deputy Commissioner allowed Stack three weeks to make an application to adduce further evidence of entitlement. Those proceedings (VG39 of 1996) were filed in the Victorian District Registry of the Court. On 29 January 1996 GSA also filed an appeal (VG40 of 1996) in the Victorian District Registry against the decision of the Deputy Commissioner. Each appeal sought revocation of the petty patent on the grounds contained in the s 28 notices. Those grounds replicated the invalidity grounds pleaded in the defence and cross-claim in QG28 of 1994. The Deputy Commissioner, on 27 February 1996, found that the further evidence tendered by Stack and GST did not establish a prima facie case that Stack was entitled to the grant of the petty patent. On that date the Deputy Commissioner refused to admit the further evidence and concluded that the petty patent was granted to a person who was not entitled to be granted the petty patent. As this circumstance was not capable of rectification by amendment, the Deputy Commissioner refused to extend the term of the petty patent and awarded costs against Stack and GST. (Emphasis added). The appeal proceedings (QG29 of 1996) sought orders that the term of the petty patent be extended and that DS and GSA pay the costs of the appeal. In the Victorian District Registry, Heerey J, on 29 April 1996, ordered that VG39 of 1996 and VG40 of 1996 be transferred to the Queensland District Registry and be heard with QG11 of 1996 and QG29 of 1996. The second petty patent, like the petty patent, concerned water meter assemblies. The proceedings sought, as against Queensland, the fixing of terms pursuant to s 165 of the Act for exploitation of the second petty patent. The proceedings sought orders against the Commissioner that the assignment of the second petty patent to GST be registered. After a hearing before Kiefel J the assignment was registered and the proceedings against the Commissioner were dismissed by consent. That finding, however, was made in favour only of the Brisbane City Council and the State of Queensland in respect of claims made against those parties in respect of Petty Patent No 662284. In that case, the first and second respondents in the present proceeding were not entitled to declaratory relief in respect of that petty patent, because, in those proceedings, there had been no claim made against the present first and second respondent that they had infringed PP2, nor had they sought revocation of PP2 in that proceeding. 19 The decision of Cooper J made on 15 September 1999 concerned, amongst other things, the issue of whether George Stack and/or GST were entitled to the grant of PP1, namely, Australian Petty Patent No 645740. 20 The current proceeding concerns the issue of whether George Stack and/or GST are entitled to the grant of the second petty patent, being Australian Petty Patent No 662284, PP2. 21 The Patents Amendment (Innovation Patents) Act 2000 (Cth) introduced significant amendments to the patent regime. These proceedings are concerned with the provisions of the Old Act . George Stack is not, and was not at any material time, entitled under s 15 of the Patents Act 1990 (Cth) to the grant to him of a patent in consequence of the filing of the provisional specification PK2036. George Stack is not, and was not at any material time, entitled under s 15 of the Patents Act 1990 (Cth) to a grant to him of a standard patent in consequence of the filing of application 85236/91. George Stack was not entitled under s 15 of the Patents Act 1990 (Cth) to the grant to him of Australian Petty Patent Number 645740. GST Technology Pty Ltd was not entitled under s 15 of the Patents Act 1990 (Cth) to a grant to it of Australian Petty Patent Number 645740. GS Technology Pty Ltd is not entitled to Australian Petty Patent Number 645740 within the meaning of s 138(3)(a) of the Patents Act 1990 (Cth). 25 His Honour also declared that the invention claimed in PP1 was a patentable invention within the meaning of s 18 of the Old Act , and that the specification of that patent complied with the requirements of sections 40(2) and 40(3) of the Old Act . 26 The first respondent and the second respondent contend, and it is not disputed by the applicant, that PP1 and PP2 were divisionals of Application No 85236/91. 27 Section 39 of the Old Act made provision for divisional applications. It was for this reason that Cooper J found that the entitlement of Stack to the parent patent was determinative of his entitlement to the divisional. 29 The respondents contend that there was a finding of lack of entitlement to PP1 in George Stack because Mr Stack was not, at any material time, entitled under s 15 of the Old Act to the grant to him of a patent in consequence of the filing of the provisional specification PK2036 and because Mr Stack was not, at any material time, entitled under s 15 of the Old Act to grant to him a standard patent in consequence of the filing of Application No 85236/91. In the light of those findings, it is contended that the applicant is estopped from asserting an entitlement to PP2, a further divisional of 85236/91. The consequence is that he was not entitled, nor were he and Grieves jointly entitled, to make any divisional application and to have granted a patent, including the petty patent, on the basis of an entitlement to Stack or Stack and Grieves under s 15(1) of the Act . Nor was Stack, as patentee, entitled to be granted the petty patent within the meaning of s 28(1) of the Act . 32 Cooper J and the Full Court of the Federal Court also held that the subject matter of s 138(3)(a) (revocation of a patent on the ground that the patentee is not entitled to the patent) is the entitlement of the original grantee: see Cooper J in his Honour's First Set of Reasons at [51]-[53] and the Full Court at [34]. 33 In this proceeding, the patentee, at the time of revocation proceedings, is a later registered assignee of the patent. The question of entitlement remains to be determined by reference to the eligibility of the original grantee under s 15 , because the subsequent holder of title to a patent stands in the shoes of the person from whom the title is acquired. As Cooper J noted at [52] of his Honour's First Set of Reasons, an assignee can obtain no better entitlement to the patent than the original grantee. Therefore although assignment or devolution by law of the patent prior to revocation carries an entitlement to registration as the proprietor of the patent, registration does not cure a defect in the title which renders it liable to revocation because it should never have been granted originally. 36 On 21 October 1999, Stack and GSA filed a Notice of Motion seeking in effect to adduce further evidence and to reopen the issue of the applicant's entitlement to PP1. That evidence included a Deed dated 22 October 1996, which is a document referred to in the proposed Amended Statement of Claim in the present proceeding. 37 The applicants sought to have Alan Joseph Grieves made a respondent to the proceedings and to have the Court order the amendment of the patent, or patent request, under s 105 of the Old Act . 38 On 10 May 2000, Cooper J revoked Petty Patent No 655740 and dismissed the Notice of Motion insofar as it sought to reopen the issue of the two applicants' entitlement to Petty Patent No 645740. They also seek to set aside on the entitlement issue all findings of fact made on that issue, to re-open their case to tender the evidence on the entitlement issue, which was previously struck out, and to call additional evidence which, on its face, was available at the time of the trial. This they seek to do to overcome matters determined adversely to them in a trial which has concluded and after judgment has been given. In my view, no demonstrable basis for the making of such an order has been made out, or is even attempted to be made out, on the material filed in support of the notice of motion. Stack was present for most, if not all, of the trial. There is no reasonable basis to suggest that Stack and GST and their legal adviser did not understand what was being done and the consequences of not producing the witnesses for cross-examination. This is not an application to re-open before judgment, where the taking of such a decision may not carry so much weight against allowing re-opening: Urban Transport Authority of NSW v Nweiser (1991) 28 NSWLR 471 (CA) at 475-6, 478-479. See also Hindmarsh Medical Clinic v Hindmarsh Family Practice Pty Ltd (1997) 38 IPR 616. Further, Stack and GST seek to retain the benefit of the declarations of validity in declarations 6 and 7 by contending that those issues were found in their favour, and that, having regard to my findings on them, Grieves and Stack would not be subject to cross-examination on those issues. To take such a position smacks of the earlier conduct being a deliberate attempt to deny the cross-claimants an opportunity to cross-examine the inventors on the invalidity issues, and to now seek to retain the benefit of having taken such a course without accepting the consequences which flowed in terms of the entitlement issue. DS and DSQ also submit that if declarations 1 to 5 are set aside, then declarations 6 and 7 should also be set aside so that they too could re-open their case on all issues. Whether or not cross-examination would have assisted them on the other issues is a moot point. However, to set aside all declarations and all findings would involve a substantial waste of time and costs. The parties litigated the issues to judgment on the basis of the evidence before the Court the content of which, was in no small way, determined by the way in which GST and Stack conducted their case at trial. Even assuming that GST and Stack are in a position to pay the costs thrown away if all of the declarations are set aside, and leave is given to all parties to re-open their cases, there is no offer to pay such costs, whether they be with respect to all issues or limited to the issues which arose on the entitlement of Stack and through him GST, to the grant of the petty patent. In my view, no such reason has been shown. Nor am I persuaded on the material produced in support of the notice of motion that to re-open the trial would necessarily lead to any different result, so far as the entitlement of Stack or GST to the grant of the petty patent is concerned. I decline to set aside any of the declarations made on 15 September 1999. Stack and GST have persisted with their claim that the petty patent was validly granted to Stack alone. No Application has been made under s 105 of the Act in any of the pending proceedings to have the Court direct amendment of the patent request and patent so as to add Grieves as a joint patentee. 41 On 30 March 2004, Cooper J made final orders in his Honour's Third Set of Reasons. His Honour dismissed proceeding QG 28 of 1994, save for some paragraphs of the Further Amended and Consolidated Statement of Claim filed on 6 October 1997, which relate to claims concerning copyright, breach of confidence, and breach of contract. All claims relating to Petty Patent No 645740 and Petty Patent No 662284 were dismissed. His Honour further dismissed proceeding QG 21 of 1996 and entered judgment for the State of Queensland in respect of claims relating to Petty Patents Nos 645740 and 662284. This means that Stack and GST cannot make out the necessary entitlement to the grant of Petty Patent 662284. To allow the proceedings to proceed in respect of the Issues relating to Petty Patent 662284 in the face of ultimate failure would amount to an abuse of process. The proceedings against the BCC for infringement and against the State of Queensland for relief under s 165 of the Patents Act will be dismissed pursuant to O 20 r 2 of the Federal Court Rules . However, neither the BCC nor the State of Queensland sought a revocation of Petty Patent 662284 in substantive proceedings by cross-claim. Accordingly they are not entitled to such relief in a summary manner on these notices of motion. 44 Stack and GST made a further application to the High Court for special leave to appeal from the judgment and order of the Full Court of the Federal Court of 4 May 2001, which application was refused on 23 June 2005. ([2005] HCATrans 445). His Honour found that as Stack was not the inventor, but rather one of two joint inventors, he was not within par 15(1)(a). He had no claim to an assignment upon issue of the patent and so was not within par 15(1)(b). Clearly, the alleged circumstances in which Grieves permitted Stack to apply did not amount to a transfer of title to the invention for the purposes of par 15(1)(c). The evidence suggests only that Grieves was agreeable to Stack making the application. There was no allegation that Stack was the legal representative of any deceased person who was entitled to a patent (par 15(1)(d)). A perusal of the texts suggests that there has been little recent consideration of this point. Each may have been entitled to a patent over his part (if it was otherwise patentable), while they both may have been entitled to a joint patent over the whole. Neither was solely entitled to a patent over the total invention. It follows that they could not, by arrangement between them, create in Stack an entitlement to a patent, save to the extent that they created a relationship pursuant to which he satisfied either par 15(1)(b) or par 15(1)(c). As we have observed, whatever agreement there was between them did not have that effect. " What we are estopped from saying is that George Stack was entitled to patent 662284 in his capacity as the inventor, that is, that is under 15(1)(a). That's what the issue which we are estopped from denying. That's it. Since GST's entitlement to PP2 depends on Stack's entitlement to PP2, and since Stack's entitlement to PP2 depends on his entitlement to the standard patent under Application No 85236/91, of which PP2 was a divisional, GST is estopped, in these proceedings, from asserting an entitlement to PP2. In my judgment, the finding that Stack was not entitled to the Patent No 85236/91 is, in the words of Dixon J in Blair v Curran (supra) was " a matter necessary to decide and actually was decided, as the groundwork of the decision " that Stack was not entitled to PP1. 53 It follows that GST is not entitled to PP2 and that therefore an extension of PP2 would be futile. The delegate of the Commissioner was right to refuse the application for an extension of PP2 on this ground. 54 If, contrary to my finding, there was no issue estoppel binding on the applicant, the applicant claimed that having regard to the contents of the Deed of 22 October 1996, and the affidavit of Alan Joseph Grieves filed in these proceedings, there is evidence before the Court on which it might be concluded that Stack comes within s 15(1)(b) or (c) of the Old Act . 55 The document is styled "Agreement" and bears the date 22 October 1996. PK 2036 in respect of a water meter assembly. This application was lodged by Stack with the knowledge and consent of Grieves and with the common intention that any patent rights to be derived from that application would be transferred to the company to be incorporated. The applicant's written submissions allege, first, that the delegate of the Commissioner " was in error in not allowing this document into evidence . This was tantamount to Grieves giving to Stack his interest in the rights to the patent and for Stack to hold it in trust until it was transferred to a company formed to exploit the inventions, the subject matter of the patent. It is clear from the membership structure of the company (when it was formed) that there was an agreement of some kind in place. The statement is a recital to an agreement. The existence of that recital is not " tantamount to Grieves giving to Stack his interest in the rights to the patent ", as was contended for the applicant, and a fortiori does not amount to a gift, or an assignment of those rights to Stack. 60 My conclusion is the same as the view of the Full Court about the document of 22 October 1996, which is set out in par 45 above, and consistent with the observations of Cooper J at [24] of the Second Set of Reasons, set out in par 37 above. Mr Stack is therefore not within s 15(1)(b) or s 15(1)(c) of the Old Act . 61 It was submitted for the applicant that the delegate was in error in not allowing this document into evidence, and that the Delegate Bruhn wrongfully refused to amend under s 69(4) of the Old Act . 62 The submissions seriously mis-state the position before Delegate Bruhn. The solicitor for the applicant before the delegate had sought leave to adduce further evidence into the proceedings, including material which had been exhibit 24 in the Federal Court proceedings concerning Petty Patent No 645740. He noted that the deed had not been filed by the patentee in the s 28 proceedings for Petty Patent 662284, and that the patentee did not provide the deed in evidence in response to the invitation by the Commissioner to file any evidence in response to the notifier's original s 28 evidence, nor requested the Commissioner to grant leave for the patentee to adduce the deed as further evidence into the proceedings for Petty Patent No 662284. In particular the deed does not seem to establish a prima facie case for Stack having entitlement to be granted petty patent No 662284. The patentee has had ample opportunity to formally seek to adduce the document into the proceedings but has not done so. Accordingly I will not have further regard to this deed. However, this is a strike-out application, and I am not concerned to reach a final determination on this question on such an application. 66 Finally, the applicant contends that it is able to rely on the provision of s 105 , in that there is power to amend in s 105 , which can be used in a situation such as the present, and that the exercise of the Court's discretion to so amend would be proper. If there is a failure to disclose all relevant matters, amendment will be refused. Secondly, amendment will be allowed provided the amendments are permitted under the Act and no circumstances arise which would lead the court to refuse the amendment. Thirdly, it is in the public interest that amendment is sought promptly. Thus, in cases where a patentee delays for an unreasonable period before seeking amendment, it will not be allowed unless the patentee shows reasonable grounds for his delay. Such includes cases where a patentee believed that amendment was not necessary and had reasonable grounds for that belief. Fourthly, a patentee who seeks to obtain an unfair advantage from a patent, which he knows or should have known should be amended, will not be allowed to amend. Such a case is where a patentee threatens an infringer with his unamended patent after he knows or should have known of the need to amend. Fifthly, the court is concerned with the conduct of the patentee and not with the merit of the invention. " Counsel also points to the third factor referred to by Aldous J, namely, " ... it is in the public interest that amendment is sought promptly. It was further submitted that even if there were power, the amendment would not be allowed on the basis that is inconsistent with the findings and declarations made by Cooper J in his Honour's First Set of Reasons. Thirdly, even if it were possible, the amendment should not be allowed as a matter of discretion because of the lengthy delay on the part of the applicant in seeking the amendment. 70 In my view, as earlier indicated, the proposed amendment is inconsistent with the findings and declarations of Cooper J, which I have held constitute an issue estoppel. 71 The research of all counsel has not established any decision in which invalidity of a petty patent on the grounds that a patentee was not entitled to be granted the petty patent has been held to be capable of being remedied by amendment of the patent request under s 105 of the Old Act . 72 Mr Vasta for the applicant points to the instance where Mr Stack had made application No 32815, which " emanated from application of 85236 of 91 ", but before the grant of the patent, " the patent request was changed ... to make the grantee Stack and Grieves. " However, this was no contradictor, nor any consideration to the question of power to make that change. 73 Amendment has been held capable of curing or avoiding invalidity on other grounds. For example, where the invention is not a patentable invention because it does not comply with s 18(1)(a) or (b) or that the specification does not comply with s 40(2) or (3). Examples of amendment cases in this Court are: JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2005] FCA 1474 at [26] (Crennan J), Neurizon Pty Ltd v Jupiters Ltd [2005] FCA 1177 at [13] (Kiefel J); Novartis AG v Bausch & Lomb (Australia) Pty Ltd (2004) 62 IPR 71 at [67] and [68] (Merkel J); Gambro Pty Ltd v Fresenius Medical Care South East Asia Pty Ltd (1999) 48 IPR 625 at [69] (Tamberlin J) and Wimmera Industrial Minerals Pty Ltd v RGC Minerals Sands Ltd (No 3) (1997) AIPC 91-366 at 39,789 (Sundberg J). None of these supports amendment in circumstances such as those of the applicant here. 74 Relevant to this argument, is the distinction in tense in s 28(1)(a) of the Old Act with the tense in s 28(1)(b) and (c) of the Old Act . Subsection 28(1)(a) is concerned with the question of whether the patentee, being the person to whom the patent was granted, was entitled to be granted the petty patent at the time when it was granted. That ground of invalidity has to be considered by reference to whom the patent was actually granted. A purported amendment of a patent or a patent request, after grant, to substitute the name of another person or persons as patentee would not alter the fact that the patent had been granted to another person not entitled to the grant. In my view, there is nothing in the Act to suggest that an amendment, after grant, of the identity of the persons who applied for grant would operate nunc pro tunc . The proposed amendment would not affect the patent's invalidity as a consequence of s 28(1)(a) of the Old Act . 75 It was submitted by Ms Bowskill for the first respondent that the reason why an amendment of the kind here sought by the applicant is not allowable under s 105 is to be found in both the specific provisions of the Old Act dealing with amendments of a specification to save an otherwise invalid patent, as well as the consequences of utilising the remedy afforded by s 34 of the Old Act . 76 Where an amendment of a specification to save an otherwise invalid patent is granted, the Old Act provided safeguards in respect of priority dates and restrictions on the recovery of damages in respect of infringement predating the amendment: (see ss 114 - 115 and reg 3.14). 79 An action for infringement of the new patent granted under s 34(2) would lie only from the date of publication of the complete specification relating to the application of that new patent: (see s 51(1) and (2) of the Old Act ) Thus use by a person which was lawful at the time does not become an infringement through the operation of s 34. The "rectified grantee" acquires rights in respect of infringement only prospectively. 80 I accept the submission on behalf of the first respondent that the applicant's application to amend pursuant to s 105 misconceives s 28 of the Old Act , and in turn the true extent and proper purpose of the power of amendment in s 105. Further, I accept that the distinction between pre and post-grant amendments is also demonstrated by ss 106 and 107 of the Old Act . 81 Section 106 deals with the situation where a patent has been granted, and the Commissioner is satisfied that the patent is invalid on grounds that could be removed by appropriate amendments of the specification . Under s 107 , where a complete application for a standard patent has been made, but the patent has not yet been granted, and the Commissioner is satisfied that there are lawful grounds of objection to the patent request or complete specification but that those grounds of objection could be removed by appropriate amendments of the request or specification , the Commissioner may direct the applicant to file a statement of proposed amendments. Post-grant, no provision is made for amendment of the patent request. 82 Section 113 makes provision, before a patent is granted, for another person to be added to the patent request as a nominated person. The position is now put beyond doubt in respect of applications filed on or after 24 May 2001 by reg 10.3(9) of the Patent Regulations 1991 (Cth) which relevantly provides that, " A proposed amendment of a patent request is not allowable after the patent has been granted ". 83 I accept the submission on behalf of the first respondent that this regulation merely declares the law as it stood previously. I am satisfied that there is no power under s 105 to amend the patent request. If there were power, the applicant is estopped by the findings and declarations of Cooper J in his Honour's First Set of Reasons from contending as the proposed amendment would wish. 84 Finally, even if it were within power and not the subject of a binding estoppel, to amend the patent as foreshadowed by the applicant in the present matter ought not be allowed having regard to the length of time taken by the applicant to seek the amendment which it has foreshadowed. As the Full Court pointed out, " The failure to nominate Grieves in the patent request was not an oversight. " ([2001] FCA 501, [49]). 85 The applicant has persisted for nearly 10 years to assert that it is entitled to Petty Patent No 662284. Extensive and expensive litigation have been fought and lost on that basis, with the consequence that extensive costs have been incurred by, amongst others, the first and second respondents. It is only in very recent times that the applicant has sought to invoke s 105. Previously, it elected to pursue what it asserted was its own entitlement to Petty Patent No 662284, a course inconsistent with the mooted application under s 105. Stack and Grieves have not sought to assert a claim to Petty Patent No 662284, preferring to sit behind the claims made by the applicant. 86 For all of the above reasons, the foreshadowed amendment pursuant to s 105 ought not be permitted. 87 In all the circumstances, it is right to order that Petty Patent No 662284 be revoked. The patent has expired, and if it is not revoked, further litigation is possible. An application for revocation of the patent has now been made and pursuant to s 138(3) of the Old Act , the Court has power, and, in my opinion, should revoke Petty Patent No 662284 on the ground that the patentee is not entitled to the patent. 88 I propose to make the following orders: on the Notice of Motion of the applicant for leave to file an Amended Statement of Claim, leave is refused. Pursuant to O 20 r 2 of the Federal Court Rules , proceeding QUD 46 of 2000 should be dismissed. Australian Petty Patent No 662284 should be revoked. 89 I will hear the parties on costs. My present view is that the applicant should pay the costs of the first respondent of and incidental to the proceeding, including the costs of and incidental to the Amended Notice of Motion filed by the first respondent on 13 December 2005, and the costs of and incidental to the Notice of Motion filed by the applicant on 16 January 2006 and the applicant should pay the costs of the second respondent of an incidental to the proceeding, including the costs of and incidental to its Amended Notice of Motion, filed 5 December 2005, and the costs of and incidental to the Notice of Motion filed by the applicant on 16 January 2006. I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. | patents petty patent entitlement divisional applications assignment of patent consideration of successor in title of patent and original grantee where applicant not entitled to any benefit of patent due to title defect where patent revoked whether amendment of patent request pursuant to s 105 patents act appropriate where amendment of patent request can not remedy lack of entitlement applicant otherwise not entitled to exercise of court's discretion issue estoppel whether present matters raised cardinal to earlier determined matters where present matters so cardinal intellectual property intellectual property practice and procedure |
Further, or in the alternative, they assert that the respondents have aided and abetted contraventions of s 52 within the meaning of s 75B of the Act. The applicants say they have suffered loss and damage as a result of the respondents' contraventions of the Act. The applicants were ordered to file and serve the affidavits on which they intended to rely at the trial by 27 November 2008. The applicants filed their affidavits in early December 2008. On 19 December 2008, the Court ordered the first respondent to file and serve his defence and any affidavits upon which he intended to rely at the trial of the proceeding. The first respondent had until 30 January 2009 to do so, but did not file any affidavit on which he intended to rely. The first respondent filed a defence on 17 July 2008 in response to the applicants' amended statement of claim dated 13 May 2008. In effect, the first respondent's defence denied the allegations and made submissions regarding the clarity of the applicants' amended statement of claim. The first respondent ceased to be legally represented on 1 December 2008 and did not appear at the hearing of the matter on 2 March 2009, despite being notified of the hearing. The second respondent has failed to file a defence or appearance in this matter. No documents, including the order setting down the hearing for trial, have been served by the applicants on the second respondent since 7 May 2008. In particular, the second respondent was not served with the amended statement of claim. However the paragraph that most affects him, being [15] of the amended statement of claim, does not vary in any significant respect from the original pleading. Both respondents reside in New Zealand. The second respondent was served with the application and statement of claim on 7 May 2008. The second respondent failed to enter an appearance, file a defence or take any part in these proceedings. The evidence shows that the second respondent was aware of the proceeding and nevertheless failed to take any step to defend it. The second respondent's failure to enter an appearance, file a defence or take any step to defend the application constitutes default under O 35A r 1(2)(a)---(c), (g) and (h). However, the Court may only give judgment under O 35A for relief that "the applicant is entitled to on the statement of claim". In light of the evident objectives of the O 35A procedure in providing for a ready and expedient means to dispose of uncontested litigation, I consider that the Bank's submission duly reflects a correct description of the subr (2)(c)(i) requirement. In relation to the alleged breaches of s 52 of the Act by the second respondent identified in [11] of the amended statement of claim, the elements of the wrongs cannot be said to have been "properly and discretely pleaded". The amended statement of claim also identifies seven further representations which are said to have been made by each of the respondents, EVP Holdings and EVP Recruitment. Paragraph [16] of the amended statement of claim indicates why the representations as to future matters in [15] are said to have been misleading or deceptive. In relation to the second respondent, the allegations in [15] of the amended statement of claim meet the requirements of O 35A r 3(2) as discussed in Macquarie Bank Ltd v Seagle at [24]. Consequently, the power to give relief concerning contraventions of s 52 of the Act is within the Court's powers. Given the second respondent's failure to participate in any way in the proceeding, it is appropriate to exercise the Court's discretion to order relief against the second respondent, for breaches of s 52 identified in [15] of the amended statement of claim. The first respondent filed a notice of appearance, a defence to the amended statement of claim and participated in the proceeding through his solicitors until 1 December 2008. No prior notice of the applicants' intention to seek default judgment was given to the first respondent. No motion was filed with the Court that would have alerted the first respondent to the applicants' intentions. That did not occur in this case. As we have said, the notice of motion failed to state any ground for the proposed order. The appellants were left to divine that from the evidence. On 25 February 2009, the first respondent informed the Court by email that he would not appear at the trial of the proceedings on 2 March 2009. In light of the relief sought by the applicants, the lack of notice to the first respondent of the applicants' intention to seek default judgment and the reasons given by the first respondent for the default, I am not satisfied that it is appropriate to give default judgment against the first respondent. It is more appropriate to test whether the evidence supports the claims made by the applicants against the first respondent. At the relevant time, the first respondent was a director of EVP Recruitment and its parent company, EVP Holdings Pty Ltd ("EVP Holdings"). The second respondent was the managing director of EVP Holdings. EVP Recruitment operated joint venture recruitment businesses across Australia and New Zealand in conjunction with investors such as the applicants. Investment in the joint ventures was marketed through internet advertisements. During 2004, the applicants each invested in a joint venture business with EVP Recruitment after responding to an internet advertisement. The second respondent became a bankrupt in New Zealand on 7 July 2004. EVP Recruitment entered voluntary administration on 11 March 2005 and was placed into liquidation on 14 April 2005. The applicants ultimately found each of the joint venture businesses to be unprofitable, with several of the joint ventures also entering administration. The applicants allege that they relied on representations made by the respondents either personally or as representatives of EVP Recruitment as to the financial position and history of EVP Recruitment and the returns, costs and services which they could expect as investors in the joint venture. The applicants say that they would not have invested in the joint ventures if the alleged misrepresentations had not been made. The respondents did not rely on any evidence in the proceeding. The Initial Representations and Further Conduct occurred while the applicants were engaged in investment decisions and the purchase of businesses. Accordingly, apart from the salary representation which counsel for the applicants abandoned during the hearing, each of the representations can be said to have been made in trade or commerce. The evidence establishes that the Initial Representations identified in [28] of these reasons as (a)---(f), (h), (j), (k), (n)---(q), (s) and (t) were made to the first applicant. The first applicant's evidence establishes that Initial Representations (a)---(f), (h), (j), (n)---(q), (s) and (t) were misleading or deceptive conduct in contravention of s 52 as: The Initial Representations were made by EVP Recruitment and EVP Holdings, rather than by the first respondent in a personal capacity. The representations outlined in [30] were made on documents which bore a prominent EVP logo and at meetings at EVP offices which the respondents attended in their capacity as representatives of the companies. Even the meetings held outside EVP offices, which the first applicant and the first respondent attended at the Hilton Hotel in Brisbane on 1 February 2004 and at a solicitor's office on 25 May 2004, were meetings which were attended by the first respondent as a representative of EVP Holdings and EVP Recruitment. The statements made at those two meetings are also to be attributed to EVP Recruitment and EVP Holdings, rather than to the individuals present. Accordingly, it is necessary to consider whether the first respondent is liable as a party to a contravention for the Initial Representations made to the first applicant. In relation to representation (k), EVP Recruitment made the representation in relation to a future matter. Section 51A of the Act creates a presumption that the representation was misleading, unless EVP Recruitment demonstrates that it had reasonable grounds for making the representation. As the respondents did not adduce any evidence in the proceeding, the presumption in s 51A is not displaced. Section 75B of the Act enables persons, such as the first applicant, who have suffered loss or damage as a result of a contravention to recover the loss or damage from other persons who were involved in the contravention. Whilst it is not a contradiction in terms to speak of a person being "party to" something of which he is unaware, some indication is needed to convey such a meaning. There is nothing in the paragraph itself which would point to any conclusion other than that the words "party to" are sued to refer to a participant in the nature of an accessory. Moreover, the wider context of the whole section leads to the same conclusion. We have already indicated why para. (a) requires knowledge. Paragraph (b), which speaks of inducing a contravention by threats, promises or otherwise, and par. (c) requires a party to a contravention to be an intentional participate, the necessary intent being based upon knowledge of the essential elements of the contravention. There is no evidence to show the first respondent prepared or authorised these documents. The Initial Representations were also made during meetings which the first respondent did not attend. There is no evidence to suggest that the first respondent directed or knew what was said at these meetings. No liability on the part of the first respondent under s 75B of the Act arises in relation to these aspects of the Initial Representations. The first respondent attended a meeting with the first applicant on 1 February 2004. None of the Initial Representations were made during this meeting. The first respondent also attended a meeting of "EVP managers and partners" on 3 April 2004. Initial Representation (a) was made during the April 2004 meeting. The evidence, in particular that of Trudee Maxine Mashlan, shows that EVP Holdings and EVP Recruitment at that time were in what can best be described as a precarious financial position and at worst were a short step from insolvency. The first respondent was aware of these facts which rendered the representation that the group has a successful business model and history misleading and deceptive. Accordingly, the first respondent is liable under s 75B of the Act with respect to representation (a) of the Initial Representations. Section 82 of the Act requires the first applicant to have suffered loss caused by the first respondent's conduct in order to receive compensation for loss or damage. The first applicant's evidence is that if he had known representation (a) was untrue he would not have invested in EVP Windsor. However, the representations made at the 3 April 2004 meeting were made after the first applicant had entered into the Heads of Agreement and had paid $50,000 to EVP Recruitment as the first instalment for share capital in EVP Windsor. This suggested to me that Holdings and Recruitment were not 'established' as represented by Pierce and Hughey. This suggests that the first applicant did not rely on the representation on 3 April 2004 that EVP Recruitment and EVP Holdings were established businesses as he had already invested in EVP Windsor and was aware that the representations were misleading. The first applicant's loss was not caused by representation (a) as the first applicant invested in EVP Windsor before the representation was made. The first applicant's statement that if he had known the representation was misleading he would not have invested in the business cannot be accepted and the first respondent is not liable under ss 75B and 82 of the Act for the representation. The conduct included both positive representations by the first respondent and representations implied by the first respondent's silence. For the reasons discussed in relation to the Initial Representations, the first respondent engaged in the Further Conduct in his capacity as a representative of EVP Holdings and EVP Recruitment. Further Conduct (a) and (b) was misleading and deceptive conduct in contravention of s 52 of the Act. The ongoing financial position of EVP Holdings and EVP Recruitment was not sound. Through the first respondent, EVP Holdings and EVP Recruitment were aware of the importance of the matters in (b) to the first applicant, but nevertheless failed to disclose these matters. The first respondent is a party involved in these contraventions of the Act in accordance with s 75B of the Act. There is sufficient evidence to show that the first respondent was aware when making the representations or refraining from correcting the representations that Further Conduct (a) and (b) was misleading or deceptive. The first respondent was aware by at least December 2004 that EVP Holdings and EVP Recruitment were not in a sound financial position and failed to disclose their "imminent or likely insolvency". The conduct was misleading and deceptive as it created the impression that the relevant companies were financially viable. The first respondent is liable in accordance with ss 75B and 82 for loss suffered as a result of Further Conduct (a) and (b). In relation to the failure to disclose the matters in (e), the evidence of Ms Mashlan indicates that the first respondent was aware as early as at least 8 July 2004 of the second respondent's bankruptcy. Despite this knowledge, the first respondent refrained from advising the first applicant of the matters in [15(e)]. The relationship between the first respondent and the first applicant was such that it is reasonable to infer that the first respondent would have known the importance of those issues to the first applicant but nevertheless chose not to inform the first applicant. This knowledge is to be imputed to EVP Recruitment and EVP Holdings in accordance with s 84 of the Act. The failure of EVP Holdings and EVP Recruitment to disclose the sequestration of the second respondent's estate at the time it occurred, or within a reasonably prompt time, was conduct in breach of s 52 of the Act. In light of his involvement in the failure to inform the first applicant of the matters in (e), the first respondent is liable pursuant to ss 75B and 82 for loss suffered by the first applicant as a result of this conduct. Conduct (f) and (g) was not directed at the first applicant. Nevertheless, it was misleading and deceptive conduct in contravention of s 52 of the Act as it induced in the administrator of EVP Recruitment the belief that the altered financial records were accurate financial records. The first applicant is eligible for compensation pursuant to s 82 for any loss or damage which he suffered by conduct the breach of s 52 of the Act. The evidence establishes that the Initial Representations identified in [28] of these reasons as (a), (b), (d), (e), (g), (k), (l), (o) and (p) were made to the second applicant. Representations (a), (b), (d), (e), (k), (o) and (p) were misleading or deceptive conduct in contravention of s 52 of the Act for the reasons discussed in relation to the first applicant. Representation (g) contravened s 52 of the Act as the second applicant was not provided with a business plan for EVP Sydney and did not receive any input or assistance in developing his own business plan for EVP Sydney and EVP Recruitment did not show that it had reasonable grounds for making the representation. Representation (l) is also misleading or deceptive conduct by virtue of the operation of s 51A of the Act as it is also a representation as to a future matter which EVP Recruitment did not demonstrate it had reasonable grounds to make. The representations made to the second applicant by the first respondent were made by EVP Recruitment and EVP Holdings, rather than the first respondent in a personal capacity. The representations the second applicant relies on include representations in documents entitled "EVP Holdings Limited Manager/Partner Opportunity" and "EVP Manager's Policy Manual and Job Description"; neither of which was provided by the first respondent. Each bears prominent EVP logos. Similarly, the unsigned 10 May 2004 and 19 May 2004 letters to the second applicant are on EVP Holdings letterhead. They were written by the first respondent in his capacity as a director of EVP Holdings. The 31 May 2004 conversation relied upon by the second applicant followed a tour of EVP offices. The first respondent participated in that meeting as a representative of EVP Holdings and EVP Recruitment. The representations made at the 31 May 2004 meeting are to be attributed to EVP Recruitment and EVP Holdings. The first respondent is not primarily liable for the initial representations made to the second applicant. Any liability on the part of the first respondent for the representations can only arise under s 75B of the Act. There is no evidence that the first respondent was aware of these documents, prepared or authorised them. Therefore the first respondent cannot be said to have been involved in the contraventions of the Act which flow from the content of those documents. The first respondent appears as the author of the unsigned letters of 10 May 2004 and 19 May 2004. The first respondent also participated in the meeting with the second applicant and second respondent on 31 May 2004. The conduct identified as (a), (b), (k), (l) and (p) in [28] above was made in these letters and during the meeting, both as direct representations and as representations by silence. The evidence does not show that the first respondent was aware in May 2004 of facts which made representations (k), (l) and (p) misleading and deceptive. The applicants did not adduce any evidence to show that the first respondent knew that the marketing campaigns would not occur, that the second applicant would be required to contribute more that $40,000 in working capital or that EVP Recruitment would not provide working capital to EVP Sydney as required. The first respondent is not liable pursuant to s 75B of the Act for these representations. There is no evidence which established that the first respondent was aware in May 2004 that the joint venture businesses were not largely successful. The third and sixth applicants gave evidence that the first respondent sent a letter on 12 July 2004 discussing the poor performance of EVP West End Pty Ltd. However, the applicants did not adduce any evidence which indicated when the first respondent acquired this knowledge, and particularly that the first respondent was aware in May 2004 that representation (b) was misleading and deceptive. The first respondent is also not liable pursuant to s 75B of the Act for this representation. The evidence of the applicants indicates that the first respondent was aware of facts which rendered representation (a) misleading and deceptive. For the reasons discussed in relation to the representations made to the first applicant, the first respondent was aware that EVP Holdings and EVP Recruitment did not have "a solid and successful trading history". The second applicant undertook steps to invest in EVP Sydney in the days following the representations, executing the relevant agreements on 3 June 2004. The second applicant would not have invested in EVP Sydney if he had known that representation (a) was misleading and deceptive. The first respondent is liable for any loss or damage caused by representation (a) made to the second applicant pursuant to ss 75B and 82 of the Act. This conduct included both positive representations by the first respondent and representations implied by the first respondent's silence. For the reasons discussed in relation to the first applicant, the conduct was attributable to EVP Holdings and EVP Recruitment rather than the first respondent personally. Also for the reasons discussed above, conduct (a), (f) and (g) was misleading and deceptive conduct in contravention of s 52 of the Act. The first respondent was aware of the importance of representations (a) and (b) to the second applicant, but nevertheless failed to correct the representations until 24 January 2005. A letter of that date and an attached "EVP Recruitment Pty Ltd Proforma Balance Sheet as at 31 December 2004" to the second applicant disclosed the true financial position of EVP Holdings and EVP Recruitment. As the second applicant admitted, the letter revealed that "neither company was financially stable". After this date the second applicant cannot be said to have acted in reliance on the representation that the ongoing financial position of either EVP Holdings or EVP Recruitment was sound. For the reasons outlined in relation to the first applicant, conduct (e) towards the second applicant was a contravention of s 52 by EVP Holdings and EVP Recruitment. For those reasons also, the first respondent was a party to this contravention. The second applicant was not advised of the second respondent's bankruptcy until 15 September 2004. The first respondent is only liable for loss or damage suffered by the second applicant as a result of the contravention until this date. The conduct in (f) and (g) was directed at the second applicant. The conduct was misleading and deceptive conduct in contravention of s 52 of the Act as it induced in EVP Recruitment's administrator the belief that the altered financial records were accurate records. The second applicant is eligible for compensation in accordance with s 82 for any loss or damage which he suffered by the contravention of s 52 of the Act. After this date the fifth applicant, of whom the third applicant is a director, became the trustee of the Blakiston Trust. The third and fourth applicants in their capacity as trustees invested in the EVP Executive (Brisbane) Pty Ltd ("EVP Executive") joint venture with EVP Recruitment on 5 August 2004. EVP Executive business operated what was previously the executive recruitment business of EVP West End Pty Ltd. Prior to its division into separate executive recruitment and information technology and telecommunications business, EVP West End Pty Ltd was owned by Mr Nick Smith. The representations identified in [28] of these reasons as (a)---(c), (h), (l) were made to the third applicant. Representations (a)---(c), (h) and (l) were misleading or deceptive conduct in contravention of s 52 of the Act for the reasons discussed in relation to the first and second applicants. The third applicant also relied on representations made during telephone conversations with the first respondent on 21 July 2004 and 28 July 2004. For the reasons discussed in relation to the first and second applicants, the relevant representations were made by EVP Holdings and EVP Recruitment rather than by the first respondent in a personal capacity. The first respondent is not liable pursuant to s 75B for the representations made in the emails dated 28 July 2004 and 29 July 2004 from the second respondent to the third applicant. The first respondent is also not liable for the representations made by Mr Smith in his emails to the third applicant dated 3 August 2004 and 4 August 2004. The first respondent was not a party to these communications and there is no evidence that he was aware of the emails or approved of them being sent. The first respondent authored the emails to the third applicant on 29 July 2004 and participated in the relevant telephone conversations with the third applicant. The representations identified in [28] as (a), (b), (h) and (l) were made in these communications. The first respondent was aware of facts which rendered representations (a) and (b) misleading and deceptive. For the reasons discussed in relation to the first and second applicants, the first respondent was aware that EVP Holdings and EVP Recruitment did not have "a solid and successful trading history". Representation (b) to the third applicant was made after the first respondent's letter to Mr Smith of 12 July 2004 which discussed the poor performance of EVP West End Pty Ltd. The letter indicates that by the time the first respondent made representation (b) to the third applicant, he was aware of facts which rendered that representation misleading and deceptive. The third applicant would not have invested in EVP Executive if he had known that representation (a) was misleading and deceptive. The first respondent is liable pursuant to ss 75B and 82 of the Act for loss or damage suffered by the third, fourth and fifth applicants for representations (a) and (b). The applicants did not adduce evidence to show that the first respondent was aware that representation (h), regarding the accuracy of the financial projections provided to the third applicant, was misleading or deceptive. Ms Mashlan said that the first respondent did not request the financial information which would be required to produce a budget for EVP Executive. However, the budget in question was not prepared by the first respondent. Accordingly, the first respondent is not liable pursuant to ss 75B and 82 of the Act for this representation. There is no evidence that the first respondent was aware in July 2004 of facts which made representation (l) misleading and deceptive. The applicants did not prove that the first respondent knew that the third, fourth and fifth applicants would be required to contribute more that $40,000 in working capital or that EVP Recruitment would not provide working capital to EVP Executive as required. The first respondent is not liable pursuant to ss 75B and 82 of the Act for this representation. This conduct included both positive representations by the first respondent and representations implied by silence. For the reasons discussed in relation to the first and second applicants, the conduct was attributable to EVP Holdings and EVP Recruitment rather than the first respondent personally. Further conduct (f) and (g) was misleading and deceptive conduct in contravention of the Act for the reasons discussed in relation to the first and second applicants. The conduct in (f) and (g) was not directed at the third, fourth and fifth applicants. Nevertheless, the conduct was misleading and deceptive in contravention of s 52 of the Act as it induced EVP Recruitment's administrator to believe that the altered financial records were accurate financial records. The third, fourth and fifth applicants are eligible for compensation for any loss or damage which they suffered by conduct the breach of s 52 of the Act; see s 82 of the Act. Representation (b) was misleading and deceptive conduct as it induced these applicants to believe that the financial position of the companies was sound. The evidence indicates that the first respondent was aware of the importance of representation (b) to the third and fourth applicants, but nevertheless failed to correct the representation until 14 December 2004. In a telephone conversation, the first respondent advised the third applicant on that date that "[EVP] Recruitment anticipated a funding shortfall over the Christmas period". After 14 December 2004, the third, fourth and fifth applicants did not act in reliance on the representation that the ongoing financial position of either EVP Holdings or EVP Recruitment was sound. For the reasons outlined in relation to the first and second applicants, conduct (e) towards the third, fourth and fifth applicants was a contravention of s 52 by EVP Holdings and EVP Recruitment. For those reasons also, the first respondent was a party to this contravention. The third, fourth and fifth applicants were advised of the second respondent's bankruptcy on 14 September 2004. The first respondent is only liable for loss or damage suffered by the third, fourth and fifth applicants as a result of the contravention until 14 September 2004. The representations identified in [28] of these reasons as (a), (b), (d), (h), (l) and (m) were made to the sixth applicant. Representations (a), (b), (d), (h), (l) and (m) were misleading or deceptive conduct in contravention of s 52 of the Act for the reasons discussed in relation to the first to fifth applicants. The representations made to the sixth applicant were made by EVP Recruitment and EVP Holdings, rather than the first respondent in a personal capacity. The respondent is not primarily liable for the representations. Any liability on the part of the first respondent for the representations made to the second applicant can only arise under s 75B of the Act. Representations (a), (b), (d), (h), (l) and (m) were made in emails from Mr Smith, documents provided by Mr Smith to the sixth applicant and in an advertisement which directed interested persons to contact the second respondent. There is no evidence to show the first respondent prepared or authorised the documents, advertisement and emails. The representations were also made during a meeting which the first respondent did not attend. No liability on the part of the first respondent arises in relation to these representations under ss 75B and 82 of the Act. The sixth applicant also pleads that misleading or deceptive representations were made in two conversations with the first respondent in September 2004 and during a telephone conversation with the first respondent in mid-November 2004. The sixth applicant did not give any evidence of a conversation with the first respondent in mid-November 2004. The representation identified as (h) was made during a meeting between the sixth applicant, the first respondent, Mr Smith and Mr David Young, a representative of EVP Recruitment, in September 2004. As discussed in relation to the third to fifth applicants, the applicants failed to prove that the first respondent was aware that the representation regarding the accuracy of the financial projections was misleading or deceptive. The first respondent is not liable in relation to this representation. This included both positive representations by the first respondent and representations implied by the first respondent's silence. For the reasons discussed in relation to the first and second applicants, the further conduct was attributable to EVP Holdings and EVP Recruitment rather than the first respondent personally. Representation (b) was misleading and deceptive conduct as it induced the belief that the financial position of the companies was sound. The first respondent was aware of the importance of representation (b) to the sixth applicant, but nevertheless failed to correct the representation. The first respondent is liable pursuant to ss 75B and 82 of the Act for loss or damage suffered by the sixth applicant as a result of representation (b). For the reasons outlined in relation to the other applicants, conduct (e) towards the sixth applicant was a contravention of s 52 by EVP Holdings and EVP Recruitment. For those reasons also, the first respondent was a party to this contravention. The first respondent is only liable for loss or damage suffered by the third, fourth and fifth applicants as a result of the contravention until 24 December 2004. The conduct identified as (f) and (g) was misleading and deceptive conduct for the reasons discussed in relation to the other applicants. Conduct (f) and (g) was not directed at the sixth applicant. Nevertheless, the conduct was misleading and deceptive conduct in contravention of s 52 of the Act as it induced in EVP Recruitment's administrator the belief that the altered financial records were accurate financial records. The first respondent is also liable under ss 75B and 82 for loss or damage which the sixth applicant suffered by conduct the breach of s 52 of the Act. The Court will also adjourn the proceeding to a directions hearing to be held at 9.30 am on 1 May 2009 to deal with the question of programming the further conduct of the proceeding on the quantum of relief and any ancillary issues, including costs. I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | misleading or deceptive conduct where investments in joint venture business representations regarding financial position of companies whether representations misleading or deceptive whether first respondent liable for representations under section 75b of trade practices act 1974 (cth) application for summary judgment relevant considerations where first respondent filed a defence where second respondent failed to take any step in proceeding where respondents did not rely on any evidence whether respondents in default trade practices practice and procedure |
I say that the application is one, in effect, for leave to appeal because the appellants have filed on 18 December 2006, a notice of appeal from the orders and judgment of Federal Magistrate Scarlett. However, the decision of Federal Magistrate Scarlett is an interlocutory decision and accordingly leave is required to appeal. I propose to treat the notice of appeal as, in effect, an application for leave to appeal. Its members have been subjected to arrest and imprisonment. However, the delegate refused the applicant is not the person of adverse interest to the PRC authorities otherwise the applicant would not be able to obtain a passport and depart the country. 4 The female appellant applied for a protection visa, Class XA, which was received by the Department on 1 November 2005 (see appeal book before the Federal Magistrate's Court at pages 1 to 26). An application was also made, received on the same date, on behalf of the second appellant on the footing of an application of a family member. On 16 November 2005, the Minister's delegate made a decision refusing the application on behalf of both applicants. On 15 December 2005, the applicants filed an application for review before the Refugee Review Tribunal. On 3 January 2006, the Tribunal wrote to the appellants, advising that a hearing would take place on Wednesday, 8 February 2006 and thus an opportunity was provided to the appellants and particularly the female applicant/appellant, to demonstrate before the Tribunal that she held a well-founded fear of persecution for a Convention reason. 5 A hearing took place on that date and the female appellant was present for the hearing, accompanied by the male appellant. At the hearing the appellants were assisted by an interpreter, who spoke the particular dialect of the appellants and was able to assist the appellants in understanding the content of the questions being put to them. On 15 February 2006, the Tribunal reached a decision in relation to the conduct of the review and on 7 March 2006 the Tribunal handed down its decision in the review application. The applicants filed an application for review of the decision of the Tribunal on 3 April 2006. That application was first mentioned before Lloyd-Jones FM on 2 May 2006 and then adjourned until 31 August 2006 for directions. The matter was further adjourned on 14 December 2006. Arrangements were made to transfer the particular matter to the docket of Federal Magistrate Scarlett and on 12 September 2006, the Federal Magistrate's Court wrote to the applicant at her address, advising her that the matter would be listed for directions before Federal Magistrate Scarlett on Monday, 25 September 2006. 6 The applicant did not appear on that date. Accordingly, as there was no appearance by or on behalf of the applicants, Scarlett FM dismissed the application for non-appearance under the provisions of rule 13.03A(c) of the Federal Magistrate's Court rules. The applicant then filed a notice of motion on 16 October 2006 seeking to set aside the judgment made on 25 September 2006 made in her absence. That notice of motion was listed before Scarlett FM at 11.30 am on 23 October 2006. The applicant did not appear when the matter was listed or called at 11.30 am. Scarlett FM held the matter in the list and called the matter again at 12 noon. There was no appearance by or on behalf of the applicant. The notice of motion was dismissed for non-appearance, again under the provisions of the rules of the Federal Magistrate's Court. 7 The applicant then filed a notice of motion on 10 November 2006, seeking to set aside the orders of Scarlett FM of 23 October 2006. The applicant filed an affidavit in support of that application, contending that the applicant could not find the court on the hearing date on 23 October 2006. The application to set aside the orders of 23 October 2006 was listed for hearing on the morning of Monday, 20 November 2006. The applicant did appear on that occasion. The applicant was unrepresented but assisted by an interpreter, who was not able to translate in the particular dialect of the applicants and thus the application was adjourned until 11 am on Friday, 24 November so that an interpreter with the relevant skills could be available. 8 The applicant attended the court on 24 November 2006 and gave evidence with the assistance of the interpreter. On 27 November 2006, Scarlett FM refused to reinstate the applicants' application for judicial review. His Honour found that the applicants did not have a valid excuse for not attending the court on the two prior occasions and that it would be futile to reinstate the application as it had no reasonable prospects of success. From that decision, the applicants filed their notice of appeal. As I have indicated, it is clear from the consideration of ss 24(1)(d) of the Federal Court of Australia Act 1976 and ss 24(1A) and 25 (2)(a) that leave is required to appeal from the decision of Scarlett FM. I also note the operation of order 52 of the Federal Court Rules and particularly, of course, order 52, rule 5 which governs appeals from interlocutory judgments other than interlocutory judgments of the Federal Court. 9 It is also well established and clear that in making an application for leave to appeal from such a judgment, the applicants must establish that the decision of Scarlett FM is 'attended by sufficient doubt to warrant its being reconsidered by the Full Court. ' and must also demonstrate that 'substantial injustice' would result if leave were refused, supposing the decision to be wrong. The orthodoxy of those principles is established in Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 ( 'Décor v Dart' ) and is confirmed in Ogawa v University of Melbourne (No. 2) (2004) FCA 1275. Of course, those principles are consistent with well established principles derived from Hall v Nominal Defendant [1966] HCA 36 ; (1966) 117 CLR 423 and also other authorities of the Federal Court of Australia. In examining the decision of Scarlett FM and the analytical exposed reasons published by his Honour in support of the orders, it is clear that his Honour turned his mind in considerable detail to the chronology of events, the principles to be applied in considering the application before him and the underlying merits of the contentions advanced by the appellant in relation to the proceedings before the Tribunal and the contended jurisdictional error on the part of the Tribunal. 10 His Honour looked at the circumstances that led the appellants to miss the hearing and considered the merits of the substantive application. His Honour observed that he would turn his mind to the issue of where there are no prospects of success in the substantive application , reinstatement would be futile and then weighed those considerations in the balance in making the order in question. The application for leave to appeal is not supported by a proper application nor any affidavit material in support of the application which would go to establishing the two essential matters prescribed by Decor v Dart . The only material before the court on the question is the contention recited in the proposed notice of appeal. In supporting the merits, if I can put it that way, of an argument of error of law on the part of Scarlett FM, the female appellant contended that before the Refugee Review Tribunal she could not understand what the Tribunal was talking about or perhaps understand more broadly the proceedings. 11 The appellant also says that she believes she would suffer persecution should she return to the People's Republic of China. Neither of these matters constitute demonstrated error on the part of Scarlett FM and accordingly there is no basis for concluding that his Honour's decision should be reconsidered by the Full Court. Moreover, having regard to his Honour's exposed set of reasons, there is no basis for concluding that substantial injustice would arise should leave not be given. The second limb, in any event, of course, is predicated upon the applicant/proposed appellants, demonstrating that the first limb is made out. Accordingly, the application must necessarily be dismissed and the notice of appeal must necessarily be dismissed. 12 In addition to a consideration of the substance of the application this morning, an application has been made for a direction that the title of the first respondent be changed to "Minister for Immigration and Citizenship" and I make that direction. I make an order that leave to appeal from the decision of Scarlett FM should be refused. I make an order striking out the notice of appeal filed on 18 December 2006 and I make a further order that the appellants pay the first respondent's costs of and incidental to the application. 13 I further order that the quantum of the costs payable by the applicant/appellants to the first respondent be fixed in the sum of $650.00. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application for leave to appeal from a decision of a federal magistrate refusing an application to reinstate an application for judicial review migration |
Some resolutions were passed and some resolutions were not passed. Two members of the Company have challenged the validity of the resolutions on the basis of their claim that the Chairman of the meeting, in whose favour proxies had been given by numerous members, did not cast votes in accordance with the directions of the members contained in the proxy forms appointing him as their proxy to vote at the EGM on their behalf. The first applicant, Mr Richard Campbell, holds shares in the Company personally and through a superannuation fund of which he is one of the trustees. He was appointed a director of the Company on 29 July 2008 and remained a director until he was removed by one of the resolutions passed at the EGM on 2 April 2009. Mr Campbell challenges the validity of the resolution removing him as a director as well as challenging other resolutions. There is now no second applicant in the proceeding. The third applicant, Mr Norman Seckold, holds a significant parcel of shares in the Company personally and through the fourth applicant, Altinova Nominees Pty Ltd. A resolution to elect Mr Seckold as a director of the Company was one of the resolutions put to the EGM on 2 April 2009 but it was not passed. The removal of Duncan Campbell Pursell as Director. The removal of Malcolm Lindsay Jansen as Director. Removal of all other Directors who have been appointed by Directors and have not been re-elected by Members. The appointment of Norman Alfred Seckold as a Director. The appointment of Peter James Nightingale as a Director. The appointment of Melanie Jaye Leydin as a Director. The confirmation of the appointment of Richard Malcolm Campbell as a Director. An Explanatory Statement and Proxy Form were attached to the notice sent to each member. That Mr Richard Malcolm Campbell be and is by this resolution removed from office as a director of this Company. That with effect from the passing of this resolution and in accordance with section 136 of the Corporations Act 2001 , the regulations contained in the printed document produced to this general meeting and signed by the Chairman for identification purposes are hereby approved and adopted as the constitution of the Company in substitution for and to the exclusion of the existing constitution of the Company. That for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to allot and issue up to 500,000,000 shares on the terms and conditions set out in the Explanatory Statement. That Mr Duncan Campbell Pursell be and is by this resolution removed from office as a director of this Company. That Mr Malcolm Lindsay Jansen be and is by this resolution removed from office as a director of this Company. That Mr Derek Alan Foster be and is by this resolution removed from office as a director of this Company. That Prof Kenneth David Collerson be and is by this resolution removed from office as a director of this Company. That Mr Norman Alfred Seckold be elected as a director of this Company. That Mr Peter James Nightingale be elected as a director of this Company. That Ms Melanie Jaye Leydin be elected as a director of this Company. That Mr Richard Malcolm Campbell, having been appointed by the Board as an additional Director during the year, and retiring as a director at the annual general meeting in accordance with the constitution of the Company, be elected as a director of this Company. A shareholder entitled to attend and vote is entitled to appoint not more than two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified number of shares or a specified proportion of the shareholder's voting rights. If the shareholder appoints two proxies and the appointment does not specify this number or proportion, each proxy may exercise half of the votes. A proxy need not be a shareholder of the Company. A proxy form is attached. If required it should be completed, signed and returned to the Company's registered office (Level 20, 114 William Street, Melbourne) or Computershare Investor Services Pty Ltd, Yarra Falls (452 Johnson Street, Abbotsford) or faxed to +61 3 9473 2555 in accordance with the instructions set out in the proxy form so as to be received by not later than 11am (AEDST) on 31 March 2009 . It consisted of two pages. There was an issue between the parties as to whether the proxy form, strictly so-called, comprised both pages (as the Company submitted) or only the second page (as the applicants submitted). Having regard to the conclusion which I have reached on the principal issue in the proceeding, nothing turns on whether the proxy form executed by the members of the company and returned to Computershare Investor Services Pty Limited ("Computershare") (which maintained the Company's share register) comprised both pages or only the second page. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item. In that letter: shareholders were asked to reject the proposal that the entire present board, with the exception of Mr Campbell, be removed and that the board be replaced by nominees of the group of shareholders who requested the meeting; it was recommended that shareholders remove Mr Campbell as a director; Mr Pursell said he considered that shareholders should vote to retain the balance of existing Board members. The Company's share register was maintained by Computershare in accordance with s 174 of the Act. Computershare was also responsible for the ultimate receipt, collation and tallying of the proxy forms delivered by members to the Company. Prior to the commencement of the EGM Computershare had prepared electronically what has been called a "live tally" of the votes represented in the proxy forms delivered by members. This included a tally of the votes represented in the proxy forms which were referred to by Computershare as "open-useable" proxies, that is to say proxy forms where no direction had been given by the member submitting the proxy to the Chairman as to whether the Chairman should vote for or against resolutions or abstain from voting on resolutions. These proxy forms were also referred to in the course of the hearing as "undirected proxies". Prior to the commencement of the EGM on 2 April 2009 Mr Campbell had access to Computershare's live tally of the votes represented in the proxy forms which were "open-useable" proxies. They were required to revoke their appointment of a proxy in order to attend the EGM as a member. As a result the open-useable proxies available to the Chairman and other nominated persons were reduced. The number of open-useable proxies available to the Chairman at the time the polls were taken also included 108,000 open-useable proxies that had not been collected by any nominated persons resulting from the non-attendance at the EGM and therefore, "or failed", that is, were given to the Chairman (within the meaning of that expression in "STEP 1" of the proxy form). At the commencement of the meeting Mr Duncan Pursell announced that he was the Chairman of the Meeting and that there would be a poll in relation to each of the resolutions. (Presumably, although there was no evidence Mr Pursell was Chairman because, in accordance with cl 38.1 of the Company's Constitution, Mr Pursell had been nominated as such Chairman). The Chairman then put each of the resolutions to a poll. After the meeting concluded the Company formally announced in a letter to the Australian Securities Exchange ("ASX") its tally of the votes cast at the meeting in relation to each resolution and advised as to whether or not each motion had been passed. This result would have come about as a result of the votes which are set out in Schedule B to these reasons. The proxy must vote or abstain on a poll or show of hands in accordance with any instructions on the appointment. The Company denied that the Chairman committed the breaches claimed by the applicants. As to the allegation of a breach of s 250A(4)(c) of the Act, the Company contended that the operation of that section is confined by its terms to proxies which specify the way in which the proxy is to vote on a particular resolution and has no application to undirected proxies. In relation to the allegation of a breach of a common law duty by the Chairman, the Company admitted that the proxy holder owed a duty at common law to the proxy-giver (but to no other person) to act in accordance with instructions of the proxy given but contended that the instructions were to vote as the proxy saw fit. The proxy forms are, in my opinion, to be considered and construed as commercial documents. They are, in substance, directions or appointments by a principal to an agent authorising the agent to act on behalf of the principal in a particular way. In such circumstances there is a duty upon the agent (the proxy) to abide by the direction or instruction given by the principal (the shareholder): Whitlam v Australian Securities and Investments Commission [2003] NSWCA 183 ; (2003) 57 NSWLR 559 at 600-601 at par [152]. The Company filed four affidavits sworn by four shareholders in the Company who had completed and lodged proxy forms in which they had appointed the Chairman of the meeting as their proxy but had not otherwise marked any of the "For", "Against" or "Abstain" boxes on the form. Those shareholders said that they did not provide any directions as to how the proxy was to vote and that they appointed the proxy to vote as he saw fit. They said they appointed the Chairman as their proxy expecting that Mr Pursell, Managing Director, was to be Chairman and that they expected at the time they completed the proxies that the Chairman would vote in favour of resolution 1 (the removal of Mr Campbell as a director), against resolutions 4, 5, 6 and 7 (the removal of the current Board) and against resolutions 8, 9, 10 and 11 (the appointment of the alternate board). The shareholders said that at no point of time did they expect, or want, their proxy to vote in favour of all resolutions put forward at the EGM. The secretary of the Company, Mr John Lawrence Neill, said in an affidavit that between 14 and 16 April 2009 he had received 16 letters from shareholders who provided an "open-useable proxy" (that is to say, undirected proxies) to the Chairman and who were concerned that the applicants were submitting that the votes cast as a consequence of these open-useable proxies should be counted as affirmative votes for each of the eleven resolutions and not as cast by the Chairman of the meeting. This evidence (the four affidavits of the shareholders and Mr Neill's evidence in his affidavit) is not admissible in relation to the proper construction of the proxy forms sent in by the shareholders and the proper construction of the direction given to the proxy in these proxy forms. It is well settled, in particular, by recent High Court authority, that the meaning of commercial contracts in documents and their proper construction is to be determined objectively, although regard may be had to all the surrounding circumstances known to the relevant parties at the time the document was created and that the subjective belief or understanding of the parties in relation to the document is not relevant or admissible: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 , 461-462; Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 ; (2004) 219 CLR 165 at 179; Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5 ; (2002) 186 ALR 289 at 292-293; Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144 ; (2006) 156 FCR 1 at 12-13 per Weinberg J, at 22 per Kenny J, at 50 per Lander J. The Company did not submit otherwise on the issue of the proper construction of the proxy forms. Rather, it submitted that evidence as to what the members who submitted proxy forms intended by the manner in which they filled out the proxy forms was relevant to issues which might arise in relation to the form of relief the Court might grant if the Court was disposed to find in the applicants' favour on the issue of the proper construction of the proxy forms. I deferred consideration of the admissibility of this evidence on the basis submitted by the Company until it became necessary to consider the relief to be granted to the applicants. Having regard to the view I have formed, that the applicants' claim fails on the principal issue whether the undirected proxies constituted a direction to the Chairman to vote in favour of each of the eleven resolutions, it is not necessary to consider the nature of the relief to be granted to the applicants. In those circumstances, it became unnecessary to determine the admissibility of the evidence contained in the four affidavits and the relevant part of Mr Neill's affidavit. As I noted earlier (par [6]) above) there was an issue between the parties as to whether the proxy forms which were executed by the shareholders were constituted by one or two pages. The proxy forms sent out to shareholders consisted of two pages. The first page was addressed to the shareholders and contained instructions as to how the proxy form was to be signed. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item. The Company submitted that the proxy form to be interpreted and construed was the two page document whereas the applicants submitted that only the second page was the relevant document to construe. The applicants submitted that the "appointment" of the proxy was constituted by the second page of the proxy form. I consider that the first page of the proxy form was no more than an explanation to members as to the proxy form and the manner in which it was to be completed. The applicants submitted that the Chairman's intention stated at the foot of "STEP 2" in the proxy form amounted to an indication as to the manner in which the Chairman would vote on each item of business and that once the proxy form was executed by the proxy-giver, it became the proxy-giver's document indicating the manner in which the proxy was directed. It followed, submitted the applicants, that the Chairman was expressly prohibited by cl 50.6 of the Constitution from voting the undirected proxies other than in accordance with that indication and direction. The applicants submitted further that cl 50.6 placed a positive obligation on the Chairman to vote the undirected proxies in such a way. The applicants submitted that the words in the section of the undirected proxies marked "STEP 1" did not amount to an indication or instruction to the Chairman to vote as the Chairman saw fit. It was submitted that those words must be read together with the Chairman's intention and so read together, the reference to "the following directions" in "STEP 1" must be a reference to all of "STEP 2" of the proxy form which included the indication of the Chairman's intention. I do not accept that the statement of the intention of the Chairman on the proxy form was nonsensical, that is, that it made no sense. It does give rise to an arguable inconsistency within the four corners of the proxy form which is to be resolved by attempting to reconcile the arguable inconsistent provisions on the proxy form by reference to the proper construction of the proxy form, determined objectively. One or other of resolutions 1 and 11 may have been otiose or in substance a duplication but that was brought about by the Company's secretary, Mr Neill, adding the resolutions numbered 1, 2 and 3 to the list of resolutions which the 124 shareholders had requested be put before the EGM. Resolutions 1 and 11 were not contradictory; rather they required consideration of the same substantive issue, whether Mr Campbell should be a director of the Company to be addressed twice. The letter of 27 February 2009 signed by Mr Pursell as Managing Director, not in his capacity as Chairman of the Company or Chairman (or proposed Chairman) of the EGM asked shareholders to reject the proposal to remove the then "entire present Board with the exception of Mr Richard Campbell" and to replace the Board with nominees of the group of shareholders who had requested the calling of the EGM. The letter concluded with a recommendation that shareholders remove Mr Campbell as a Director of the Company and retain the balance of the Board. Undirected proxies voted by the Chairman of the Meeting in favour of resolutions (or items) 4 to 11 would be inconsistent with, or not in accordance with the request and recommendation to shareholders contained in the letter. However the letter, albeit part of the surrounding circumstances leading up to, and resulting in, the completion of the proxy forms by members and their delivery to the Company or to Computershare, does not dictate or require that the intention of the Chairman noted in "STEP 2" of the proxy form be ignored or disregarded. It remains part of the four corners of the proxy form to be construed. The sample proxy form posted on the Company's website is to be regarded similarly. It does not have the effect that the intention of the Chairman noted in "STEP 2" of the proxy form is to be ignored or disregarded. The Company submitted that upon the proper construction of the proxy form alone, one was led to the conclusion that an appointment which did not contain specific directions in "STEP 2" by marking the boxes in "STEP 2" "For", "Against" and "Abstain" in respect of the eleven items of business gave rise to an appointment in favour of the proxy holder entitling the proxy to act generally at the meeting and to vote as the proxy saw fit. The Company submitted that the words appearing at the foot of "STEP 2", "The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business", did not form part of the direction given by the proxy-giver to the proxy holder upon the proper construction of the proxy form, but merely conveyed a statement of intention on the part of the Chairman of the Meeting. I consider that the Company's construction of the proxy form is objectively the correct construction. By marking the box in "STEP 1" appointing the Chairman of the Meeting the proxy, or by not completing that box or the box next to it for the appointment of another person to be the proxy and by not completing or marking any of the boxes in "STEP 2" marked "For", "Against" and "Abstain", the member was giving a direction to the Chairman of the Meeting to vote as the proxy, that is as the Chairman, saw fit. By adopting that course the member was not giving the Chairman a direction to vote in favour of each item of business. When one turns to "STEP 2" and the words at the bottom of "STEP 2", "The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business", I consider that this was no more than an indication, albeit, at that time, a present indication, of the manner in which the Chairman, whoever that was, intended to vote. I do not consider that an indication of the manner in which the Chairman intended to vote undirected proxies was thereby converted into a "direction" by the shareholder as to how the Chairman should vote. The "following directions" is a reference to the boxes under the headings "For", "Against" and "Abstain" headings in "STEP 2". To be a direction, what is said to be the direction must emanate from the proxy-giver or member. If the member did not mark any of the boxes in the three columns under the "For", "Against" and "Abstain" headings, the consequence was that no direction had been given by the member. The words at the foot of the section "STEP 2", "The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business" is not a statement that emanates from the member; rather it is an indication of the intention of the Chairman of the Meeting. So understood, it is not properly described as or referred to as a "following direction". It follows, therefore, that consistently with cl 50.6 of the Company's Constitution the Chairman, as proxy, did not vote on the poll otherwise than in accordance with "any instructions" on his appointment. Further, consistently with s 250A(4)(c) of the Act, the Chairman has not voted the undirected proxies contrary to the way the Chairman was appointed to vote in the proxy form. It also follows that the Chairman has not acted in breach of such common law duty as he owed to the members or proxy-givers consistently with the appointment contained in the proxy forms. It is therefore unnecessary to consider the submissions made by the Company as to why the relief sought by the applicants was not available to them if I had found that there was a breach of cl 50.6 of the Constitution , s 250A(4)(c) of the Act or a breach of the common law duty relied on by the applicants. The application in the originating process should be dismissed and the applicants should pay the respondent's costs of and incidental to the application. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | extraordinary general meeting appointment of proxy whether chairman in breach of direction given by proxy-givers validity of resolutions s 250a(4)(c) of the corporations act 2001 (cth) proxy form and contract construction whether chairman's intention construed as direction company constitution common law duty of agency. corporations |
His Honour decided the application for an order nisi which had been remitted from the High Court of Australia to this court on the papers. The lawyer for the Minister will not be giving any information to the court. Before the court makes a decision you may make such written submissions in the English language as you wish on the question of whether the court should make an order nisi . His Honour considered the material in the outline of submissions to which he referred (see: [2005] FCA 1655 at [6] ). The applicant sought an adjournment of this hearing for three weeks which I refused for reasons which I delivered earlier today. 3 The question as to whether or not leave should be granted to appeal from an interlocutory decision requires the court to have regard to well-established principles. These are that an applicant for leave must establish that the decision in question is attended with sufficient doubt to warrant the grant of leave and must also show that substantial injustice will result from a refusal of leave to appeal: Bienstein v Bienstein [2003] HCA 7 ; (2003) 195 ALR 225 at 231 [29] . 4 The applicant has been involved in a challenge to the decision of the Refugee Review Tribunal ('the Tribunal') affirming the decision of the delegate of the first respondent ('the Minister') since the Tribunal's decision was given on 12 March 1998. The delegate had made a decision refusing to grant the applicant a protection visa on 26 February 1996. The applicant had joined the Muin/Le class action in the High Court of Australia: Muin v Refugee Review Tribunal ; Lie v Refugee Review Tribunal [2002] HCA 30 ; (2002) 190 ALR 601. The issues which the applicant sought to raise in his outline of submissions, which Sackville J considered, involve, in effect, purely a merits review of the decision of the Tribunal in not accepting his evidence or being satisfied that he had established a claim to a protection visa. 5 No basis on which the court could interfere with the decision of the Tribunal appeared in the material in the outline of submissions when I considered it and I consider that no error in the approach or reasons of Sackville J has been shown. For that reason the decision of Sackville J to refuse to issue an order nisi is not attended with sufficient doubt to warrant the grant of leave to appeal. Moreover, I am not satisfied that the applicant will suffer any injustice if I were to refuse his application for leave to appeal. For these reasons I refuse the application for leave to appeal. 6 The Minister has applied for an order for costs fixed in the sum of $700. The applicant has opposed the making of this order on the basis that he was unable to work because of the conditions imposed on his permission to be in Australia and was indigent. He said that the court should not make the order it would otherwise make in the ordinary course of litigation against a person whose case has wholly failed. Notwithstanding the matters put to me by the applicant, I see no reason why, in justice, the applicant should not be ordered to pay the costs sought by the Minister. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | no question of principle migration law |
In the application she gave her "nominated occupation" as "tradesperson and related worker" and said she had obtained an Advanced Diploma of Information Technology (E-Business Development) from AlphaBeta Colleges. She paid the required application fee of $1,935. 880.222 The applicant has the qualifying score when assessed in relation to the visa under Subdivision B of Division 3 of Part 2 of the Act. By reg 4(1) (the 2005 transitional provision) this amendment applied to a visa application made on or after 1 July 2005. 4 The appellant had supplied a positive skills assessment to meet the requirement in clause 880.221. (2) If the assessment mentioned in subclause (1) is made on the basis of a qualification obtained in Australia while the applicant was the holder of a student visa, the qualification was obtained as a result of full time study of a registered course. 5 The amendments in [4] were made by the Migration Amendment Regulations 2006 (No 4) (Cth) (the 2006 Regulations). 6 The course upon which the appellant relied in her visa application was not a "registered course" for the purposes of clause 880.230(2). 7 The application was refused by the Minister's delegate on 14 February 2007. An application for review by the Migration Review Tribunal was dismissed on the ground that clause 880.230(2) applied and was not satisfied. Three grounds were propounded. The first was that either clause 880.230(2) or reg 4(3) of the 2006 Regulations (see [5]) was beyond power because it was ambiguous in its relationship with reg 4 of the 2005 Regulations (see [3]). The second was that those provisions were laws "with respect to the acquisition of property" which were not "on just terms", contrary to s 51(xxxi) of the Constitution . The third was that they were not authorised by the regulation making powers in the Migration Act 1958 (Cth) (the Act) and were entirely disproportionate to the purposes of the Act. 10 The Magistrate rejected the claim, based on the propositions at [9], that clause 880.230(2) was invalid "because the ambiguity of having a regulatory provision that applies before the coming into force of another provision upon which it depends cannot have been intended by Parliament". The drafting of the 2006 transitional provision must be understood to rely upon two assumptions based upon the legislative history. The first is that the text of cl 880.230 which was modified was the text inserted by the 2005 amendment. The second is that the 2005 text was qualified in its operation by the 2005 transitional provision. On these assumptions, the legislative change made by the 2006 amendments was a change to the effect of the 2005 amendments in their application according to their transitional provision. The 2006 transitional provision should, therefore, be readily seen to have had the intention that the additional requirement of new cl 880.230(2) should apply to all un-finalised visa applications made after 1 July 2005. 33. Since the provision which was amended carried with it a limited operation in respect of un-finalised applications, it was unnecessary to repeat this limitation in the 2006 transitional provision, and it was sufficient to indicate, in effect, that the 2006 amendment would apply to such applications as were subject to cl 880.230 (renumbered as cl 880.230(1)) and were un-finalised as at 1 July 2006. There was therefore no defect in the drafting of the 2006 transitional provision, whether described as an ambiguity, inconsistency, impossibility, lacuna, or otherwise. 12 His Honour rejected the third ground and upheld the assailed provisions under the power in s 31(3) of the Act to "prescribe criteria for a visa or visas of a particular class". He said he could find nothing in the Act suggesting an intention to preclude a change to the criteria that are to be applied when deciding an application made before the change. 15 The absurdity is said to result in invalidity because no reasonable person could have devised the 2006 transitional provision; it is a fantastic and capricious law. 16 The first three steps at [14] are not in dispute. The conclusion in the last step is, and in my view does not follow from those that precede it. Subclause (2) applies only if the assessment mentioned in subclause (1) is carried out and has a particular character. It thus has no operation if subclause (1) does not apply. The 2006 transitional provision does not purport to give subclause (2) any operation beyond the class of visa applications covered by (the existing) subclause (1), namely those made on or after 1 July 2005. A visa application lodged before 1 July 2005 remains unaffected by any part of clause 880.230. 17 This construction of the provisions accords with the ordinary meaning of the words and produces a sensible result. It is thus to be preferred to that propounded by the appellant, which would produce what she describes as an absurdity, namely that subclause (2) would purport to apply in some cases where it has no work to do for want of any assessment having been required by subclause (1). See, for example, Public Transport Commission (NSW) v J Murray-Moore (NSW) Pty Ltd [1975] HCA 28 ; (1975) 132 CLR 336 at 350 and Widgee Shire Council v Bonney [1907] HCA 11 ; (1907) 4 CLR 977 at 983. 18 The same result may be arrived at by a slightly different approach. When clause 880.230 was amended in 2006, the change was effected not by repealing and re-enacting the former clause, but by renumbering it as subclause (1) and qualifying it by the insertion of subclause (2). The natural understanding of that process is that the qualification does not purport to apply beyond the scope of that which it qualifies. Thus subclause (2) would not apply to any visa application not already caught by the original clause. Even without the aid of the process by which the amendment was made, the same approach applies to the construction of the amended version of clause 880.230. 19 Even if the appellant's construction were correct, the absurdity asserted would not in my view result in invalidity. The application of subclause (2) to cases where it had no work to do could not affect the outcome of any visa application, and accordingly there is no absurd result that can be pointed to as a basis for arguing that the transitional provision is "merely fantastic and capricious ..., such as reasonable men could not make in good faith" or "capricious and irrational, such that no reasonable person could ever have devised it". 20 Of course the appellant's case is not within the class she labels absurd. Her application was lodged after 1 July 2005 and was thus caught by clause 880.230 from the outset. 21 The appellant raised an alternative attack on the 2006 transitional provision that was not put to the Magistrate. This was that it was invalid because its application to cases clearly within its scope (applications lodged between 1 July 2005 and 1 July 2006) could lead to arbitrary and unjust results. One is assigned to an efficient assessor and is finalised before 1 July 2006. The other goes to a less efficient assessor and is finalised after that date. (b) An application is processed and refused prior to 1 July 2006 on the basis of an erroneous interpretation of some other criterion. An application for review is not heard before that date, with the result that the Tribunal must reject the application based on the amendment, even though it finds that the application should have been approved by the primary decision maker. (c) A dishonest decision maker puts an application aside and finalises it after the amendment comes into effect. 22 In this connection the appellant relied on the obiter observations of Gyles J in Li v Minister for Immigration and Multicultural Affairs [1999] FCA 1147 ; (1999) 94 FCR 219 ( Li ). There in question was a regulation deeming documents dispatched in a particular way to have been received at a particular time. The result is not simply the possibility of some illogical or strange result depending upon the circumstances. It is the certainty of an absurd result if the notification is posted on the seventh day, as the regulation expressly contemplates. The inevitable result of that state of facts is that the applicant will simply not receive the prescribed number of days in which to make an application for review as required by s 347(1) and reg 4.10. Thus, another way of analysing the matter is to say that the delegated legislation is inconsistent with the legislation, and in particular with s 347(1). ... I cannot accept that in the present context Parliament would intend that delegated legislation may validly contemplate the certainty that the Minister may correctly follow its provisions, yet the applicant will not receive the benefit of the prescribed statutory period of notice. 23 Gyles J's obiter observations were approved by two members of the Full Court in Minister for Immigration and Multicultural Affairs v Singh [2000] FCA 377 ; (2000) 98 FCR 77 at [49] , where their Honours noted that reg 5.03 could produce the absurd result that the document, if sent on the seventh day after its date, was to be taken to have been received before that could possibly be the case. 24 The Minister accepts that the differential results that could arise between two visa applicants whose positions are otherwise the same depending on the luck of the draw is unfortunate. However, he says that this is the inevitable result where the regulation maker wishes promptly to close a loophole in the existing criteria, and that scope for debate as to the consequences of such a measure does not mean that it lacks a rational foundation. Support for this view, which I accept, is provided by the distinction drawn by Starke J in City of Brunswick v Stewart [1941] HCA 7 ; (1941) 65 CLR 88 at 98 - "it is one thing to say that the provision is drastic, and another to affirm that it is so capricious and oppressive that no reasonable mind can justify it". 25 The present case is quite unlike Austral Fisheries [1993] FCA 45 ; 40 FCR 381 , where the formula for the allocation of quotas was based on a statistical fallacy which operated to produce such a capricious and irrational result that no reasonable person could have devised it. It is also unlike Li [1999] FCA 1147 ; 94 FCR 219 , where the delegated legislation was inconsistent with the Act itself. That is not the case here. Indeed, little assistance is to be derived from other cases on capriciousness and irrationality. Each depends on its own facts. For the reasons I have sought to express, I do not regard the result in the present case as having either of those characteristics. That is what clause 880.230(2) purports to do. The Magistrate said the ultra vires argument required the appellant to locate an intent in the Act that its regulation making powers (s 31(3) and s 504(1)) cannot be used, after an application has been made, to effect a change in visa criteria applicable at the date of decision. His Honour found no such intent. On the appeal the appellant's counsel relied on s 93 of the Act as disclosing the relevant intent. That section had not been drawn to the Magistrate's attention. Section 93 appears in Subdivision B of Division 3 of Part 2 dealing with the "points system". 27 Section 65 of the Act provides that after considering a valid visa application the Minister, if satisfied that the criteria for the visa prescribed by the Act or the regulations have been satisfied, must grant the visa. If not so satisfied, the Minister is required to refuse the visa. The criteria there referred to are those in force at the time the Minister makes the decision. As counsel for the Minister pointed out, it is common for amendments to be made to the regulations, and for grandfathering to occur, so that in respect of a particular application a decision maker may be required to apply criteria that were in force at some earlier time. That is done by means of transitional provisions, and does not change the basic proposition in s 65 that the decision maker must apply the criteria in force at the time of decision. 28 As indicated earlier, the power to prescribe criteria is in s 31. In s 93 Parliament has decided that a particular kind of assessment is to be made according to qualifications that are prescribed at the time the assessment is made. That does not, in my view, suggest anything in relation to the power of the regulation maker to say whether a particular set of criteria are to be applied to a particular applicant in either the form they took at the time of application or the time of decision. There is in truth no dichotomy. There is the time of decision model (eg s 93) and the time of application model, which the appellant says is inherent in the Act. But there is also the middle ground where it is left to the regulation maker to prescribe whether, in the case of an amendment to criteria, the old or the new ones are to apply. The fact that in a provision such as s 93 Parliament has specified that in a particular situation the time of decision criteria are to be applied, is quite consistent with the default position being that the regulation maker can specify the applicable time on a case by case basis. 29 As appears from ss 92 and 93 read together, the application of s 93 to any visa or class of visa application depends on the way in which the criteria in the regulations have been framed (s 92). That, in my view, is not a firm basis for an inference as to the scope of the regulation making power itself. 30 In my view s 93 does not give rise to the implication the appellant must establish, namely that the power in s 31(3) to prescribe criteria does not enable the alteration, between the time an application is lodged and the time of decision, of criteria to be established at the time of decision. 31 The attack on the validity of clause 880.230(2) and the 2006 transition provision fails. The Magistrate correctly so decided. She paid the fee voluntarily. There was no compulsory acquisition, expropriation or requisition. See Health Insurance Commission v Peverill [1994] HCA 8 ; (1994) 179 CLR 226 at 235, 299 ( Peverill ) and Smith v ANL Ltd [2000] HCA 58 ; (2000) 204 CLR 493 at [128] per Hayne J, with whom McHugh J agreed. 33 The appellant claims that the making of clause 880.230(2) and the 2006 transitional provision changed the character of the fee. It took away any chance of the appellant obtaining the visa, and the value of her access to the visa determination process, for which she had paid the fee, was entirely removed. The amendment, combined with the transitional provision and s 46(1)(ba), turned the payment of the fee into an ex post facto expropriation. Those provisions became laws "with respect to" the acquisition of property. Section 46(1) prescribes the requirements for a "valid visa" for the purposes of other provisions such as s 65. See [27]. One such requirement (par (ba)) is that any visa application charge required by the regulations to be paid at the time of application has been paid. The appellant relied on Mutual Pools and Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 (Mutual Pools ) at 188 as authority that a law can have more than one character. She claimed that there was no reason why a law cannot have different characters in different circumstances. It was said that when the Commonwealth obtains a fee for the provision of a benefit, and later legislation takes away the value of that benefit (in the sense of any prospect of obtaining it), the amount paid is acquired by the Commonwealth other than on just terms. 34 The central question is whether there has been an acquisition of property belonging to the appellant. That arises for decision before one gets to the question canvassed in cases such as Mutual Pools 179 CLR 155 , which is whether the law has the constitutional character of a law with respect to the acquisition of property. 35 In order for the voluntarily paid fee to become an expropriated asset, the challenged provisions must have defeated some right that was acquired by the appellant when she entered into the transaction constituted by the visa application accompanied by the fee. What she thereby obtained was the right to have her application considered and determined according to law. That right is enforceable by public law remedies such as mandamus. It is not a right to a particular outcome. The right to have an application determined according to law is always subject to the power of Parliament and its delegates to change the law. Accordingly there is no right to have an application considered against criteria that exist at the time the application is made. In Peverill 179 CLR at 261, McHugh J quoted with approval the observation of Pitney J in New York Central RR Co v White (1917) 243 US 188 at 198 that "No person has a vested interest in any rule of law entitling him to insist that it shall remain unchanged for his benefit". 36 The change that occurred as a result of the impugned provisions, although it affected her chances of success, was not a change which detracted from any rights the appellant obtained on the making of her valid application. 37 The Magistrate correctly rejected the contention that there had been an acquisition of property. 38 In the event that his submission on s 51(xxxi) failed, the Minister sought to rely on s 3B of the Act. That section provides that if the Act results in an acquisition of property and a provision of the Act would not be valid in the absence of compensation, compensation is payable. In view of my conclusion that there has been no acquisition of property here, it is not necessary to deal with this submission. I observe however that there appears to me to be considerable force in the appellant's submission that s 3B does not apply because it is the transitional provision in the regulations that would result in the acquisition of property, and it is that provision that would be invalid if there had been an acquisition. No part of the Act would result in an acquisition and no part of the Act would as a result be invalid apart from s 3B. The existence of many provisions of the Act specifically mentioning the regulations made under the Act makes it difficult to read references in s 3B to "the Act" alone as including the regulations. Examples of provisions referring to "this Act and the regulations" are found in ss 91R(1), 91S, 91T, 96(1), 137(2), 197AC(3)(b), 245, 269, 336D, 336L, 474(3)(i), 493(1) and 504(1)(a)(i). I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg. | acquisition of property application for visa payment of application fee criteria for grant to be satisfied at date of decision expectation at time of application that criterion would be satisfied change in criteria before date of decision refusal of application whether loss of application fee acquisition of property without just terms. visas power to prescribe criteria for visa or class of visa application for visa regulation made after application and before decision changing criteria applicable at time of decision validity. constitutional law (cth) delegated legislation |
The s 260- 5 notices required payment from the respondent and relate to substantial taxation liabilities due by two of its then directors, Mr John Eric Barnes and Mrs Judith Angela Barnes ("Mr and Mrs Barnes"). The application is supported by two affidavits of Aris Zafiriou, an officer of the Australian Taxation Office. The first, sworn 22 October 2008, is relied on as to certain paragraphs and attachments only as specified in a notice dated 10 June 2009. The second was sworn on 3 June 2009. The applicant also relies upon the respondent's admissions in its amended defence as well as its admissions in respect of the applicant's notice to admit facts and authenticity of documents dated 9 April 2009. All facts and documents were admitted. The respondent relies upon the affidavit of Paul Michael Tayler, its accountant, sworn 2 July 2009 although at the hearing, I struck out paragraphs 5-7 (inclusive) as being inadmissible. If you do not owe the available money to the debtor but you will later owe it to the debtor, the payment to the Commissioner of Taxation is to be made immediately the money becomes owing to the debtor. The Commissioner contends, however, that these liabilities still exceed the amounts alleged to be owed to each of them by the respondent. The applicant issued notices dated 23 February 2009 to the respondent amending, by reduction, the amounts under the s 260- 5 notices, to $899,530.72 in respect to Mr Barnes and $497,854.76 in respect to Mrs Barnes. Section 260- 5 forms part of Subdivision 260-A to Schedule 1 of the TAA. The amounts were amended by notice dated 23 February 2009 to reduce the taxation liabilities to $899,530.72 and $497,854.76 respectively. This time in each case has passed. A copy of the relevant notice was sent to Mr and Mrs Barnes respectively. The Commissioner alleges that as at 22 June 2007 the respondent was an entity which "may later owe money" to Mr Barnes and submits that according to the respondent's financial records prior to 9 April 2008, but backdated to and effective from 30 June 2007, the respondent became an entity which owed money to Mr Barnes, being a debt payable on demand of $73,842. The Commissioner alleges that the respondent was an entity which, as at 22 June 2007, owed money to Mrs Barnes, namely, a debt payable on demand of $383,451.31. The Commissioner relies upon an admission by the respondent that a $73,842 debt was due by it to Mr Barnes as at 30 June 2007. I am not satisfied for reasons to which I will refer later that this admission is unqualified and ought be accepted. The respondent contends, as a matter of law, that s 260- 5 does not enable the applicant to pursue civil recovery proceedings as it is a penal provision and that non-compliance with this provision does not entitle the Commissioner to recover from it the amount specified in the notices. The Commissioner submits that, as a matter of construction, once a notice has been validly served under s 260- 5 (2), and the time specified in s 260- 5 (5) has arrived in respect of a sum of money which is the subject of the notice, an action lies to enforce payment of that sum to him. Section 260- 5 provides that the notice must require an amount of money to be paid to the Commissioner. The Commissioner submits that the section gives statutory backing to that requirement so as to impose an obligation on the recipient to pay money and, in turn, an action lies for its recovery. The Commissioner submits that an action in debt arises by implication upon the proper construction of s 260- 5 . Alternatively he submits that the monies alleged due to Mr and Mrs Barnes by the respondent are tax related liabilities which may be sued for as debts under the provisions of s 255- 5 of the TAA. The obligation is none the less a debt because the statute gives no particular method of enforcing it. In cases in which the statute contains no express denial of the right to bring an action, the proper course to adopt in order to determine whether it contains 'some provision to the contrary' within the meaning of the rule stated above is to consider whether it appears from the whole purview of the Act that it was the intention of the Legislature that the remedy provided should be a substitute for the right of action which would otherwise exist; and in determining this question it is material to consider whether the obligation imposed by the Act was designed to benefit a particular class of persons .... It is also material to consider whether the provision made by the Act for compelling obedience to its commands is in the nature of a penalty for disobedience or in the nature of compensation to the person whose rights are affected by the failure to perform the obligations imposed by the Act. [The case citations have been omitted]. The respondent argues, applying the Shepherd v Hills proviso adopted in Mallinson , that s 260-20 constitutes a "provision to the contrary", which denies the right to sue for recovery that would otherwise arise by implication. This is because, it submits, s 260-20 provides a sanction for non-compliance with a notice under the criminal law, with power in the criminal court in its discretion to order payment of an appropriate sum to the Commissioner. I do not consider that the Parliament intended the criminal sanctions in s 260-20 to be the exclusive means of enforcing a notice. The offence created by s 260-20(1) is not an offence of strict or absolute liability. Accordingly, so the Commissioner submits, the relevant mental element must therefore be proved, to the criminal standard, before a conviction can be obtained; and, in the case of a failure to comply (which is an "omission to perform an act", and therefore "conduct" for the purposes of s 4.1(2) of the Criminal Code Act 1995 (Cth), the mental element is intention. There is scope, the Commissioner contends, for controversy as to whether the relevant intention would involve knowledge of the existence of obligations under the notice but that whatever the extent of the practical difficulties may be, it is clear in principle that the Commissioner's rights may be infringed by conduct that does not constitute an offence. The consequence he submits, if s 260-20 were the only means of enforcement, is that there would necessarily be a class of cases in which the obligation created by a notice would be wholly unenforceable and that Parliament should not be taken to have intended that result. The Court, under s 260-20(2), may order the third party to pay some or all of the debt to the Commissioner. However, such an order can be made only if a conviction has been obtained, and the power is discretionary. In my opinion the evident purpose of s 260-20(2) is that, in an appropriate case, an order for payment can be obtained without the need for multiple proceedings. It does not provide a basis for an inference that Parliament intended to exclude the enforcement of a notice by civil remedies. The respondent further submits that s 255-5, which provides for an express regime of civil recovery but does not extend to amounts arising under s 260-5, is also "a provision to the contrary". This seeks, in effect, to apply the maxim expressio unius est exclusio alterius as an aid to construction. It is an aid which must be used with caution: Houssein v Under Secretary of Industrial Relations and Technology [1982] HCA 2 ; (1982) 148 CLR 88 at 94; Barratt v Howard [1999] FCA 1132 ; (1999) 165 ALR 605 at 615 per Hely J. If applied in this case it would bring about a result which I doubt the Parliament intended: Ainsworth v CJC [1992] HCA 10 ; (1992) 175 CLR 564 at 575. The existence of affirmative provisions elsewhere in the Act does not, in my opinion, override the principle articulated in Mallinson . The proposition that s 260-5 creates an obligation which is enforceable by an action in debt is supported by cases concerning one of its statutory predecessors, former s 218 of the Income Tax Assessment Act 1936 (ITAA36). This provision, as the parties accepted, is substantially to the same effect as ss 260-5 and 260-20 taken together. In Clyne v Deputy Commissioner of Taxation [1981] HCA 40 ; (1981) 150 CLR 1 , Mason J (Aickin and Wilson JJ agreeing) described s 218 as imposing an obligation on the recipient of a notice to pay money which falls within the statutory description. Brennan J observed that the Commissioner was entitled to insist on compliance and that there was no reason why the Commissioner's right should not be enforced by proceedings other than prosecution under subs (2). No other member of the Court considered this point. When Clyne was decided s 218 did not confer any power on the Court convicting an entity for non-compliance with the notice to pay some or all of the amount in the notice. I do not consider that this affects the proper construction of s 260-5. Brennan J further observed that the statute worked an assignment of the moneys to be paid to the Commissioner as though the taxpayer had charged the moneys otherwise payable to him with payment of his tax liability. Bryson J of the Supreme Court of New South Wales, referring to that observation, held in Deputy Commissioner of Taxation v Lanstel Pty Ltd (1996) 22 ACSR 314 that the s 218 worked an assignment of the debt so that it became payable to the Commissioner. The respondent contends that a dictum in the judgment of the High Court in Bluebottle UK Ltd v Deputy Commissioner of Taxation [2007] HCA 54 ; (2007) 232 CLR 598 referring to s 218 as a "penal" provision, might on one reading be seen as indicating that that section did not give rise to an obligation enforceable by civil proceedings. Bluebottle concerned the scope of ITAA36 s 255 which made a person who had "control" of money belonging to a non-resident liable to pay "the tax due and payable by the non-resident". Section 255 did not, itself, contain any provision characterising the relevant amounts as "debts" due to the Commonwealth. Rather, the liability was described as one in respect of "tax", defined in subs (4) to include the general interest charge. Making a person liable to pay the "tax" due and payable by the non-resident clearly had significance: for example, ITAA36 ss 175 and 177(1) would apply to make the relevant assessment conclusive as to the amount payable, while TAA ss 14ZZM and 14ZZR would govern the recoverability of that amount pending the outcome of any review or appeal against the assessment. The Commissioner argued as the Court understood it that, if not given a relatively broad construction, s 255 would have "little or no work to do" different from that done by s 218. The Court considered that s 255 did have additional work to do, even on a narrower view than that urged by the Commissioner. Section 255 concerns only tax which is or will become due from a non-resident; s 218 is not so limited. Secondly, and perhaps more importantly, s 255 makes the controller of moneys liable for the tax payable by the non-resident (to the extent of the amount that was, or should have been, retained); s 218 is a penal provision and does not permit the Commissioner to recover any of the tax due from the person to whom the notice is given. These differences suffice to distinguish between the two provisions and give each a separate operation in the 1936 Act. I apprehend the Court here was saying no more than that under s 218 the third party was, unlike s 255, not liable to pay the "tax payable". Section 255(1)(c) rendered the "controller" of monies of a non-resident personally liable for the tax payable on behalf of the non-resident. Section 218, by contrast, created a new obligation for payment to the Commissioner of "money due, accruing or (which) may become due" by a person to a taxpayer, albeit the payment of that money by the person to the Commissioner was to be credited against the taxpayer's liability to tax. However, it did not in terms enable the Commissioner to recover from the other person the tax due by the taxpayer. The provisions to which I have referred in the ITAA36 concerning assessments of tax have no immediate application in respect of s 218. This, in my view, is how the distinction between ss 218 and 255 referred to in Bluebottle should be understood. I would expect that had the Court meant that s 218 provided no capacity for the Commissioner to sue for recovery of amounts the subject of a notice other than through criminal proceedings, it would have referred to earlier High Court authority on the subject such as Clyne and particularly the principle explained in Mallinson . Indeed Clyne was applied in Bluebottle in dealing with another issue and Mallinson was also referred to but not on this point. I do not regard Bluebottle as overruling the principle articulated in Mallinson. Bluebottle therefore does not stand in the way of a conclusion that the ITAA36 s 218 permitted the Commissioner to sue in debt for the amount required to be paid pursuant to a notice. Other authority supports this conclusion. It also supports the same conclusion in respect of TAA s 260-5. There is therefore nothing to displace the ordinary rule that, where a statute creates an obligation to pay money, an action in debt will lie to enforce the obligation. The Commissioner, in my opinion, may sue in debt to recover an amount that is required to be paid by a notice under s 260-5, when the time for payment of that amount as specified in s 260-5(5) has arrived. Balance as at 30 June 2006 $1,035,444 2. Add: Capital introduced 2006/2007 (A/C 50101) 75,491 3. Less: Drawings to 30/06/2007 up to $309,609.31 entry (running balance up to last drawings entry) (A/C 50103) (1,334,810) 4. Less: Drawings, Income Tax up to 30/06/2007 (A/C 50105) (11,892) 5. This was admitted as a fact following delivery to the respondent of a notice to admit facts and authenticity of documents. This too was admitted by the respondent as a fact. Journal entries, each in the sum of $309,609.31 were made by the respondent's accountant in the annual general ledger. They represent a double entry approach and are inextricably connected. This amount was credited to the loan account of Mr Barnes converting a debit balance of $235,767.74 to a credit balance, rounded up, of $73,842. The same figure of $309,609.31 was applied as a debit to the loan account of Mrs Barnes reducing her loan account also to the figure, rounded up, of $73,842. Each journal entry took effect as at 30 June 2007. The Commissioner submits that because the effect of the journal entry operated on Mrs Barnes loan account only as at 30 June 2007 and because the amount due to her by the respondent crystallised upon service of the s 260-5 notice on 22 June 2007 it is the amount of $383,450.95 then owed to her by the respondent which is recoverable. I accept that submission. The Commissioner accepts that as at 22 June 2007 Mr Barnes was not owed any money by the respondent, but as I explained earlier he has admitted in his defence at para 5-6 to being owed $73,842 by the respondent as at 30 June 2007. It is to be remembered that the figure in respect to Mr Barnes was in respect of monies which "may become due" to him and accordingly the material date in respect to monies owed to him by the respondent is a date after 22 June 2007. The Commissioner says that the journal entry relating to Mr Barnes' loan account should be taken into account in his case. The effect of the application of the journal entry is, as I have said, to transform a very significant indebtedness on his part to the respondent to an amount of $73,842 owed to him by the respondent. Certainly the respondent has admitted that to be the position as at 30 June 2007 in its amended defence. However it is apparent, taking the evidence as a whole, that this admission proceeded on the premise that both of the journal entries in relation to Mr and Mrs Barnes respectively were effective as at that date. It is not an admission that this amount was owed to Mr Barnes at any time prior to then, including 22 June 2007. Nonetheless the Commissioner submits that I should accept at face value the efficacy of the journal entry in relation to Mr Barnes combined with the admission of the amount due to him at 30 June 2007 by the respondent. Indeed, as I referred to earlier, in his affidavit sworn for the Federal Magistrates Court proceedings, Mr Barnes deposed that as at 30 June 2007 he owed the respondent $235,767. This was sworn before the journal entries were put into effect by the respondent's accountant. I do not think that produces a just result. I do not think that the Commissioner can have it both ways. That is to say to attribute the benefit of the journal entry to Mr Barnes but not in turn to Mrs Barnes. If the journal entry was applied to both loan accounts then each would be owed $73,842, a total of $147,684. This truly reflects the amounts owed to them in total as I have noted above. I have taken into account that the balance sheet for the respondent, for the year ended 30 June 2007 produced after the journal entries were made discloses the loan accounts of Mr and Mrs Barnes at the figure of $73,842 for each of them. The correctness of this is the subject of a written declaration by each of them as directors. However, these financial records are but prima facie evidence of the facts contained in them: s 1305 of the Corporations Act 2001 (Cth). They are not determinative of the factual position. If I were to proceed as the Commissioner would have it, this would, in my view, work an injustice upon the respondent by artificially increasing the loan account of Mrs Barnes viewed on a joint basis, by in excess of $300,000. After producing draft reasons I was advised by the Commissioner's solicitor that the claim for $73,842 in respect of Mr Barnes is no longer pressed although its position that it was entitled to relief in this sum was maintained. I have considered it appropriate therefore to include in these reasons why I have come to an opposite conclusion. I am satisfied that the Commissioner has established its claim in respect to monies owed by the respondent to Mrs Barnes in the amount of $383,451.31 but not at all in respect to monies alleged owed by the respondent to Mr Barnes. I find that as from 22 June 2007 to 9 April 2008, Mr Barnes was indebted to the respondent. There should be an order that the respondent pay the sum of $383,451.31 together with interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) from 22 June 2007. The respondent should pay the applicant's costs. I will invite the parties to bring in a minute of proposed orders to reflect these reasons including a calculated figure for interest. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | application by commissioner to recover monies alleged due to taxpayers by respondent taxpayers had substantive taxation liabilities notices for payment under s 260- 5 of the taxation administration act 1953 (cth) served on respondent whether commissioner entitled to sue respondent upon default for payment of those sums proper construction of s 260- 5 whether any provision in the act was contrary to the implication of an entitlement to sue whether courts express discretionary power, upon conviction of third party in criminal proceedings for failure to comply with notice, to order payment of monies the subject of notice was such a provision to the contrary. taxation |
The particular point concerns the effect of liabilities that may arise out of agreements reached between the voluntary administrators of Huon Corporation Pty Limited ACN 115 243 206 (Huon) and several automotive manufacturers. On 30 June 2006 Anthony Milton Sims, Kenneth Stewart Sellers and Scott Darren Pascoe were appointed as joint and several voluntary administrators of Huon pursuant to s 436A of the Corporations Act 2001 (Cth) (the Act). Evidence has been given in some detail as to the history of Huon, the financial position of Huon at the time of the appointment of the administrators, the nature of the substantial business being conducted and the various steps that the administrators had taken. The administrators formed the opinion that the maintenance of the business of Huon as a going concern is crucial in order to obtain the best value for the assets of Huon for the benefit of creditors. It is their view that, if Huon cannot be sold as a going concern, it will very likely reduce the value the administrators can obtain for the assets which will, in turn, reduce the ultimate return available to creditors. That is a matter of business judgment. The administrators worked towards that end with some urgency because, following certain redundancies on or about 14 July 2006, the employees of all of the business units of Huon went on strike. Negotiations ensued with customers, trade unions and the Victorian State government. An agreement was also entered into with another customer, PBR Australia Pty Ltd, which is not in issue in this proceeding. The Supply Agreements relate to the business unit of Huon known as Empire Rubber, which operated from a property at Bendigo. They are virtually identical. A satisfactory summary of the key terms of the agreements is as follows: (1) The customer acknowledges that nothing contained in the Supply Agreement gives rise to any personal liability on the part of the administrators other than any liability that the administrators have under the Act or at law (cl 1.5(c)). (2) Huon agrees to supply to the customer and the customer agrees to purchase the products and volumes for the months of July, August, September and October 2006 set out in Schedule 1 to the Supply Agreement or the latest delivery schedules submitted by the customer to Huon prior to the commencement of the Supply Agreement (cl 4.1). (3) The customer agrees to a 35 per cent increase in the price that the customer was required to pay for equivalent products prior to the commencement of the Supply Agreement (the Price Increase). This increase is payable in order to reflect the estimated additional operating expenses of running the Empire plant during the period of the Supply Agreement (cl 5.1). (4) In consideration of the customer agreeing to the Price Increase, Huon agrees to grant the customer a price rebate (Price Rebate) (cl 6.1). The Price Rebate for each customer comprises its share of the total Price Increases for all of the customers multiplied by: (a) Any cash surplus from revenue earned by Huon from the supply of products from the Empire plant during the period of the Supply Agreement after all operating expenses have been fully satisfied (Surplus). 'Operating Expenses' is defined as 'the costs, remuneration and expenses of the administrators relating to the conduct of the business but excluding any employee entitlements accrued prior to the appointment date or any redundancy entitlements'. (b) Any excess of the sale proceeds from the sale of the Empire business as a going concern and/or the Bendigo property, once the amounts owing to the secured creditors in respect of the Empire business and the Bendigo property and the costs, remuneration and expenses (including trading losses) of the administrators relating to the conduct of the Empire business have been paid. (5) Pursuant to cl 6.2 and cl 6.3 of the Supply Agreements, the maximum amount payable by Huon to each of the customers is the total amount of the Price Increase paid by that customer. (6) Clause 6.5 of the Supply Agreements provides that the administrators must make application to either the Federal Court of Australia or the Supreme Court of Victoria as soon as practicable after the commencement of the Supply Agreements (being 25 July 2006 in each case) for orders to give effect to cl 6. (7) If there is no Surplus or excess sale proceeds from the sale of the Empire business or the Bendigo property, then no part of the Price Increase is repayable to the customers by Huon. It should be noted that the administrators, Huon and GE Commercial Corporation (Australia) Pty Limited ACN 000 974 747 (a secured creditor pursuant to a floating charge) have entered into a Deed of Funding and Consent, which has established a priority regime. The effect of cl 5.1 of that Deed is to give first priority to moneys owed by Huon to the administrators supported by the statutory indemnity and lien pursuant to s 443E and s 443F of the Act. The Price Rebate obligations undertaken in cl 6 of the Supply Agreements give rise to the issue. The promises in that clause are made by Huon. It is provided in cl 1.5 that the administrators are acting as agents of Huon pursuant to s 437B of the Act and nothing contained in the agreement gives rise to any personal liability on the part of the administrators other than any liability the administrators have under the Act or at law. There is an initial question as to whether any liability which ensues would properly be described as a 'debt'. Counsel has properly referred me to the decision of Branson J in Molit (No55) Pty Ltd v Lam Soon Australia Pty Ltd (Administrator Appointed) & Macks (1996) 68 FCR 319 in which a strict instruction of the term 'debt' is adopted, drawing a distinction between a debt and a liability for unliquidated damages in this section. Counsel has pointed out that, in other sections, the words such as 'debt' and 'creditor' have been given a wider construction. The provision for insolvent trading is one example. Another is the construction of s 563A in Sons of Gwalia Ltd v Margaretic [2006] FCAFC 17 ; (2005) 149 FCR 227. There is also a question as to whether the liabilities are 'incurred' by reason of cl 6, at least unless and until there is a surplus to be distributed. Counsel has referred to the decision of the New South Wales Court of Appeal in Hawkins v Bank of China (1992) 26 NSWLR 562 which dealt with whether a relevant debt was incurred when a company entered into a guarantee under which it was obliged to pay a liquidator an amount contingent upon demand following default. It is not necessary for me to decide those interesting questions because, in my opinion, it is clear that any liability which ensues would not be for any of the topics enumerated in s 443A(1). The only possible argument is that the liability would be for services rendered. I cannot view what is involved in cl 6 of the Supply Agreements as incurring a liability for services rendered. In that respect, I would adopt the reasoning of Goldberg J in Re Ansett Australia Ltd and Mentha [2001] FCA 1806 ; (2001) 115 FCR 376 at [45] ---[46]. (See also Re Spyglass Management Group Pty Ltd (Administrator Appointed) (2004) 51 ACSR 432; (2004) 23 ACLC 28 at [4]. ) I decline to give the direction sought. In the alternative, it is submitted that I should make an order pursuant to s 447A that Pt 5.3A of the Act is to operate in relation to Huon so that liabilities incurred pursuant to cl 6 should be deemed to have been debts incurred pursuant to s 443A for services rendered. Such an order has substantive effect compared with the giving of directions (cf Gidley Re Aliance Motor Body Pty Ltd [2006] FCA 102 ; (2006) 150 FCR 345 at [3] ---[4]). Because of this, it is necessary to ensure that notice has been given to those affected. On the other hand, the application is not a lis between parties or adversary litigation. There is no need to manufacture a contradictor if there is not one. I am satisfied that all those who might be affected by an order have been effectively given notice of the proceeding and none has appeared to oppose. Indeed, there is actual consent on the part of almost all of those affected. In particular, those most affected, the secured creditor and those representing employees with priority claims, have indicated consent and do not appear to oppose. That does not lessen the scrutiny to be applied to the proposed application of s 447A. That section grants a most unusual power to the Court that requires careful consideration before exercise. It is not easy to grasp all of the ramifications of such an order in the absence of a contradictor, notwithstanding the assistance of counsel for the applicant. The arrangement is fundamentally a financing mechanism to enable the business to continue as a going concern but is more than that. The arrangement guarantees the sale on favourable terms of the products manufactured by the business and virtually ensures that the business will be profitable in the short term. The business risk has largely passed to the customers. This is to the benefit of other creditors who stand to gain from sale of the business as a going concern. The only hesitation I have is whether it is appropriate to potentially include the surplus on the sale of the Bendigo property as part of Price Rebate. That potentiality is by way of being part of the security for repayment of the advances. However, it is difficult to unpick parts of an arrangement like this, which was the result of heavy negotiation between the interested parties and which, on the evidence, has the support of those most interested in the outcome. The decisions of Goldberg J in Re Ansett Australia Ltd and Mentha [2001] FCA 1806 ; (2001) 115 FCR 376 and of Finkelstein J in Re Spyglass Management Group Pty Ltd (Administrator Appointed) (above) and the orders made by Hely J in Re Henry Walker Eltin Group Ltd (Administrators Appointed) (No 4) [2005] FCA 745 provide support for making the order. Order 2 as sought will be made. | whether voluntary administrators incurred debt for services rendered as did not s 447a order made to assist continuation of business corporations |
In the proceedings, the Commission alleges contravening conduct by the three corporate respondents and accessorial liability for the contraventions by the three individual respondents. The Commission seeks various declarations, pecuniary penalties, injunctions and other orders against the respondents. The parties to the proceedings entered into negotiations and they have agreed to settle the proceedings. The respondents have not admitted the contravening conduct alleged by the Commission. Subject to certain undertakings to be given by the respondents, the settlement of the proceedings involves orders that the proceedings be dismissed and that there be no order as to costs including reserved costs. The issue before me is whether the Court has the power to accept the undertakings proffered by the respondents and whether it is appropriate to accept the undertakings. Five undertakings are proffered. The first undertaking is proffered by the three corporate respondents and, for reasons I will give, the Court has the power to accept the undertaking and, in my opinion, it would be appropriate to do so. The second undertaking is proffered by the individual respondents and again, for reasons I will give, the Court has the power to accept the undertaking and it would be appropriate to do so. The third undertaking is proffered by the first corporate respondent (Auspine Limited) and is to the effect that the first corporate respondent will implement the recommendations contained in the March 2006 'Report on the Implementation and Effectiveness of Auspine Ltd's Trade Practices Compliance Program'. The report was prepared by a company called Watchdog Compliance Pty Ltd. For reasons I will give, I do not think that even if the Court has the power to accept this undertaking it would be appropriate for it to do so. The fourth undertaking is proffered by the second and third corporate respondents (Geo J Bone & Sons Pty Ltd and JAG Timber Products Pty Ltd) and is to the effect that those respondents will implement a trade practices corporate compliance program in accordance with a document annexed to the proposed minutes of order. For reasons I will give, I do not think the Court has the power to accept this undertaking, or, in the alternative, that it would be appropriate to do so. The fifth undertaking is proffered by the individual respondents and is to the effect that each of them will attend a trade practices compliance seminar in accordance with a document annexed to the proposed minutes of order. For reasons I will give, the Court has the power to accept the undertaking and, in my opinion, it would be appropriate to do so. In the circumstances, I do not propose to make any orders at this stage. The undertakings and orders are part of an overall settlement. I will adjourn further consideration of the proceedings to enable the parties to consider these reasons and, if so advised, to proffer undertakings which are within power and which are appropriate. The allegations made by the Commission The first respondent Auspine Limited ('Auspine'), the third respondent Geo J Bone and Sons Pty Ltd ('Bone Timber'), and the fifth respondent JAG Timber Products Pty Ltd ('JAG Timber') ('the corporate respondents') were at all material times companies under the Corporations Act 2001 (Cth) and trading corporations under the Act. Each of them carried on business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia. In these reasons, 'material times' means the period between, in or about 1 July 2001 and 18 June 2003. Auspine carried on its business through its Pre-fab Division from premises located at 140 Eastern Parade, Gillman, Penola Road, Tarpeena, and North-East Terrace, Kalangadoo, in the State of South Australia. Bone Timber carried on its business under the trading name Bone Timber Industries from premises located at 856 South Road, Edwardstown, in the State of South Australia. JAG Timber carried on its business from premises located at 4-10 Alfred Street, Alberton, in the State of South Australia. The second respondent is Mr Francis Gerald McDonald and, at all times between July 2001 and December 2002, he was an employee or agent of Auspine and he occupied the position of General Manager of Auspine's Pre-fab Division. The fourth respondent is Mr Andrew Howard Bone and, at all material times, he was a director of Bone Timber and an employee or agent of the company and occupied the position of Sales Manager. The sixth respondent is Mr Gary Gordon Daniel and, at all material times, he was one of the two directors and shareholders of JAG Timber and an employee or agent of the company. With respect to the matters alleged by the Commission, each of the second, fourth and sixth respondents acted within his authority as an employee or agent of the respective corporate respondents. There are other persons and entities who are relevant to the allegations made by the Commission. They are as follows: At all material times, Mrs Julie Daniel was one of the two directors and shareholders of JAG Timber. Dubsky Timber Pty Ltd ('Dubsky Timber') is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia from premises located at 4 Hookina Road, Burton, in the State of South Australia. In relation to the allegations made by the Commission, he was acting within his authority as an employee, agent or director of Dubsky Timber. Footers Pty Ltd trading as Footersville ('Footersville') is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at 250 Regency Road, Regency Park, in the State of South Australia. In relation to the allegations made by the Commission, he acted within his authority as an employee, agent or director of Footersville. Freeman Wauchope Pty Ltd ('Freeman Wauchope') is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia from premises located at 93 Morphett Road, Camden Park, in the State of South Australia. In relation to the allegations made by the Commission, he acted within his authority as employee, agent or director of Freeman Wauchope. Timbertech Pty Ltd ('Timbertech') is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at 74 Days Road, Croydon Park, in the State of South Australia. In relation to the allegations made by the Commission, he acted within his authority as employee or agent of the company. MSP Group Pty Ltd trading as Wingfield Timber Supplies ('Wingfield') is and was at all material times, a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from 79 Cavan Road, Gepps Cross in the State of South Australia. In relation to the allegations made by the Commission, he acted within his authority as employee or agent of Wingfield. Keith Timber and Hardware Pty Ltd ('Keith Timber') is and was at all material times, a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at Hender Street and Park Terrace, Keith, in the State of South Australia. Dahlsens Building Centres Pty Ltd ('Dahlsens') is and was at all material times, a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at Bay Road, Mt Gambier, in the State of South Australia. South Coast Timber and Hardware Pty Ltd ('South Coast Timber') is and was at all material times, a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at Port Elliot Road, Port Elliot, in the State of South Australia. D J and L K Tarca were persons who at all material times were in partnership trading under the business name of D J and L K Tarca ('Tarca') carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at 9 Crompton Road, Mt Barker, in the State of South Australia. W M and J P Wray ('Wray') were persons who at all material times were in partnership trading under the registered business name of Clare Building Supplies carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at Neagles Rock Road, Clare, in the State of South Australia. Timco Pty Ltd ('Timco') is and was at all material times a company carrying on the business in Australia of, amongst other things, supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing to persons in South Australia, from premises located at 172 Park Terrace, Salisbury Plain, in the State of South Australia. On 17 December 2002, the Timber Truss and Wall Frame Association was incorporated as Timber Truss and Wall Frame Association (SA) Incorporated ('the TT & W Association'). The Commission alleges that, at all material times, there was a demand by the public and the building industry in South Australia for timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing, and for pre-fabricated steel truss and wall framing and ancillary services, including estimating services and/or quotations derived therefrom. The Commission alleges that, at all material times, the corporate respondents and the other entities and persons (other than Mrs Daniel) (collectively, the timber suppliers) carried on the business of supplying timber and ancillary services, including estimating services and/or quotations derived therefrom, for truss and wall framing persons in South Australia in competition with one another and in competition with suppliers of pre-fabricated steel truss and wall framing and ancillary services, including estimating services and/or quotations derived therefrom. The Commission alleges that by reason of the aforesaid matters, at all material times, there was a market in South Australia for timber and ancillary services, including estimating services and/or quotations derived therefrom for truss and wall framing and for pre-fabricated steel truss and wall framing ancillary services, including estimating services and/or quotations derived therefrom ('the market'). At all material times prior to 1 January 2003 each of the corporate respondents engaged estimators for the purposes of preparing take-off lists, providing quotations to customers derived therefrom and in so doing and supplied estimating services to customers. Auspine and JAG Timber employed estimators directly, and from time to time engaged third party estimators. Bone Timber from time to time engaged third party estimators. At all material times prior to 1 January 2003, it was the regular practice of each of the corporate respondents to absorb estimating charges as part of their business overheads and not to specify an estimating charge when providing a quotation or invoice to its customers. The Commission alleges that in or about the period 1 November 2002 to 11 December 2002, Mr McDonald, on behalf of Auspine, Mr Bone, on behalf of Bone Timber, and Mr Daniel, on behalf of JAG Timber, made an arrangement or arrangements, or alternatively, arrived at an understanding or understandings, containing provisions including provisions that: Auspine, Bone Timber and JAG Timber would no longer provide estimating services without charge, but would pass on to the customer any charges incurred at cost; and Auspine, Bone Timber and JAG Timber would procure, or attempt to procure or induce, other timber suppliers to make an arrangement or arrangements, alternatively, to arrive at an understanding or understandings, containing a provision to the same effect, but including such other timber suppliers or some of them, as the provisions set out in subparagraph (1) above. It is alleged that Mr McDonald, on behalf of Auspine, Mr Bone, on behalf of Bone Timber, and Mr Daniel, on behalf of JAG Timber, made the arrangement or arrangements, or arrived at the understanding or understandings, both in writing and orally. It is alleged that in or about late October to early November 2002, Mr McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, discussed with one another by telephone and in person, among other things, a proposal to obtain the support of timber suppliers to charge all customers a fee for service for the cost of providing or obtaining take-off lists. It is alleged that in early November 2002, following the discussions with Mr Bone, referred to above, Mr McDonald, on behalf of Auspine, prepared a final version of a notice to be sent to timber suppliers regarding the said proposal and that the final version of the notice was addressed 'Dear customer' and stated, among other things, that estimating charges, 'can no longer be provided as a free service' and that 'charges incurred will be current estimating rates and passed on at cost'. It is alleged that on or about 7 November 2002, Mr McDonald, on behalf of Auspine, with the approval of Mr Bone on behalf of Bone Timber, drafted a letter to timber suppliers to accompany the final version of the notice referred to above, and distributed copies of the letter and that notice to timber suppliers ('the 7 November 2002 letter and notice'). The letter was on letterhead titled 'Timber Truss and Wall Frame Association (SA)' dated 7 November 2002 and signed by Mr McDonald. The letter stated that it was their intention that the notice would be sent to all customers advising of their intentions 'of charging for all estimates'. The letter asked recipients for their 'support' and advised that it was their intention to send out the notice (which was attached) with everyone's signature on it as a 'consolidated front'. A copy of the letter and notice was sent to timber suppliers, including Keith Timber, Dahlsens, Footersville, JAG Timber, Tarca, Wray, Dubsky Timber, Bone Timber and Timco. On 11 November 2002, Mr and Mrs Daniel, on behalf of JAG Timber, sent an e-mail to Mr McDonald and Mr Bone, on behalf of Auspine and Bone respectively, indicating JAG Timber's 'support to the idea of advising customers on estimating charges' and including a version which they prepared of the notice referred to above. The e-mail was sent to Mr McDonald's e-mail address at Auspine and copied to Mr Bone's e-mail address at Bone Timber. The said version of the notice was addressed to 'Dear customer' and stated that 'timber merchants and truss manufacturers' would, from 1 January 2003, no longer provide estimating services free of charge and provide customers with a list of available estimators so that customers could obtain their own take-off lists from estimators at their own expense or pass on their customers' plans to estimators and any estimating charges incurred in obtaining and providing the take-off lists would be passed on to customers at cost. In the period from 11 November 2002 to 21 November 2002 Mr McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, and on another occasion Mr McDonald and Mr Daniel, on behalf of JAG Timber, discussed the draft version of the notice from JAG Timber referred to above. In or about the period 21 November to early December 2002, Mr McDonald, on behalf of Auspine, adopted, converted to letter form and dated as 21 November 2002 the version of the notice provided by JAG Timber referred to above and prepared a final version in letter form of the notice on letterhead titled 'Timber Truss and Wall Frame Association (SA)' and bearing the names of 25 potential signatories ('the proposal'). In or about the period 21 November to early December 2002 Mr McDonald, on behalf of Auspine, Mr Bone, on behalf of Bone Timber, and Mr Daniel, on behalf of JAG Timber, signed the proposal. The Commission alleges that each of the provisions referred to above had the purpose or substantial purpose, or had or were likely to have had the effect, of fixing or controlling, or providing for the fixing or controlling, of the prices of estimating services supplied or to be supplied by the parties to the respective arrangements or understandings in competition with each other. The price of estimating services was fixed or controlled at the 'cost' to the parties to the respective arrangements or understandings of obtaining or providing the estimating services. Each provision was a provision that, by virtue of s 45A of the Act, is deemed for the purposes of s 45 to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition in the market. By reason of s 84(2) of the Act the conduct of Mr McDonald, Mr Bone and Mr Daniel is deemed to have been the conduct of Auspine, Bone Timber and JAG Timber, respectively. It is alleged that by engaging in the conduct each of Auspine, Bone Timber and JAG Timber as therein referred to, made an arrangement or arrangements, or arrived at an understanding or understandings, a provision or provisions of which had the purpose or substantial purpose, or had or was or were likely to have the effect, of substantially lessening competition in the market in contravention of s 45(2)(a)(ii) of the Act, being a provision of the Act referred to in s 76(1)(a) and 80(1)(a) and 80(1)(a)(i) of the Act. It is alleged that each of Mr McDonald, Mr Bone and Mr Daniel 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, the respective contributions by Auspine, Bone Timber and JAG Timber under s 45(2)(a)(ii) of the Act. It is alleged that on or about 11 December 2002, Mr Bone, on behalf of Bone Timber, advised its customers that it would no longer provide estimating services without charge, but would pass on its customers' plans to estimators and charge the cost of the estimation to customers' accounts at cost, and, from about 12 February 2003, Bone Timber charged its customers for estimating charges at cost on a number of occasions. It is alleged that as from 11 December 2002, Bone, on behalf of Bone Timber, sent, to approximately 20 to 25 of its customers, an open letter ('the open letter') which attached the 21 November 2002 letter and referred to it as having 'been sent to and signed by all the major timber merchants in South Australia' and stated that as from 1 January 2003, Bone Timber would no longer be bearing the cost of estimating services, would be happy to continue to handle customers' plans and send them on to estimators but would charge the cost of the estimation to customers' accounts and any estimating charges put to customers' account would be passed on at cost. It is alleged that as from 12 February 2003, Bone Timber charged estimating charges at cost to at least 43 customers. It is alleged that on or about a date presently unknown, but some time in or about November 2002, Mr Daniel, on behalf of JAG Timber, sent an open letter to some of its customers referring to future estimating arrangements in terms materially similar to those found in 7 November 2002 letter and notice or 21 November 2002 letter or both, and that from about 20 March 2003, JAG Timber charged its customers for estimating charges at cost on a number of occasions. It is alleged that from about 28 March 2003, JAG Timber charged estimating charges at cost to at least eight customers. It is alleged that by reason of the above matters that each of Mr Bone, on behalf of Bone Timber, and Mr Daniel, on behalf of JAG Timber, gave effect, or alternatively intended or attempted to give effect, to the provision referred to in paragraph [15] above. It is alleged that in or about the period 21 November to early December 2002, Mr McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, discussed the proposal with other timber suppliers and procured their signatures to the proposal intending and expecting that the timber suppliers whose signatures or agents' signatures appeared on the proposal would no longer provide estimating services without charge but would pass on to the customer any charges incurred at cost and thereby, in the case of each of Mr McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, gave effect to or intended and attempted to give effect to the provision of the arrangement or understanding referred to in paragraph [15] above. It is alleged that in or about the period 21 November to early December 2002 McDonald, on behalf of Auspine, and Mr Bone, on behalf of Bone Timber, telephoned and attended on Mr Thomas of Freeman Wauchope and Mr Dubsky of Dubsky Timber. It is alleged that Mr McDonald, on behalf of Auspine, telephoned and/or attended on Mr Stewart of Timbertech, Mr Footer of Footersville and Mr Pietrobon of Wingfield to discuss and obtain their companies' acceptance of the proposal. It is alleged that in or about the period 21 November to early December 2002 Mr Thomas, on behalf of Freeman Wauchope, signed the proposal at the time of the attendance of Mr McDonald and Mr Bone and that Mr Dubsky, on behalf of Dubsky Timber, signed the proposal at the time of the attendance of Mr McDonald and Mr Bone, and that each of Mr Stewart, on behalf of Timbertech, Mr Footer, on behalf of Footersville, and Mr Pietrobon, on behalf of Wingfield, signed the proposal at the time of the attendance of Mr McDonald as referred to above. It is alleged that by s 84(2) of the Act the conduct of Mr Bone and Mr Daniel and the conduct of Mr McDonald and Mr Bone is deemed to have been the conduct of Auspine, Bone Timber and JAG Timber respectively. It is alleged that, by engaging in the conduct, each of Bone Timber and JAG Timber gave effect to a provision or provisions of an arrangement or understanding which provision or provisions had the purpose or substantial purpose, or had or was or were likely to have the effect, of substantially lessening competition in the market in contravention of s 45(2)(b)(ii) of the Act, being a provision of the Act referred to in s 76(1)(a)(i) and 80(1)(a)(i) of the Act or, in the alternative, intended and attempted to give effect to such a provision or provisions being conduct of the kind referred to in ss 76(1)(b) and 80(1)(b) of the Act. It is alleged that, by the conduct, each of Auspine and Bone Timber gave effect to a provision or provisions of an arrangement or understanding which provision or provisions had the purpose or substantial purpose, or had or was or were likely to have the effect, of substantially lessening competition in the market in contravention of s 45(2)(b)(ii) of the Act, being a provision of the Act referred to in s 76(1)(a)(i) and s 80(1)(a)(1) of the Act or, in the alternative, intended an attempted to give effect to such a provision or provisions in conduct of the kind referred to in s 76(1)(b) and s 80(1)(b) of the Act. It is alleged that each of Mr McDonald, Mr Bone and Mr Daniel 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, the respective contraventions by Auspine, Bone Timber and JAG Timber, of s 45(2)(b)(ii) of the Act. In the alternative to the above, it is alleged that Auspine, Bone Timber and JAG Timber, by their agents, intended and attempted to make an arrangement or arrangements, or intended and attempted to arrive at an understanding or understandings, in the terms set out in paragraph [15] above and which had the purpose or substantial purpose, or effect or likely effect, of substantially lessening competition in the market, and thereby attempted to contravene s 45(2)(a)(ii) of the Act. The Orders and Undertakings Before considering each undertaking it is appropriate to make some general points about the Court's power to accept undertakings and the exercise of that power. First, the Court's power to accept an undertaking is subject to the same limitations that apply to its power to grant an injunction. In other words, the Court cannot accept an undertaking in terms which go beyond the Court's power to grant an injunction in similar terms. This proposition is well-established: Thomson Australian Holdings Pty Ltd v Trade Practices Commission [1981] HCA 48 ; (1981) 148 CLR 150 per Gibbs CJ, Stephen, Mason and Wilson JJ at 164-165 (' Thomson '). An undertaking to the Court is given in lieu of an injunction and the remedies for breach of an undertaking are the same as those for breach of an injunction. Limitations which affect the court's jurisdiction or power to grant a final injunction must be observed in the acceptance of an undertaking when it is offered as a substitute for a final injunction. Thirdly, in the same way as an injunction must be couched in clear and unambiguous language, so must an undertaking. As the learned authors of Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (4 th ed, 2002) at [21-505] say, 'the recipient of it must be placed in a position where he knows exactly what he is obliged to do'. (See also Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 per French J at 88-89 [26] (' REIWA ')). An undertaking should not be accepted if it is vague and uncertain or if enforcement is likely to prove impossible. This proposition is subject to a narrow qualification. I agree with the point made by French J, albeit in the context of s 86C, that in the context of compliance programmes it is neither practicable nor useful to prescribe with minute particularity the content of such programmes: Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [24] . An order or undertaking which contains objectives to be fulfilled, or aims to be achieved, might be too uncertain to be enforceable, although the problem might be overcome by making the obligation a best or reasonable endeavours obligation: REIWA per French J at 90 [35]. Fourthly, there must be a relevant nexus between the injunction or undertaking and the alleged or established contravening conduct. It is not the case that an injunction or undertaking can only be framed in terms of restraining a repetition of contravening or alleged contravening conduct: Foster . As far as future conduct is concerned, an injunction or undertaking may be in wider terms. The question of what is a relevant nexus between the alleged or established conduct and the proposed order or undertaking has been discussed in the context of orders or undertakings requiring a compliance or educational programme to be implemented. Of course, there is no denying the desirability of an extensive compliance or educational programme, but that is a different issue from the question of the Court's power to order such a programme or to accept an undertaking to implement such a programme. In Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 (' Z-Tek '), Merkel J considered the scope of an appropriate order implementing a trade practices compliance programme. It is within the scope and purpose of s 80 to grant injunctive relief which is designed to prevent a repetition of the conduct for which the relief is sought. As the jurisdiction to grant an injunction is enlivened by an alleged or actual contravention of a provision of Pt IV , IVA or V of the TPA, there must be a sufficient nexus or relationship between the contravention and the injunction granted. It is that nexus or relationship that enables determination by the Court of whether the injunction sought is "appropriate". It was contended by counsel for the ACCC that the program was "appropriate" because it arose as a result of a breach of the TPA. In my view the contention is based on an unwarranted and excessively broad view of s 80. The jurisdiction to make orders under s 80 only arises as a result of advertising and representations by Z-Tek which are alleged to have contravened ss 52 , 53 (e) and 53C of the TPA. As the order is sought under s 80(1AA) I do not have to be satisfied that the conduct contravened the particular provisions of the TPA. Nevertheless, I must determine whether the orders are "appropriate". Given that the orders are sought by consent I am prepared to take a broad view of the conduct which may fairly be described as misleading or deceptive advertising and the making of representations in contravention of ss 52 , 53 (e) and 53C of the TPA. The compliance program, which the Court may order, should be no wider than one which is designed to prevent repetition of that conduct. In my view it is not appropriate to make orders which require a compliance program which relates to conduct other than the alleged contravening conduct as characterised by the Court. The Full Court did not say anything to suggest that they did not agree with his observations. French J considered the same issue in REIWA . At one level the orders sought may be so remote from the contravention alleged that the question is readily resolved as one of power. Thus an injunction directing implementation of a compliance program covering all of the provisions of Pt V in answer to an alleged contravention of Pt IV of the Act might well be thought so remote from the contravention as to be beyond the purpose of s 80 and thus beyond its power. A fortiori such an order might be thought inappropriate even if strictly within power. I respectfully agree with his Honour in relation to that aspect of his approach in the Z-Tek case. To enter into a blatant price fixing arrangement with a competitor might well fall within that category. In such a case an order for a compliance program providing for development of awareness of the provision contravened and related areas of competition law may be seen as appropriately connected to the contravention and designed to prevent the diversion of public resources to further enforcement action whether in relation to the contravention grounding the claim or contraventions in the same general area. What is "a sufficient nexus" between the conduct the subject of the injunction and the conduct alleged or found to constitute a contravention of a provision of the Act is a matter of judgment. In ACCC v Z-Tek Merkel J accepted that the making of orders or the acceptance of undertakings to implement a trade practices compliance program are within the power conferred upon the court by s 80 of the Trade Practices Act . In the event this was a question of judgment of the sufficiency of the nexus between the compliance program ordered and the particular contravention. I do not take his Honour's approach to preclude the possibility of a compliance program which covers the provisions of Pt IV generally. Before leaving this point, I should mention s 86C of the Act which was introduced in 2001. I note that the type of 'probation order' which may be made under the section may only relate to the 'contravening conduct, similar conduct or related conduct' so the section itself requires a nexus between the contravening conduct and the order or undertaking. I did not hear submissions on whether s 86C bears upon the interpretation of s 80 and I will say nothing on that topic. I will proceed by having regard to the principles developed in the context of s 80 of the Act. Fifthly, a question which has arisen in the cases, and which arises in this case, is the Court's power to make an order or accept an undertaking requiring an external audit of a compliance programme or, alternatively, the appropriateness of so doing. It seems that such an order may not be made under s 86C: BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452 (Gray, Goldberg and Weinberg JJ) at 468 [51]. It is important to have a clear understanding of what is meant by an external audit of a compliance programme. In my opinion, an order or undertaking which leaves the definition of the major obligations undertaken by a respondent to a third party or which makes the question of whether there has been a breach turn on the assessment or opinion of a third party is beyond power, or at the very least inappropriate. A court should not grant an injunction leaving the scope of the injunction to be determined by a third party and should not accept an undertaking to similar effect. Such an injunction or undertaking would not be in clear and unambiguous terms and it would involve an impermissible delegation of the Court's power to formulate the terms of the order and to determine the question of breach. None of this is to say that an order or undertaking might not include a provision for an external audit providing the major obligations are defined and it is clear that the question of breach is for the court to determine, having regard to the facts and the terms of the order or undertaking. I turn now to consider the particular undertakings proffered in this case. I have the power to accept the first undertaking and I think that it would be appropriate to do so. The undertaking has been proffered as part of a negotiated settlement of what is a complex dispute. Unless there was good reason not to do so, and there is no such reason here, then, providing the adoption of the settlement is within power, I should give effect to the settlement reached between the parties. All the corporate respondents were legally represented as was the Commission and I see no reason why it would not be appropriate to accept the first undertaking: N W Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 per Burchett and Kiefel JJ at 291; REIWA per French J at 87 [20]-[21]. The individual respondents, other than Mr McDonald, had legal representation, and Mr McDonald told me that he had received legal advice. The third undertaking is proffered by Auspine, the fourth is proffered by Bone Timber and JAG Timber, and the fifth is proffered by the individual respondents. All undertakings require positive measures to be undertaken by those proffering them and the measures involve compliance or education programmes. I will deal first with the fifth undertaking because it is straightforward and can be disposed of briefly. ' In my opinion, the undertaking is within power and it would be appropriate to accept it. It is true that the seminar will go beyond the particular provisions in issue in this case, but I think there is a sufficient nexus between the alleged contravening conduct and the subject matter of the proposed seminar. The seminar is to relate to Part IV of the Act and, in particular, the issue of price fixing and anti-competitive collusion in the context of contracts, arrangements and undertakings. In my opinion, a knowledge of the other provisions of Part IV of the Act will assist in an understanding of the operation of s 45 and s 45A. He holds qualifications in economics and law and was employed in the Commission's compliance section for a number of years. He appears to be well-qualified to express the opinions set out in the report. The purpose of the report was to review the implementation and effectiveness of Auspine's trade practice compliance programme over five years. However, in the course of his report Mr Johnson makes a number of recommendations, and those recommendations are the subject of the undertaking. These would be more likely to be read and referred to by staff than the longer manuals and policies that are currently available. For example, as resources permit, Auspine's Legal Counsel may be able to provide regular brief presentations at various Business Unit meetings within Auspine on current trade practices related matters that may have an impact on Auspine. This will also allow that person to "touch base" with staff and keep trade practices compliance current in the minds of staff in between the planned biannual training sessions. Auspine may wish to consider short, regular trade practices "information" sessions that could be conducted for targeted staff on topics of relevance to Auspine's operations. This will assist Auspine by reducing the time between training sessions, ensuring more targeted training is conducted while minimising disruption to everyday duties of staff and general business operations of Auspine. This could be done by way of targeted brief information sessions for groups of staff or regular presentations by Auspine's Legal Counsel at Business Unit or staff meetings. The first difficulty is that the compliance programme to which the undertaking relates goes beyond the provisions of ss 45 and 45A of the Act and indeed the provisions in Part IV of the Act ( Z-Tek , REIWA ). This difficulty can be overcome by linking the recommendations to the provisions in Part IV of the Act. The second difficulty relates to the nature of the recommendations. Is it within power or appropriate to impose nothing more than an obligation to consider doing something? Counsel for the Commission said that it was, likening the obligation to that placed on the holder of a power to appoint property of a testator or settlor to third parties. I am prepared to accept that in the circumstances of this case it is within power and appropriate to impose an obligation (or accept an undertaking) requiring Auspine to consider doing something. The undertaking is proffered as part of a commercial settlement. Auspine is a large organisation which has a detailed trade practices compliance programme and an obvious interest in improving the same. The difficulty with some of the recommendations set out above is that they do not even place an obligation on Auspine to consider taking a particular course of action. I would not accept an undertaking in such terms. This particular problem can be overcome by making the obligation to consider mandatory. The Program will be implemented within two calendar months of this Undertaking. Such records are to be available from one week after the date of review for a period of three years after that date. Such records are to be provided to the Australian Competition and Consumer Commission within five working days of a written request for those records. The Respondent shall ensure that an independent external consultant with expertise in trade practices law conducts training on the Program including in relation to price fixing and anti-competitive collusion in contravention of Section 45 of the TPA, to the Respondent's staff on six occasions during the three year period following the making of this Undertaking. The first of these training programs is to be completed within three calendar months of this Undertaking and the remaining five on a six monthly basis thereafter. The formulation of the programme is left to the respondent and the external consultant (clause 3). The suggestion is that it is up to an independent external consultant to determine if whatever programme is formulated is appropriate and is implemented from time to time (clauses 8 and 9). As I have said, I do not see a difficulty with a requirement that an independent external consultant review the question of compliance with a programme providing the major aspects of the programme are defined and providing the question of whether there has been a breach of the programme is not made to turn solely on the consultant's opinion. A further difficulty is that there is a suggestion (see clause 9(c)) that the programme may be changed from time to time. I do not think that I have the power to accept this undertaking or, in the alternative, I do not think that it is appropriate to do so. Conclusion For these reasons, I refuse to accept the undertakings proffered by the respondents and to make the orders sought by the parties. I will give the parties liberty to apply so that the parties can make a further application if so advised. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | enforcement and remedies undertakings court's power to accept undertakings degree of certainty required nexus between alleged or established contravening conduct and undertakings compliance programmes whether within power and appropriate for court to accept undertaking requiring external audit of trade practices compliance programme whether within power or appropriate for court to accept undertaking to the effect that a party may 'consider' a course of action. trade practices |
It would appear that in January 2007 Telstra advised the Department of Communications, Information Technology and the Arts ('the Department') that since lodging its application it had decided to proceed with 'OF installation to Marble Bar' at its own expense for operational reasons. Accordingly, it sought permission from the Department to remove such installation from its application and to substitute other works. By an email dated 25 January 2007 an officer of the Department invited Telstra to do so. On 31 January 2007 Telstra provided the Department with an amended application and other documents explaining the relevant changes. 4 On 18 June 2007 Telstra was advised by an officer of the Department that its application had been unsuccessful. The OPEL Networks proposal was considered to offer the Government the best value for money. OPEL has agreed to make its own commercial contribution of over $900 million to significantly upscale this new network. WiMAX is a high quality wireless broadband standard that is purpose built for supplying very fast speeds over long distances and is specifically designed for optimum broadband performance. ● Why wasn't it told about the possibility of funding exceeding $600 million? If I had been aware that the Commonwealth had made an additional $358 million in funding available, I would have worked with the Fundamental Planning and the Finance divisions within Telstra to establish various scenarios as to how that $958 million could be allocated by Telstra. I would have sought to develop a proposal to use the additional funding to provide greater ADSL coverage to more under-served areas and premises. After taking all the above factors into account, I would have put forward to senior management each scenario for their consideration, together with my own recommendation as to the most appropriate option for Telstra. Senior management would ultimately have been responsible for deciding the details of any revised bid lodged by Telstra for the $958 million in funding. He was primarily responsible for preparing Telstra's proposal for funding under the Infrastructure Programme. 13 As Mr Smith explained in paragraph 124 of his affidavit his role was confined to putting forward matters for consideration by senior management. His role was to make recommendations. He had no responsibility for decision making in respect of applications for funding that Telstra may have seen fit to lodge. 14 Mr Smith's evidence was that the Telstra Country Wide business division, in which he worked, covered all areas in Australia outside Sydney and Melbourne. As a Business Development Manager in that division he reported to a Gary Goldsworthy who was the Director of Business Development and Support, who in turn reported to a Geoff Booth who was the Group Managing Director in the division. 15 Mr Smith gave evidence that the head of the project team within Telstra in relation to the Infrastructure Programme was a Mr Don Pinel. 16 It is clear that at an executive level the decision as to whether or not Telstra would submit an application for a funding grant and the form such an application might take rested with Telstra's Chief Executive Officer, Mr Sol Trujillo. 17 At an Industry Briefing attended by officers of Telstra and officers of the Department on 27 September 2006 Mr Smith asked a series of questions of the Departmental officers which he had previously prepared and reduced to writing. The Telstra representatives at the briefing were Don Pinel, Paul Granville, David Quilty and Mr Smith. 18 By an email dated 26 October 2006 to Mr Smith, a Mr Sleeman from the Department provided Telstra with a clarification of the Infrastructure Programme guidelines in response to Mr Smith's questions. Does the $600m include GST? Also, DCITA is not obligated to outlay all the funding, for example, if the selected projects do not require this amount of capital contribution or if all the underserved premises are not adequately covered. 21 Previously, by a Media Release dated 31 October 2006, the Minister had announced that the deadline for submitting proposals under the Infrastructure Programme had been extended to 18 December 2006, the date on which Telstra lodged its initial application for funding. 22 It would appear that on 15 June 2007 (three days before the Prime Minister's announcement of OPEL Networks Pty Ltd as the successful applicant) Senator Stephen Conroy, the Shadow Minister for Communications and Information Technology in the Commonwealth Parliament wrote a letter to the Commonwealth Auditor-General expressing his concerns about the manner in which the tender process for the Infrastructure Programme was being administered by the Department. However, in light of your correspondence, we have undertaken a preliminary review into the selection of the program's preferred applicant to provide broadband access to currently under-serviced areas and premises. Neither clarification mentioned the potential availability of additional funds beyond $600 million. All of the applicant's funding options were considered in the benchmarking phase of the assessment process. However, the application did not proceed to the final assessment phase for reasons unrelated to the amount of funding sought by the applicant. ... The possibility that the Government may commit additional funds to the program if it believed that additional funding was justified and would bring significant benefits, may have influenced some potential applicants and applications. OPEL Network's application sought $600 million of Australian Government funding. DCITA documentation indicates that, with Ministerial agreement, its negotiations with OPEL Network focused on enhancing its proposal within the $600 million funding available, as well as exploring options to extend service coverage to a greater number of under-served premises should additional funding be made available. This approach was supported by DCITA's process advisors. Where did the additional $358 million in funding come from? We assessed all the bids in accordance with those Guidelines. We did not have any communications with the Minister until we had made our recommendation. Once we made our recommendation to the Minister, the Minister's office asked us what could be achieved with an additional $358 million in Commonwealth funding. Before turning to the Clayton Utz letter, it is appropriate to note that at the debriefing session a number of shortcomings in respect of Telstra's application for funding were discussed. Mr Bryant, who apparently opened the meeting, commenced by indicating that applications were required to satisfy eight criteria at the screening and benchmarking stage. Whilst Mr Smith raised certain questions at the de-briefing session on 2 August 2007, no challenge was apparently made by Telstra to the Department's finding that Telstra's application was unsatisfactory when assessed against three of the eight essential deliverables specified in the Infrastructure Programme guidelines. 27 It would appear that on 20 October 2006 the Chief Executive Officer of Telstra, Mr Sol Trujillo, considered Telstra's then proposed bid for funding under the Infrastructure Programme. A memorandum prepared by Mr Smith for a meeting of Telstra's Policy Council on 1 November 2006 recorded that Mr Trujillo agreed for Telstra's Infrastructure Programme team to continue to develop a detailed and fully costed proposal for consideration by Mr Trujillo and agreed in principle that ADSL extension was the preferred approach that Telstra should pursue. ... . This next stage, with a value of $600m has been established to encourage infrastructure build to provide broadband services to premises which are currently not served by terrestrial broadband services. On that day a number of emails passed between servants or agents of Telstra under the heading 'RE: Australian Foreign Aid for Singapore'. The emails which are in evidence include emails from Don Pinel as Executive Director, Transformation, Telstra Country Wide and John W Short. Anyone hear anthing (sic) ???? Maybe the $600 will be consistent with the original intent (we are also hearing this) and the additional $300M will be for competitive infrastructure????? Means we have to get even stronger on the inappropriate use of Taxpayer funds and the negative impact of this on investment. The infrastructure program will establish an efficient, sustainable broadband infrastructure base across regional Australia to enable the roll-out of higher speed broadband. Did we receive any such info? The funding would comprise $600 million from Government's Broadband Connect programme, a further $358 million Government investment and a matching commitment from Optus and Elders of $917 million comprising $200 million in cash and $717 million in value in kind including existing infrastructure and services acquired from other providers including Telstra. Whether the additional $358M has been lawfully appropriated from Consolidated Revenue. This means that there is no simple and obvious "killer legal blow" to this decision based on the information currently available. What we understand is the text of that request is at the end of this advice. The Auditor-General presents the best opportunity for exposing what has occurred as the Auditor-General has the ability to obtain information and also the ability to review the decision on the merits in terms of whether it is an efficient and effective use of public money. Telstra, by contrast, has very limited rights. We should do as much as possible, publicly and privately, to assist whatever review he undertakes. Hence, we have split the legal work into various teams across various firms and Senior Counsel to get as many lateral approaches as possible. The first stage in this process is a series of correspondence with DCITA setting up the claim and seeking documents. The second stage (which would commence in about a month depending on what comes out of stage one) is the formal legal process to get a hearing date for pre-trial discovery, which means the hearing is then likely during September or a month either side, with judgment on access to the documents likely to followed (sic) a month or two later. If we are successful in getting documents this way, there will be limits on how they are used (eg only for litigation purposes, not in the media), but the hearing itself will be public and would presumably of itself be of media interest. We may be more successful than we expect, and in any event, we focus the Government on taking greater care in any future decision making. The effect of this, at the very least would be to delay the commencement of any build by Opel while the government remade its decision on a proper procedural basis. This would take time and with an election looming, if there is a change of government it would be very surprising if this proposal then proceeded. Against that is the fact that we may have lodged a different bid had we known all the facts and what was actually on offer, and that, by misleading Telstra in relation to the amount of funding available and the expectations concerning metro-comparability, DCITA may not have fulfilled its obligations to us regardless of the then status of our bid. If it turns out that Singtel also lodged a non complaint (sic) initial bid, that would also be positive for the likelihood of success. We are commencing a review with those involved in TCW to take statements and see what other evidence we can develop. He readily acknowledged that in an earlier form Telstra's draft bid was non-compliant. Telstra has chosen not to tender its 'bid' to demonstrate that it was, as Mr Smith asserted, a 'compliant bid'. It should also be noted that Mr Smith's contemplated work on developing proposals as to how $958 million could be allocated by Telstra, has to be measured against Mr Pinel's observation of 2 March 2007 that more funding would be a problem for Telstra as it 'had trouble in spending the $600 M' (see [11] and [29] above). 40 By the letter from Telstra's Group General Counsel Legal Services to the Minister dated 19 July 2007 it sought answers to a number of questions. However, the available information, including your announcement, suggests that all of the funding is being provided to support the capital cost of establishing new broadband infrastructure in accordance with the Program. As a matter of substance, therefore, the Government appears to have amended the Guidelines by substantially increasing the amount of funding available under the Program without notifying all applicants, and in particular Telstra, of the change. The Government did not amend the Guidelines by substantially increasing the amount of funding available under the Program. Indeed, the only amendment to the Guidelines once they were published on 21 September 2006 was to extend the closing date for applications to 18 December 2006. The Government did not make additional funding available pursuant to the application process for the Program. All applications were assessed strictly in accordance with the Guidelines, including in relation to the eight essential deliverables set out in section 2.1 of the Guidelines. Applications were required to achieve each of these essential deliverables to a satisfactory level to pass the benchmarking step in the assessment process (as set out in section 3 of the Guidelines). OPEL's application under the Program did not seek funding greater than $600 million. In accordance with the process provided for in the Guidelines, Telstra's application did not pass the benchmarking assessment and was therefore excluded from further consideration at the end of benchmarking. Whereas Telstra's application was determined to be unsatisfactory with respect to three of the eight essential deliverables, the OPEL application was assessed in accordance with the process in the Guidelines as meeting each of the eight essential deliverables and being the preferred application. As noted above, the OPEL application did not seek funding in excess of $600m. After the OPEL application was determined by DCITA's assessment team to be the preferred proposal, OPEL was invited by DCITA to enter into discussions. Those discussions focused on enhancing the value for money to the Government in respect of the $600 million funding sought by OPEL. Discussions also explored additional options to extend coverage of the OPEL solution to a greater number of under-served premises should the Government decide to provide additional funding for this purpose. The Government decided (as is its prerogative to do), following the discussions with OPEL, to make additional funding available to OPEL to obtain extended coverage. As you will appreciate, it is ultimately an executive matter for the Government to determine whether, how, and in what amounts, it decides to fund initiatives in the national interest. ... the Guidelines do not state that funding could not be sought beyond $600 million. Only one potential applicant (which was not OPEL) sought information as to whether more than $600 million might be made available, at a briefing session held on 24 November 2006, as provided for in section 6.7.1 of the Guidelines. DCITA stated that it could not comment on whether more than $600 million would be made available under the Program. The potential applicant then asked whether a bid in excess of $600 million would be considered. DCITA stated that it was up to the applicant to decide on the scope of its application but that DCITA was encouraging all applicants to submit modular proposals, in both size and scope. DCITA stated to the potential applicant that it should submit a bid within the budget. DCITA also stated that the Government may commit further funds if it believed additional funding was justified and would bring significant benefits. What was the content of the communications referred to at 1(a) and (b). We are also instructed that there was no communication between the Government and OPEL in relation to the possibility of any additional funding being made available for additional coverage and benefits until after OPEL had been selected as the preferred applicant on the basis of the assessment of OPEL's proposal as submitted. Accordingly, Telstra's application was excluded from further consideration at the completion of benchmarking (by decision of the assessment panel on or about 14 February 2007). not until after OPEL's selection as preferred applicant), DCITA and OPEL also explored options to extend coverage of the OPEL solution to a greater number of under-served premises if additional funding was to be provided. OPEL was requested to provide a separate proposal in relation to the relevant additional benefits and coverage. When did OPEL first submit an application seeking more than $600 million of funding, either under the Program or in addition to funding available under the Program? As noted above in response to Questions 1 and 2, after OPEL had been selected as the preferred applicant and as part of discussions to improve the value for money to the Government of OPEL's submitted proposal, DCITA and OPEL explored options for extending coverage if additional funding were to be provided. OPEL first submitted an additional proposal to achieve extended coverage on 2 April 2007. Following further discussions, a proposal to extend the OPEL coverage for an additional $358 million was submitted by OPEL on 31 May 2007. When did the Minister decide to award funding to OPEL? On 10 April 2007, the Minister agreed to OPEL's submitted proposal, as revised during the course of the discussions with OPEL, for funding of $600 million. On 5 June 2007 the Government agreed to OPEL's additional proposal. ...there can be no suggestion that Telstra has any cause of action against the Commonwealth with respect to the application process for the Program. In this regard, we refer in particular to section 6.1 of the Guidelines which in DCITA's view precludes any possibility of the existence of a cause of action as impliedly asserted in your letter. Even if, notwithstanding section 6.1 of the Guidelines, anything done or not done by DCITA in relation to the conduct of the funding application process for the Program could conceivably give any potential applicant a cause of action against the Commonwealth, the facts recited above negate the existence of any such cause of action. Directions have also now been sought as to the form of the discovery to be given and in relation to the inspection of documents that may be discovered. The original Application was filed on 3 August 2007. Rather, it sought the tender of competing proposals which, if implemented, would achieve certain specified goals that were deemed to be in the public interest, when viewed on their own or in conjunction with other proposals. The object of the exercise was to secure an outcome which met a series of benchmarks and for which a taxpayer funded grant or grants of up to $600 million would/may be available. A discretion to withhold funding was reserved in the event that projects that were proposed did not offer what was considered to be sufficient value-for-money. The Infrastructure Programme contemplated the provision of privately owned, rather than publicly owned, broadband infrastructure at taxpayer expense. The opportunity to provide a response to the EOI was available to all interested parties, including carriers and service providers. As a result, the Australian Government is now implementing a Broadband Connect Infrastructure Program and is seeking applications for funding from interested parties on a competitive basis in accordance with these guidelines. The intent is to collectively provide sustainable wholesale broadband services as widely as possible across the geographic areas covered under the existing Broadband Connect program in order to provide broadband access to currently under-served areas and premises. In this regard, applicants could present a range of options for the geographic coverage of their proposed projects. For example, applicants could include a national option as well as options for lesser geographic areas of coverage that might also fit their proposed business case. Value-for-money in this context involves a range of considerations, which are reflected in the assessment criteria, and further detailed in part 4 (Assessment criteria) below. The Australian Government also reserves the right not to allocate funds from the Mobile Connect program for new mobile phone infrastructure if it considers that projects do not offer sufficient value-for-money. Funding will not be provided to support the ongoing operation of networks established through the program. Only one funding round will be held. Depending on the nature of the applications received, the Australian Government may not allocate any or all available funds. Funding will support infrastructure that will service under-served areas or premises that otherwise would not get timely access to metro-comparable services through commercial investment alone. All applications will be screened to ensure that they are compliant with the requirements set out in these guidelines and associated documentation, and provide sufficient information to be effectively assessed. Applications that do not meet the benchmark standard, and which therefore do not provide sufficient value-for-money to warrant further assessment, will be excluded at this point. Section 4.2 below sets out the criteria that will be used for the comparative assessment. The proposed re-shaping framework is set out in part 3 (Application assessment strategy) below. For the purposes of assessing applications for funding, the Australian Government has divided these outcomes into essential deliverables and desirable features. Essential deliverables must be addressed by all proposals, while desirable features are additional benefits that would add value to proposals and which will be taken into account in the comparative assessment process. Applications will be required to achieve these essential deliverables to a satisfactory level to pass the benchmarking assessment. The essential deliverables will also be a key component of the comparative assessment process in stage two. Although these features are not essential, they would add value and are likely to be favourably considered should an application pass the benchmarking assessment and proceed to the comparative assessment process in stage two. Desirable features will be drawn on to help distinguish between proposals that are assessed at a reasonably equivalent level against the essential deliverables. This is because under-served premises are located throughout regional, rural and remote areas, including in regional and rural cities and towns as a result of technology impairments (e.g. RIMs and pair gains). Alternatively, a proposed project may be considered to offer significant coverage if it offers coverage broadly across discrete target communities that face particular difficulties in accessing services (e.g. remote Indigenous communities). It is expected that proposed projects would cover at least 95 per cent of under-served premises within the target coverage area. In relation to geographic areas this means that proposed projects must offer coverage across the populated parts of contiguous regional areas, given that under-served premises are generally located throughout such populated areas. In general, such justification would need to include technical and/or economic reasons why it was not reasonably feasible to provide broadband access to such premises using the proposed technology or mix of technologies. All under-served premises will be considered of equal importance. Such benefits might include additional higher speed broadband services and additional wholesale access, particularly in relation to services that may be considered to have 'bottleneck' characteristics. Following the selection by the Australian Government of any preferred project proposals, DCITA will enter into contract negotiations with the successful applicant(s). In order to pass the screening stage an application will need to meet the following minimum requirements. The purpose of the benchmarking assessment is to assess all applications against the essential deliverables. Both quantitative and qualitative means will be used to assess if a proposed project represents overall value-for-money in terms of meeting the essential deliverables. Applications will then be assessed on a comparative basis. The comparative assessment criteria build on the benchmarking criteria (which will remain the key assessment criteria), but also include assessment criteria relating to desirable features, which will be used to distinguish between applications that are otherwise assessed at a similar level. Should the Australian Government be unable to finalise a funding agreement (or any other required documentation) with a preferred applicant, the Australian Government may, at its sole discretion, decide to grant funding to another applicant and invite that applicant to finalise a funding agreement and any other required documentation. It is expected that all proposals, including those targeting the most remote parts of Australia, will contribute part of the required capital investment towards establishing new wholesale broadband infrastructure in targeted service areas. Proposals will be compared based on the cost to the Australian Government of providing each under-served premises with access to wholesale broadband services that would allow at least metro-comparable retail broadband provision (see section 4.1.2.1 above). Proposals will be comparatively assessed on any commercial contributions to providing broadband services to under-served premises, based on the approach outlined in section 4.1.2.2 above. Proposals will be compared based on the total number of under-served premises (residential and small business) within the proposed target coverage area that would be provided with access to wholesale broadband services that would allow the provision of metro-comparable retail services. Proposals will also be compared based on the percentage of under-served premises (residential and small business) within the proposed target coverage area that would be provided with access to wholesale broadband services that would allow the provision of metro-comparable retail services. No action or inaction in relation these guidelines (sic) , whether the issue of the guidelines, the making or assessment of an application, any steps in relation to stage two of the assessment process as described in these guidelines, or otherwise, creates any contract, or a binding undertaking of any kind by the Australian Government, including without limitation, quasi-contractual rights, promissory estoppel or rights with a similar legal basis. The Australian Government will notify all potential applicants (by means of a media release and an appropriate notice on the DCITA website), or all applicants where the time for submission of applications has closed, of any changes to these guidelines. It allows for discovery to identify a respondent, discovery from a prospective respondent, discovery from a non-party, inspection of discovered documents and inspection, measurement, photocopying, preservation, custody and detention of property, the taking of samples, carrying out of experiments etc. (cf. Order 17 rule 1 of the Rules in respect of inter-partes proceedings which have already been commenced). 52 Order 15A rule 2 ensures that a person providing discovery under Order 15A is not required to produce documents which, on the ground of privilege, the person could not be required to produce. Division 2 of that Order deals with inspection and includes rules 10 --- 14. Paragraphs 6 (a) and 6 (c) pose an objective test, the opening words "there is" in each paragraph signifying "there exists"; but the "insufficiency test" of para 6 (b) has both subjective and objective aspects. Although I need not explore the subjective aspect fully, it seems clear that if the evidence went so far as to show that a particular applicant was already able to decide to commence a proceeding by, for example, showing that the applicant had in fact decided to do so, para 6 (b) would not be satisfied even though the information available satisfied the objective aspect of the insufficiency test referred to below. The fact that a particular applicant genuinely feels unable, because of a lack of information, to decide to commence a proceeding does not, without more, satisfy para 6 (b); the objective aspect of the paragraph requires it to be shown as an objective fact that the applicant lacks "sufficient information to enable a decision to be made whether to commence a proceeding". In my view, the objective aspect of para 6 (b) invokes a notion of "reasonable sufficiency", the question raised being whether it is reasonable that the applicant for an order be required to take its decision without having the information to become available from inspection of the document or documents of which discovery is sought. If the insufficiency test is satisfied, a second question will arise, namely, whether the Court's discretion should be exercised in favour of the making of an order. The questions posed by rule 6 and referred to above are to be answered in the context of an adversary system of forensic contest in which a proposed respondent is ordinarily entitled to withhold its evidence, certainly prior to the commencement of proceedings. The questions are also to be answered in the light of the nature of the "cause of action" contemplated and the range of information potentially available in respect of a cause of action of that kind. ... in my opinion rule 6 is not necessarily rendered unavailable by the fact that the applicant already has available evidence establishing a prima facie case for the granting of relief. This is made clear by the reference in para (a) to the existence of "reasonable cause to believe that the applicant has ... the right to obtain relief ..." (emphasis supplied). It would impose an artificial constraint on rule 6, not supported by its terms or purpose, to exclude, a priori , all cases in which the insufficiency of the information possessed by the applicant to enable a decision to be made whether to litigate is due to a matter of "defence" which would defeat the prima facie case. Rule 6 does not provide a means by which an applicant will be enabled to have available to it every document which would assist it in deciding whether to litigate. If that were the intention, paras (a) and (c) would stand alone and the additional condition set out in para (b) would not be necessary. Paragraph 6 (b) contemplates that after making all reasonable inquiries, the applicant has come up against a problem, namely, that it is lacking a piece of information or pieces of information reasonably necessary to enable it to decide whether to commence a proceeding. Further, the words "or may have" cannot be ignored. Belief is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. The question is whether the applicant has sufficient information to make a decision whether to commence proceedings in the court: Quanta Software at ALR 543 [33]-[34]; IPR 32-3, Alphapharm at 24---6. Indeed O 15A r 6 "expressly contemplates" what once might have been castigated as "fishing": Bailey v Beagle Management Pty Ltd [2001] FCA 60 ; (2001) 105 FCR 136 at 143 [27] ; [2001] FCA 60 ; 182 ALR 264 at 270-1; 20 IPR 79 at 85. All documents (including but not limited to, correspondence and notes of any discussions between the Respondent or any officer, servant or agent of the Department of Communications, Information Technology and the Arts (the Department ) and OPEL Networks Pty Limited ( OPEL )) relating to the possibility of any applicant for funding under the Broadband Connect Infrastructure Program (the Program ) being able to submit an application seeking more than $600 million of funding, or being provided with funding in excess of $600 million, either under the Program or in addition to funding available under the Program. All applications made by OPEL for funding under the Program and for any additional funding for its proposed infrastructure projects as described in the media release entitled "Australia Connected: Fast affordable broadband for all Australians" issued by the Respondent on 18 June 2007. All documents recording or implementing the decision to award funding under the Program to OPEL including the signed funding agreement with OPEL. 60 Were I otherwise minded to make an order for preliminary discovery, I consider that the categories of documents defined in the Second Further Amended Application would be appropriate. The party has in his possession ... the documents enumerated in Schedule 1. 65 Telstra has no objection to an order being made requiring it to pay the reasonable costs of the Minister of making and serving a list of documents, should an order for discovery be made against the Minister. 67 It is not of the essence of an interlocutory order that it is one made in the course of a pending action or suit (per Taylor J in Hall at 440; see also per Owen J at 447). 68 An order made on an application in proceedings preliminary to the bringing of an action, which does not preclude a further application to like effect being brought, is interlocutory (per Taylor J in Hall at 440; see also per Owen J at 447). 69 The character of proceedings such as an application under Order 15A rule 6 may be of more significance than the result for an applicant, in determining whether an order is interlocutory or not (per Windeyer J in Hall at 445). 70 An order made in an application under Order 15A rule 6 will be interlocutory, given that it will not preclude a further application (per Beaumont, Lee and Dowsett JJ in Malouf v Malouf [1999] FCA 284 ; (1999) 86 FCR 134 at 143). 71 Discovery against a prospective respondent is invasive. If therefore the plaintiff in a bill for discovery does not show by his bill a title to sue the defendant in some other court, or that he is actually involved in litigation with the defendant or liable to be so, and does not also show that the discovery which he prays is material to enable him to support or defend a suit, he shows no title to the discovery, and consequently a demurrer will hold. There are exceptions to this rule, as where the object of discovery is to ascertain who is the proper party against whom the suit should be brought. But these are of rare occurrence. The bill must, therefore, allege (and if required, the fact must be established) that the plaintiff is unable to prove such facts by other testimony. 77 Order 15A rule 6 is directed to aiding an applicant who is having real difficulty, and reasonably so, in deciding whether to litigate because of a lack of key information, whether relating to its own case or to that of the proposed respondent, which is in the possession of the respondent. It requires evidence demonstrating that the applicant for relief is on the horns of a dilemma: whether to sue or not to sue (per Lindgren J in Alphapharm at [45]). 79 It wishes to mount an argument that it was denied procedural fairness. 80 It also contends that, in allocating the additional $358 million, the Minister as the relevant 'approver' failed to satisfy herself that the proposed expenditure was in accordance with the policies of the Commonwealth as required by Regulation 9(1)(a) of the Financial Management and Accountability Regulations 1997 (Cth) ('the FMA Regulations') made under the Financial Management and Accountability Act 1997 (Cth). In other words, it contends that it is not just a busybody sticking its oar into business which is of no direct concern to it. 84 In Bateman's Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Limited [1998] HCA 49 ; (1998) 194 CLR 247 ('Bateman's Bay') the first respondent, the Aboriginal Community Benefit Fund Pty Ltd, operated a contributory funeral benefit fund business catering for members of the New South Wales aboriginal community. The second respondent, the Aboriginal Community Benefit Fund No 2 Pty Ltd, operated a contributory life insurance business for members of the same community. The first appellant, the Bateman's Bay Local Aboriginal Land Council, was a body corporate constituted under s 6 of the Aboriginal Land Rights Act 1983 (NSW). Its functions were set out in s 12(1) of that Act. The second appellant, the New South Wales Aboriginal Land Council, was a body corporate constituted under s 22 of the same Act. Its functions were set out in s 23(1) of that Act. There was no power permitting the second appellant to expend monies by providing a subsidy, guarantee or indemnity. By a deed of trust between the first appellant as trustee, the second appellant as guarantor and the State of New South Wales, the New South Wales Aboriginal Land Council's Funeral Contribution Fund was established. The second appellant provided an indemnity to the first appellant in respect of any liability the first appellant might suffer in connection with the New South Wales Aboriginal Land Council's Funeral Contribution Fund. 85 The respondents instituted proceedings in the Supreme Court of New South Wales seeking an order restraining the appellants from carrying on the New South Wales Aboriginal Land Council's Funeral Contribution Fund. At first instance, McLelland CJ in Eq held that the respondents lacked standing to maintain the proceedings. That decision was reversed on appeal to the New South Wales Court of Appeal. The matter was remitted to McLelland CJ in Eq for hearing. His Honour proceeded to make declarations and grant injunctions in the respondents favour. The appellants proceeded to appeal against the decision of the Court of Appeal in respect of standing. Special leave to appeal was granted on the condition that the appellants withdrew their appeal against McLelland CJ in Eq's decision on the merits. The High Court dismissed the appeal in respect of standing, with costs. 86 It held that the public interest in equity may be vindicated at the suit of a party with a sufficient material interest in the subject matter. No doubt special considerations may apply in that context, but it would be an odd result if the requirements for standing outside the constitutional sphere were more stringent than within it. Prejudice to a sufficient material interest, such as that in the practice of a profession or occupation, will suffice in constitutional cases. The primary judge found that because the parties would be operating in substantially the same limited market it was highly probable that, if not restrained from commencing and concluding their activities, the appellants would cause severe detriment to the business of the respondents. That, in the circumstances of this litigation, gave the respondents a sufficient special interest to seek equitable relief. In most cases, it is for the executive government and not for the civil courts acting at the behest of disinterested private individuals to enforce the law. There are sometimes very good reasons why the public interest of a society is best served by not attempting to enforce a particular law. To enforce a law at a particular time or in particular circumstances may result in the undermining of the authority of the executive government or the courts of justice. In extreme cases, to enforce it may lead to civil unrest and bloodshed. It is a decision that is arguably best made by the Attorney-General who must answer to the people, rather than by unelected judges expanding the doctrine of standing to overcome what they see as a failure of the political process to ensure that the law is enforced. The subject matter of this suit is the legality of the Councils' arrangements setting up the State Fund. The respondents had a special interest in that subject. The allegedly unlawful activities of the appellant affected them financially and to an extent that exceeded the injury to any other individual. Moreover, if the arrangement between the appellants was illegal, the continuing financial injury to the respondents, caused by the arrangement, would be remedied by a grant of the injunction they sought. 90 Under s 64 of the Constitution the Governor-General was empowered to appoint 'officers to administer such departments of State of the Commonwealth as the Governor-General in Council may establish'. Such officers were to 'be members of the Federal Executive Council' and to 'be the Queen's Ministers of State for the Commonwealth'. The Minister is such an officer. 91 Under s 71 of the Constitution , the judicial power of the Commonwealth was vested in the High Court of Australia and, relevantly, 'in such other federal courts as the Parliament creates'. 92 By virtue of s 75(v) of the Constitution , original jurisdiction was conferred on the High Court of Australia in all 'matters' in which 'a writ of Mandamus or prohibition or an injunction' was 'sought against an officer of the Commonwealth'. 93 By s 77 of the Constitution the Parliament was empowered to make laws defining the jurisdiction of any federal court other than the High Court. 95 Constitutional writ relief under s 75(v) of the Constitution is discretionary. (See Re Refugee Review Tribunal; ex parte AALA [2000] HCA 57 ; (2000) 204 CLR 82 ('AALA') at [5], [18]-[62], [145]-[150], [172] and [217]; see also Lam at [25] per Gleeson CJ. The discretion is to be exercised against the background of the animating principle described by Gaudron J in Enfield City Corporation v Development Assessment Commission . It follows that, within the limits of their jurisdiction and consistent with their obligation to act judicially, the courts should provide whatever remedies are available and appropriate to ensure that those possessed of executive and administrative powers exercise them only in accordance with the laws which govern their exercise. The rule of law requires no less. " (Footnote omitted. At the time when the cancellation of his visa was under consideration Lam was incarcerated, having been sentenced to imprisonment for eight years for trafficking in heroin. He was notified that contact was being sought with his children's carers to assess the possible effect upon them of a cancellation of his visa. As it transpires, the relevant Minister made no attempt to contact the carers. 98 The High Court dismissed Lam's application for prohibition and certiorari in respect of the relevant Ministerial decision to cancel his visa. Lam alleged that the relevant Minister failed to accord him procedural fairness/natural justice by failing to make the foreshadowed contact with the carer of his children. 99 Not every departure from a stated intention necessarily involves unfairness, even if it defeats an expectation (per Gleeson CJ in Lam at [34]). 100 A failure to observe an expectation reasonably attributable to a party such as Telstra does not reasonably (perhaps better expressed as 'necessarily') found a case of denial of natural justice. The notion of legitimate expectation serves only to focus attention on the content of the requirement of natural justice in the particular case. The ends sought to be attained by the requirement of natural justice may be variously identified. The concern is with the fairness of the procedure adopted rather than the fairness of the outcome. It is with the decision-making process, not the decision. (Per McHugh and Gummow JJ in Lam at [105]). 101 On no view can the doctrine of 'legitimate expectation' give rise to substantive rights rather than to procedural rights (per Callinan J in Lam at [148]; see also per Gleeson CJ at [28]). 102 The content of the requirement for procedural fairness may fluctuate during the course of particular administrative decision-making (per Gaudron and Gummow JJ in AALA at [62]; see also per McHugh and Gummow JJ in Lam at [48]). 103 Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice (per Gleeson CJ in Lam at [37]). 104 If, in making a decision, a decision-maker is obliged to act with procedural fairness, the decision-maker must give a sufficient opportunity to those directly affected by the decision to present material and argument before the decision is made (per Hayne J in Lam at [114]). 105 In MBA Land Holdings Pty Ltd v Gungahlin Development Authority (2000) 206 FLR 120 ('Gungahlin') Higgins J, as his Honour then was, sitting in the Supreme Court of the Australian Capital Territory, found that the respondent had failed to accord tenderers procedural fairness in respect of the grant of a lease of certain land within the Territory. Tenders had been submitted by a number of tenderers but it was not apparent whether the bids that were submitted were inclusive or exclusive of goods and services tax ('GST'). After the closing date for tenders, the respondent asked the tenderers to clarify the GST aspects of their respective bids. The successful tenderer, Landco Pty Ltd, had offered $5,700,000. Following the request for clarification in relation to the GST position, Landco Pty Ltd advised that its price 'exclusive of GST' was $6,080,000. Plainly this bid involved an increase in the tender price of $380,000 independently of any GST. In the circumstances, Higgins J found that acceptance of Landco Pty Ltd's revised tender rendered the 'assessment process lacking in procedural fairness' (at [182]). 106 The present case is not such a case. In this case the only evidence of the submission of a different application for funding of up to $600 million, after the closing date for applications, related to Telstra's own application. It will be recalled that Telstra substituted a different proposal for the provision of infrastructure, following its decision to proceed with 'OF installation to Marble Bar' at its own expense for operational reasons. 107 Apart from other considerations, the Court in Gungahlin found that the obligation to accord procedural fairness to tenderers arose by virtue of an implied agreement with the respondent pursuant to the Conditions of Tender independently of the respondent's public law obligations to like effect. Given paragraph 6.1 of the guidelines, no such finding could be made in this case. It will be recalled that Part 3 of the guidelines stated that the 'Australian Government's objective' was to improve access to broadband services in regional Australia to the maximum extent possible. It would seem to me that the importance of the guidelines cannot be denied in discerning the relevant policies. However, regard must also be had to the relevant Ministerial Media Releases, notably the joint Media Release of the Minister and the Deputy Prime Minister and Minister for Trade of 21 September 2006 referred to at [1] above. That Media Release revealed that the guidelines had been 'finalised after an Expressions of Interest process earlier this year'. It is becoming increasingly apparent that next generation broadband, characterised by multi-megabit capacity able to support advanced multimedia applications and improved delivery of government services, is becoming essential to Australia's economic and social prosperity. While such services are increasingly available in the major metropolitan areas, there is concern that the purely commercial roll-out of these services may not occur in regional and rural areas in a timely way. The Australian Government intends to test the feasibility of using a substantial portion of the Broadband Connect funding to facilitate a small number of major infrastructure projects that would also leverage significant commercial investment in order to drive a major advancement in the capacity and reach of Australia's regional broadband networks. Funding support would be targeted at supporting the provision of infrastructure to service under-served areas that otherwise would not get timely access to metro-comparable services through commercial investment alone. 111 The fact that funding support for large scale broadband infrastructure projects may be available up to $600 million does not mean that a later proposal to provide a greater level of funding support would be otherwise than in accordance with the policies of the Commonwealth. 113 It is apparent from the evidence presently before the Court that the relevant expenditure was in fulfilment of a policy of the Australian Government to fund, by way of grant, infrastructure development that would take metro-comparable broadband to under-served areas in rural and regional Australia where, without such funding, it would not be commercially viable to establish the necessary infrastructure. 114 I am unable to discern any shackle on such policy which would limit the amount of funding that could be made available in fulfilment of the relevant policy. 115 In my opinion there does not exist reasonable cause to believe, in the sense in which that expression is used in Order 15A rule 6 of the Rules (see [58(c)-(d)] above), that Telstra may have or has the right to obtain relief in this Court from the Minister in respect of the denial of procedural fairness of which it complains, in respect of the additional funding of $358 million. 116 It is apparent that Telstra's amended application for funding of up to $600 million under the Infrastructure Programme was non-compliant. • the Department considered Telstra's application as lodged and amended to be non-compliant in respect of three out of the eight essential deliverables and Telstra did not, according to the evidence, object to that judgment. • the officers within Telstra who compiled the draft internal memorandum of 26 June 2007 headed ' Broadband Connect --- Legal Options ' were of the opinion 'that Telstra lodged a non-compliant bid'. In the circumstances, Telstra lacked a sufficient special interest to seek relief for a denial of procedural fairness in respect of the provision of additional funding under the Infrastructure Programme. 117 The case which Telstra would seek to advance could not be expected to succeed given the reservation by the Australian Government, under paragraph 6.1 of the guidelines, of the right to seek changes to proposed projects in the context of negotiating an agreement for funding and to vary or amend the funding process at any time. 118 Perhaps more importantly, Telstra's only evidence as to the information available to it to enable a decision to be made whether to commence a proceeding in the Court against the Minister to obtain the foreshadowed relief was that of Mr Smith, supported by the various documents that were tendered (see Order 15A rule 6(b) of the Rules). 119 A company, of course, is an abstraction. It has no mind of its own, and its state of mind must consequently be found in the person or persons who is or are really the directing mind and will of the company, 'the very ego and centre of the personality of the corporation' (see per Hunt J, as his Honour then was, in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (1983) 1 NSWLR 1 at 5). 120 It is clear that Mr Smith's standing in the Telstra hierarchy was well down the ladder. No evidence was called as to the information available to Telstra, within the meaning of Order 15A rule 6(b), from Mr Smith's superiors, Messrs Goldsworthy and Booth, from the head of the Project Team within Telstra in relation to the Infrastructure Programme, Mr Don Pinel, or from the senior executive within Telstra whose judgment on any application for funding, to be submitted by Telstra, was critical, namely its Chief Executive Officer, Mr Sol Trujillo. What is more, no evidence was tendered as to the discussions, if any, at board level concerning the information available to Telstra and any consideration by the board of the question as to whether or not to commence a proceeding against the Minister in the Court. 121 In my opinion, there is insufficient evidence to enable the Court to conclude that after making all reasonable enquiries, Telstra does not have sufficient information to enable a decision to be made whether to commence a proceeding in the Court against the Minister to obtain the foreshadowed relief. 122 Mr Smith did not even attempt to give information and belief evidence as to the information available to his several superiors. 123 The requirement for a successful application for discovery by a prospective respondent contained in Order 15A rule 6(b) of the Rules has not been met. The evidence does not, in my opinion, demonstrate that, to use Lindgren J's expression 'Telstra is on the horns of a dilemma: whether to sue or not'. 126 This brings me to the question of discretion. No question of delay arises. It was reasonable for Telstra to await Clayton Utz's response of 26 July 2007 to its Group General Counsel, Legal Services' letter of 19 July 2007 before making its Order 15A rule 6 application, which, in its original form, was filed on 3 August 2007. 129 One could certainly not characterise Telstra's application as an abuse of process. However, its legitimacy, in terms of its necessity, is in some doubt, given the matters to which I have referred. 130 In my opinion, the application should be dismissed with costs. I certify that the preceding one hundred and thirty (130) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | application for an order that a prospective respondent make discovery of documents under order 15a rule 6 of the federal court rules discovery and inspection distinguished means of providing discovery need for evidence from controlling mind of a corporation interlocutory nature of proceedings relief discretionary administrative law scope of judicial review of administrative action under s 75(v) of the constitution standing to bring proceedings to vindicate the public interest held: application dismissed practice and procedure |
Acting through various companies (of which the applicant is one) and utilising the services of architects and engineers of their choosing, they have, over the past 30 years, been responsible for the erection of a number of office buildings and residential blocks. This case is concerned with one of those buildings which is located at 5 Bowen Crescent Melbourne. Specifically it concerns the foyer of the building. 2 After building works (other than fit out) had been completed the applicant sought tenants for its new development. The respondent ("Tabcorp") expressed a willingness to take a lease over the whole of the premises. Following negotiations a lease was entered into under which Tabcorp was to occupy the whole building. It did not consider that the foyer was suitable either aesthetically or in size for its purposes. It engaged its own architect and internal designer who produced plans for an alternative foyer. It then proceeded to strip back all of the surfaces (floor, walls, pillars and ceiling) and substituted its own finishes and extended the area of the foyer. 3 In this proceeding the applicant seeks to establish that Tabcorp's refurbishment of the foyer was undertaken without its permission, contrary to the provisions of the lease, to the general law and to provisions of the Trade Practices Act 1974 (Cth) ("the TP Act "). It seeks various remedial orders. 4 It will be necessary to return to the actual circumstances in much greater detail. However, before doing so, some reference should be made to the procedural history of the matter in this Court. The proceeding was commenced by application on 30 September 2005. The accompanying statement of claim pleaded various causes of action: breach of the terms of the lease, waste, contravention of ss 52 and 53 (g) of the TP Act , unconscionable conduct contrary to ss 51AA and 51AC of the TP Act and unconscionable conduct contrary to the general law. The trial commenced on 16 October 2006. In the course of opening his case senior counsel for the applicant indicated that he wished to allege that there had been a contravention of what he described as a "general make good" provision which had appeared in the Heads of Agreement but had not, in those terms, appeared in the lease. In order to make out this cause of action he had first to succeed, as he acknowledged, in obtaining an order for rectification of the lease. The statement of claim did not plead the facts necessary to support such an order. He sought, and was granted, leave to amend the pleadings. However, as additional factual issues arose it was also necessary to adjourn the trial so that the respondent could obtain instructions, respond to the amended statement of claim and put on any necessary additional or amended witness statements. These matters were attended to and the trial resumed on 19 March 2007. Bowen Investments Pty Ltd ("Bowen Investments") (a company controlled by the Bergamin family) purchased various properties in Bowen Crescent, Melbourne in 1988. In due course the various buildings on the sites were demolished and plans were prepared for the erection of a major office building. Construction of the new building commenced but work ceased before it had progressed very far because of an economic downturn. Work resumed in about 1995 and was nearing completion in 1996. Bowen Investments engaged Jones Lang Wootton as its agent to secure tenants for the completed building. On 16 September 1996 Jones Lang Wootton wrote to Tabcorp setting out terms and conditions on which Bowen Investments would be prepared to grant a lease over part or all of the building to Tabcorp. Tabcorp responded by letter dated 25 October 1996 in which it advised of its interest in leasing the whole of the premises. It sought Bowen Investments' "confirmation and/or consideration of the following terms and conditions to enable finalisation of this negotiation and preparation and execution of appropriate lease documentation without delay. " Tabcorp proposed various terms some of which involved variations to terms proposed by Bowen Investments. It was also said that the offer was subject to Tabcorp's satisfaction with the terms and conditions of the lease. 7 Mrs Bergamin, acting on behalf of Bowen Investments, responded on 30 October 1996. Her letter recorded what were said to be lease terms and conditions which had been agreed with Tabcorp. Those terms included a "make good" provision in the same terms as that offered by Tabcorp in its letter of 25 October 1996 and acknowledgment that any agreement was subject to formal approval by the Tabcorp board of the terms and conditions of any proposed lease. There was also an acknowledgment that tenancy works were to be subject to Bowen Investments' approval but that that approval should not unreasonably be withheld or delayed. 8 Under cover of a letter dated 1 November 1996 solicitors acting for Bowen Investments forwarded a copy of a draft lease to solicitors acting for Tabcorp. That draft did not contain a general "make good" obligation in the terms contained in the Heads of Agreement. Rather it contained a series of more specific provisions to deal with damage which might occur during Tabcorp's occupancy. Clause 2.11 required Tabcorp, on the determination of the lease, to surrender the premises "in good and substantial repair order and condition in all respects. " Clause 2.12.4 imposed an on going obligation on Tabcorp, to "make good any breakage defect or damage to the building or any part thereof ... . " Clause 2.12.7 dealt with restoration of the premises at the end of the tenancy to make good any damage or disfigurement, caused by signage or advertisements which had been removed by the tenant. Clause 2.13 (to which more detailed attention will be devoted later in these reasons) required that Bowen Investments' written approval should be obtained by Tabcorp before it undertook any alteration or addition to the premises. Clause 2.14.6 required Tabcorp to make good any damage done by reason of the installation or removal of partitions. Clause 3.2 provided for Tabcorp, during the currency of the lease, to remove fixtures and other equipment installed by it subject to the requirement that the removal was to do no damage or that any unavoidable damage caused would be made good. 9 Tabcorp submitted the draft lease to its solicitors, Corrs Chambers Westgarth, for consideration and advice. By letter dated 6 November 1996 the solicitors provided certain advice to Tabcorp. That advice referred to the Heads of Agreement and to certain of the "make good" provisions which had been included in the draft lease. It did not draw attention to the absence of a general "make good" clause of the kind which appeared in the Heads of Agreement. The solicitors advised Tabcorp that it was "important for Tabcorp to consider both the provisions which have been prepared (and are included in the Heads of Agreement) and all issues required to be addressed by Tabcorp which have not been covered in the documentation to date. Following that conference and under cover of a letter dated 12 November 1996 Corrs provided Tabcorp with a copy of the draft lease in which it had incorporated various amendments which were said to have reflected the instructions given by Tabcorp in the course of correspondence and the conference. Relevantly, amendments were suggested to the language of clauses 2.11, 2.12.4, 2.12.7, 2.13 and 3.2. No general "make good" clause was inserted and no reference was made, in the covering letter, to the absence of such a clause. 11 On 14 November 1996 Corrs sent a copy of the draft lease containing its proposed amendments to Bowen Investments' solicitors, McGrath Colman Stewart. The covering letter noted that the draft lease was "forwarded subject to ratification by our client. " It was suggested that a conference between the parties might be useful in resolving any outstanding issues. 12 On 20 November 1996 McGrath Colman Stewart wrote to Corrs advising that Bowen Investments had "perused all amendments requested by your clients to their lease" and setting out those instructions clause by clause. Bowen Investments agreed to all of the proposed changes to clause 2.11 save as to a disagreement as to whether the word "substantial" or "tenantable" should be included. The proposed amendments to clauses 2.12.4 and 2.12.7 were agreed. Bowen Investments agreed to the proposed changes to clause 2.13 but suggested the addition of certain words at the end of the clause. A minor amendment was proposed to clause 2.14.6. The proposed change to clause 3.2 was agreed. No mention was made of the absence of a general "make good" clause. The solicitors endorsed the suggestion that a round table conference between the parties would be beneficial in resolving outstanding issues. 13 A conference was held on 25 November 1996. It was attended by representatives of the parties including Mr Gullquist from Tabcorp. Following the conference a number of issues remained outstanding. They were listed in a two page document prepared by Mr Gullquist. The only clause which related to "make good" matters which was referred to in the list was clause 2.11. The note recorded that Bowen Investments' solicitor had indicated that the word "tenantable" may be acceptable to the lessor. 14 Under cover of a letter dated 29 November 1996 McGrath Colman Stewart sent to Corrs a further amended draft lease. It did not contain a general "make good" clause. 15 The revised draft was considered by Corrs. On 2 December 1996 the partner responsible for the carriage of negotiations prepared a list of further amendments required to the draft lease. These amendments included changes to clauses 2.12.4, 2.12.7 and clause 2.13. Telephone discussions between solicitors followed and, by 4 December 1996, the list of additional amendments required had contracted considerably. It did not include any further amendments to clauses creating "make good" obligations. 16 On 6 December 1996 further changes were suggested by Corrs in a facsimile message to McGrath Coleman Stewart. It was suggested that the word "substantial" appear before "alteration" in clause 2.13 but otherwise there was no reference to the "make good" clauses. 17 Shortly afterwards internal discussions occurred within Tabcorp with a view to seeking board approval for a lease. On 10 December 1996 Mr Gullquist asked Mr Damien Brown, an employee of National Portfolio Strategies Pty Ltd (which had been acting on Tabcorp's behalf) to comment on a document which he had prepared which was entitled "Summary of substantial amendments to heads of agreements arising out of lease negotiations for 5 Bowen Crescent, South Melbourne. " A settled version of that document was sent by Mr Gullquist and Mr Brown to Mr David Simpson an officer of Tabcorp's board, on the following day. No reference was made to any "make good" obligations in that document. On the same day Mr Gullquist advised Mr Simpson that the "lease is finally in a form which accurately reflects the negotiations which have taken place between Allan Hall [from Corrs], Damien Brown and myself for TABCORP and the Lessor and its advisers. 19 On 21 December 1996 Corrs forwarded to McGrath Colman Stewart copies of the lease which had been executed by Tabcorp. Any dispute under this clause as to the condition of the Demised Premises shall be determined by the President for the time being of the Royal Australian Institute of Architects RAIA (or its successor body) or his or her nominee whose decision shall be binding on the parties. Any dispute shall be determined by the President for the time being of the Royal Australian Institute of Architects RAIA (or its successor body) or his or her nominee whose decision will be binding on the parties. The Tenant must ensure that such alterations and additions do not void any warranties on any of the building works or installations the details of which warranties have been notified to the Tenant by the Landlord in writing. In the event that any of the warranties are so voided the Tenant acknowledges that it is fully liable in this regard. In clause 5.11 provision was made for Tabcorp to exercise options to extend its tenancy by two five year terms. No rent was payable for any period prior to 1 August 1997. 23 By the early part of 1997 the foyer area of the building had been completed. It had a striking appearance. The floor was made of Canberra York Gray granite. Carpet was inlayed in parts of the floor. Some of the walls were adorned by American cherry wood panels. Pillars were covered with marble. It was accepted that these were high quality materials and that the overall effect of the foyer was regarded by the Bergamins' as having a timeless quality. The upper office floors had been carpeted but had not been fitted out pending a determination of the tenant's requirements. 24 In February and March 1997 the parties discussed various issues relating to the partitioning and carpeting of the office floors. On 13 March 1997 McGrath Colman Stewart wrote to Mr Gullquist recording what were said to be the terms of an agreement under which Bowen Investments permitted Tabcorp to remove carpet installed on some of the office floors and replace that carpet with carpet of Tabcorp's choosing. Mr Gullquist signed on behalf of Tabcorp. 25 At about this time Tabcorp engaged the services of a firm of interior designers. Their task was to prepare plans for the fit out of the office floors and the redesign of the foyer. Lend Lease Interiors was engaged as the Project Managers for the internal fit out project. 26 By letter dated 8 April 1997 Mr Noel Phelan, the senior project manager for Lend Lease Interiors, wrote to Mr Bergamin. We have been advised by Tabcorp that their lease on 5 Bowen Crescent requires the Owner's consent for the proposed fit out. We therefore submit for your consideration and approval copies of the following architectural drawings, which detail the proposed works as noted on the attached transmittal. A plan will be submitted for your approval as soon as Tabcorp finalises their requirements. Mrs Bergamin gave consent on behalf Bowen Investments by signing this section of the letter on 11 April 1997. The reference to "ground floor works" related to the foyer and adjacent office space. These consultants are Simpson Kotzman Pty Ltd, Consulting Engineers, Bonacci Winward, Structural Engineers, and Bruce Henderson, Architect. Only one set of drawings was provided. Please provide us with another set of drawings which we can give to Bruce Henderson. In the circumstances, the time you have given for us and our consultants to properly check the drawings are far too short. As advised to you earlier today we will make reasonable efforts to have our consultants approve these drawings as soon as possible, however, we cannot promise that approval will be given by the date you seek. You would appreciate that without the approval of our consultants we will not be able to provide ours. 28 Work on the fit out of the office floors commenced shortly afterwards and continued for some months. 29 As Mr Phelan's letter indicated Tabcorp had, under consideration, in April 1997 proposals for the fit out of the ground floor. Although the nature of those plans was not conveyed to the Bergamins at that time, the evidence suggests that, earlier in the year, the then CEO of Tabcorp, Mr Ross Wilson, had determined that the foyer area required a total redesign in order to project what he perceived to be Tabcorp's image as a progressive, technologically advanced business. 30 One of the features of the foyer, as it was originally constructed, was a rondor door. Early in July 1997 Mrs Bergamin became aware of a proposal by Tabcorp to remove the rondor door and replace it with a sliding door. She instructed McGrath Colman Stewart to take the issue up with Tabcorp. On 10 July 1997 McGrath Colman Stewart wrote to Tabcorp advising of Bowen Investments' concern at the proposal and noting that it had "not been provided with any plans or specifications in relation to this as required under the Lease. " The letter also advised that, in any event, Bowen Investments did not consent to such an alteration. 31 Early on the morning of 11 July 1997 Mr Phelan telephoned Mrs Bergamin. It was a relatively short conversation. There is some dispute in the evidence as to precisely what passed between them during the conversation. This is a matter to which it will be necessary to return later in these reasons. Following the conversation Mr Phelan wrote to Mrs Bergamin. Works, if any are agreed, will only proceed when we have confirmation of such agreement in writing from your company. We also confirm that our only instructions from Tabcorp in relation to this item are to examine costs for alternative doors. It is currently intended to replace these elements with materials which will reflect the high quality of the building and Tabcorp's corporate image. It would be appreciated if you could (sic) confirm this agreement by signing this letter and returning a copy to us. The signature block beneath it remained blank. 32 The reason for this is clear from a letter written by Mrs Bergamin to Mr Phelan later on 11 July 1997. We have not yet been provided with plans and as you will appreciate, we are concerned about the integrity of the building and any structural implications of proposed alterations to the building. You have advised that you will be forwarding plans to us today and we will be able to meet with you on site next Monday 14 July to have a look at the proposed alterations. Under the terms of the lease we should be provided with plans and specifications so that we can obtain advice from our consultants before giving our consent. We do not wish to slow things down or obstruct any agreed works and we understand that you have a lot to achieve in a short time. Throughout the progress of these works we have gone out of our way to accommodate you and it would make sense to us if you contacted us earlier in these matters so that the proper consideration can be given to your proposals. We are not difficult to contact and you have our telephone numbers. The granite currently in place is known as "Canberra York Grey" and your representatives have advised us that you cannot obtain any more of this. We acknowledge that you have a requirement to install more granite and that you wish to therefore completely replace the existing granite with a different granite, but remind you of the obligations of the tenant under the lease to make good the premises at the end of the term. This of course would require the "Canberra York Grey" to be reinstated. Mrs Bergamin and her son arrived at about 10.45 am on 14 July 1997. They were shocked and dismayed to see what remained of the floor stonework being jack hammered and the pieces thrown into bins. The onsite meeting proposed by Mr Phelan then took place. Those present were Mrs Bergamin, Mr John Bergamin Jnr, Mr Noel Phelan and Mr Andy Asker from Lend Lease and Mr Rolph Axelsson, Mr Craig Launder and Mr Michael Gullquist from Tabcorp. At that meeting Mrs Bergamin objected to the ongoing demolition work on the ground that it had not been approved by the lessor. In the course of the meeting she was provided with a letter from Mr Phelan, dated 14 July 1997. The letter confirmed that no decision had been taken in relation to the rondor door. Enclosed with the letter were three drawings which were said to "indicate the current concept of the refurbishment of the Foyer" and "the current extent of proposed alterations to the ground floor foyer. " These plans were preliminary in nature. Mr Phelan advised that final drawings would be forwarded "once costings and details are confirmed. The lobby area had had the floor taken up and original granite panelling removed. John Bergamin requested detailed plans including profiles and a schedule of finishes. Mary Bergamin stated that they would not agree to removal of the existing front door and replacement with frameless glass sliding doors. The existing front door was viewed and it was agreed that the alternate plan of moving it forward in line with the building façade was acceptable. It was noted that this work which would require the cutting down of the upper bulk head would be carried out by the original door contractor. There was no discussion of any reinstatement issues. 36 On 14 August 1997 Mr Phelan wrote to Mrs Bergamin seeking her written approval of the alternations to the foyer. All works are contained to the replacement of finishes and partitions as indicated on the plans together with associated minor alterations to services. The drawings I have received don't specify the type of 305 x 305 tiles to be laid on the floor. My concern is that without a sample board showing all finishes both myself and our architect are unable to determine whether your new proposed foyer will be of equal standard end value to the original foyer. Approval for these works should have been received prior to demolition commencing. Due to the scarcity of the original building materials, i.e. granite etc, I should point out that it is also a requirement of the lease to return this area to original condition. We appreciate the fact that you have a tight building programme, however, on a marketable side of things the foyer sets the standard for the whole building and we would like to ensure that the integrity of the original foyer remain. Mrs Bergamin instructed McGrath Colman Stewart to raise her concerns directly with Tabcorp. On 27 August 1997 McGrath Colman Stewart wrote to Tabcorp. The letter was marked to the attention of Mr Gullquist. In this regard we refer you to clause 2.13 of the Lease. We enclose herewith copy of our client's letter of 19 August 1997 to Lend Lease Interiors Pty Ltd in this regard. No response has been received to this letter by our clients. We are advised that the work which has been undertaken was led to a significant change in the appearance of the foyer of the building which in our client's opinion, detracts from the overall presentation of the building. Should our clients wish to sell the building during the term of your tenancy, then these works undertaken by Lend Lease Interiors Pty Ltd, our clients believe will result in a lower retainable sale price than would have been the case had the foyer remained the same. The above premises represents a considerable investment on the part of our clients and they are justifiably proud of the construction, finishes and appearance of the building. Our clients regret very much that these circumstances have arisen as they value their association with you. They have made themselves available at all times and have responded promptly to all queries and correspondence and have merely requested that the same courtesies be extended to them by Lend Lease Interiors. This clearly has not been happening and we must make it clear to you that our clients have not given their consent to any of the alterations to the foyer. His letter enclosed a sample finishes board for the finishes which Tabcorp had approved for the ground floor foyer. This obviously required the removal of existing partitions and rework of the finishes to suit the new layout. You will recall at the meeting it was acknowledged that supply of the original granite was no longer available and that the existing stone tile would need to be replaced. Subsequently the remainder of the finishes in the foyer have been selected to compliment the new stone flooring. On this understanding we have been instructed to proceed with the works. Nevertheless, we are happy to supply with the attached finishes details and regret if there has been a misunderstanding on this matter. They have advised that the finishes board is being prepared simultaneously with the carrying out of the lobby re-fit by the consulting architects and will be forwarded to your clients as soon as it is available. That removal occurred on the planned date. 42 On 2 September 1997 Mr Henderson, the architect who had designed the building for the Bergamins, inspected the renovated foyer. He recorded his observations in a letter to Mrs Bergamin dated 5 September 1997. My surprise comes from two areas, the first being the lack of quality in the finishes you now have to accept and the second surprise comes in the design of the foyer. The concern is that these finishes are a far lesser quality than those, which were part of the building prior to the commencement of work. The design is very minimalist and very much early 1990's. The likelihood is that it will date very quickly. Whilst this is not your problem, this solution has now dated the building which will necessitate the total upgrade of this area, including the lift lobby and lifts when the tenant vacates the building. She made various complaints about the conduct of Lend Lease Interiors. It was helpful from our point of view to be able to explain how disappointed that we were that Lend Lease gave us no opportunity to inspect or approve the final finishes of our building even though it was a requirement of the lease to have our approval prior to commencement. As you are aware, we did not receive the sample board until 28 August 1997. Can you arrange for them to give us this explanation. This is clearly not the case. The tiles laid are only 10mm thick 305mm x 305mm tiles, not 20mm granite slabs as was there previously. Also, the wall finishes are nothing more than painted MDF (Custom Wood) board. We are disappointed in the final product as apart from an aesthetic point of view the original quality of material has not been upheld. We note that in your letter of 29 August 1997 to our solicitors you state that there was no doubt that we consented to the lobby re-fit proceeding. This consent was always on the basis that we would be provided with the sample board within two days of the meeting on 14 July 1997 so that we would have a chance to approve or disapprove of the intended finishes. As stated previously, we were not given this opportunity and consequently no approval has been given by the landlord to the finishes contained in the lobby. In addition we still feel that we have been misled by Tabcorp and its representatives by them assuring us that we were getting a foyer of equal quality. We genuniely believe these concerns are unfounded but quite understand the owners desire to be fully informed regarding design aspects, finishes and materials utilised. They have a valuable asset to protect. The owners in entering into a lease with you would have been well aware of the nature of your business. Additionally, to better portray the corporate image of Tabcorp, being that more closely aligned to a financial services organisation, and thus a dramatic contrast was required with that of the existing Tabcorp premises to reflect the new direction of the corporation. It was considered by the design team that these objectives were best satisfied by enlarging the foyer. The interest was to be continually stimulated by the introduction of a changing works of art provided by up and coming artists. Thus the foyer finishes were purposely chosen such as to provide an appropriate backdrop to the artworks which were to be displayed. The owners may disagree on this issue and it is really a matter of subjective opinion as to what constitutes the best design. However, on any view we could not agree that the design chosen could negatively affect the value of their asset --- quite the contrary. We would, however, acknowledge that the finish in several areas is not up to standard and is in the process of being rectified. Once the defective work is corrected and the artworks are installed, it is our belief that the majority of the Bergamins' concerns will be alleviated. There was no suggestion that the works could not proceed in the interim. Subsequent to your letter of 19 August, the finishes board was supplied on 28 August --- while I accept the timing was less than ideal from your perspective, it reflects the very tight time frames which the parties were locked into and the logistics of moving our whole company. No disrespect was intended to yourselves. Nor, are we able to turn back the clock. At TABCORP, we obviously think that it is. Lend Lease are of a similar view --- which is set out in their letter of 17 September 1997, a copy of which is enclosed for your reference. Doubtless, given the subjectivity of the issue other parties, among them Mr Henderson, will be of a different view. Despite a disparity of views, the earliest date of which the matter may first really become relevant is upon the expiration of the initial ten year term of our lease. At this point, the likelihood is that both the original lobby fit out and the TABCORP fit out will be superseded but on any view, the Tabcorp fitout less so. On that day Bowen Investments' solicitors --- now named McGrath Carey Katz --- wrote to Mr Gullquist. The letter commenced by setting out clause 2.13 of the Lease. The foyer of the building as installed by our client has been completely removed and replaced without consent. In fact, such is the degree of the variation, with materials of significantly inferior quality that our client considers the alteration as desecration. The approval of our client's architect and the written approval of our client was required to all works carried out by you. This has not been obtained. Our client regards these transgressions as extremely serious. One step demanded of Tabcorp was that the foyer be "immediately restored to its original condition". Legal action was threatened if the various demands were not met. 47 A meeting was then arranged to discuss the issues raised by the solicitors' letter. This meeting took place over about an hour and a half at Tabcorp's offices on 25 June 1998. Those present were Mrs Bergamin, Mr John Bergamin Jnr, Mr Bruce Henderson, Mr Peter McGrath and Ms Elizabeth Hourigan (solicitors from McGrath Carey Katz) and Mr Ames and Mr Gullquist from Tabcorp. Both Ms Hourigan and Mr Gullquist made notes of the meeting. There is substantial agreement between the two accounts. The meeting discussed the various complaints contained in McGrath Carey Katz's letter of 11 June 1998, including the complaints about the renovation of the foyer. Bowen Investments' position was that its requirements of clause 2.13 of the Lease had not been observed and, in particular, that its written consent had not been obtained prior to the works being undertaken. Tabcorp's representatives replied that written consent had been obtained and that Bowen Investments, on 11 July 1997, had advised Mr Phelan that it had no objection in principle to the removal of the foyer. They further asserted that there was verbal agreement, given in the course of the meeting on 14 July 1997. He also claimed that there had been implied consent to work continuing on and after 14 July 1997. Mr Gullquist was adamant that under no circumstances would Tabcorp agree to removing its lobby fit out and restoring the foyer to its former condition. 48 This refusal was confirmed in writing in a letter from Mr Ames to Ms Hourigan on 14 July 1998. 49 Correspondence continued between the parties until 28 January 1999. In that correspondence they maintained their respective positions as to the alleged breach of clause 2.13 of the Lease. 50 The dispute between the parties relating to the changes to the foyer was revived in the course of a market rent review provided for in the Lease, which commenced in about January 2004. By April 2004 the negotiations had reached an impasse. On 2 April 2004 solicitors for Bowen Investments - now McGrath Carey --- wrote to Tabcorp advising that Bowen Investments was considering its options in the light of the unsuccessful negotiations. TABCORP rejects the assertions that changes were performed without your client's authority and have diminished the value of the building. Rather than elaborate on this subject, there is considerable documentation between the parties, which dates back to 1997. Suffice it to say that I reiterate the comments in TABCORP's letter to your client's former Solicitors dated 14 July 1998. In any case, your client's valuer will be able to argue in its submission to the determining valuer an assessment of incremental value, if any, for the original foyer design. Please note that any such assessment of incremental value is likely to be vigorously contested in TABCORP's submission to the determining valuer on the basis that the present foyer represents an enhancement to the building when compared to the original foyer design. Tabcorp was asked to supply more details of the plans to enable their consideration. This did not happen. The matter could not progress from there as our client had been confronted with a fait accompli and has always retained the right to demand that the foyer be restored. You have admitted to the writer previously that Tabcorp had breached the lease. Now you deny it. The correspondence in our possession attests the truth of that admission and the diminution of value. However, given it is separate in one sense, we note that in our conversation of 15 April 2004, you are refusing to reinstate. In this regard we refer you to clauses 2.13 and 4. Please take this letter as a formal and separate demand for the reinstatement pursuant to the Landlord's rights set out in the lease. The right to address this issue at the end of lease does not exist in the circumstances. Further I categorically deny that I have "admitted [to the writer previously] that TABCORP has breached the lease". 54 By agreement between the parties in April 2006, the lease was extended for a period of six years from 1 February 2006. That agreement provided that the existing lease should continue to operate subject to certain immaterial modifications. An option of a further five year term of the lease until 31 January 2017 was agreed. The agreement contained a clause which provided that nothing in it should be construed as affecting, limiting or compromising in any way the present proceeding. 56 The respondent contends that the evidence does not support any of the causes of action on which the applicant relies. Moreover, it contends that some of the causes of action are statute barred. 58 Courts have long recognised that there exists an "inherent probability that a written instrument truly represents the parties' intention because it is a document signed by the parties": see Thomas Bates and Son Limited v Wyndham's (Lingerie) Limited [1980] EWCA Civ 3 ; [1981] 1 WLR 505 at 521. Accordingly "convincing proof" is needed to support an order for rectification of a document which records a commercial agreement: see Pukallus v Cameron [1982] HCA 63 ; (1982) 180 CLR 447 at 452; Joscelyne v Nissen [1970] 2 QB 86 at 98. The classes of documents which may be rectified include leases: see Murray v Parker (1854) 19 Beav 305. 59 The applicant's primary argument is that, at the time at which the lease was executed, the parties laboured under a common mistake that the lease contained a general "make good" clause in the terms appearing in the Heads of Agreement. In the alternative, it is contended that, if the mistake was the Applicant's alone, the respondent, through its officers, was aware of the mistake and took advantage of it in an unconscionable manner. • Mrs Bergamin's unwavering belief that the lease which she executed contained a general "make good" clause along the lines contained in the Heads of Agreement. • Repeated assertions, in writing, by the applicant and its solicitors that Tabcorp was under an obligation, imposed by the lease, to make good the premises at the end of the lease and Tabcorp's failure to rebut these suggestions: see for example above at [32], [38] and [46]. • Mr Gullquist's apparent acceptance that Tabcorp was under an obligation to "make good" the premises upon determination of the lease. Such an acknowledgement was made by him in writing on 13 March 1997: see above [24]. Although the Heads of Agreement contained a term of the kind which it is now sought to have included in the lease, the Heads of Agreement also provided that the "Lessor will immediately forward a lease which reflects these terms and conditions so as to enable the commencement of a concurrent legal review of the proposed documentation. " The Heads also provided that: "any agreement remains subject to the formal approval of the full Board of the lessee, Tabcorp Holdings Limited, to the terms and conditions of the proposed lease on the subject property. " In accordance with the Heads of Agreement the lease was prepared by the applicant's solicitors and then subjected to review by solicitors acting for Tabcorp. Negotiations continued over a number of weeks leading ultimately to agreement on the terms of the lease, a number of which differed in material respects from the Heads of Agreement. By 20 November 2006 negotiations had proceeded to a point where the applicant's solicitors had considered it appropriate to submit the then current version of the lease and various amendments to it which Tabcorp had requested to Mrs Bergamin. In a letter dated 20 November 1996 (above at [12]) the applicant's solicitors advised Tabcorp that their client had "perused all amendments requested" and given various instructions on the proposed amendments. Mrs Bergamin said that it was she who had given these instructions. She said that, although she had no independent recollection of doing so, she expected that she would have followed her usual practice and read the lease before giving the instructions. Mrs Bergamin also gave evidence that she assumed that the lease contained a general make good clause because all McGrath Coleman Stewart leases which had been prepared for the applicant had contained such a provision. An examination of a number of these leases which had been prepared in respect of other premises owned by the applicant disclosed no such clause. In this context it is notable that the clause which it is proposed should be added to the lease was originally suggested by Tabcorp and not by the applicant. 62 I do not consider that what was said (and not said), after the lease was executed, in relation to Tabcorp's alleged obligation to "make good" at the end of the lease, assists the applicant. There was a number of specific "make good" clauses in the lease which had been the subject of discussion in the course of negotiations. Mistaken claims by the applicant and its solicitors as to the "make good" obligations imposed on Tabcorp by the lease, which were made months after the lease was executed, do not provide "convincing proof" of the parties' intentions or of mistake at the time at which the lease was signed. Mr Gullquist's apparent acceptance of the assertion, by the applicant's solicitors, of the existence of such an obligation can be understood as the acceptance by him of the solicitor's assertion of the legal position rather than as an acknowledgment of an independently held belief as to what the parties had agreed, in December 2006, to include in the lease. 63 Even if it be accepted that the applicant, acting through Mrs Bergamin, was labouring under a mistake as to the content of the lease when she signed it, there is no evidence that, at that time, Mr Gullquist, or anyone else associated with Tabcorp, was aware of the mistake or acted in an unconscionable manner in order to take advantage of it. What is complained of is Mr Gullquist's alleged awareness, in March 1997, that the applicant asserted that the lease imposed a general "make good" obligation on Tabcorp and failed to draw attention to the falsity of the assertion. As already noted, this failure, on the part of Mr Gullquist, is susceptible of an innocent explanation. Moreover the event post-dated by some three months the execution of the lease. Rectification for unilateral mistake requires knowledge of that mistake by the other party prior to execution of the relevant document and the deliberate failure of the other party to disabuse the party labouring under the mistake in circumstances which may be characterised as unconscionable: Thomas Bates & Son Ltd v Wyndham's (Lingerie) Ltd [1980] EWCA Civ 3 ; [1981] 1 All E R 1077 at 1085-6. In the present case Tabcorp was not aware, in December 1996, that Mrs Bergamin thought that the lease contained a general 'make good' clause and it neither, through action or inaction, took unconscionable advantage of Mrs Bergamin's alleged mistake. This is a matter to which I will return. Waste is a tort which occurs where a positive act, such as demolition, occurs which is injurious to the reversion, usually by diminishing its value: see Marsden v Edward Heyes Ltd [1927] 2 KB 1. 65 The respondent denies that its actions in altering the foyer constituted waste but, in any event, pleads that any cause of action based on waste is statute barred. 66 The Limitation of Actions Act 1958 (Vic) restricts the bringing of a cause of action in tort more than six years after the right of action accrued: see Judiciary Act 1903 (Cth), s 79 and Limitation of Actions Act 1958 (Vic), s 5(1)(a). The cause of action in question accrued no later than July 1998 when Tabcorp unequivocally stated (above at [47] and [48] that it would not restore the foyer. In my view it accrued in July and August 1997 when the works were undertaken. In either event the six year limitation had expired by the time at which the proceeding was commenced on 30 September 2005. 67 The applicant accepted that damage was an element of the cause of action for waste. It also accepted that the six year limitation period applied. It sought, however, to avoid the procedural difficulty which it faced by arguing that the damage on which it relied did not occur until the lease was determined. It was submitted that it was determined at the point at which the original lease was superseded and the new lease commenced in February 2006. 68 This argument cannot be accepted. The renovations to the foyer occurred in 1997. If they caused damage to the building, as the applicant contends, the damage occurred at that time. The foyer has remained in its renovated condition since 1997. Any damage occurred at that time. The suggestion that it occurred in February 2006 assumes that Tabcorp was under an obligation, under the original lease, to restore the foyer to its original condition upon the termination of that lease and failed to do so. This failure is said to constitute the damage which must be demonstrated in order to establish the tort of waste. The argument assumes that the lease required Tabcorp to "make good" the foyer at the end of the lease. As I have held, the lease imposed no such obligation. There is, moreover, an air of unreality about the contention that, at the time of a seamless transition from one lease to the next, with Tabcorp continuing to be the sole tenant of the building, it was required to then undertake restoration works. Given the terms of s 51AA(2) of the TP Act I consider that the allegations of contraventions of the two sections should be treated as alternatives rather that cumulative allegations. It is said that, between April 1997 and May 2004, the applicant laboured under the mistake that Tabcorp was obliged to reinstate the foyer to its original condition upon the expiry of the lease, that Tabcorp was aware of the applicant's mistake and that it unconscientiously took advantage of it by undertaking the alterations to the foyer, without the applicant's approval, in the knowledge that there was no term in the lease that would have obliged it to undertake reinstatement at the end of the lease period. 70 It is not easy to comprehend how the applicant could have, over a period in excess of seven years, believed that Tabcorp was under an obligation to reinstate the foyer when the lease was determined. The applicant's solicitors had drawn the lease. It was available to be read throughout this period. The applicant had the advantage of legal advice at all relevant times. Nonetheless, it may be accepted that, at various times over the seven years, the applicant or its solicitors advised the respondent that this was its understanding of the lease: see, for example, above at [46], [51]. Tabcorp also had the benefit of advice from its solicitors. It did not, in terms, tell the applicant that, in its view, no such obligation was imposed by the lease. Rather, it asserted from time to time that it was under no obligation to do so because it had not contravened clause 2.13: see, for example, above at [47], [52]. 71 The way the applicant puts its case on this point is no doubt influenced by its acceptance that Clause 2.13 of the lease conferred on Tabcorp a qualified right to make substantial alternations to the premises. The prior consent of the applicant was required but that consent could not unreasonably be withheld or delayed. The applicant could not have refused consent to Tabcorp proceeding as it did on the sole ground that it could not be required, under the lease, to reinstate the foyer at the end of the lease period. That being so it is not easy to understand how it could be put that Tabcorp acted unconscionably by proceeding with the foyer alterations without (if that be the case --- a matter to which I will return) obtaining the applicant's consent. If it did the lease may have been breached. This does not render the conduct unconscionable, simply because Tabcorp was aware (if it was) that, although the applicant thought otherwise, it was under no obligation to reinstate, in circumstances in which the work could lawfully have been undertaken had consent first been obtained. 72 The term "unconscionable" as used in s 51AA of the TP Act bears a particular legal meaning. It is the meaning conferred by "the unwritten law, from time to time, of the States and Territories", that is, the common law of Australia: see Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18 ; (2003) 214 CLR 51 at 71. The concept of unconscionability, so understood, was explained by Gummow & Hayne JJ in Berbatis Holdings by reference to earlier authority. I qualify the word 'disadvantage' by the adjective 'special' in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasise that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interest, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party. It will be apparent that the special disadvantage at which Mason J spoke in this passage was one seriously affecting the ability of the innocent party to make a judgment as to that party's own best interests. Fullagar J cited by way of example "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary": Blomley v Ryan [1954] HCA 79 ; (1956) 99 CLR 362 at 405. 73 Section 51AC of the TP Act proscribes unconscionable conduct in trade or commerce on the part of a corporation. In this context the word "unconscionable", bears a wider meaning than that recognised by the common law of Australia. Whatever 'unconscionable' means in s 51AC , the term carries the meaning given by the shorter Oxford English Dictionary, namely, action showing no regard for conscience, or that are irreconcilable with what is right or reasonable --- Qantas Airways Ltd v Cameron (1996) 66 FCR 246 at 262. The various synonyms used in relation to the term 'unconscionable' import a pejorative moral judgment --- Qantas Airways Ltd v Cameron (1996) 66 FCR 246 at 283-4 and 298 ... Before s 51AC will be applicable, there must be some circumstance other than the mere terms of the contract itself that would render reliance on the terms of the contract 'unfair' or 'unreasonable' or 'immoral' or 'wrong'. There is, however, no evidence that this knowledge in any way motivated the decision to proceed with the renovation of the foyer in July and August 1997. As will emerge later in these reasons, it is my view that the principal imperative which informed Tabcorp's conduct at this time was its desire to have all renovation works concluded by 31 August 1997 when it was due to move to 5 Bowen Crescent. 75 Moreover, Tabcorp cannot be said to have acted unconscionably in either of the senses used in ss 51AA and 51AC of the TP Act . The applicant laboured under no special disadvantage in its relationship with Tabcorp. It had been engaged in the construction and letting of commercial premises for over 30 years. It had access to advice from experienced solicitors. Those solicitors negotiated with solicitors for Tabcorp in order to settle agreed terms for the lease. This process continued over many weeks and was ultimately successful. The applicant continued to have the benefit of its solicitors' advice after the lease had been executed and Tabcorp's tenancy had commenced. There is nothing in Tabcorp's conduct at any stage during this process that attracts any moral opprobrium. 76 Even if it be assumed that the applicant had a cause of action based on ss 51AA or 51AC of the TP Act , Tabcorp contends that such a cause of action is statute barred. I agree. Section 82(2) of the TP Act requires that any proceeding be commenced within six years of the cause of action accruing. What I have already said in relation to the applicant's claim in waste being statute barred applies also to its claims under ss 51AA and 51AC . It starts with the uncontroversial proposition that the work undertaken by Tabcorp in July and August 1997 whereby the foyer was stripped back and renovated constituted a substantial alteration to the building. It says that it never gave written consent for the work to be undertaken and that, as a result, a breach of Clause 2.13 of the lease occurred. It seeks damages in the sum of $1,350,000 which is the estimated cost, in 2007 dollars, of restoring the foyer to its former condition. 78 Tabcorp's response to these allegations is made at a number of levels. The allegation that the respondent did not advise the applicant that they were carrying out the proposed refurbishment works is plainly wrong. The evidence clearly establishes that the applicant was aware that the refurbishment works were due to get under way on about 11 July 1997. Further, when the applicant's representatives attended the premises on 14 July 1997, the foyer works were already underway. There was no formal written consent given by or on behalf of the applicant to the foyer works in the form of endorsement of the plans, as had been given in respect of the fit-out of the rest of the premises. However, the evidence is that the representatives of the applicant expressly consented to the foyer and, or alternatively, waived strict compliance with the terms of the lease. The in principle lack of objection to the foyer works was confirmed in a letter dated 11 July 1997 from Mrs Bergamin to Lend Lease Interiors Pty Ltd ("LLI"). More detailed plans of the foyer were provided under cover of a letter from LLI dated 14 August 1997. Further, the finishes board requested in the course of the 14 July meeting was later provided to the representatives of the applicant on 28 August 1997, consistently with the arrangements agreed at that meeting, albeit later than they would have liked. Thus, even if the applicant establishes that their consent was somehow conditional on the provision of more detailed plans or the finishes board, or both (which is denied), that condition was duly met. The representations on behalf of the applicant on 14 July 1997 to the effect that the foyer works would continue are described above. The respondent relied on those representations to its detriment in continuing with and completing the foyer works. Apart from a half-hearted attempt to raise the foyer works again in mid-1998, only to be told that the respondent would not be reinstating the original foyer, the applicant was silent on the matter until early 2004, when the respondent sought a rent review which it maintained should lead to a rent reduction. It does not sit well in the mouth of the applicant over 6 years later to assert that the consent was not given strictly in accordance with the lease. Thus, if the express consent on behalf of the applicant and/or the waiver of strict compliance with the requirement for consent, is not a complete answer to the allegations of breach of the lease, the conduct of the representatives of the applicant described above is such that the applicant is estopped from relying on clause 2.13 of the lease. Its CEO, Mr Ross Wilson, decided that radical change was necessary in order to project what he considered to be an appropriate corporate image. Specialist advisers were engaged to redesign the foyer. The applicant was made aware of Tabcorp's intention to redesign the foyer by Mr Phelan. In his letter to Mr Bergamin, dated 8 April 1997 (above at [26]), he advised that the necessary plans for "the proposed ground floor works" had yet to be issued and foreshadowed that they would be submitted for the applicant's approval "as soon as Tabcorp finalises their requirements. " At some stage early in July 1997 Mrs Bergamin became aware that Tabcorp had under consideration the removal of the Rondor door at the entrance to the foyer. This led to the pre-emptive letter from the applicant's solicitors to Tabcorp on 10 July 1997 (above at [30]). Early the following morning Mr Phelan telephoned Mrs Bergamin and they had a short conversation. Neither participant in that conversation was able, 10 years after it occurred, to recall precisely what was said on each side. The subject of the discussion was the proposed commencement of works in the foyer. The conversation was not confined to the possible removal of the Rondor door. Other changes were mentioned but the evidence does not allow me to make a finding as to what was said above those changes. I do, however, conclude that, despite Mr Phelan's assertion in the letter he wrote to Mrs Bergamin later on that day (above at [31]), she did not, during that conversation, consent to the removal of the existing glass and stone partition, the timber panelling and the stone floor tiles in the foyer. I reach this conclusion for a number of reasons. Mrs Bergamin had made it plain, in her letter of 9 April 1997 (above at [27]), that written approval for major works was required and would not be forthcoming until detailed plans had been provided and sufficient time allowed for advice to be obtained from the applicant's architect and engineers. At the time of the conversation, on 11 July 1997, there were no detailed plans for the redevelopment of the foyer. (Although Mr Phelan's letter of 11 July 1997 contained a promise to forward plans on that day, no plans were sent. Some preliminary plans were provided at an onsite meeting on 14 July 1997 but these were provisional in nature). The conversation extended only over a few minutes. Mr Phelan could not have explained the nature of the planned renovations during that conversation even if he had been aware of them which he was not. It was agreed during the conversation that there would be an onsite meeting on 14 July 1997 at which details of the renovations would be provided. When she arrived to attend that meeting Mrs Bergamin was aghast at what she saw. She was not expecting to see major work being undertaken in the foyer: she was there to be told about what was proposed. In the course of the meeting she complained about the work proceeding without prior consultation. Accordingly, I accept Mrs Bergamin's evidence that she would not have given consent to the commencement of works during her conversation with Mr Phelan. She would not have done so without knowing the detail of what changes were proposed. On 11 July 1997 no work had commenced on the foyer despite the fact that any renovations had to be completed by 31 August 1997. I infer that Mr Phelan was under pressure from Tabcorp to proceed with work on the foyer with expedition and this is the likely explanation for him wishing to commence to dismantle the existing foyer even though plans for it replacement were not ready. In these circumstances it is likely that he was predisposed to understand any general acquiescence by Mrs Bergamin to the idea that Tabcorp might wish to redesign the foyer, as assent to proceed. 80 Tabcorp claims that, when Mrs Bergamin responded to Mr Phelan by letter on 11 July 1997 (above at [32]), she expressly consented to the commencement of work on the foyer. I do not accept this construction of the letter. What Mrs Bergamin, said, on behalf of the applicant, was that it had "no objection in princip[le] to the removal of the existing foyer surfaces ...". However, immediately thereafter, she expressly said that the applicant was not in a position to give the written consent which Mr Phelan had sought until plans had been received and considered. By giving "in principle" approval the applicant did no more than recognise the obligation imposed on it by Clause 2.13 of the lease. It did not grant the unqualified assent in writing which could only be given following Tabcorp's provision of the detailed plans. 81 I, therefore, find that the applicant had not consented in writing or otherwise to the removal of the former foyer surfaces before those surfaces were removed between 11 and 14 July 1997. The work involved was a substantial alteration to the premises. I further find that, at the time at which the removal work was undertaken, Mr Phelan was well aware that no written consent had been provided. A breach of the negative covenant contained in Clause 2.13 of the lease occurred when the original foyer surfaces were removed at that time. 82 By the time the meeting commenced on 14 July 1997, Mrs Bergamin and Mr Bergamin Jnr had been confronted with a fait acomplis. All (or almost all) of the original surfaces in the foyer had been stripped back. They had to be replaced. I accept that Mr Gullquist's contemporaneous notes (above at [34]) as to what transpired at the meeting provide an accurate summary of what was discussed. The Bergamins expressed their displeasure at not having been consulted prior to the removal works being undertaken. Mr Bergamin Jnr sought detailed plans of what Tabcorp was proposing should replace the former surfaces. Mr Phelan responded that the plans had not yet been prepared but undertook that, when they were, they would be forwarded to Mr Bergamin Jnr for his review. Given the complaint which had been made about lack of prior consultation in relation to the removal works Mr Phelan's reassurance about provision of plans for Mr Bergamin Jnr's review was plainly intended (and was understood by the Bergamins) to be an assurance that they would be provided with the plans so that they could seek advice before any proposed refurbishment occurred. At the meeting Mrs Bergamin specifically stated that the applicant would not agree to the removal of the Rondor door and the substitution of glass sliding doors. Tabcorp seeks to contrast her approach to the door with that taken in relation to the surfaces. It is suggested that the absence of any express refusal to agree to work on the surfaces confirmed (at least inferentially) the applicant's consent to continuation of the foyer works. I reject this submission. At the time of the meeting the Rondor door had not been removed. It is, therefore, understandable that Mrs Bergamin would seek, in strong terms, to direct Tabcorp that it was not to be disturbed. On the other hand, the foyer had been stripped; something had to replace the surfaces which had been removed. What the Bergamins wanted was the opportunity to examine the plans (including the finishes board) so that they could be carefully assessed and, if need be, advice taken, before an informed written consent was given. The Bergamins did not, at that meeting, or otherwise give or confirm consent to the continuation of the foyer works. 83 Despite this the works continued. It was a month later, on 14 August 1997, when Mr Phelan provided the plans which had been promised on 14 July 1997. In his letter of 14 August 1997 (above at [36]) he sought what was, in effect, retrospective written approval for the refurbishment works. He told Mrs Bergamin that the plans which accompanied the letter detailed "the alterations which are currently being undertaken at Tabcorp's request. " (Emphasis added). No sample board of finishes was provided at that time. None was provided until 28 August 1997, by which time the work was almost complete. Not surprisingly, Mrs Bergamin responded to Mr Phelan on 19 August 1997 reminding him that approval for the works should have been received prior to demolition commencing. Written consent was not given at that time. Nonetheless, work continued. After a week had passed and no response was received from Mr Phelan the applicant placed the matter in the hands of its solicitors. By then work was all but completed. All that the solicitors could do was to draw attention to the requirements of Clause 2.13 of the lease and complain about Tabcorp's failure to meet its obligations. 84 By proceeding to undertake refurbishment work between 14 July 1997 and 31 August 1997, without first obtaining the written consent of the applicant, Tabcorp committed a further breach of the lease. No written consent was provided under Clause 2.13. Mr Phelan, acting on behalf of Tabcorp, was well aware of the need to obtain such consent and knew that it had not been provided. Despite this work continued. This contumelious disregard for the rights of the applicant cannot be justified, as Mr Phelan sought to do on 28 August 1997 (above at [39]), by the assertion that "Tabcorp were under the impression that you had consented to the proposed alterations. " (Emphasis added). The applicant could not consent because it did not have the plans and the finishes board until 14 August 1997 and 28 August 1997 respectively and was, as a result, in no position to give or withhold its written consent. 85 I do not accept that contention of Tabcorp that the applicant waived strict compliance with the written consent requirement. It did not do so on 11 July 1997 when Tabcorp was told that it had no objection, in principle, to the removal of the existing foyer surfaces and it did not do so on 14 July 1997 by confirming that works could continue. I have already dealt with Tabcorp's submissions relating to the "in principle" approval: see above at [79]. I would only add in the present context that the 11 July 1997 letter spoke of "in princip[le] approval" of the removal of the existing surfaces. It said nothing about approval for subsequent refurbishment. On 14 July 1997 the Bergamins reluctantly accepted the inevitability that refurbishment work would have to take place. They could hardly have done otherwise given what had been done to the foyer. They made it plain that their prior written consent to the necessary works was needed and that, before that consent would be forthcoming, they wished to see the detailed plans (including the finishes board). This was not conditional approval; it was a reiteration of what the Bergamins understood, correctly, to be Tabcorp's obligation under Clause 2.13 of the lease. In no way did the applicant encourage Tabcorp to act on a false assumption that the applicant did not insist on Tabcorp complying with its obligations under clause 2.13. The applicant was not, therefore, estopped from insisting on Tabcorp so complying: Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7 ; (1998) 164 CLR 387. Section 52(1) of the TP Act provides that a "corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. " Section 53(g) provides that a "corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services, make any false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy. It is alleged that the representations that the proposed fittings and finishes would be of a high standard was a matter of opinion for which Tabcorp had no reasonable basis. 88 Having regard to the findings which I have made, in dealing with Tabcorp's breach of Clause 2.13 of the lease, I would have been disposed to uphold some, but not all, of the alleged contraventions of ss 52 and 53 (g) of the TP Act . However, the applicant claims that it "has" suffered loss in that, at the termination of the lease, it will be left with a foyer of inferior standard which Tabcorp will not be obliged to restore to its original condition. There is also a claim that, by reason of the moving of the wall in the foyer, Tabcorp will have lost a net lettable area once Tabcorp vacates the building. 89 By s 82(2) of the TP Act , any action brought under ss 52 or 53 (g) must be commenced within six years after the day on which the cause of action accrued. An action for loss or damage, commenced pursuant to s 82 of the TP Act , for conduct undertaken in contravention of ss 52 and 53 (g) of the TP Act requires that actual loss or damage has occurred. Anticipated loss or damage, at some time in the future, will not suffice: see Wardley Australia Ltd v The State of Western Australia [1992] HCA 55 ; (1992) 175 CLR 514 at 525, 527. No doubt, it is for this reason, that the applicant claims that it "has" suffered loss and damage. Any such loss and damage occurred at the time that the demolition and renovations occurred in July and August 1997. Any cause of action accrued at that time. As a result, the alleged causes of action are statute barred. The quantum of damages sought is $1,380,000. This figure is made up of the estimated cost of reinstatement of the foyer to its former condition ($580,000) and loss of rental income during the four month period in which such works are undertaken ($800,000). 91 It is common ground that reinstatement of the foyer will not occur prior to the conclusion of Tabcorp's tenancy. This will not occur, at the earliest, until 2012. If Tabcorp exercises its option to extend the lease by a further five years, it will not occur until 2017. The parties make competing submissions as to the appropriate measure of damages. The applicant seeks the costs of reinstatement of the foyer. Tabcorp, on the other hand, submits that damages should be measured by reference to the diminution, if any, in value of the building occasioned by the works undertaken in the foyer. 92 In some cases it may be appropriate to award damages on the basis contended for by the applicant. This will be so in a relatively narrow range of cases where a tenant has so damaged or modified premises that they are unlettable at the conclusion on the lease: see Joyner v Weeks [1891] 2 QB 31. Normally, however, reinstatement costs will not be awarded unless there exists some special interest in reinstatement arising from a radical change to the usage to which the property can be put following renovations by the tenant: see Evans v Balog [1976] 1 NSWLR 36. 93 The weight of the expert evidence called in the present case supports the conclusion that, at the end of Tabcorp's lease, whether that occurs in 2012 or 2017, there will be little, if any, diminution in value of the premises occasioned by Tabcorp's renovation of the foyer. While there may be different views as to the aesthetic values of the former foyer and that installed by Tabcorp, Tabcorp's works have not occasioned any significant loss of value to the building. Furthermore, extensive renovation of the foyer would, according to the evidence, be necessary in any event at the end of the lease. 94 The applicant relied on the evidence of three expert witnesses. Mr Christopher Holroyd, a certified practising valuer, had prepared a rental submission on behalf of the applicant in the course of the 2004 dispute with Tabcorp. He confirmed his opinion, contained in the rental submission, "that an impressive foyer as originally provided by the Lessor is of a significant benefit of a building and would command a higher rental that that achieved by a building with an inferior foyer. " His views as to the quality of the present foyer were influenced, in part, by those of Mr Henderson, the architect who had designed the original foyer who considered that the finishes used in the present foyer were of "far less a quality" than those used in the foyer which he had designed. Mr Holroyd did not quantify the "higher rental" which he considered could be obtained were the original foyer, or something like it, to be reinstated. 95 Mr John Clarke, an independent property advisor, considered that the original foyer would be a more effective "leasing tool" than the present foyer. He explained that, once Tabcorp vacated the premises, it was likely that it would be succeeded by multiple tenants. In his view there needed to be a high quality foyer which would "instantly appeal to all tenants as they enter the building. " In his subjective opinion the former foyer was more likely to have the desired effect than the present one. 96 Mr Christopher Robinson, a property and construction consultant provided evidence supporting the estimated cost of reinstatement being claimed by the applicant. 97 Tabcorp called evidence from four experts. Mr Mark Lochran is a specialist in conceptual estimating and planning for building projects. His view is that the current foyer "does not disadvantage the building in terms of merit, quality, durability or replacement impact when compared to the original foyer. " He considered that there exists a strong likelihood that the foyer will require upgrading in about five years to reflect "the commercial realities of competition with new and refurbished buildings. It was his view that the market rental value of the premises had not changed as a result of the alterations to the foyer. Either foyer was, in his opinion, "acceptable for a building of this standard. " He agreed that refurbishment of the foyer would, in any event, be necessary at the expiration of the existing lease. 99 Mr Joseph Perillo is a certified practising valuer. He was also of the opinion that the altered state of the foyer had not had any material effect on the value of the property with the exception of the reduced area available for letting as office space on the ground floor. He calculated that "if capitalised in perpetuity at prevailing market yield of 8% [the reduction in lettable area caused by the extension of the foyer] would reflect a diminution in value of $25,937.50. " He agreed that an upgrade of the foyer would probably have to occur at the end of the tenancy. In coming to this conclusion he had regard to what had occurred in a number of high quality buildings in recent times. They had had foyer upgrades 15 to 25 years after they opened. 100 Mr Andrew Norbury, an architect, made a comparison of the two foyer designs. He considered that the previous foyer "expressed a conservative and more sombre design language. " On the other hand, the current foyer was "a successful example of late 1990's design with its lighter, brighter and more dynamic atmosphere. " He said that the costs of the finishes of the two foyers were roughly equal. He also considered that refurbishment of the foyer would be necessary at the end of the tenancy having regard to the experience of other major buildings with which he was familiar. 101 The present case closely resembles that of James v Hutton [1949] 2 All ER 243, in which the Court of Appeal refused to award more than nominal damages to the plaintiff lessor in circumstances where the outgoing sub-tenant had "modernised" the façade of the demised premises. In that case the assignee of a lease was granted a licence by the landlord to construct a new shop front to business premises. The licence contained a covenant that the assignee would, if so required, reinstate the premises in their original condition. The landlord gave the assignee notice to reinstate the premises but the assignee failed to do so. At first instance the landlord was awarded damages calculated by reference to estimates of the probable costs of restoration work. The assignee was successful on appeal. The Court of Appeal applied the general rule as to damages for breach of contract, namely that the landlord could only obtain compensation for damage actually suffered. She has got back a shop ...provided with a modern and convenient front, and there was no suggestion that the work had not been carried out properly. We do not for one moment suggest that it might not be possible for a landlord, in circumstances such as these to give evidence that she or her superior landlords at the end of the term desire to carry on or to let the premises for the purpose of carrying on a business for which the altered shop front would be inappropriate and the old one suitable. In that case she might well say that it is of value to her to have the shop back in its former condition and she would suffer damage if the tenant's or assignees' covenant to restore was not carried out, but if it is a mere matter of getting back a shop which has been altered and there is no suggestion that any damage whatever has been caused to the landlord thereby, it appears to us that she has suffered no damage by reason of the tenant's or assignee's failure to comply with her requirements to reinstate. The applicant has erected and leased the building for commercial purposes. It is an investment property. The evidence supports the conclusion that, apart from the loss of lettable space on the ground floor caused by the movement of one wall in order to expand the size of the foyer, the applicant has suffered no diminution in the lettable value of the building by reason of the works undertaken by Tabcorp in the foyer area. This work has not had any adverse effect on the lettable value of the property while it is being leased by Tabcorp. At the end of that lease the building will be lettable to another tenant or tenants. It is likely that, at that time, refurbishment of the foyer will be necessary (as it would be necessary had it been retained in its original condition) in order to take account of architectural developments and the need to "freshen up" the building to make it attractive to potential tenants. 103 At that time there will have been a loss of net lettable area. That loss has been quantified at about $26,000. The cost involved in removing the existing wall and relocating it in its former position so as to restore the lettable area is of approximately the same order. Mr Robinson gave uncontested evidence that the building work necessary to restore the foyer to its original proportions would be $33,820. The applicant is entitled to damages in this amount. Nominal damages are also appropriate having regard to Tabcorp's failure to abide by its obligations under Clause 2.13 of the lease. I would award the applicant $1,000 under this head. 104 My provisional view is that the respondent should pay the applicant's costs of the proceeding. If the respondent wishes to submit that some other orders should be made as to costs it should file and serve short written submissions by 4:00 pm on 23 May 2007. If such submissions are made the applicant should file and serve short submissions in reply on or before 4:00 pm on 28 May 2007. I certify that the preceding one hundred and four (104) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | landlord and tenant lease breach of lease agreement alteration of premises whether the respondent obtained the requisite consent of the applicant to alter the premises pursuant to clause 2.13 of the lease consent not obtained lease rectification common intention of parties reinstatement clause in heads of agreement not appearing in final executed lease whether landlord entitled to rectification of clause whether parties laboured under a common mistake that the lease contained a general "make good" clause in the terms appearing in heads of agreement misleading or deceptive conduct unconscionable conduct damages under trade practices act action for damages to be commenced within six years after cause of action accrued any loss or damage crystallised at the time alteration to premises occurred in july and august 1997 causes of action statute barred waste whether respondent has committed a voluntary waste action for damages in tort to be commenced within six years after cause of action accrued cause of action statute barred appropriate measure of damage onus on landlord to prove actual damage suffered no diminution to value of building compensatory damages awarded for restoration of foyer to its original proportions nominal damages awarded for respondent's failure to abide by its obligations under clause 2.13 of the lease contract contract trade practices torts damages |
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