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Those stations include TCN-9 Sydney, GTV-9 Melbourne, QTQ-9 Brisbane and NTD-8 Darwin. Nine also provides content and branding rights to affiliates including metropolitan stations NWS-9 Adelaide, STW-9 Perth and to regional broadcasters such as WIN Wollongong and NBN Newcastle. Nine acquires the rights to television programs which it believes will appeal to audiences. It selects dates and times to broadcast those programs with an eye to maximising viewers. It drafts or obtains short descriptors ('synopses') about the programs. Nine then records the Nine Programming in various formats ('the Nine Schedules') for distribution prior to broadcast to stations within the Nine Network, its affiliates and the viewing public. Those formats differ in appearance and content. 2 A "broadcast week" in the television industry commences on a Sunday and ends on a Saturday. Viewers are typically informed of the date and time of a proposed broadcast, together with additional program information such as program classification, consumer advice and synopses, by television program guides published prior to the broadcast of a program. Nine does not itself publish such guides. Nine supplies the Aggregators with a weekly schedule of the Nine Programming, two to three weeks prior to any given broadcast week ('the Weekly Schedule'). The Weekly Schedule contains time and title information for one broadcast week, additional program information and synopses. The Aggregators aggregate the information provided by Nine in the Weekly Schedule with the program schedules provided by other Australian free to air television channels, namely the ABC, SBS and stations within and affiliated to the Seven and Ten networks. Television program guides with information for all free to air channels ('the Aggregated Guides') are then published in publications such as TV Week and on websites such as the Yahoo!7 TV Guide , published at <au.tv.yahoo.com/tv> ('the Yahoo7 Guide'). The Aggregators are advised by Nine of any late changes to the Nine Programming so that such changes can be incorporated into the published guides. The IceGuide when uploaded on subscribers' devices displays details of the television programs scheduled to be broadcast by free to air television stations, including stations within the Nine Network, for the coming 6, 7 or 8 days. It is essential to Ice's business model that those details are accurate. Ice does not, however, receive information from Nine or the Aggregators about the time, date and title of programs proposed to be broadcast by Nine. It says that it "predicts" that information for inclusion in the IceGuide based on its observations of Nine's past programming behaviour and knowledge of the television industry. Ice then "checks" its "predictions" against publicly available program guides, that is, the Aggregated Guides. If there is a discrepancy as to program title, date and time as between the IceGuide and the Aggregated Guides, Ice generally (but not always) amends the IceGuide to reflect the published guides. It submits that any doubt as to whether copyright so subsists was extinguished by the Full Court decision in Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd [2002] FCAFC 112 ; (2002) 119 FCR 491. The infringement allegations are founded on the assertion that Ice appropriates the ' skill and labour of authorship ' of Nine in compiling the Nine Schedules by reproducing program time, title and date of broadcast information from the publicly available Aggregated Guides. 6 Nine alleges that the IceGuide includes a close to 100% reproduction of the time and title information in the Nine Schedules, as updated by any late changes and that the activities of Ice in producing and disseminating the IceGuide involve five acts of infringement of the copyright in the Nine Schedules. The second respondent ('Ice Holdings') is said to be jointly liable for those acts of infringement. 7 The allegations are denied by Ice. Ice does not dispute that copyright subsists in the Weekly Schedule. Ice asserts that it did not (and does not) copy the Weekly Schedule in creating and updating the IceGuide. It denies taking all or a substantial part of the Weekly Schedule. It denies that Nine owns independent copyright in components of the Weekly Schedule and submits that other Nine Schedules are not relevant to the proceedings. Ice also seeks leave to file a cross-claim alleging that Nine has made unjustified threats of copyright infringement ('the second cross-claim'). An earlier cross-claim was discontinued. 8 Ice drafts its own synopses for inclusion in the IceGuide, which differ in content to those in the Weekly Schedule. There is no suggestion that those synopses infringe Nine's copyright. • What is the effect of aggregation on the copyright subsisting in the Nine work(s)? • Did Ice copy the Nine work(s) when it created the first templates for the IceGuide? • Do Ice's present activities infringe Nine's copyright? • Should Ice be granted leave to file the second cross-claim? 12 Mr Michael Healy, the Director of Programming at Nine and Ms Penny Wieland, Program Executive, describe the process of creating and recording the Nine Programming. Mr Healy and Ms Wieland make multiple decisions with respect to the selection, arrangement and ordering of the programs to be broadcast. Mr Healy explains the different factors that are taken into account in making those decisions. These factors include the acquisition of new programs locally and overseas to meet current viewer preferences and trends, audience size and demographic appeal, leading programs, competitor programming, ratings and windows in which broadcast rights are available, as well as statutory and contractual obligations. 13 Ms Wieland is primarily responsible for the daytime and off-peak period while Mr Healy works on the prime time (6:00 pm to midnight). The selection, arrangement and ordering of programs by Mr Healy and Ms Wieland take place well in advance of the dates being scheduled. It involves time spent by Mr Healy every working day and approximately 80% of Ms Wieland's working week. Other Nine employees assist with the various genres of programming, with reviewing programs and determining classifications and consumer advice. 14 Strategic changes may be made to the Nine Programming up to a few days before the date of a broadcast, depending on competitor programming. Changes are also made to the Nine Programming in response to ratings information, which is received for 40 weeks of the year and reviewed by Nine daily. The responsibility for final decisions on all issues of program scheduling for Nine rests with Mr Healy, subject to consultation with the head of the Nine Network. 15 Decisions involve consideration of the program schedule from a yearly, seasonal, weekly and daily perspective. Nine's annual planning process relates mainly to the forward planning of the acquisition of programs. Sports broadcast rights, which occur on a seasonal timetable at different times of the year, are also taken into account. The Nine Programming is then developed so as to ensure variety and balance in programming across each week, with emphasis placed on appealing to the 25---54 and 16---39 year old age groups to reflect advertising demand. Also taken into consideration is the suitability of programs in particular time slots, the requirement for children's programming and Australian content quotas. Each day in the Nine Programming is also individually developed and considered against competitor programming to maximise and retain viewers. 16 The work done and skill, labour and judgment exercised in selecting material for inclusion in the Nine Programming are directed to Nine's programming or broadcasting activities. 18 Prime time programs are selected and arranged by Mr Healy using a large notebook containing blank grids ('the Grid'). Each page represents a week of the year and is divided into seven vertical columns (one for each day of the week). Horizontal half-hour segments represent the timeslots. Once he has decided where to schedule a program, Mr Healy writes the relevant program name (or an abbreviation) onto the Grid using a pencil to permit changes and amendments. "Fixed events", such as the TV Week Logie Awards , are entered into the Grid first, followed by sporting events. Programs that are broadcast at the same time each week are then entered (for example, National Nine News ) before the remaining slots are filled. 19 Daytime and off-peak programs are arranged by Ms Wieland using an Excel spreadsheet ('the Spreadsheet') which is also configured to show separate pages for each week of the year. The Spreadsheet pages have seven vertical columns representing each day of the week and are divided into 49 half-hour segments beginning at 6:00 am each day and finishing at 6:00 am the following day. During the period from 6:00 am to 3:30 pm a number of programs are episodes of serial programs. For example, at 1:00 pm on Friday 16 June 2006, episode number 10,148 of Days of our Lives was broadcast. Ms Wieland selects and enters the programs for daytime and off-peak timeslots directly into the Spreadsheet. 20 Approximately three to four weeks prior to the commencement of any given broadcast week, Mr Heath Forrest (Nine's Schedule Co-ordinator) transposes the entries in the Spreadsheet and the Grid into a third document called the "Master Paper Grid". This document is effectively a consolidated version of the Spreadsheet and the Grid. Annexure 'A' to these reasons sets out one page of the Master Paper Grid for the broadcast week commencing 11 June 2006. During the same period, the programming entries in the Master Paper Grid are entered by Mr Forrest into a program database on Nine's computer network ('the Nine Database'). The entry or "dumping" of information into the Nine Database grants access to the Nine Programming to Nine personnel outside the programming department, namely local affiliates of Nine such as NWS-9 Adelaide and STW-9 Perth. Access is not given at this stage to WIN, NBN or the Aggregators. 21 Approximately 17 days prior to the commencement of a broadcast week most of the Nine Programming for that week will have been completed; those parts that remain incomplete are marked "TBA" in the documents described above. Mr Forrest and Ms Wieland check that all available information has been included and add additional information if necessary. Mr Forrest also amends the Nine Database to reflect differences in programming between TCN-9 Sydney, GTV-9 Melbourne and QTQ-9 Brisbane. The catalogue codes are used by Nine to identify and retrieve programs for the purposes of broadcasting. A copy of one page of the "First and Final Schedules" for the broadcast week commencing Sunday, 11 June 2006 is Annexure 'B' to these reasons. • "Excel" and "text" formats: The Weekly Schedule is disseminated in these formats. A copy of one page of the Weekly Schedule for the broadcast week commencing Sunday, 11 June 2006 in Excel format is Annexure 'C' to these reasons and a copy of one page of the Weekly Schedule for the same broadcast week in text format is Annexure 'D'. The Excel and text format versions are in tabular form. They include program synopses in the final column. • The "Nine Program Guide": The Nine Program Guide is a printed version of the Nine Programming for a single broadcast week produced from the Nine Database. It is in tabular form, similar in appearance to the text format and includes synopses in the final column. The Excel and/or text formats of the Weekly Schedule are also sent to Pagemasters. A few days later, the Nine Program Guide is distributed to various departments and people within Nine, together with hard copies of the First and Final Schedules. At that time Excel and text formats of the Weekly Schedule are emailed to HWW and eBroadcast. 24 The Excel and text formats of the Weekly Schedule are the only version of the Nine Schedule sent to the Aggregators and, through the Aggregators, to the public. They are in weekly format and include program synopses. Nine advises the Aggregators of changes or additions to the Nine Programming by "Late Change Notices". The Late Change Notices contain information that is not included in the Weekly Schedule and may include movie titles not advised for strategic reasons. The Weekly Schedule may simply have ' DETAILS: TO BE ADVISED ' in that timeslot. Late Change Notices are typically issued by Nine every week and may be issued up to and including the day on which a program is scheduled to be broadcast. They may notify a change to program line-up, or program information such as classification or duration. An example of a Late Change Notice for 11 May 2006 is Annexure 'E' to these reasons. Ms Wieland exhibits to her affidavit the Late Change Notices issued by Nine between 1 April 2005 and 10 August 2006 in electronic form. There were in excess of 600. 26 The Aggregated Guides may have been published by the time of receipt of a Late Change Notice. The Aggregators update the Aggregated Guides from time-to-time to reflect changes as notified by the Late Change Notices. At issue is the identity of the compilation(s) of program information in which copyright subsists and against which Ice's activities are to be assessed for the purposes of infringement. Nine accepts that the Nine Programming does not attract copyright until it is reduced into a material form. That would include the Weekly Schedule and the other formats of the Nine Schedules, such as the Master Paper Grid, discussed above. The Nine Programming may also be recorded as a collocation of words and symbols in the Nine Database. Ice does not have access to the Nine Database. That is expressly provided for in s 10(1) of the Act. The Weekly Schedule in Excel or text format, as a compilation, comes within the description of a literary work as explained by Lindgren J in Desktop at [160]. It is the result of the operation, action or labour of a person or other agent and a product of exertion, labour, judgment, skill or activity. I shall refer, generally, to this compendiously as "skill and labour". 29 Section 32 of the Act relevantly provides for the subsistence of copyright in an original literary work. Desktop establishes that a compilation of factual information may be an original literary work and attract copyright protection under the Act if the author ' has exercised skill, judgment or knowledge in selecting the material for inclusion in the compilation...or in presenting or arranging the material ' or ' has undertaken substantial labour or incurred substantial expense in collecting the information recorded in the compilation ' ( Desktop at [409] per Sackville J). The preparatory skill and labour to bring about the Weekly Schedule includes the skill and labour of the selection of programs, their placement and ordering in the Nine Programming and the adjustment of the programs to allow for inclusion of special events and differing length of time of those special events and of movies. Ice accepts that sufficient skill and labour is undertaken in the creation of the Weekly Schedule so as to render it an original literary work. It will be necessary later to consider the nature and extent of that skill and labour in some detail. 30 A literary work is deemed published if 'reproductions of the work...have been supplied (whether by sale or otherwise) to the public ' (s 29(1)(a) of the Act). Subject to the Act, copyright subsists in unpublished (s 32(1)) or published s (32(2)) original literary works. There is no suggestion that the authors of the Weekly Schedule are other than qualified persons (s 32(1)(a) ; s 32(2)(d)). 31 Ice admits by its amended defence that copyright subsists in each Weekly Schedule prepared and distributed since 2001. There is no need to address Nine's submission that copyright subsists in the whole body of its programming schedules since 1 November 1956. The activities of Ice relevantly began in 2004. Whether or not those activities constitute an infringement is to be determined by reference to the copyright subsisting in the Weekly Schedules published since then. It is those works, in which Nine has copyright, that Ice is alleged to have copied directly. The Weekly Schedule is the only compilation produced by Nine that is relevant for the purpose of assessing any copying and any taking of Nine's skill and labour. For example, the First and Final Schedules are in landscape form and include internal catalogue codes. They do not include the synopses. 33 The only compilations to which Ice has had access for the purpose of creating, updating and disseminating the IceGuide are the Aggregated Guides. They are produced, in the manner described below, by the aggregation of the Weekly Schedule with program information provided by other networks. There is no suggestion that Ice or the Aggregators has or had access to or have reproduced the Master Paper Grid or the First and Final Schedules. These schedules may attract copyright protection from, for example, unauthorised copying by a person within the Nine Network or its affiliates. That is not, however, relevant to these proceedings. Does copyright subsist in individual columns and days of the Weekly Schedule? It gives program starting times, program titles and, where relevant, episode titles for each day. The Weekly Schedule also contains additional program information, including whether the program or episode is a repeat or live, format information (for example, ' WS ' for widescreen and ' HD ' for high definition), the classification (for example ' PG ' for parental guidance, ' M ' for mature), consumer advice information (for example ' Frequent Course Language [L] ') and program or episode synopses. The synopses have a literary element. 35 The information included in the Weekly Schedule is set out in columns for each day (see, eg Annexure C). The first two columns comprise program time and title information. The third and fourth columns comprise additional program information. The fifth and final column contains the synopses. The primary compilation on which Nine relies is the daily compilation of program time and title information only. Ice submits that to construe daily or weekly compilations of time and title information, without synopses, as copyright literary works is to adopt a '[r] ussian doll ' approach of ' looking inside a copyright protected compilation for some smaller sub-set of the information and awarding it the status of an independent copyright compilation '. 37 In determining the subsistence of copyright, it is necessary to consider works such as anthologies and compilations as a whole ( Desktop at [99], [152] and [160] per Lindgren J; Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273). In Ladbroke , for example, an argument that copyright attached to individual components of the compilation was rejected by the House of Lords (276-7 per Lord Reid, 284 per Lord Evershed, 285 per Lord Hodson and 291 per Lord Pearce). The relevant compilation was a fixed odds football betting coupon, issued weekly. Their Lordships said that the whole coupon, there considered in the context of a consideration of the originality of the compilation, was to be treated as a single compilation. 38 In Network Ten Pty Limited v TCN Channel Nine Pty Limited [2004] HCA 14 ; (2004) 218 CLR 273 at [75] , McHugh A-CJ, Gummow and Hayne JJ considered that ' a television broadcast ' for the purposes of s 87 of the Act included the programs ' put out to the public, the object of the activity of broadcasting, as discrete periods of broadcasting identified and promoted by a title '. Their Honours rejected the notion that any image or sound broadcast by way of television in the course of those programs satisfied the statutory description. This suggests that the manner in which an author presents a copyright work may assist in determining what that work is. 39 Section 10(1) of the Act relevantly defines a literary work to include ' a table, or compilation, expressed in words, figures or symbols '. The work that Nine relevantly produces is the Weekly Schedule. It is that work that is disseminated to the Aggregators. The compilation is expressed in words, figures and symbols that describe, in their totality, time and title information, additional program information and the synopses for a complete broadcast week. 40 The first two columns of the Weekly Schedule, the time and title information, although part of the whole compilation, are not purveyed by Nine and have not been shown to have any commercial value to Nine or the Aggregators. The evidence establishes that the synopses, which can be said to contain the "literary component" of the Weekly Schedule, require time and attention, are important and of commercial and promotional significance. Mr Healy states that he sees them as being a form of promotion for new programs. Nine considers it important that the synopses included within the Weekly Schedule are correct. 41 Nine submits that, were it to create and publish a daily schedule consisting only of time and title information, that would be a copyright protected compilation under the Act. However, that is not what the Weekly Schedule is. The Act provides for the subsistence of copyright in compilations of information, not mere information per se. The fact that copyright may subsist in the Weekly Schedule as a whole does not mean that it attaches to the individual facts referred to or the component parts therein ( Victoria Park Racing and Recreation Grounds Co Ltd v Taylor [1937] HCA 45 ; (1937) 58 CLR 479 per Latham CJ at 498 and Dixon J at 511). 42 Nine accepts that a proper identification of the copyright work takes account of the way in which the copyright owner packages or presents its work. Nine submits, however, that the identification must take account of the way in which Nine knows the work is going to be delivered to the consumer. Nine relies upon the fact that the published Aggregated Guides, in print and electronically, discard or hide synopses to varying degrees, while the time and title information always appears. It submits that its intention is that the Weekly Schedule ' be published [by the Aggregators] with primary emphasis on the time and title information, and on a daily basis, especially in the digital environment '. However, the fact that a reader may make use of a part of the compilation does not of itself change the nature of the copyright which subsists in the Weekly Schedule an original literary work. That compilation, as supplied to the Aggregators, is not limited to time and title. Nor is it limited to just one day of the relevant broadcast week. 43 Each of the sets of information contained in the Weekly Schedule, including the days in the broadcast week, the additional program information and the synopses, are a part of that compilation. The purpose of the Weekly Schedule is to impart the totality of that information to the Aggregators and, in turn, the public. Nine's operational activities are, as Ms Wieland agreed, ' geared to [a] week to week basis '. The Weekly Schedule, built up each week by Mr Healy and Ms Wieland, inevitably includes the synopses and the additional program information. These, in turn, are an integral part of the relationship between the information in and the design of the Weekly Schedule. The Weekly Schedule is the only relevant work to leave Nine. It is the work sent to the Aggregators. It is, with all of the information it includes, the way in which Nine, for good commercial reasons, presents the collocation of information. The totality of the information there included is necessary because it is required by the Aggregators and is also provided to the Aggregators by Nine's competitors for the purposes of the Aggregated Guides that are made available to the public. 44 Nine can claim copyright in the Weekly Schedule. It cannot claim copyright in the components of the Weekly Schedule as if they are separate compilations. They are not. The test of originality is whether the work was not copied, but originated from the putative author ( Desktop at [160] per Lindgren J). Copyright in a factual compilation is infringed where a person reproduces the copyright work or a substantial part of that work. In this context, '[s] ubstantiality is...determined by reference to the originality of that part of the work taken by the alleged infringer ' ( Desktop at [409] per Sackville J). It follows that, while the subsistence of copyright in the Weekly Schedule is accepted, an understanding of the nature and extent of Nine's skill and labour of authorship of the Weekly Schedule is fundamental to the question of infringement. 46 The extent of an author's contribution to the making of a factual compilation is a question of fact and degree ( Desktop at [160]). In this case, there are two sets of skill and labour exercised by Nine and its employees in the creation of the Weekly Schedule. First, the skill and labour of selecting and arranging the programs to be shown on Nine to attract viewers to programs in the different timeslots and to meet competitors' programs. For the purposes of these proceedings, this is the "antecedent" or "preparatory" skill and labour in the sense discussed in Ladbroke at 287---8 per Lord Hodson and Desktop at [132] and [160] per Lindgren J, [371] and [409] per Sackville J. Secondly, there is the skill and labour of drafting the synopses, selecting and arranging the additional program information such as classifications and consumer advice and recording, weekly, all of the information into documentary form, the Weekly Schedule. 47 Ice accepts that copyright subsists in the Weekly Schedule by virtue of the skill and labour in the scope of selection of programs, the decision to move or replace existing programs, the adjustment of times, program changes, the mode of expression and in the arrangement of the information by Nine. The work of Mr Healy and Ms Wieland and their colleagues at Nine in preparing each Weekly Schedule is not in dispute. Each Weekly Schedule "emanates" from them ( Desktop per Sackville J at [396]). 48 Relatively little information about the preparation and inclusion of synopses by Nine was included in Nine's evidence. Nine devotes skill and labour to producing and preparing synopses for inclusion in the Weekly Schedule. It emerged in cross-examination that Mr Holman, Mr Forrest and occasionally Mr Healy draft synopses for inclusion in the Weekly Schedule. Synopses are also obtained from the producers or publicists for some programs. The synopses are entered into the Nine Database and change each week. They are reviewed by Mr Holman and Ms Wieland before publication of the Weekly Schedule. Ms Wieland may instruct Mr Holman to make amendments to correct typographical or grammatical errors, or to change the description of a program or episode. 49 In T R Flanagan Smash Repairs Pty Ltd v Jones [2000] FCA 625 ; (2000) 102 FCR 181, Hely J observed that copyright may even subsist in compilations that consist entirely of existing material. Originality may lie in the selection or arrangement of such material ' provided that sufficient skill, judgment and labour was involved ' (at [29]). Any of the latter three may be sufficient for the work to be original ( Desktop per Lindgren J at [159]). 50 The author of a compilation does not acquire copyright in the facts that have been published. The facts do not originate from the author. If the selection or arrangement of the facts involves sufficient skill or labour then the form of selection or arrangement is protected. If there is sufficient work done or expense incurred in gathering the facts, that is also protected ( Desktop at [313] per Sackville J citing the primary judge, Finkelstein J in Telstra Corporation Ltd v Desktop Marketing Systems Pty Ltd (2001) 181 ALR 134 at [64]; see also Desktop at [409] per Sackville J). 51 In Desktop , copyright attached to the compilation by reason of the labour of collecting, verifying, recording and assembling the data and not by reference to the form of the compilation, the alphabetical manner of presentation of the data. The former but not the latter was what originated from the putative author (see, eg Desktop at [438] per Sackville J). In that case, a telephone directory of subscribers in alphabetical order did not permit selection in ordering or expression of the information. Nine submits that, similarly, it is the collocation of information in the Weekly Schedule that is protected. It is the selection of things to be shown in chronological order, as opposed to the order itself, that constitutes the relevant skill and labour to be protected. There must be copying and sufficient resemblance but in such a case, form is not important ( Desktop at [223] per Lindgren J). Nine relies on the fact that copyright protection is medium and technology neutral and that is provided for in the Act (eg, s 21(1A) and s 24). Nine submits that the mere input of material into a database cannot deprive the author of copyright protection. 52 The skill and labour involved in making a factual compilation is likely to vary in each case. As described by Ice, pieces of information are brought together; the selection of that information to the exclusion of other items and the association of pieces of information, one with the other in a line or table creates an intelligible relationship between the pieces of information. The usefulness of the pattern created by the compiler is achieved by the choices that were made and judgment exercised about the individual pieces of information and the relationship between them. There is sufficient skill, judgment and labour in the selection of information and in the mode of expression of the Weekly Schedule, in the presentation of the data after the preparatory work of program selection and arranging is done, to attract copyright protection in that arrangement and presentation. As will become apparent, there is scope for variance in the content of synopses, the selection of additional program information and the overall manner of presentation of the compilation as a whole. The detail of the underlying subject matter, the work in choosing the program for each timeslot is not relevant to the compilation once the "timetable" is prepared, much in the same way that the history of the rolling stock of a rail carrier is not relevant to a train timetable. 53 Infringement of a factual compilation is tested by reference to the interest which the copyright is intended to protect ( Desktop at [223] per Lindgren J). In Desktop , that interest was the labour and expense of gathering together in one place the details of all the members of the given universe of all telephone subscribers in a region --- the skill and labour in collecting, extracting and verifying the data compiled. Although the constituent parts of the resulting compilation of those names in alphabetical order are inevitably arranged in the same way, the compilation was thereby protected. 54 Where there is skill and labour not only in the obtaining or collection of the material but also in the form of arrangement, or where there may be more than one arrangement of the obtained material, it does not follow that any form of arrangement will infringe. Cambridge University Press v University Tutorial Press (1928) 45 RPC 335 is illustrative of this principle. In Cambridge , there was no infringement of a collection of 13 essays where the collection was included in a later work with an additional seven essays, in different order and with different notes and introductions. 55 Nine relies on what it describes as the high level of protection in Australia afforded to ' industrious collection [s] of facts ' or ' "sweat of the brow" compilations organised in an orthodox or natural manner (cf the position in the United States of America as outlined in Feist Publications Inc v Rural Telephone Service Co Inc (1991) 499 US 340). Nine submits that the preparatory skill of the thinking and the planning and the skill of setting down the program time and title in material form as a compilation are not to be separated. That may be the case where, as in Desktop , the skill and labour was in the collection of the data and the form of the compilation followed from that collection and the nature of the work. It does not follow where the skill and labour of collection of information was preparatory to the further exercise of skill and labour of creation of the arrangement of that information in the Weekly Schedule. Nine's submission also ignores the correct characterisation of the skill and labour employed in the creation of the Weekly Schedule, as the arranging in a single document of not only the order of the programs and their time and title which followed from the creation of the Nine Programming, but also the additional program information and the synopses and the arrangement of the different sets of data. This was the relevant skill and labour protected in Desktop . (b) Where the form of presentation or arrangement of a compilation is a product of the skill and labour of the author, it is that form that is protected. (c) Copyright subsists in the Weekly Schedule as an original work by reason of both "types" of skill and labour. It is relevantly sent to HWW, eBroadcast and Pagemasters, the Aggregators who aggregate the information therein with comparable information obtained from other television broadcasters, from 17 (Pagemasters) to 14 (eBroadcast and HWW) days before the start of the broadcast week. HWW aggregates the program information of all free to air broadcasters into a more merchantable product. It is part of HWW's business model that it supply aggregated information. Mr Paul Marshall was the Chief Executive Officer of HWW from August 2002 until shortly prior to the hearing of these proceedings. I accept Mr Marshall's evidence that there is no paying market for information of what is intended to be broadcast on Nine alone. The process of aggregation involves HWW receiving information on a weekly basis from 257 channels. This includes over 100 free to air channels, of which five are part of the Nine Network and, Nine contends, others are affiliates. The data sets provided to HWW by the television channels vary between channels. HWW extracts program information using a proprietary software application and uploads the information from the respective schedules into its database ('the HWW Database'). The HWW database has 31 separate fields of information for each program, only some of which (14) are populated with information which emanates from the Weekly Schedule. Fields not filled automatically with information provided by the networks are filled by a default mechanism operating on HWW's programming system. Examples of fields of information not provided by Nine but populated by the default mechanism include genre and duration for programs other than movies. HWW then conducts over 60 checks of the data contained within the fields. Where those checks show discrepancies in the data, manual sub-edits are conducted by HWW staff. HWW checks the data for spelling, grammar, consistency and completeness. Corrections made by HWW's content team include the deletion of swear words, superlatives or defamatory material from the synopses. Such amendments are made according to general rules which HWW applies to data received from all channels. 60 HWW disseminates the information in the Weekly Schedule for aggregated publication in the YourTV Guide on HWW's own website. It also disseminates program listings information to third party clients for publication by them in other Aggregated Guides. 61 The YourTV Guide comprises 9 days of program listings (today, the two previous days, and the following six days) and includes a standard display of channel name, broadcast time and date, program and episode titles, program genres, instance information (eg, premiere, repeat, final, live etc), program duration, classification, consumer advice and synopses. Updates occur each day at approximately 1:45 am. Viewers can access the YourTV Guide in aggregated or single network format. Synopses are not visible when the guide is viewed in aggregated format but become visible in a separate pop-up window when the user mouse clicks on the name of the program. The YourTV Guide also displays a copyright notice. That notice states that HWW publishes the aggregated TV program listings ' under licence from the TV channels ' and that the various non-aggregated TV guides ' have many copyright owners ', including the Nine Network. 62 Clients who receive aggregated program listings data from HWW publish that information in television guides online (eg, the News Interactive website at <entertainment.news.com.au>), as part of their mobile telephone services (eg, Telstra, Vodaphone and Optus ) and, in the case of Foxtel, in an EPG (the Foxtel Digital Guide). HWW provides different aggregated program listings information to its clients, depending on their specific requirements. In the case of some clients, entire online television program websites have been developed by HWW. 63 One client of particular relevance to these proceedings is Yahoo Australia & NZ Pty Ltd ('Yahoo'). HWW supplies Yahoo with program listings information pursuant to a written agreement ('the Yahoo Agreement') on a rolling 5 business day feed for publication in the Yahoo7 Guide. As it wants the Yahoo7 Guide to have its own "look and feel", Yahoo takes only listings data from HWW. Television program listings are visible for eight days in advance in the Yahoo7 Guide. As with the YourTV Guide, program synopses are visible but only when the user mouse clicks on the name of the program. 64 The Yahoo7 Guide includes links to the copyright notice displayed on the YourTV Guide and states ' Copyright (c) yourTime 2006 '; ' Copyright (c) 2006 Yahoo! Australia & NZ Pty Limited ' and ' Copyright (c) HWW Limited' . • HWW "separating" the data contained in those schedules into the relevant HWW fields. This is done by a software application that has been written by HWW specifically for each network's unique data. • Adding fields of data to those provided by the television networks (in the case of Nine, information may be added to 17 data fields; in some cases the field will simply record a null (rather than technical) value). • Aggregating the different data sets, which vary from time to time for each individual program broadcast by the 100 or so free to air television channels. • Updating the YourTV Guide and its customers with late changes issued by the networks. • Customising guides and/or content feeds to suit particular customer specifications. • Distributing content feeds to individual customers at different times as required. For example, Yahoo requires its feed on a rolling 5 business day basis and also receives intra-daily feeds where there are program changes. HWW does, however, make a lot of corrections. It also conducts research where data are missing in order to fill incomplete (null) fields, such as genre or duration. HWW's "Ingestion Manager", Ms Janet Cottee, explained that not every incomplete field will be filled; depending on the client's requirements, data may be disseminated with a default value. For example, the default for field ' [15] Language ' is English. The development of automated systems providing for greater efficiency is, according to Ms Cottee, the result of ' six years worth of development work '. 68 Pagemasters provides aggregated program guides to newspapers and print publications such as TV Week . It receives the Weekly Schedule pursuant to an unwritten arrangement which has been in place with Nine since approximately 1994. Prior to that date, Nine delivered the Weekly Schedule directly to print media publishers who, in turn, provided it to Pagemasters for reformatting. Nine began delivering the Weekly Schedule directly to Pagemasters in around 1994, for distribution efficiency. 69 eBroadcast Australia distributes an aggregated online program guide which is published on websites such as <ourguide.com.au> ('the OurGuide') and <ebroadcast.com.au>. Nine provides the Weekly Schedule to eBroadcast pursuant to an agreement dated July 2004 ('the eBroadcast Agreement'). 70 The evidence of the activities of the Aggregators was primarily based upon the activities of HWW and the submissions as to aggregation were based on that evidence. Where I refer to the activities of the Aggregators, I refer to the activities of HWW, as modified where appropriate by the evidence of the activities of the other Aggregators. Nine acknowledges that the appropriation of the information in a Late Change Notice is not, on its own, an appropriation of the skill and labour of authorship of the compilation. Nine submits that the late changes are ' corrigenda, revisions, or emendations of a subsisting larger work' . However, it is the skill and labour of the Aggregators that is engaged to insert that information into the Aggregated Guides. There is no assertion by the Aggregators of a taking of their skill and labour. 72 In the alternative, Nine characterises the late changes as divorced from and separate to the act of revising the underlying copyright work but as attracting their own copyright over a week-long period. While that information is a relatively small quantitative part of the totality of information, it is qualitatively important for Nine. As already noted, such information may be withheld from the Weekly Schedule for competitive reasons. However, Ice does not access the Late Change Notices. Ice refers to the information as to late changes when it accesses the Aggregated Guides. The Late Change Notice is no part of the Weekly Schedule. It is merely a notice or, over the week, a series of notices. If there is no copyright in news as such but only in the form in which it is expressed ( Walter v Steinkopff [1892] 3 Ch 489), it follows that there is no copyright in the subject matter of the Late Change Notices. Further, the Late Change Notices are not themselves incorporated into the Aggregated Guides but only the information that they contain. • The time and title information is arranged in a horizontal grid rather than vertical columns. The synopses and some of the additional program information, although present, is not set out in the grid. That information only becomes visible when selected in a pop-up window. • A "day" is expressed as a calendar day rather than from 6:00 am to 5:59 am the next day. • Program finish times, duration and genre are displayed in the Yahoo7 Guide and the YourTV Guide. This information, save for the genre of movies, is not included in the Weekly Schedule. • The YourTV Guide discloses the program country and links to official program and related websites. • The YourTV Guide discloses, where applicable, the program cast. • Closed captions, widescreen and high definition are not expressed by abbreviations in the YourTV Guide and the Yahoo7 Guide. A comparison of the program synopses as included in (relevantly) the Weekly Schedule, the YourTV Guide, the Yahoo7 Guide and OurGuide for a randomly selected day (4 October 2006) showed that OurGuide had the same synopses as the Weekly Schedule (save for two shortened synopses). HWW made minor edits to the synopses provided by Nine, which were reflected in the YourTV Guide and two other guides sourced from HWW, including the Yahoo7 Guide. 75 Nine first contended that the only changes to the Weekly Schedule are authorised by Nine and carried out by HWW and its recipients in an "amanuensis-type" role or as a "scribe". Nine later conceded, however, that it is not simply done by HWW as a "scribe". The submission is elucidated by reference to the terms of the HWW Agreement. 77 Nine is contractually bound to supply HWW with ' Nine Listings Content' under the HWW Agreement for each ' 7 day period commencing on Sunday and ending Saturday ' within the term of the agreement. This would include additional program information and the synopses. 78 The Weekly Schedule, including the manner and form in which it is presented, would fall within the definition of Nine Listings Content. HWW is relevantly licensed under the HWW Agreement to "integrate" the Nine Listings Content with third party content to create Aggregated Guides, subject to certain conditions. This would include amendment to include the information in the Late Change Notices. Nine does not acquire any copyright in such additions. 79 The fact that Nine retains ownership of rights in the Nine Listing Content under the HWW Agreement does not mean that it owns copyright in the time and title information included in the Aggregated Guides. The relevant compilation produced by Nine that is protected by the Act is the Weekly Schedule. For the reasons earlier given, neither the time and title information itself nor the Late Changes Notices are an original literary work within the meaning of the Act. Nine may retain ownership of the Weekly Schedule under the HWW Agreement but the copyright which vests in any aggregated guide created by HWW is the property of HWW. 80 The provisions of the eBroadcast Agreement as to copyright ownership are in relevantly the same terms as the HWW Agreement, save for one matter. There is no express provision that Nine does not acquire copyright in additions. 81 The Yahoo Agreement between HWW and Yahoo provides that HWW owns or is licensee of all rights, title and interest in the content provided to Yahoo for display in the Yahoo7 Guide. No right of ownership of that content is conferred on Yahoo. Yahoo does, however, retain copyright in the "look and feel" of the Yahoo7 Guide. 82 A confidential agreement between Pagemasters and a third party for the supply of aggregated ' TV Listings pages ' was also in evidence. [ This sentence has been removed to preserve confidentiality ]. 83 According to Ms Wieland, no one at Nine is presently charged with the responsibility of supervising the output of HWW, Pagemasters or eBroadcast or their respective clients. Are the Aggregated Guides separate and distinct copyright works? 86 Nine relies on the fact that, after the Weekly Schedule is aggregated by HWW and updated by the Late Change Notices under licence, ' copyright in the consolidated version of the [Weekly Schedule]' reverts to Nine. Nine asserts that the Aggregators are merely "sub-publishers". However, Nine accepts that, while the "sub-publishers" publish time and title, they have a "level of determination" that they apply as to whether they link time and title information with additional information or not. Indeed, that is somewhat of an understatement when one considers the activities of HWW. Nine relies upon this to support its submission that "time and title" is a candidate for independent copyright protection. 87 Nine accepts that the Aggregators use information additional to the Weekly Schedule. Nine also accepts that the ultimate presentation of the information depends on the style of publication of the Aggregators or their clients. 88 Professor James Lahore and Warwick Rothnie, Copyright and Designs (Butterworths, subscription service) at [6040] describe a compilation as ' a work formed by the collection and arranging together of pre-existing materials, or of data that are selected, co-ordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship '. Recognising that the definition of a "collective work" in the Act only has statutory force in relation to works made before 1 May 1969, the authors contrast a compilation and a collective work as defined in s 204(2) of the Act. In the latter but not the former, the contributions may themselves constitute separate and independent works produced by different authors, in addition to the authorship of the collection as an original work (at [20,010]). More than one copyright may subsist: the copyrights of the authors of individual contributions and the copyright of the arranger or publisher of the work as a whole. Where a compilation is not a collective work, ' the compiler is in general the sole author of the compilation as an original work ' (emphasis added) (at [20,010]). Neither Nine nor Ice characterised the Aggregated Guides as "collective works". This is understandable in the statutory context. However, irrespective of the terminology, this accords with the concept that Nine relies on in submitting that the fact of aggregation does not destroy or affect Nine's copyright in so much of the Weekly Schedule as is incorporated in the Aggregated Guides. 90 Once HWW works with the individual compilations it receives from the various networks to vary and add to the information, each compilation is effectively "de-compiled" and a new compilation is produced. That, too, necessarily includes not only the information received from Nine but also the information from the other free to air channels. This is not merely a change in form or medium. It is a fundamental change in the nature and content of the compilation itself. The aggregated compilations of listings information produced by HWW set up more complex and subtle relationships between the information they contain. The same may be said of the other Aggregators. While I accept that HWW assigns back to Nine any changes to the Nine Listings Content it is conceded that the new compilation is owned by HWW. The same position applies under the eBroadcast Agreement. 91 The process of aggregation does not "destroy" Nine's copyright in the Weekly Schedule. The Weekly Schedule remains a copyright work but it is separate and distinct from the Aggregated Guides, which are themselves original literary works and copyright protected compilations. Users of the Aggregated Guides may elect to view program listings information in a single station format with, for example, the YourTV Guide or the Vodaphone Mobile Phone Guide . However, that is the choice of the user of the aggregated guide. The Channel 4 Digital Guide chooses to present time, title and classification information only. That is not what Nine chooses to present to the Aggregators in the Weekly Schedule. • the product of the expenditure of skill and labour by content aggregators (such as HWW) and certain customers (such as Yahoo) in the creation and maintenance of Aggregated Guides which themselves attract copyright protection. • customised compilations for publication on the internet, with changed style and format significantly different from that of the Weekly Schedule so as to give rise to independent and claimed (as set out in copyright notices) copyright protection. Nine asserts that Ice engaged in wholesale copying of the time and title information in the Aggregated Guides. This is denied by Ice and will be considered later in these reasons, but Ice accepts that it takes information from those guides for the purposes of updating the IceGuide. 93 The Aggregators integrate, edit and add to the information for inclusion in the Aggregated Guides and determine the arrangement of that information. There is no claim by the Aggregators that Ice has infringed their copyright. The Aggregates "stand between" Ice and the taking of the skill and labour of the creation of the Weekly Schedule. However, it can be said that the preparatory skill and labour protected by the copyright in the Weekly Schedule remains as Nine's preparatory skill and labour for that part of the Aggregated Guides. Nine contends that Ice copied a published aggregated guide containing the Weekly Schedule to create the templates. The alleged copying was of the time and title information, which Nine submits represents a substantial part of the Weekly Schedule. If that copying took place, Nine says, the requisite causal connection is established. Ice contends that it did not copy but created its templates by watching the broadcast programs and writing down the title of the programs and the days and times at which they were shown. A reproduction of a substantial part of the Nine Schedules (including the Weekly Schedule) in the course of making and updating each IceGuide. 2. A reproduction of the Nine Schedules (including the Weekly Schedule) in the course of storing successive infringing IceGuides in Ice's database and on servers controlled by it. 3. A reproduction of the Nine Schedules (including the Weekly Schedule) onto the processing memories or hard drives of subscribers' personal computers ('PCs') or "Media Centres", or alternatively Ice's authorisation of subscribers' acts of reproduction. 4. A communication to the public of the Nine Schedules (including the Weekly Schedule) as part of the IceGuide to subscribers via the internet. 5. An authorisation of a subscriber's reproduction of the Nine Schedules (including the Weekly Schedule) when a subscriber transmits the infringing IceGuide from his or her personal computer to a personal video recorder ('PVR'). Without it, they are not made out. If it is made out, they follow '. 97 In order to deal with the infringement allegations, it is necessary to have an understanding of the Ice technology, the IceGuide and its uses. Recorded programs can then be stored and subsequently replayed. Although PVRs are in this sense similar to traditional video recorders, there are differences between the two devices. Digital hard drives produce near perfect reproductions of the original program which are not degraded by subsequent viewings. Further, it is not necessary to fast-forward or rewind a reel of video tape to move through a series of recorded programs; users can move forward or backwards at high speed or "jump" between recordings. 100 Television programs can also be recorded using a "Media Centre". Media Centres are computers with hardware and / or software that allows for digital TV receiving and recording capacity. PCs functioning as Media Centres use an operating system designed to facilitate use of the PC for music, photos, video and live and recorded television. Television programs may be recorded onto a hard drive within the Media Centre. 101 EPGs allow a television program schedule to be viewed on the screen of a television set or computer. The program schedule is presented on-screen in the form of a list or chart showing the different programs available on individual or multiple channels. EPGs can be configured to update the program schedule daily so that the viewer sees the program schedule for the day on which the guide is being viewed, together with a future period. Some EPGs show a program schedule for seven or more days into the future; others show only the name and timeslot for the program currently being broadcast and the next program coming up. 102 Not all EPGs are "interactive". For example, the Channel 4 Digital Guide shows program schedules for each of the free to air television networks including program title, time and classification information but the viewer cannot manipulate or navigate through that information. Nor can programs be selected for viewing or recording. It is the only commercially available EPG in Australia which can be used to record programs with different PVR devices and Media Centres. 105 In order to receive the IceGuide, a subscriber's PVR or Media Centre must first be connected to the Internet. The IceGuide data is held by Ice in a database ('the Ice Database'). A PVR or Media Centre can be programmed to regularly and automatically connect to that database and "fetch" and download the latest version of the IceGuide for a six to eight day period. Different users fetch different subsets of the universe of data contained in Ice Database. For example, if a user wants to view the IceGuide for Sydney channels only, data relating to Melbourne channels will not be fetched. The IceGuide data is encoded for transmission over the Internet and the manner of receipt of that data varies depending on the hardware used. After the data is fetched by the PVR or Media Centre, it is stored in text files on the hard drive of the device. A normal day-to-day IceGuide user would not access or print out the IceGuide in text format. These determine the "look" of the IceGuide and the way that the IceGuide is displayed on the screen of that device. The display formats available to the user typically include multiple channel, single channel or single program. • Current time, date and day of the week (' 10:06, 28/09/2006 (Thu) '). • The current program title ( 'The Footy Show (AFL) ') together with start and end times (' 23:30 ~ 02:00 ') and the date and day (' 28/09 (Thu)' ). • Start and end times for the 5 programs scheduled to be broadcast directly after the program currently screening. • A television inset ("picture-in-picture", or "PIP") moving image of the program currently screening on the channel. As the user continues to scroll, additional boxes, containing the program title and time of successive programs proposed to be broadcast, will appear. 110 Underneath the "PIP" inset is a separate blue text box containing the name of the program, sometimes an episode name (eg, ' Grand Final Show' ) and the synopses. As the user scrolls down the boxes containing program names using the remote control, each program title is highlighted and the synopsis, depending on its length, is party or entirely visible. The full synopsis can be viewed by selecting the program. • The IceGuide displays aggregated program listings information when viewed in multiple channel format. • The information in the IceGuide is not selected, expressed or arranged in a broadcast week of Sunday to Saturday. Viewers can view program schedules for 6, 7 or 8 days in advance. • Although the viewer can "scroll through", the emphasis as to time and title information is on the program currently screening and the programs which immediately follow. • The synopses have a different commercial purpose. They may contain criticism of individual programs and the use of humour. The evidence shows, however, that in some instances, information as to genre and technical matters (eg, ' CC ' for "Closed Captions") visible using a Media Centre will not be visible using a Topfield PVR device. The Pimp is intended to enable users to control and program PVRs or Media Centres remotely using a mobile phone or the internet. 114 Ice has also developed a service called the "Widget". The Widget can be downloaded by any person (not just subscribers) from Ice's website using a PC and is a small, desktop application. It displays television program listings for the next 7 days for all the free to air channels on the PC screen. 115 Little attention was devoted to the Pimp and the Widget in the course of the hearing. Nine described them as ' the tail end of the case ' and accepted that the Court's findings in respect of the IceGuide would follow through to the Pimp and the Widget. It is unnecessary to refer to them further. The owner of the copyright in a literary work has the exclusive right to do the acts set out in s 31(1)(a) of the Act. These acts relevantly include ' to reproduce the work in a material form ' (s 31(1)(a)(i)) and ' to communicate the work to the public ' (s 31(1)(a)(iv)). An ' infringing copy ' is defined in s 10(1) to mean, relevantly, a reproduction of the work, or of an adaptation of the work '. Infringement by reproduction is usually said to require first, a "sufficient degree" of similarity between the two works and, secondly, that there is a "causal connection" between the two works ( Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) 225 ALR 57 at [173]-[174] per Crennan J; Skybase Nominees Pty Ltd v Fortuity Pty Ltd (1996) 36 IPR 529 at 531 per Hill J; Desktop at [220] per Lindgren J). A reproduction of the whole or a substantial part of the work is an infringement (s 14(1)(b)) of the Act). 117 Program information for every program broadcast on SBS and the ABC is provided to Ice by agreement with those entities. Ice attempted to enter similar arrangements with networks Nine, Seven and Ten. Those approaches failed and Ice sought legal advice with a view to developing a technique for building an EPG that did not infringe third party intellectual property rights. Ice's objective was to begin with ' a clean sheet of paper ' and ' build both a system and a methodology of creating an ultimate program guide ' without infringing copyright. It endeavoured to implement that objective. 118 It cannot be said, and Ice does not assert, that Ice has conducted itself in the absence of knowledge of Nine's claim or potential claim to copyright in the Weekly Schedule. Ice took legal advice and conducted itself with the express purpose of avoiding an allegation of copyright infringement. 119 In order to create the IceGuide, Ice created templates which were entered into the Ice Database. The templates formed the basis for Ice's methodology of "predicting over" the IceGuide from the same channel and day in a previous week to create successive IceGuides. So long as the second compiler does not copy the first compilation, there would be no infringement of any copyright in that compilation ' any more than the existence of copyright in a photograph of a scene signifies that there is copyright in the scene itself, which, therefore, a later photographer is not at liberty to photograph from the same viewpoint ' ( Desktop at [26] per Lindgren J). 121 The work in which copyright subsists for the purposes of these proceedings is a compilation --- the Weekly Schedule. Nine does not claim copyright in these proceedings in its television broadcasts (cf s 87 of the Act) or the programs themselves. To the extent that Nine's employees expend skill and labour in connection with Nine's television programming activities, its relevance is as preparatory skill and labour expended in the creation of the Weekly Schedule. The broadcast of the programs in the sequence in which they are recorded in the Weekly Schedule is not the publication of the Weekly Schedule (cf s 29(1)(a) of the Act) nor the communication of that compilation to the public. The copying down of those publicly aired programs, their titles and the times of their commencement and completion by watching television, without reference to the compilation, does not establish the necessary causal connection between the work in which copyright is claimed and the result of that copying, even if the resulting work is similar or identical to the Weekly Schedule. Anyone viewing the result of the work of the selection and ordering of programs, even if it is subject to copyright, is free to start with that public source and from that source to produce his or her own work. • A person is not prevented from undertaking the original labour of recording a subject "open to all the world", for example a map of a geographical area ( Longman v Winchester (1809) 16 Ves Jun 269 at 272; 33 ER 987 at 988 cited in Desktop at [29]). • The mere publication of information that was open to all the world to publish is not an infringement of another's right ( Leslie v J Young & Sons [1894] AC 335 at 340-1, cited in Desktop at [54]). • ' The owner of copyright has, in short, no monopoly in the subject-matter. Others are at liberty to produce the same result, provided they do so independently and, though they are not the first in the field, their work is none the less "original" in the sense in which that word is used in the Copyright Act 1911 ' ( Halsbury's Laws of England (2 nd ed, 1932, vol 7) at 521, cited in Desktop at [107]). • The fact that some facts would or might be described by independent authors in the same or similar words may necessarily follow from the subject matter and is not restrained by copyright ( Spiers v Brown (1858) 6 WR 352, cited in Desktop at [31]---[32]). • Copying is not an "all or nothing" test. The degree of copying can be taken into account, that is, the degree to which the copyright work was not copied but originated with the putative author and the amount of that author's contribution to bringing a new work into being ( Desktop at [96]). • If a person is to carry out original labour, no part of another compilation can be taken ( Kelly v Morris (1866) LR 1 Eq 697, cited in Desktop at [35]). There is no right to make the results of another's skill and labour the foundation of a subsequent compilation or any material part of it ( Morris v Ashbee (1868) LR 7 Eq 34, cited in Desktop at [39]). His evidence is that Mr Peter Vogel and Mr Russell Gilbert of Ice approached him in July 2004 and instructed him in August 2004 to create a seven day television schedule independently of any published guide. Mr Rilett was not provided with specific ground rules but understood that the objective was to create a template guide that did not copy the guides in which the commercial television networks had copyright. Neither Mr Vogel nor Mr Gilbert gave evidence in these proceedings. 124 Nine contends that the initial reproduction was made by Ice in late September 2004, when Mr Rilett had recourse to and copied Aggregated Guides that displayed, inter alia, the information set out in the Weekly Schedule. It is not suggested that Ice had direct access to the Weekly Schedule or any other format of the Nine Schedules. 125 Mr Rilett was living in Adelaide in August 2004 and began work by preparing from his memory a handwritten list of over 100 programs. Once that task was complete, Mr Rilett watched television for approximately three weeks. He described this exercise as ' torture '. He kept a notepad by the television and recorded by hand details of the programs screened including name, channel, day of broadcast, start time, sometimes the duration, classification and whether the program offered closed captions, widescreen and/or sometimes high definition ('the Notebook Guide'). Mr Rilett continued watching television until he had noted the programs for a 24-hour period for each day of the week for the three commercial free to air networks. While creating the Notebook Guide, Mr Rilett also researched and wrote descriptions of the programs into a descriptions list. This required him to have recourse to Internet search engines and websites to find information about the content of the programs. Mr Rilett says that he did not consult published television guides for those descriptions. Mr Rilett no longer has the Notebook Guide and it was not in evidence. His descriptions list was in evidence. 126 Mr Rilett then created templates for each of the Sydney channels Nine, Ten and Seven. He used Microsoft Excel to create seven documents for each Sydney station (one for each day of the week) and called them the "Templates for Sydney". The templates were populated with the information he had recorded in the Notebook Guide including program name, movie slot times, durations, genres, classifications and whether the programs offered closed captions, widescreen and/or sometimes high definition. 127 Because the Templates for Sydney were based on Mr Rilett's viewing observations in Adelaide, he made modifications to exclude programs specific to Adelaide. Around September 2004, Mr Rilett then compared the Templates for Sydney with the published Aggregated Guides for Sydney, including the YourTV Guide. He said that he noted a "slight variation" between his templates and the published guides and amended the Templates for Sydney accordingly. There is no documentary trail evincing the extent of the changes Mr Rilett made to the Templates to Sydney to reflect the Aggregated Guides to which he had recourse. 128 Charts showing the relationship between various stations within each of the networks were also created by Mr Rilett. Mr Rilett confirmed his views of how the programs on the various stations in one network differ from each other by comparing the schedules in Aggregated Guides for stations outside Sydney and using the templates he had created for Sydney stations. This enabled him to create local programming and parent channel relationship guides. The charts and the relationship guides were in evidence. 129 Nine rejects Mr Rilett's explanation as to the process he undertook in preparing the amended Templates for Sydney. It tendered a table comparing Mr Rilett's templates with TV Week as published for the weeks commencing 13 September 2004 and 27 September 2004. The table relevantly shows that the program time and title information in the amended Templates for Sydney closely follows the entries for Nine in TV Week for the week commencing 27 September 2004 including, for example, the inclusion of a one-off pilot program, Andy Richter Controls the Universe , scheduled for broadcast on Nine on Tuesday, 28 September 2004 at 02:05 am. Similar observations can be made in respect of channels Seven and Ten. The amended Templates for Sydney do not follow TV Week so closely for the week commencing 13 September 2004. 130 Nine submits that the ' extraordinary correlation ' between the amended Templates for Sydney and TV Week supports an "overwhelming" inference that Mr Rilett fully populated his templates with program time and title information taken from an aggregated guide, such as that appearing in TV Week , sometime around 27 September 2004. This inference is said to be supported by the assertion that, in order to provide Mr Vogel and Mr Gilbert with an idea as to the level of detail that he was proposing to incorporate into his templates, Mr Rilett undertook a "dummy run" which did involve wholesale copying of the whole of the Weekly Schedule, including time and title information, for the week commencing 13 September 2004 from an aggregated guide. The dummy schedule was sent by Mr Rilett to Mr Vogel and others by email dated 9 September 2004. The email notes that synopses for the dummy schedule were ' taken from Aust sources as no point (for this exercise) for originality '. There is no suggestion that the dummy schedule was used in any way to populate the Templates for Sydney or the IceGuide. Mr Rilett explained the purposes of the dummy schedule. No inference can be drawn from the dummy schedule to support the assertion of wholesale copying from an aggregated guide into the amended Templates for Sydney. Accordingly, the precise source of the information in the dummy schedule is not relevant to determining the source of the information in the IceGuide. 131 I accept that there is a very close correlation between the program time and title information in the amended Templates for Sydney and in TV Week for the week commencing 27 September 2004. There are, however, also differences of content consistent with Mr Rilett's explanation. For example, the TV Week entry for Thursday, 30 September 2004 at 2:50 am lists Nine Presents: Shannon Noll on Nine while the amended Templates for Sydney list a ' Movie ' between 1:00 am and 3:00 am; on Friday, 1 October 2004, TV Week lists The Bernie Mac Show on Nine at 3:30 am while the amended Templates for Sydney list Guthy-Renker Australia at that time. As to form, TV Week uses a 12 hour clock, while the amended Templates for Sydney use a 24 hour clock. 132 I accept Mr Rilett's explanation as to the source of the program time and title information included in the amended Templates for Sydney. I accept that Mr Rilett populated those templates with program time and title information derived from the Notebook Guide he prepared. I accept that Mr Rilett created his own template of programs by watching television in Adelaide over a period of about 3 weeks in about August 2004 and recording what he saw and the time at which each program was shown. His evidence of that experience and his voluntary description of it as "torture" was compelling. Mr Rilett compiled his templates from his watching of Adelaide television. He created the Templates for Sydney based upon that watching of television and his experience in programming and in the television industry generally. He removed programs specific to Adelaide, compared those templates with published Aggregated Guides for Sydney and amended the time and title information in them accordingly. The Templates for Sydney as amended were in evidence. The similarity as to time and title between those templates and TV Week for the relevant period is consistent with Mr Rilett's evidence that he amended the templates by reference to the published guides. The differences (while not extensive) contradict the assertion of wholesale copying. 133 Mr Rilett has significant experience working in the television industry, including past experience working as a Senior Presentation Coordinator for an Australian commercial television network. His instructions were to create a television program schedule for a period of seven days independently of any published television guide. He said that he created his templates based on his knowledge of the industry and the three weeks he spent watching television. Mr Rilett described the process he undertook to prepare the amended Templates for Sydney in detail. 134 While Nine challenged Mr Rilett's evidence, I note that Mr Rilett is not a substantial shareholder in Ice Holdings and no sufficient reason was established for him to exaggerate his achievements. Further, Ice deliberately took steps to attempt to overcome claims of copyright infringement and the formation of an independent template was an important aspect of that basis of Ice's business plan. The evidence, including documents tendered by Nine, evinces a clear intention on behalf of Ice to devise and implement a system to avoid infringement. 135 For all of these reasons, Nine's assertion that Mr Rilett embarked on an exercise of wholesale copying of time and title information from the published guides to produce the amended Templates for Sydney is rejected. 136 The amended Templates for Sydney were completed by Mr Rilett by 25 October 2004. His evidence is that they were then incorporated, with his programs descriptions list, into the Ice Database by Mr Gilbert in November 2004. Using the Ice Database and associated computer programs, Mr Rilett then commenced compiling 24-hour television program guides for channels Seven, Nine and Ten Sydney and Melbourne for each day of the calendar week, six days ahead of when the programs were scheduled to be broadcast. Additional regions were added to the Ice Database and IceGuides created for additional channels throughout Australia before the actual launch of the IceGuide in April 2005. While Nine complains that, in the absence of direct evidence, it is impossible to determine the extent to which Ice undertook "one big update" of the time and title information in Mr Rilett's templates before it went live in April 2005, this is answered by Mr Rilett's evidence, which I accept. From around about November I was doing guides every day, okay. I actually thought we went live. I did I swear, I thought we were live. In fact I was a bit cranky with these two guys come April when they told me about some upcoming launch date and I took a double-take and said, you know, I've been doing this every day seven days a week since November. That process is as follows. Those persons include Mr Rilett, Ms Suzanne Langford, Ms Samantha Tai, Ms Madeleine Doyle and Ms Kiriaki Orfanos. Mr Rilett, Ms Tai and Ms Langford are responsible for compiling program listings information for the IceGuide for programs broadcast on the Nine, Seven and Ten networks. This is generally done six days ahead of any given broadcast day. The source schedule is often taken from one week earlier although there are exceptions, especially in summer. For example, if cricket was broadcast on Nine last Monday but no match is scheduled for the coming Monday, Ice staff may use a non-cricket day as the source schedule, such as the Monday two weeks earlier. 140 The term used within Ice for the process of selecting a source schedule and transferring the program schedule from that day to the day for which a new IceGuide is to be created is "predicting it over". The operator causes a screen titled ' Channels ' to appear, which lists all of the channels covered by the IceGuide. • Selecting the channel for which a new IceGuide schedule is to be created. This causes a screen to appear which lists all the days for which an IceGuide schedule for that channel is currently available in Ice's database. Clicking on a button labelled ' Predict ' causes a new screen to open, headed ' Predict Schedules '. • Selecting an IceGuide schedule for a particular channel and day to use as the source schedule and entering the channel and date details. • Selecting the channel and entering the date and times for the "destination schedule"; that is, the channel and day for which a new IceGuide schedule is to be created. • Clicking an on-screen button labelled ' Predict ' at the bottom of the ' Predict Schedules ' webpage. This causes the program listings in the source schedule to be reproduced in the destination schedule for the channel and day for which the schedule is being created. The starting template will have the same program time and title information (including movies) as the source schedule, except that the software replaces episode titles with question marks (' ? ') where the source channel and the destination channel are the same. If the source channel and destination channel are different, the episode titles are reproduced. This enables, for example, a complete schedule for GTV-9 Melbourne (including episode titles) to be created from the finalised IceGuide schedule for TCN-9 Sydney for that day. The same episode titles are produced in the expectation that the episodes shown in Melbourne will likely be the same as those shown in Sydney. In providing Nine's solicitors with a demonstration of the process used to create the IceGuide, Ms Tai used TCN-9 Sydney as the source schedule to create IceGuides for GTV-9 Melbourne and WIN in Tasmania for that day. 142 As Ice submits, the process of "predicting it over" using Ice's software proceeds on the assumption that ' the structure of television broadcasting is such that the daily content of the commercial broadcasters for a particular day in this week is likely to be substantially replicated on the same day next week or on the same day in two weeks time '. This assumption obviously has its limitations, as changes in programming occur from week to week. 143 The parties disagree as to the proper characterisation of historical records of past Schedules. Ice submits that the evidence shows ' a high degree of predictability of the shape of Nine's television day and a high degree of consistency and repetition in the shows placed in [the] key timeslots on comparable days of the week '. • The afternoons are occupied by long running American serials Days of Our Lives and The Young And The Restless commencing at 1:00 pm, followed by US talk show Entertainment Tonight at 3:00 pm and the children's program New McDonald's Farm at 3:30 pm. • The early evening is occupied by family interest shows; at the time of hearing Antiques Roadshow and Bert's Family Feud leading up to the National Nine News at 6:00 pm. • Series that are shown in the evening, whether made locally or overseas, commonly remain in Nine's schedule for months and sometimes years. Examples include CSI , Miami Vice and McLeod's Daughters . Ms Wieland and Mr Healy identified Strip Programs as programs broadcast Mondays to Fridays, five days a week. Examples include Today , Days of Our Lives and The Young And The Restless . Nine also takes account of the repetitive nature of these programs in preparing the Weekly Schedule. For example, preparation of the Spreadsheet by Ms Wieland involves cutting and pasting Strip Programs from week to week. At the time of hearing, Ms Wieland had copied Strip Programs into the Spreadsheet up to 2008. It could be said that Mr Wieland "predicts" the continuation of the Strip Programs. • Eleven variations in program time and title between Monday 6 October 2003 and Monday 16 October 2006 (six programs were scheduled in different timeslots; five were not scheduled at all). • Twelve variations in program time and title between Monday 15 October 2001 and Monday 16 October 2006 (three programs were scheduled in different timeslots; nine programs were not scheduled at all). • No programs have always appeared in the same timeslots. • National Nine News , at 6:00 pm, is the only program which has remained in its timeslot for 21 years. • Strip Programs such as The Young And The Restless and Days of Our Lives have been shown at different timeslots during their run. At least since 2004, when Ice's activities commenced, there has been some consistency in Nine's programming, in particular between 6:00 am and 7:00 pm, Monday to Friday. There is a high degree of predictability on a daily or weekly basis of Strip Programs to be aired in those times. Both Nine and Ice assume, as a starting point for their own activities, that these programs will continue from week to week. The respective schedules to be prepared are populated accordingly. 147 Nine rejects any suggestion that its copyright protection should be diminished by the fact that some parts of the Weekly Schedule remain constant from week to week. It emphasises the evidence of Ms Wieland that all programs are subject to ongoing review; programs are continually removed and replaced. While there is a degree of repetition, decisions made to retain Strip Programs and consider their timing still involve the exercise of a measure of skill and labour. Ratings information, for example, would be taken into account. 148 The fact that many of the programs shown weekly on Nine are "boilerplate" or Strip Programs does not deprive the Weekly Schedule of copyright protection in the selection of those programs or their continuance in the time and date on which they are shown. It is relevant, however, to Ice's evidence on the preparation by Mr Rilett of his templates and the "prediction" that is made by copying Strip Programs from week to week for the purposes of the IceGuide. 149 Changes in Nine's programming from week to week are incorporated into the IceGuide as follows. Having created a starting template, Mr Rilett, Ms Tai or Ms Langford open a number of online aggregated program guides such as the Yahoo7 Guide, the YourTV Guide and the OurGuide. They then compare the program listings information in the starting template with the published guides. Where the Ice operator finds that the time or title of a program listed in the starting template differs from the entry in the published guides, amendments are made to the template in almost all cases, so that the IceGuide displays the same program titles and times shown in the published guides. There is a verbal rule that three sources must be open and referred to before any amendment is made to the IceGuide. 150 By way of example, Mr Rilett used the IceGuide for TCN-9 Sydney for Saturday, 16 September 2006 as the source schedule to create an IceGuide for TCN-9 Sydney for Saturday, 23 September 2006. "Predicting over" the source schedule using Ice's software caused the starting template for 23 September 2006 to contain the same program listings information as the source schedule, save for date and episode information. Mr Rilett then accessed the YourTV Guide, the Yahoo7 Guide and the OurGuide and set about comparing Ice's "prediction" with the published guides. Mr Rilett noted that the YourTV Guide indicated that Training Day would be screened in "High Definition" and amended the IceGuide accordingly. Mr Rilett's evidence, which I accept, is that he tends to make fewer adjustments to the Ice Guide when compiling it for weekdays. Taking Strip Programs and series programs, which are largely shown on weekdays into account, that would be expected. In demonstrating to Nine's solicitors the creation of an IceGuide for TCN-9 Sydney for Monday, 2 October 2006, Ms Tai made changes to program title, time or episode for 13 out of the 29 timeslots in the final IceGuide for that day. These numbers do not necessarily reflect changes made in response to information in the Weekly Schedule. Late changes will not have been included in the Weekly Schedule but in Late Change Notices (eg, prime time movies). 152 When making changes of this nature, Ice staff do not copy type information directly into the IceGuide. Rather, they search the Ice Database for programs or episode titles already within the database. Searching for programs across the database using Ice's software generates an on-screen list of program titles. A program sought to be included in the destination schedule can then be selected by the click of a mouse. The start time is selected or amended using drop-down boxes which incorporate a range of available times. Clicking a button marked ' Update Show ' then causes the software to insert the program into the destination schedule. Episode titles are similarly presented by Ice's software in a list accessible to the operator and available for selection. If the program or episode the operator wants to insert into the IceGuide does not appear in the list of program or episode titles already in the Ice Database, it must be added to the Ice Database using a separate screen titled ' Add New Program '. 153 Ice relies upon the means of entry of data into the IceGuide. These means were, Ice acknowledges, devised to avoid copyright infringement. The processes include using hard coded elements from mandatory drop down boxes in updating the IceGuide to reflect the Aggregated Guides and using additional screens to add program names to the database for subsequent selection, rather than keying a title directly into a schedule. The purpose of adopting these procedures is not the point. The skill and labour protected by the copyright may be taken by means other than direct entry or a "copy and paste" procedure. The taking of that skill and labour is not avoided by the adoption of these techniques. Ms Doyle is a part-time television program description writer employed by Ice. In researching new programs and episodes to add to the IceGuide database, Ms Doyle and Mr Rilett do not refer to Australian published television guides. Mr Rilett refers to American television network EPGs that are publicly available over the internet to determine programs that may be broadcast by Australian commercial networks in the future, but which have not yet been disclosed. Ms Doyle, by comparison, researches and enters new episode titles into the Ice Database for programs currently being broadcast in Australia. 155 Synopses are provided by the ABC and SBS and drafted for the commercial stations by Ms Doyle and Ms Orfanos, who work in a secure part of the Ice website. Ms Doyle reviews a list of "programs and episodes without descriptions" generated by Ice's software. Programs in that list are those which have been added to the Ice Database and which need descriptions. Ms Doyle drafts synopses in order of priority starting with programs or episodes that have a scheduled broadcast date, then movies and one-off programs, followed by series and sports programs. A variety of research sources, such as reference books and websites, are reviewed in the course of drafting synopses. For example, in drafting synopses for movie "classics", Ms Doyle may refer to Halliwell's Film & Video Guide 2002 ; in drafting a synopsis for the Seinfeld episode "The Pool Guy", Ms Doyle referred to reviews of that episode published online at <en.wikipedia.org/wiki/List_of_Seinfeld_episodes> and <www.tv.com>. Where there are no relevant research sources, synopses are "made up". Ms Doyle and Ms Orfanos are not permitted to have regard to Australian television guides and must record the sources they have used to draft each synopsis. In this way, a list of resources for each program is readily available for drafting further synopses. 156 Access rights to the Ice Database are divided between those staff involved in drafting the synopses and staff involved in predicting time and titles for inclusion in the IceGuide. For example, Mr Rilett drafts the majority of synopses for sports programs but does not have access rights to enter those synopses into the Ice Database; he emails the synopses to Ms Doyle or Ms Orfanos for inclusion in the IceGuide. Conversely, Ms Doyle and Ms Orfanos do not have a right of access to change the scheduling of programs. Each day, she relevantly determines whether late changes must be made to the IceGuide for TCN-9 Sydney and/or GTV-9 Melbourne by comparing the IceGuide for the upcoming 60-hour period with listings in the YourTV Guide. Where she finds a difference as to program name, timeslot, episode title or duration, she amends the IceGuide to show the same name, time, episode or duration as the published guide. If late changes are required to be made in Sydney and/or Melbourne, Ms Langford typically compares the listings information in the Yahoo7 Guide with the information in the IceGuide for other stations within the Nine Network for the corresponding time period where the change was necessary. Again, where Ms Langford finds a difference as to program name, timeslot, episode title or duration for other channels in the Nine Network, she amends the IceGuide accordingly. Ms Langford estimates that, on average, she causes approximately 5 --- 10 late changes to be made to the IceGuide per week across all channels in all regions. 158 Such amendments are again made by using a series of different screens and functions made available by Ice's software, rather than by direct entry into the Ice Database. Where Ms Langford makes a late change to an episode title and cannot find that title in the Ice Database, she enters the title into the Ice Database. By clicking a field titled ' Missing desc's ' and marking the episode title with a double asterix, Ms Doyle and Ms Orfanos are alerted to the fact that it is necessary for them to draft a synopsis as a matter of priority. 159 Late changes may also be made in response to information obtained by Mr Rilett from an "online forum" published on Ice's website and the Television Programming News ; these may contain comments from writers alerting the reader to amended broadcast line-ups and late changes to the Nine Programming. Mr Rilett estimates that he updates the IceGuide approximately two to five times each week on the basis of comments contained in the Ice forum and/or the Television Programming News . 161 The first limb of the analysis involved a comparison of the six weeks beginning on Monday 8 May 2006 and ending on Saturday 17 June 2006 ('the first comparison'). Throughout this period, Mr Andrews downloaded the IceGuide each Monday for the week commencing that day. He then compared the IceGuide programs listings information with the Weekly Schedule as updated by him to include Late Change Notices issued before the day on which the IceGuide was downloaded. Late Change Notices issued on or after that day were disregarded. 162 Excluding the Lotto and "back-to-back programs", the IceGuide listed 1,063 out of 1,068 programs in the correct timeslot during the first comparison period. Of the five incorrect entries, he ascertained that three were corrected by Ice before the broadcast date of the affected program. The timeslot for "back-to-back programs" always differed as the IceGuide listed such programs in single, rather than multiple, timeslots. For example, the Weekly Schedule for Saturday, 13 May 2006 in text format listed Make Way for Noddy in two, separate 10 minute timeslots whereas the IceGuide for that day lists Make Way for Noddy in a single, 20 minute timeslot. The listings for Lotto also always differed as the IceGuide never included the Lotto during the first comparison period. Differences of program title considered to be "minor" by Mr Andrews (eg, Hotel Babylon (UK) rather than Hotel Babylon ) were not taken into account for the purposes of his comparison. 163 Similarities in episode title, repeat and classification information were also observed. It is unnecessary to set out the detail of those similarities here. Mr Andrews did not compare the synopses. 164 The second limb of the analysis considered a four week period between Sunday 18 June 2006 and Saturday 8 July 2006 ('the second comparison'). Mr Andrews downloaded the IceGuide daily during this period and compared it with the Weekly Schedule as updated by him to include all Late Change Notices. By downloading the IceGuide daily, Mr Andrews was able to compare the IceGuide for each day as first published six to eight days in advance ('first available IceGuide) and as last published on the day of broadcast ('last available IceGuide') with the Weekly Schedule as updated. 165 Again excluding Lotto and "back-to-back programs", the first available IceGuide identified the correct program names and timeslots for 700 out of 710 programs broadcast during the second comparison period. All but two programs were listed with the correct name and timeslot by the publication of the last available IceGuide. The two incorrectly listed programs were each the subject of Late Change Notices which were not reflected in the IceGuide. Two further Late Change Notices, each relating to changes in episode information, were also not reflected in the last available IceGuide. 166 Mr Andrews' analysis was, in effect, that every piece of information in the IceGuide's program time and title listings only appeared after it had been published by one of Nine's authorised sources. That, of itself, does no more than provide the basis for an inference to be drawn. Mr Andrews' evidence established that, over the total 10 week period analysed, the IceGuide showed a different program or time only four times in 1,778 programs. Nine relies upon the inference of copying that arises where there is exact correspondence between the copyright work and the accused work and the opportunity to copy by way of access to the copyright work. That exact correspondence as to time and title is explained by Mr Rilett's creation of the amended Templates for Sydney and Ice's acknowledged access to the Aggregated Guides which are, in turn, updated to include the Late Change Notices. He also attended a demonstration conducted at Ice's premises on 26 September 2006. Ten tests were conducted in the course of that demonstration. Mr McKemmish prepared a report for Nine expressing his opinion as to how the Ice computer program worked and whether it had predictive capacity. • Facilitates the building of TV program schedules by copying program information from a starting date and time (the source schedule) and applying the same information to a destination period and channel (the destination schedule). The copied schedule information is subjected to a simple filtering process, whereby if the source and destination channel are the same, then only series information (and not the specific episode information) will be copied. If the source and destination channels are different, then the episode information is copied without change. • Does not contain any predictive algorithm or predictive model; it copies a previous instance of a program schedule. Changes to the copied schedule are effected by means of a manual process that involves comparisons with external sources of information on the internet. • Has been designed to allow a user to select specific show, series and episode information by means of pre-defined lists built from the information contained in the various tables. That previous schedule is built upon Mr Rilett's templates, as varied over subsequent updates which occur in the following way. The Ice operators check each entry on the copied-over schedule by reference to various Aggregated Guides on the internet and make changes accordingly. This occurs more than once before the programs are broadcast and changes are made to reflect variations in the Nine Programming from week to week and late changes. This results in an IceGuide schedule which contains time and title information (but not additional program information or synopses) that may be more than 99% similar to that part of the Aggregated Guides that reflects the Weekly Schedule and updating by Late Change Notices. They differ from each other because of the actions of the Aggregators and because late changes may not have been included. The timing of Ice's access to the Aggregated Guides will affect the fact of and timing of the inclusion of late changes in programming. 169 In order to update the IceGuide, Ice staff access not only the Aggregated Guides but also other material publicly available on the internet to obtain information on episode content and description. This material is used, for example, to add programs to the Ice Database in anticipation of their broadcast and in the preparation of Ice synopses. It is also a source of information about episodes of serials that are shown in sequence. 170 Ice cannot know with certainty the details of Nine's programming without access to the Aggregated Guides. Ice is not a direct recipient of the Weekly Schedule as prepared by Mr Healy and Ms Wieland. Ice cannot know, for example, specific movies or one-off programs until their inclusion in Nine programming is determined by Nine, included in the Weekly Schedule or a Late Change Notice and incorporated into an aggregated guide. 171 While a number of programs are repeated at the same time each week, the evidence shows that over an extended period of time, programs may be replaced or their timeslot varied. This, in turn, affects the extent to which it has been necessary for Ice to amend the information originally compiled in the templates that Mr Rilett produced around September 2004. For example, for Sunday 1 October 2006, only three programs in the Nine Programming as recorded in TV Week were in the same timeslot as in the amended Templates for Sydney; for Friday 6 October 2006, all of the program timeslots between 7 pm and 4 am in the Nine Programming were different; for Saturday 7 October 2006, five programs had timeslots common to the Nine Programming and the amended Templates for Sydney. 172 Ice accesses different online Aggregated Guides to update its schedule. These sites do not publish identical information and the information is presented in differing formats. Each of the internet guides accessed by Ice are based on the Weekly Schedule, as received by HWW or eBroadcast. HWW edits the additional program information and the synopses. There is little evidence about the nature of the changes, if any, that eBroadcast makes to the information it receives in the Weekly Schedule. Such evidence as there is suggests few, if any, changes are made, apart from the shortening of some synopses. 173 Ice accesses primarily the YourTV Guide and the Yahoo7 Guide, which are both derived from HWW content. Ice asserts that there is no direct copying from the online Aggregated Guides. It says that it adopts and compares information and makes a decision to accept a change or addition or not. Ice relies on the fact that adjustments are made using Ice's software to draw from data which typically already exists in the Ice Database. Ice conducts its own research into, for example, the episodes in a particular series and includes each of the episodes in the Ice Database. It drafts its own synopses. (c) The development of Ice's proprietary software. (d) The manipulation of Ice's database by Ice operators using Ice's software. (f) The skill and labour of Ice's schedulers (Mr Rilett, Ms Tai and Ms Langford) who use Ice's software to draw data from Ice's database to create IceGuide schedules for each channel covered by the IceGuide for each 24 hour period of time. (g) The use of Mr Rilett's analysis of broadcast relationships between different channels by Ice's operators in the process of "predicting over" to create valid IceGuide schedules using IceGuide data drawn from Ice's database. (h) The skill and labour of Ice's researchers (Ms Doyle and Ms Orfanos) in researching and writing program and episode synopses. (i) The implementation of late changes by Ms Langford by reference to the Aggregated Guides and updates by Mr Rilett using information from the Ice forum and the Television Programming News . (j) The on-going use of Mr Rilett's skill and labour in managing Ice's scheduling and researching of the IceGuide. 175 There is a difference between Ice's activities and those of Desktop Marketing Systems Pty Ltd, the infringer in Desktop . Desktop Marketing admitted that it took names, addresses and telephone numbers from the Telstra directories, as well as headings. Where the originality in the compilation lies in the skill and labour involved in collecting, verifying, recording and assembling the data, there is a reproduction of a substantial part of the copyright protected work where the great bulk of the information was taken, although the form of presentation of data is not adopted. 176 Nine's skill and labour of the Weekly Schedule derives not only from the selection and ordering of programs for broadcast but also in the work of Ms Wieland and the Nine staff who collect and prepare information for insertion into the Weekly Schedule, including additional program information and synopses. In such circumstances, the form and content of the presentation of the data are not pre-determined by the nature of the compilation and are not irrelevant to infringement. Does Ice reproduce the Weekly Schedule in the course of making and updating the IceGuide? In its submission, the fact that the program listings information in the IceGuide is presented differently on subscribers' Media Centres or PVRs from the manner of presentation of the Weekly Schedule is irrelevant. However, the concept that the taking of a single line of a directory for the purpose of saving labour and trouble amounts to an infringement was a ' famous but excessive admonition ' ( Desktop at [405] per Sackville J referring to Kelly at 701---2 per Sir W Page Wood VC). The fact that copyright may exist in a compilation does not mean that it exists in the individual facts referred to therein ( Victoria Park at 498 per Latham CJ and at 511 per Dixon J). The taking of line of a directory will not be sufficient for infringement if it does not constitute a substantial part (s 14(1) of the Act; Waterlow Directories Ltd v Reed Information Services Ltd (1990) 20 IPR 69 per Aldous J at 73, cited in Desktop at [347] per Sackville J). However, copyright in a compilation may be infringed by appropriating ' an undue amount of the material, although the language employed be different or the order of the material be altered ' (Laddie H, Prescott P, Vitoria M, Speck A and Lane L, The Modern Law of Copyright and Designs (3 rd ed, 2000) at paras 3.88 and 3.90, cited in Desktop at [375] per Sackville J). 179 Nine relies on the decisions in which British courts have found infringement of copyright in television or radio guides. In British Broadcasting Company v Wireless League Gazette Publishing Company [1926] 1 Ch 432, the British Broadcasting Company ('BBC') began publishing its own daily programs for the ensuing week each Friday in the Radio Times . The published material gave the day and hour of each performance and certain additional information. The preparation, arrangement and editing of the actual programs involved considerable time, skill and labour, although the preliminary work of fixing the times, engaging the artists and choosing the items had been done some time beforehand. Justice Astbury held that there was copyright in the compilation of the seven advance daily programs from which the defendants selected and deliberately copied items. His Lordship found that the defendants had, by copying the published program listings, infringed copyright in the Radio Times . Justice Astbury observed that there was still infringement where less than the whole of the compilation was taken but did not give this aspect any detailed consideration because there had been "wholesale copying" (at 443). 180 In Independent Television Publications Limited v Time Out Limited [1984] FSR 64, daily program schedules of programs to be broadcast by channels including the BBC were compiled for publication in weekly format in the TV Times and the Radio Times . It was accepted that ' a great deal of time, energy and skill ' was expended in producing the schedules for the programs ultimately listed in the two publications (at 66). The defendants took the date, title and time of transmission information ' either wholly from ' the published weekly schedules or ' possibly occasionally only checked ' the information they published by reference to those guides (at 67, 73). They published all or some of the information taken from the published schedules in Time Out , together with synopses which were independently drafted. The defendants accepted that sufficient skill and labour was invested in the production of the daily program schedules to justify a claim to copyright but argued that that ' what is being done...is no more than creating information '. Mere information, it was submitted, could not be the subject of copyright protection. The issue for determination was whether the schedules did any more than create information. Mr Justice Whitford rejected the submission that the program schedules were mere information that could not be protected by copyright (at 72). His Lordship also considered that a substantial part of the daily program schedules had been taken but recognised that what constituted a substantial part was a question of degree, depending on quantity taken and the importance of what was taken (at 73). It was accepted that selection on "a very limited basis" would not amount to infringement (at 74). The fact that synopses were added did not negate a finding of infringement. His Lordship emphasised that a person is free to start with a public source and from that source to produce his or her own work which may correspond very closely with the copyright work of the earlier author (at 69). 181 In neither of these two cases was there not only an absence of wholesale copying but also the checking of information against a third party aggregated guide, the checking of a selection of listed items and that selection being of the information for a given entry and the number of entries in the compilation. The cases illustrate that copying is an important factor and that it is a matter of fact and degree to ascertain whether there has been a taking of a substantial part. Each case turns on its own facts. While Independent Television Publications and Wireless League Gazette are examples that have fallen on one side of the line, they are not determinative of these proceedings. 182 Where the manner of presentation is the basis for the attraction of copyright, it may be that a presentation of the same information in different form would not infringe ( Victoria Park per Dixon J at 511). In such circumstances there may not have been a taking of a "substantial part", which is assessed by reference to the quantity and the quality of what is taken and the inter-relationship between them ( Eagle Homes Pty Ltd v Austec Homes Pty Ltd [1999] FCA 138 ; (1999) 87 FCR 415 at [70] per Lindgren J, cited in Gold Peg at [170]). It is a question of fact and degree (Crennan J in Gold Peg at [190]; also emphasised by McHugh and Kirby JJ in dismissing an application for special leave to appeal from the Full Court in Network Ten Pty Limited v TCN Channel Nine Pty Limited [2005] HCATrans 842). A defendant may rework the work of a plaintiff, capturing the ideas used or facts referred to but in a way that does not infringe because it is not a substantial reproduction. It may constitute a new original work. The taking of a substantial part of a copyright work will vary depending on the nature of the work and the degree of originality of the original work ( Skybase at 532 per Hill J, with whom French J agreed). The ' originality of that part of the work taken by the alleged infringer ' is critical ( Desktop at [409] per Sackville J). 183 The originality of a compilation may lie in the selection or arrangement of the information. It also may reflect the skill and labour of gathering the facts. As already noted, in the present case, the Weekly Schedule reflects both. It is only the originality of expression that is relevant, not the originality of the idea the subject of the expression ( Donoghue v Allied Newspapers Limited [1938] Ch 106 at 110 per Farwell J). It must be determined whether the part that is taken is an essential or material feature of the whole work, regarded as a copyright work; that is, ' whether the part or parts taken represent a substantial part of the labour, skill and judgment of the author that made the whole work "original" ' ( Tamawood Ltd v Henley Arch Pty Ltd (2004) 61 IPR 378 at [55] per Wilcox and Lindgren JJ). As one should not dissect a work to determine if a part could be protected by copyright standing alone ( Ladbroke at 277 per Lord Reid), so it is inappropriate to dissect the work for the purposes of infringement. The correct approach is to decide whether the work as a whole is protected by copyright and then to determine whether the work or a substantial part of the work as a whole has been taken. 184 The underlying principle is that the law of copyright does not give an exclusive right to state or describe particular facts ( Victoria Park at 498 per Latham CJ). Substantial reproduction and causal connection are separate and cumulative requirements for a finding of infringement ( Desktop at [399] per Sackville J). If a causal connection is shown, it is then necessary to assess whether the allegedly infringing work can fairly be said to be so sufficiently similar to the first that it is but a reproduction ( Skybase at 533 per Hill J, with whom French J agreed). While copying is an essential element in providing the requisite causal connection between the copyright work and the alleged infringement, copying does not, of itself, determine whether or not there has been the taking of a substantial part. Not every act of copying is an infringement of copyright. It is also necessary to establish the appropriate subject matter for copyright, what is original and whether there has been a taking of a substantial part ( Network Ten [2004] HCA 14 ; 218 CLR 273 at [14] ---[17] per McHugh A-CJ, Gummow and Hayne JJ). 185 In Gold Peg , Crennan J discussed the assessment of infringement. The first inquiry was to look to the similarities between two works, " which is a question of degree, taking into account the originality and essential nature of the elements which are found " (at [174]). The second inquiry was whether there had been actual copying. Her Honour considered it "instructive" whether the products would compete in the market. If actual copying were found, the next step was to ask whether a "substantial part" was copied (at [179]). The taking of a substantial part may occur in circumstances where quite small portions of a work are taken (at [188]); it is a question of quality rather than quantity. The quality of what is taken reflects the importance which the part taken bears in relation to the copyright work as a whole. It is not relevant to have regard to the importance that the part taken forms of the defendant's work (at [189]). Justice Crennan considered the factors relevant to determining substantial part to include originality, whether the purpose of the taking was to save labour and the effect of the taking in the market for the plaintiff's work (at [191]---[192]). Ice did not copy the whole of the information for insertion into the IceGuide but there has been the taking of time and title information from the Aggregated Guides by checking and updating of the IceGuide. Ice staff access those guides and choose whether to replace the time and/or title information in the starting template for each day with information from the Aggregated Guides. 187 If each "sliver" or element of the Nine compilation is entitled to copyright protection, Ice accepts that it cannot defend these proceedings. Ice submits that a piece of information about, for example, a change in episode sequence is not a copyright protected work but ' at best, a tiny star in the galaxy of a compilation '. This accords with Victoria Park . Nine accepts that a single "sliver" of information, such as the programming over five days at 8 pm, does not amount to a substantial part of the Weekly Schedule nor of the Aggregated Guides. 188 The Aggregated Guides publish a substantial part of the information set out in the Weekly Schedule. Nine retains copyright in the Weekly Schedule. The skill and labour invested in a compilation may continue to be protected even where that compilation is integrated into or extended to become a different compilation which is itself protected by copyright. Nine asserts that the Aggregators' publication is as a ' sub-publisher ' of the Weekly Schedule, authorised by Nine. Nine contends that, in updating its guide by reference to the Aggregated Guides, Ice is taking a substantial part of its copyright work. 189 The IceGuide does not replicate the content or form of the Aggregated Guides. The differences in content are primarily in the additional program information and the synopses. Those sets of information from the Weekly Schedule are not necessarily replicated in the Aggregated Guides. For example, synopses are edited and may be shortened. Importantly, the Aggregated Guides also contain information from the Late Change Notices. That information is not included in the Weekly Schedule sent to the Aggregators. The form and arrangement of the IceGuide is different to that of the Aggregated Guides and different, in turn, to the form and arrangement of the Weekly Schedule. Accordingly, neither the content nor the format of the Weekly Schedule is replicated in the IceGuide. 190 The Weekly Schedule and the Aggregated Guides contain not only time and title information but also additional program information and synopses. Ice may reject the additional program information in the Aggregated Guides as incorrect on the basis of its own knowledge or research and never takes the synopses. Disregarding Ice's assertion that it does not "take" any information as it does not copy, but amends time and title information from its own database after checking the published guides, Ice does not take the whole of the time and title information from the Aggregated Guides. It uses so many 'slivers' of information as are necessary to update those parts of the IceGuide. The Nine program information forms only a part of the aggregated program information for all of the networks represented in the Aggregated Guides. 191 Ice has not taken a quantity of information sufficient of itself to amount to a substantial part of the content of the Aggregated Guides or of the Weekly Schedule, considered as a whole. It has not taken the form of either compilation. The basis of the Ice subject matter is derived not from the Weekly Schedule but from the Templates for Sydney and later iterations. To the extent that there are similarities of form, they are dictated by the nature of the subject matter. 192 Nine contends that the quality of the time and title information, its importance in the context of a schedule of programs to be broadcast and the importance of the accuracy of a published program guide are sufficient to make the taking of the information necessary to check and update the IceGuide the taking of a substantial part of the Weekly Schedule. The accuracy, from week to week, is reflected not only in changes recorded in the Weekly Schedule but also in the subject matter of the Late Change Notices. Over 600 Late Change Notices were issued between 1 April 2005 and 10 August 2006. A single Late Change Notice may contain information for more than one program change. While the time and title of a program to be broadcast in one week that was not broadcast in a previous week may be qualitatively important, for series or episodic programs which form a significant part of the Nine Programming, the time and title may be of little importance and the synopses may be more important. In terms of the originality of the information included in the Weekly Schedule and in the Aggregated Guides, Nine has not established that, as a whole work, the time and title information is qualitatively more important than the synopses. When the originality of the component parts of the Weekly Schedule are considered, Nine has not established that, for the purpose of the compilation itself, the time and title information, determined for the purpose of broadcasting, has a greater claim to originality than the synopses created for the purpose of insertion into the compilation. Nine has not demonstrated that, qualitatively, the nature of the information taken or used by Ice constitutes a substantial part of the whole compilation. I am not prepared to infer that it is. 193 The skill and labour expended by Nine referable to the changing data to which Ice refers is not primarily expended for the purpose of producing a literary work, the compilation, but for the purpose of broadcasting programs in an order so as to maximise viewers. There is not a relevant appropriation of that skill and labour by Ice in composing the IceGuide. Ice gains the benefit of the preparatory work by Mr Healy and Ms Wieland in deciding on the positioning and identity of the Nine programs and, for a program that is not the subject of a Late Change Notice, the recording of that program by Nine into the Weekly Schedule. It can be said that Ice copies "slivers" of information. Over an extended period of time, the impact of the constant updating may have both a quantitative and qualitative effect on the accuracy of the IceGuide. However, for any given day or week the information taken is not of sufficient quantitative nor qualitative significance to be characterised as a substantial part of the whole of the Nine compilation, the Weekly Schedule. It is of even less significance if the subject matter of the Late Change Notices, which are not part of the compilation supplied by Nine to the Aggregators, are excluded. For the reasons earlier given, they should be so excluded. What is the interest that Nine's copyright protects? In Desktop , it was the skill and labour of gathering together in one place the details of all of the members of a given universe --- all the telephone subscribers in a region. The manner of arrangement of the details was then "inevitable" or "predictable" and involved little work. 195 In the present case, the interest which copyright is intended to protect is not necessarily a single interest. • The skill and labour of recording the Nine Programming into a material form (the Weekly Schedule) for distribution to the Aggregators and, in turn, the public. • Control of the timing of the release of program information for competitive reasons. • Control of the ability to record programs broadcast by stations within the Nine Network and its affiliates. • Control of the content of the published program information and to ensure that the published compilation is accurate. Section 31 of the Act prescribes the exclusive rights that comprise the copyright in such a work. For present purposes, the relevant right is the exclusive right to reproduce the work in a material form (s 31(1)(a)(i) of the Act). 197 Nine relies upon the fact that Ice competes with it directly, in the sense that Nine sub-licenses its program listings information through HWW to Foxtel for use in an EPG, the Foxtel Digital Guide. Ice does provide its subscribers with the ability to record Nine programs in digital format, other than by subscription to Foxtel. However, it is not part of Nine's pleaded case that copyright subsists in its television broadcasts or the programs themselves. Nine's copyright in the Weekly Schedule does not extend to protect the interests in the broadcast and recording of those programs that are listed in the compilation (Ricketson S, The Berne Convention for the protection of literary and artistic works: 1886-1986 (1986) at 299, cited in Desktop at [74] per Lindgren J). Those interests are not protected by the compilation but by the copyright which subsists, if established, in Nine's television broadcasts and the programs themselves as copyright works. For example, ' there may be copyrights under Pt IV [of the Act] in a cinematograph film which is the subject of a television broadcast, and the film may utilise the copyrights under Pt III [of the Act] in, for example, original dramatic and musical works ' ( Network Ten [2004] HCA 14 ; 218 CLR 273 at [31] per McHugh A-CJ, Gummow and Hayne JJ). 198 Ice does not take the skill and labour of placing programs in that it plays no part in the placement of programs. It is not in competition with Nine to attract viewers in the sense of competition with other television networks. It does not have access to information from the Weekly Schedule until that information is released to the Aggregators and published by them in the Aggregated Guides. It does not take from Nine the timing of the release of the information, as Nine chooses when to provide the Late Changes Notices to the Aggregators for inclusion in the published Aggregated Guides. Ice's business plan requires it to be accurate. Mr Rilett may reject specific time and title information in the published guides and substitute his own listing of a program, although there is no evidence to suggest that this is other than an infrequent occurrence. 199 In determining whether a defendant has taken a substantial part in quality of a work, the impact of the copying on the interest protected by the copyright is relevant (Lahore J and Rothnie W, Copyright and Designs at [34.130]). This, in turn, may make take account of the commercial interests of the copyright owner and whether the parties are in competition, as well as whether there has been a taking of skill and labour. However, the reference point is the original work for which protection is claimed. A compilation is the collection, assembly and arrangement of chosen information into a single entity. Cases addressing the taking of a part of an artistic work, for example a line in a poem or a refrain in a musical work, may address substantial part and the quality and quantity taken differently. 200 The question is one of protection of the relevant skill and labour ( Desktop at [235] per Lindgren J citing Laddie J in Autospin (Oil Seals) Ltd v Beehive Spinning (a firm) [1995] RPC 683 at 697-8). Once sufficient skill and effort have been expended in working out the information and writing it down, the compilation so created is a literary work and protected by copyright. 201 It is not disputed that Nine's employees expend skill and labour in the content and arrangement of the Weekly Schedule in the form in which it is sent to the Aggregators. 202 Nine contends that, once Mr Healy has decided on the order of the programs best to suit Nine's commercial and strategic interests, the time and title information in the Weekly Schedule is, in the words of Lindgren J in Desktop at [21], a "whole of universe case" --- a case where there was no selection of the subscribers to be included in the directory and where the directory permitted only one mode of arrangement of the factual information and only one mode of expression of the individual entries. In such a case, anyone exploring the same universe would discover the same factual information and would, inescapably, produce a directory relevantly identical in form, as well as in content, to Telstra's (at [22]---[24]). 203 In Desktop , the originality of the compilation lay in the labour and expense of collecting the information to be compiled. The copyright attached to the Telstra directories by reason of that skill and labour and not because of the skill and labour of the manner of arrangement of the compilation. Lindgren J noted at [23] that, more commonly, there is some "scope for variance" in the manner in which the individual pieces of factual information are recorded, in the selection of the factual details to be compiled and in the arrangement of the compilation as a whole. 204 Unlike Desktop , different content and modes of expression and arrangement may be utilised for a television program schedule. A day's programs may commence at midnight or 6 am, the program may be in a 12- or 24-hour format and the number of days shown in advance may vary. The format may be horizontal or vertical. There exists a scope for variance in the manner of recording of time and description of title. Some columns may not be present in some guides. There is greater scope for variance in the recording of and choice of additional program information to be included. The additional program information and what is included in such information is not preordained. It is a matter of choice whether to include the fact of digital or analogue broadcast, censor rating, black and white or colour. There is the opportunity, here availed of by Ice, to change totally the synopses for each program. The IceGuide has significant differences of form and content. 205 Nine submits that adding information, albeit complex information and in quantity, does not avoid infringement. For the mere adding of information, that may be so. However, the submission does not take into account the fact that the adding of information may affect the compilation as a whole and the interrelationship of its component parts, so as to affect not only the quantity but also the quality of what it conveys. It is a question of fact and degree. 206 Recognising that copyright in this compilation is defined by the attributes of selection, expression or arrangement, Ice contends that the copyright subsists in the Weekly Schedule by virtue of each of those attributes. In the circumstances of this case it then follows, according to Ice, that infringement is assessed against each of the attributes of selection, expression and arrangement and, if one of these is missing or not preserved in the Aggregated Guides to which Ice has recourse, there can be no reproduction of the Weekly Schedule by Ice. If, by that submission, Ice submits as a general proposition that there is no infringement of a compilation unless each of the selection, expression and arrangement are reproduced, then that is inconsistent with Lindgren J in Desktop . While the attributes of selection, expression and arrangement have all been exercised in the creation of the Weekly Schedule, a taking of any one of those attributes may be sufficient to constitute the taking of a substantial part of the work as a whole, if the requisite skill and labour have been appropriated. 207 Further, it is not a question of saying whether the expression "skill, judgment and labour" is conjunctive or disjunctive. It is the correlation between what is being taken by the alleged infringer and what is original and thereby attracts protection under s 32 of the Act. If a work is sufficiently original so as to attract protection but skill and labour is only expended in one of those attributes, it is against that attribute that infringement is measured. 208 The connection between the particular form of skill and labour and the attraction of copyright protection was emphasised by Black CJ in Desktop at [6]. Justice Lindgren also noted the distinction between the labour and expense of obtaining the information, the necessary information for the arrangement and compilation and then of the actual making of the compilation. Nine is, like Telstra in Desktop, in the position of possessing the material for inclusion in the compilation because of the effort of collating the time, title, additional program information and the synopses to be compiled. That information is collated, however, not solely for the purpose of creating a literary work, the Weekly Schedule. The main purpose of the work done by Mr Healy and Ms Wieland and the others at Nine is to determine the Nine Programming --- the order of programs to be broadcast. Having said that, it is also the case that the creation of the Weekly Schedule involves sufficient skill and labour so as to be an original literary work in which copyright subsists and that is not disputed by Ice. Nine's skill and labour in determining the Nine Programming resulted in the broadcast of those programs and the information for inclusion in the Weekly Schedule. Ice does not engage in broadcasting. Ice did not take the broadcast information in the Weekly Schedule to create the amended Templates for Sydney. It obtained that information by watching television and writing down the time and title of Nine programs, creating its own additional program information and synopses and amending its templates by reference to the Aggregated Guides. The question is not whether Ice took the skill and labour which is expended in programming decisions but whether it took the skill and labour of creating the copyright work. For example, Mr Healy or Ms Wieland may spend a great deal of time, skill and labour in deciding whether to purchase a new series from the United States, negotiating the purchase and deciding the timeslot in which it should be broadcast to maximise viewers. Once that decision is made, the time and title of that program is determined for the purposes of the Weekly Schedule. The skill and labour expended for the purposes of maximising the benefit of the broadcasting is not coextensive with that expended for the purposes of the creation of the copyright work. 209 The compiler of the Weekly Schedule of Nine programs is not necessarily the same person who determines the programming, the time and tile of the programs and is the author or originator of the facts recorded in the compilation. Once the programs are broadcast, the time, title, nature and content of those broadcast programs are available to the public. A person wishing to compile a schedule of those broadcast programs by viewing them and recording all of that information does not, in the making of that second compilation, appropriate the work of the creator of the record of the programs in the Weekly Schedule. It is similar to a speech and the report of the speech ( Walter v Lane [1900] AC 539, cited in Desktop at [68] per Lindgren J); they are two different things and the authors are relevantly two different persons. 210 The skill and labour of creating the Aggregated Guides accessible to the public, including Ice, is in the content and the form in which the information is there presented. The Aggregated Guides are separate compilations of which the Nine programming information or "Nine Listings Content" represents only a part. They are created by the independent skill and labour of the Aggregators and do not reflect the precise content and arrangement of the Weekly Schedule. Nine does not claim copyright in the Aggregated Guides but says that it retains copyright in so much of those guides as contains the Nine Programming, which was contained in the Weekly Schedule. Ice does not appropriate the skill and labour expended by Nine in arranging the format or the content of the additional program information and the synopses. It created its own templates. It accesses the Aggregated Guides. Ice adopts its own format and provides its own content. It amends the time and title information for some programs that it has not "predicted" correctly. It utilises its own skill and labour, via its software system, to insert that information into the IceGuide. It does not take the skill and labour attributable to the form of the compilation. It does not take sufficient of the skill and labour of the content of the Aggregated Guides, let alone the Weekly Schedule, to constitute a substantial part. • The time and title information of the Weekly Schedule does not include the information the subject of the Late Change Notices. • As Ms Wieland stated, prime-time movies are never included in the Weekly Schedule and new programs may not be included. They are the subject of Late Change Notices. • Strip programs may be scheduled for broadcast in the same timeslot by Nine for months and sometimes years. • Programs with episodic series are also often scheduled in the same timeslots for extended periods of time. As already noted, for these programs, the time and title information may be of less qualitative importance than the synopses. • Each compilation, the Weekly Schedule, the Aggregated Guides and the IceGuide includes the additional information and the synopses. • Ice refers to the whole of the time and title information in the Aggregated Guides but only takes "slivers" of it. Those "slivers" do not bear substantial importance in relation to the originality of the Weekly Schedule as a whole. • The synopses are, for each of the Weekly Schedule and the IceGuide, original works with commercial importance. • The skill and labour engaged in by Nine for the creation of the time and title information is skill and labour that is expended for the purposes of broadcasting and as preparatory skill and labour for the purposes of the compilation. • The skill and labour expended and the originality of the Weekly Schedule relate not only to the information contained in that schedule but also to the arrangement and form of the information. • Ice does not take the arrangement or form. • Ice expends its own skill and labour and original work in the creation of the IceGuide which is not derived from Nine's copyright. This includes the creation of the templates, the software to amend the guide, the decisions on what to include in updating and amending the guide, the writing of the synopses and the presentation of the data. It follows that Ice does not reproduce a substantial part of the Weekly Schedule as it appears in the Aggregated Guides or a substantial part of the Aggregated Guides in the course of making and updating the IceGuide. Nine accepts that it follows that the second to fifth allegations of infringement must fail. Although it is unnecessary to comment further, I would add the following observations. 214 Nine conceded during the hearing that the last infringement is '[t] he communication to the computer and the arrival [of the IceGuide] on the hard disk '. Accordingly, the allegation that there has been an authorisation by Ice of subscribers to reproduce the Weekly Schedule when transmitting the IceGuide from their PC to a PVR is not in issue. Nine is not relying on the action of any user. 215 The IceGuide can be made to appear by users in the different formats that are permitted by particular brands of PVR or Media Centre. This may be in a multiple channel, single channel and single program format. Program schedules may be viewed on-screen for a period of six to eight days from the current date. Programs may be selected and recorded. The IceGuide data are stored in files on the hard drive of the user's device as a text file. That text file has a different format and appearance to the IceGuide and is used by the PVR or Media Centre in order to display the IceGuide. • A reproduction of the Nine Schedules (including the Weekly Schedule) onto the processing memories or hard drivers of subscribers' PCs or Media Centres, or alternatively Ice's authorisation of subscribers' acts of reproduction. Nine's Convergent Technologies Manager, Mr Joshua Lowcock, explained that there is no requirement for databases to be arranged in a particular way. Data are stored as a series of electrical impulses. The manner of selection, expression and arrangement of the Weekly Schedule would need to be reproduced, Ice submits, for there to be a reproduction in the Ice Database or in the text files. Ice submits that infringement is not established by finding the elements of a compilation somewhere, randomly, on a hard drive or in a database. It is said to follow that the second and third acts of infringement cannot be made out. 218 If the making and updating of the IceGuide had constituted an infringement, the fact that data may be transmitted and stored by Ice and its subscribers in different formats to the Weekly Schedule would not necessarily mean that the other reproduction allegations would fail ( Desktop at [443] per Sackville J). As has earlier been emphasised, if copyright attaches to preparatory skill and labour and not to format, the format of reproduction is not determinative of infringement. Consistent with this principle, s 21(1A) of the Act, on which Nine relies, provides that a work is taken to be reproduced if it is converted into or from a digital or other electronic machine-readable form, and any article embodying the work in such a form is taken to be a reproduction of the work. 219 In my view, it does not matter what intermediate steps are involved in the passage of data from the IceGuide server to the destination machine, be it a PVR or Media Centre, nor the protocol that the relevant machine has in respect of receiving data. The question is whether the skill and labour in the production of the Weekly Schedule has been appropriated. I accept, for example, that had the first infringement allegation been made out, in the absence of evidence to the contrary, the text files which sit on a subscriber's PC in a folder on the hard disk would be a reproduction and, therefore, an infringing copy, of the Weekly Schedule for the purposes of the third infringement allegation. That is so whether Ice is considered to have made the reproduction of the text files itself or authorised that reproduction by its subscribers. 220 Accepting that there is no reproduction or substantial reproduction of the Weekly Schedule on the hard drives of subscribers' PCs or Media Centres, authorisation does not arise. If there is such reproduction, the facts support the contention that Ice "authorises" the reproduction of the Weekly Schedule by users of the IceGuide within the meaning of s 36 of the Act. It "sanctions, approves and countenances" such activity ( The University of New South Wales v Moorhouse [1975] HCA 26 ; (1975) 133 CLR 1 at 12-13 per Gibbs J and at 20-21 per Jacobs J). Ice encourages use of the IceGuide and is, at best, indifferent as to whether the Weekly Schedule is reproduced on the hard drives of subscribers' PCs or Media Centres ( Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 210 ALR 244). Ice has the power to prevent such reproduction and takes no steps to do so. The actions of Ice are not dissimilar to those of the proprietor of software made available from websites enabling copying and communication of sound recordings ( Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 220 ALR 1). To communicate a work is to make the work available online or transmit the work electronically, whether over a path or combination of paths, provided by a material substance or otherwise (s 10(1) of the Act). 222 The requirement under the Act that the "communication" must be "to the public" means "to the copyright owner's public" ( Telstra Corporation Limited v Australasian Performing Right Association Limited [1997] HCA 41 ; (1997) 191 CLR 140). Ice submits that Ice's subscribers cannot be considered to be Nine's "public" because ' Nine could not reasonably expect payment from anyone...for receipt by [Ice] subscribers of the [Weekly Schedule]'. It points to Mr Marshall's evidence that there is no paying market for a program guide in non-aggregated format. This does not address Nine's contention. Nine's public includes persons who wish to view Nine's programs. This would include Ice subscribers. Indeed, if it did not, there would be no commercial reason for Ice to include Nine program listings information in the IceGuide. 223 Ice also points to s 22(6) of the Act which relevantly provides that a "communication" is taken to have been made by the person responsible for determining the content of the communication. That person is said to be the subscriber rather than Ice. Ice relies on the fact that users determine the regularity by which data are downloaded and the subsets of IceGuide data that are downloaded (eg, Sydney rather than Melbourne channels). It follows, Ice submits, that there has been no relevant "communication" by Ice. 224 The IceGuide is made available online in such a way that it can be electronically transmitted as a result of a request by the user of the IceGuide. The fact that a user may elect to download the IceGuide for only some channels and determine the regularity of "fetch" is not to the point. The content of such data as is downloaded is plainly "determined", "formulated" or "created" by Ice ( Universal Music Australia Pty Ltd v Cooper [2005] FCA 972 ; (2005) 150 FCR 1 at [74] per Tamberlin J). That satisfies s 22(6) of the Act. 225 It follows that, had the first infringement been made out, I would have been of the view that Ice communicates the Weekly Schedule to the public within the meaning of s 31(1)(a)(iv) of the Act. Leave is required because Ice did not comply with O 5 r 9(1) of the Federal Court Rules (O 5 r 9(2)). Nine opposes leave being granted on the basis that the right to bring the cross-claim does not arise under s 202 and that the discretion should be exercised to refuse leave where Ice sought to file the cross-claim on the second day of hearing. Nine reserves its right to object to the cross-claim as drafted. 227 Nine issued letters of demand to Ice and Ice Holdings on 28 April 2006 which, Ice contends, threatened Ice with an action or proceeding in respect of an infringement of copyright. Nine commenced proceedings for infringement on 15 May 2006. As at that date, there was no longer a threat, the threat had been "made good" by commencement of the proceedings. 228 The Act provides a statutory cause of action for groundless threats of infringement, even if made bona fide ( Nine Films & Television Pty Ltd v Ninox Television Ltd [2005] FCA 735 ; (2005) 146 FCR 144 at [48] per Lindgren J). Nine submits that the commencement by it of the action for infringement "extinguishes" the existence of the threat of an action or proceedings in respect of an infringement of copyright. The action or proceeding cannot have commenced before the threat is made. Once the proceedings for infringement are commenced, the threat no longer exists. • The threat must be unjustifiable, that is the acts in respect of which the complaint is made do not constitute an infringement of copyright. • The words ' threatens ' and ' making the threats ' in s 202(1) are in the present tense. • An action for groundless threats may be commenced by a "person aggrieved", that is, standing to bring the action is not restricted to the recipient of the threat. In Avel Proprietary Ltd v Multicoin Amusements [1990] HCA 58 ; (1990) 171 CLR 88 at 118 McHugh J observed that the evident object of the section is to enable a "person aggrieved" by the threat of legal proceedings to obtain a determination as to whether the activities in respect of which an action or proceeding is threatened are an infringement; it prevents the "Sword of Damocles" hanging over the head of the threatened person ( Avel Proprietary Ltd [1990] HCA 58 ; (1990) 171 CLR 88 at 104 per Dawson J). • The remedies provided for are a declaration that the threats are unjustifiable, an injunction against the continuation of the threats and damages. These remedies relate to the threats and not to any action or proceeding for infringement of copyright. • The remedies are not available if the acts do constitute an infringement of copyright. • Not only is it a defence that the acts constituted infringement, a defendant in an action for unjustifiable threats may counterclaim, effectively as an action for infringement (s 202(4)). • There is no provision for an action or a cross-claim for the unjustified or unjustifiable commencement of an action for infringement of copyright. This refers to a proceeding not yet brought. "Threat" imports an intention to bring an action or ' an indication of probable evil to come ' ( Macquarie Dictionary (4th ed, 2005)). That is the commencement of the proceedings threatened. Once the proceedings have been commenced, the threat to commence those proceedings has ceased. The link between the threat and the commencement of legal proceedings and the need for a statutory remedy in the context of the comparable s 121 of the Patents Act 1952 (Cth) (then in force) was commented upon by von Doussa J in Townsend Controls Pty Ltd v Gilead (1989) 14 IPR 443 at 448. His Honour said that the purpose of the section was to provide a statutory remedy where a person makes a threat instead of enforcing the claimed monopoly by instituting proceedings for infringement. 232 The history of the section suggests that it was concerned to deter unjustified threats themselves, threats that did not result in infringement proceedings or could not be justified by actual infringement; threats made to ' frighten away competitors or to damage such persons less directly, by threatening to sue their customers or suppliers as joint tortfeasors ' (Ricketson S and Creswell C, The Law of Intellectual Property: Copyright, Designs & Confidential Information (Lawbook Co., subscription service) at [2.195]; Avel Pty Ltd v Intercontinental Grain Importers Pty Ltd (1996) 65 FCR 154 at 159)). It is a right extended to the threatened person not generally available to those threatened with an action for a civil wrong. 233 Section 202 does not specifically provide for a cross-claim in an infringement action, only for the commencement of an action. Had it brought the action, Nine would have undoubtedly availed itself of the entitlement in s 202(4) of the Act to bring an action for infringement by way of cross-claim. I do not see that Ice would have been precluded from bringing a cross-claim under s 202(1) just because Nine filed its proceedings first. It is important, however, to make it clear that Ice at no time has the right under s 202 to claim for any remedy that is not based upon the threats. To the extent that those threats were directed to Ice, they ceased upon the commencement of proceedings by Nine. Section 202 does not entitle Ice to claim damages resulting from the commencement of these proceedings. 235 There remains the question of discretion to permit Ice to file the second cross-claim. The parties relied on written submissions only. Where those submissions refer to correspondence not in evidence but without objection, I will accept the summary of that correspondence. In the history of these proceedings, Nine points out that Ice did not provide for a cross-claim in consent orders. Subsequently, Ice filed a cross-claim ('the first cross-claim') without leave but that cross-claim did not include a claim for unjustified threats under s 202. Approximately ten days before the commencement of the hearing, approximately five months after the commencement of proceedings, Ice notified Nine that it "reserved its rights" to commence proceedings pursuant to s 202(1) if Nine were unsuccessful in establishing its allegations of infringement. Ice had notified Nine that the first cross-claim was to be withdrawn some six weeks prior to the commencement of the hearing but it did not formally seek leave to discontinue that cross-claim until the second day of the hearing, when it also sought leave to file the second cross-claim. 236 The threats were not made to a third party but to Ice and Ice Holdings. The time between the threats being made (28 April 2006) and the commencement of proceedings (15 May 2006) is short. There is no evidence of any damage that flowed to Ice in that intervening time. Ice has particularised the damages claimed but it is not clear whether such damage occurred prior to the commencement of proceedings. Ice has not demonstrated that there is any utility in a declaration or injunction under s 202(1) once Nine's claim for infringement is dismissed. Nine submits that Ice's failure to alert it to the possibility of the second cross-claim prior to the commencement of the hearing may have resulted in prejudice. While there is no evidence of such prejudice, had Nine known that Ice intended to proceed under s 202(1), there may well have been actions that it might have taken or considered taking. Nine was entitled to know the totality of the case before the second day of the hearing. 237 While the second cross-claim would not prolong the existing application by Nine, permitting Ice to file the second cross-claim would prolong the proceedings between the parties. The injustice to Nine if the second cross-claim were filed would, it seems to me, to be out of proportion to the injustice to Ice if leave is refused ( Incentive Dynamics Pty Ltd (In Liquidation) v Robins [1998] FCA 1046 per Mansfield J). Ice contends that, if leave is refused, it could commence separate proceedings under s 202. That is, of course, a matter for Ice. Such a right lessens the injustice that Ice might otherwise suffer if it were totally precluded from exercising its rights under the section. 238 In the circumstances and in the exercise of my discretion, I decline to grant leave to Ice to file the second cross-claim. For convenience only, a summary of my findings follows. The Weekly Schedule is a product of Nine's skill and labour in selecting and ordering programs for broadcast. It is also a product of Nine's skill and labour in presenting or arranging the information therein in the form chosen by Nine. That skill and labour includes the synopses drafted or edited by Nine. Ice accepts that copyright subsists in each Weekly Schedule as an original literary work (s 32 of the Act). 241 Each of the components of the Weekly Schedule, including the days of the week, program time and title, additional program information and the synopses, are an integral part of that compilation. Copyright subsists in the compilation as a whole. Nine cannot claim copyright in the time and title information for a single day or week as if that information were itself a separate compilation. Nor can Nine claim copyright in its Late Change Notices. The Late Changes Notices are neither accessed by Ice nor included in the Weekly Schedule. The aggregation of information does not "destroy" Nine's copyright in the Weekly Schedule. It does, however, result in the creation of the Aggregated Guides: compilations which are themselves separate and distinct from the Weekly Schedule. The Aggregated Guides are a product of the skill and labour of the Aggregators and their clients (eg, Yahoo). They differ in form and content to the Weekly Schedule. It can, however, be said that the preparatory skill and labour protected by the copyright in the Weekly Schedule remains as Nine's preparatory skill and labour for that part of the Aggregated Guides. This is what Ice did during the "torture period" in 2004, when Mr Rilett developed the Templates for Sydney by watching television for three weeks and recording the details of the programs screened including name, channel and day of broadcast. Mr Rilett did not copy from the Aggregated Guides to create the Templates for Sydney. 244 The Templates for Sydney were entered into Ice's database and formed the basis for the IceGuide. Mr Rilett amended the time and title information in those templates prior to their entry into the Ice Database by reference to the Aggregated Guides. That means of amendment of information in the Ice Database continues today. Ice operators "predict over" a past IceGuide schedule from the same day of the week in a previous week to make a new IceGuide for that day. This involves use of Ice's software and the drawing of information in Ice's database. Ice checks each entry for the new IceGuide by reference to the Aggregated Guides and makes changes to the time and title information to reflect weekly variations in Nine's programming and late changes. The result is the creation of an IceGuide schedule which contains time and title information (but not additional information or synopses) that may be more than 99% similar to that part of the Aggregated Guides that reflects the Nine Programming. 245 Nine submits, as its primary case, that the making and updating of the IceGuide in this manner has resulted in the reproduction of a substantial part of its copyright work. This is a question of fact and degree to be tested by reference to the similarity between the works, the extent of actual copying, the quality and originality of what is taken and the interest which the copyright protects. Each case turns on its own facts. 246 Nine relies heavily on Desktop . Desktop was, however, a "whole of universe" case. A telephone directory permits no selection of the subscribers to be included and only one mode of arrangement and expression of the factual information therein. The interest that the copyright protected in Desktop was the skill and labour of gathering together in one place the details of all of the members of a given universe --- the telephone subscribers in a region. By reason of the subject matter, the manner of alphabetical arrangement of the information was inevitable. 247 Different content and modes of expression and arrangement may be utilised for a television schedule. The Weekly Schedule, the Aggregated Guides and the IceGuide each differ in their manner of selection, expression and arrangement. It follows that form and content are each relevant to the question of infringement. 248 Ice does not engage in broadcasting. It does not take the skill and labour of placing programs in an order that appeals to viewers in that Ice plays no part in the placement of programs. It does not take the format of the Weekly Schedule. It does not take synopses from the Weekly Schedule. It conducts its own research and drafts its own synopses. 249 Ice does take slivers of time and title information each day from the Aggregated Guides. For the reasons I have set out in detail, Ice does not reproduce a substantial part of the Weekly Schedule in so doing. 250 It follows that Ice has not infringed Nine's copyright in the course of making and updating the IceGuide. Nine accepts that, in these circumstances, the other infringement allegations must also fail. 251 Ice is not precluded from bringing a claim for unjustified threats of copyright infringement pursuant to s 202(1) of the Act because Nine commenced proceedings for infringement before such a claim was made. However, for the reasons I have given, leave to file the second cross-claim is refused. 252 I will hear from the parties before making orders as to costs. I certify that the preceding two hundred and fifty-two (252) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | literary work compilation television program schedules applicant ('nine') records program title, time of broadcast, additional program information and synopses in schedules respondent ('ice') has no direct access to schedules weekly version of the schedules ('the weekly schedule') sent to third parties ('the aggregators') for publication in aggregated television program guides ('the aggregated guides') admission that copyright subsists in the weekly schedule whether copyright in a single day and time and title information only compilation must be considered as a whole no separate copyright in time and title information or single day mere information late changes not included in the weekly schedule no copyright in late change notices originality of compilation preparatory skill and labour in selecting and ordering programs for broadcast skill and labour in form of weekly schedule including selection, arrangement and expression of information there included effect of aggregation of information on copyright subsisting in compilation aggregation does not destroy copyright in compilation aggregated guides are separate and distinct compilations product of the aggregators' skill and labour incorporate nine's preparatory skill and labour infringement electronic program guide produced by ice ('the iceguide') differences in form and content between the iceguide and the weekly schedule whether iceguide infringes nine's copyright alleged reproduction of a substantial part of the weekly schedule in the course of making and updating the iceguide initial iceguide templates compiled by independent inquiry synopses independently researched and drafted repetition in nine programming from week to week iceguide schedules developed by copying same day in a previous week and checking time and title information in aggregated guides for variations in programming scope for variation in selection, arrangement and expression of information in a television guide distinguishable from a "whole of universe" case form and content both relevant to infringement similarity and extent of copying substantial part measured by reference to the originality of the work allegedly taken question of fact and degree consideration of the interests which copyright protects in a compilation synopses qualitatively important late changes to programming not part of the weekly schedule "slivers" of time and title information taken from aggregated guides not of sufficient quality or quantity to amount to a reproduction of a substantial part ice is not a broadcaster no taking by ice of nine's skill and labour of placing programs so as to maximise viewers no taking by ice of nine's skill and labour in form of the weekly schedule no reproduction of a substantial part of the weekly schedule no infringement alleged communication to the public of the weekly schedule copyright owners "public" includes iceguide subscribers ice determines content of data communicated alleged authorisation of subscribers' acts of infringement no infringement as no reproduction of the weekly schedule in the course of making and updating the iceguide unjustified threats of infringement leave sought by ice at hearing to file cross-claim alleging unjustified threats whether proceedings for unjustified threats of copyright infringement can be commenced while infringement proceedings on foot "threat" ceases once infringement proceedings are commenced no entitlement to claim damages resulting from commencement and prosecution of proceedings no utility in injunction or declaration where infringement proceedings dismissed short period between threats and proceedings no evidence of damages discretion exercised to refuse leave copyright copyright copyright copyright copyright copyright |
The Tribunal had affirmed a decision of a delegate of the then Minister for Immigration and Multicultural Affairs to refuse to grant a protection visa to the appellant under the Migration Act 1958 (Cth) ('the Act'). On 5 May 2005 the appellant lodged an application for a protection visa with the then Department of Immigration and Multicultural and Indigenous Affairs. A delegate of the Minister refused the application for a protection visa on 14 July 2005 and notified the appellant of the decision and his review rights. On 15 August 2005 the appellant applied to the Tribunal for a review of the delegate's decision. The appellant attended a hearing at the Tribunal on 13 October 2005 and gave oral evidence. He said that he was married in 1994 in Hebei, and that his wife and son reside in China. The Tribunal noted that the appellant appeared to have travelled to Australia using a passport in his own name, which was issued in Hebei in February 2003, expiring in 2008. The appellant further indicated that he had lived at the same address in Hebei from March 1970 until April 2005. The appellant stated that he worked as a process worker from 1986 until 1988, and that he was then self-employed as a farmer from 1988 until 2005. The appellant claimed that he left China because he was a Falun Gong member and the head of his village. 4 The appellant claimed that he became a member of Falun Gong in 1998 and that in 1999, he went to Beijing to participate in Falun Gong activities and to ask for "legal status" for Falun Gong practitioners. The appellant further claimed that in 2000, a "team from the Chinese Communist party came to my home; they investigated me and tried to find some evidence against me". The appellant further claimed that he was taken to the local Security Bureau and "suffered mental and physical persecution from the police" although no evidence was found against him. The appellant then claimed that he was beaten, insulted and eventually released after a few days. He claimed that he did not change his belief and that in 2005 the police again investigated him, as that was he felt that he could not "get away from this", he came to Australia for protection. 5 In his oral evidence before the Tribunal on 13 October 2005, the appellant stated that his application for a protection visa was prepared with the help of a friend in Australia who was not a migration agent, but had experience in immigration matters, and that he gave this person his details and information and the person wrote such information in the application. The appellant claimed that this person "roughly" read the information back to him in his own language. The appellant identified his own signature on the application for protection visa form, stating that as far as he was aware, the details in the application form were true and correct. 6 The appellant wrote down the address of the place he had lived prior to coming to Australia, stating that he had lived there his entire life and that his wife and child are still living there. He also stated that he had worked at the same place in his own animal feed wholesale business for 3 to 5 years prior to coming to Australia. When asked by the Tribunal as to why he left China in 2005, the appellant stated that he did so because he was persecuted and harassed often by police, and that he was arrested in 2000 because of his practice of Falun Gong and because he went to Beijing to protest in 1999. The appellant further stated that he had practised Falun Gong since 1998, as he was told that it would improve his health. 7 When asked by the Tribunal how he practised Falun Gong, the appellant stated that he practised with others, and sometimes practised at home. He further alleged that he only occasionally did the exercises, because he was too busy with his business, but that he watched Falun Gong videos and read Falun books. The appellant was unable to describe the five main exercises to the Tribunal, stating that he had not practised them for years, further stating that he had not practised since 2000 because "they were very strict and I did not practise. " When asked if he knew the Falun Gong symbol, the appellant drew a sketch of it, and agreed that it was incomplete, stating that "I can't recall the symbol exactly as I haven't had anything to do with it for a long time. " When the Tribunal then asked why he was investigated in 2005, the appellant stated that he was arrested in 2000 and "they became interested in me again in 2005" due to the records on file about him. The appellant further stated that he had "rarely" practised Falun Gong in Australia, because he was busy with work, later agreeing with the Tribunal that he had not practised Falun Gong whilst he had been in Australia, because he had not had any time, due to work commitments. 8 The Tribunal told the appellant that it had difficulty accepting his claims that he was a genuine Falun Gong practitioner, as he was able to tell the Tribunal only a very little about Falun Gong. The Tribunal informed the appellant that it had difficulty accepting as true his evidence that the authorities became interested in him in 2005. 9 The appellant then told the Tribunal that his home was searched by authorities in 2000 and that he was detained at the local police station in his hometown. He agreed with the Tribunal that he did not have any trouble getting his passport issued in his hometown in 2003, and had no trouble from authorities exiting China, but said that if he returned to China, he feared that he would have the same trouble from authorities that he had in 2000. When asked why he lived and worked in China until 2005, the appellant stated that the authorities only became interested in him in 2005, due to his Falun Gong books. The Tribunal told the appellant that it did not accept that he was a genuine Falun Gong practitioner and that it did not accept as true his evidence about what happened to him in China in 2000. The appellant responded that many people were arrested in China simply for having Falun Gong books and that his evidence was true. As a result the Tribunal did not accept that the appellant was investigated, detained or ill-treated as he claimed either in 2000, in 2005, or at any time because of his Falun Gong activities. The Tribunal did not accept that the appellant left the PRC for the reasons he claimed, and further did not accept that the appellant cannot or will not returned to the PRC, due to fear of persecution in the PRC. The Tribunal commented that the reason that the Tribunal found against the appellant in relation to these matters, was because the Tribunal did not accept that the appellant was a witness of truth. 11 The Tribunal did not accept that the appellant was a genuine Falun Gong practitioner, in either China or Australia, commenting that if he were a genuine Falun Gong practitioner, he would have been able to tell the Tribunal more about Falun Gong, as well as describe or name the Falun Gong exercises. When the Tribunal asked the appellant about the Falun Gong exercises, he was not able to do this, stating that this was because he had not practised Falun Gong for a long time, because he was not able to practise Falun Gong in China, as he was both busy and the authorities were "very strict" in their opposition to the practise of Falun Gong. The Tribunal did not accept this explanation as true and further did not accept that the appellant did not practise Falun Gong in China, due to opposition from authorities. The Tribunal found that if the appellant had practised Falun Gong in China between 1998 and 2000 as he claimed, he would have been able to tell the Tribunal more about Falun Gong, and that he would have generally been able to explain the Falun Gong exercises. The Tribunal further found that if the appellant was a genuine Falun Gong practitioner, he would have resumed his practise of Falun Gong in Australia, despite being busy with work, noting that the appellant agreed that he had not done so. 12 The Tribunal further noted that if the appellant was of interest to the Chinese authorities and persecuted for Falun Gong activities, he would not have been able to work in his business, that he told the Tribunal that he had been working for three to five years prior to coming to Australia, and that he had lived at his usual family home, where he further stated that he had lived his entire life. The appellant's explanation for this was that he was able to do this, because the authorities only became interested in him again in 2005, as a lot of books and CD's about Falun Gong were becoming available on sale at that time. The Tribunal did not accept this explanation as plausible. 13 The Tribunal found there was no plausible evidence before it that the appellant was a Falun Gong practitioner, and that he would suffer persecution from authorities in China either now or in the reasonably foreseeable future, for Falun Gong activities if he returns to China. The Tribunal was not satisfied on the evidence before it that the appellant had a well-founded fear of persecution in China within the meaning of the Convention. Consequently, the Tribunal was not satisfied that the appellant was a person to whom Australia has protection obligations under the Refugees Convention, as amended by the Refugee Protocol, and affirmed the decision not to grant the appellant a protection visa. The appellant raised one ground of contention in an amended application filed on 29 May 2006, which stated that the Tribunal failed to carry out its statutory duty. Essentially these particulars outlined that the Tribunal had failed to comply with s 424A of the Migration Act 1958 (Cth) ('the Act') and as such committed jurisdictional error. Quotations from two judgments were also provided. Migration Act 1958 s 424A. The Tribunal also was required to explain why the information was relevant and providing the applicant with an opportunity to comment upon it. The Tribunal's failure to so act was a jurisdictional error. 17 The allegation that the Tribunal had failed to understand his application was as the Federal Magistrate noted, not particularised. His Honour held that it was for the applicant to satisfy the Tribunal that he was a person to whom Australia owes protection obligations: Applicant S214/2003 v Refugee Review Tribunal [2006] FCAFC 166 [26]---[28]; Dranichnikov v Minister for Immigration & Multicultural Affairs [2003] HCA 26 ; [2003] 197 ALR 389 [78] per Kirby J; Abebe v Commonwealth [1999] HCA 14 ; [1999] 197 CLR 510 at [187] per Gummow and Hayne JJ. 18 His Honour rejected the submission that the Tribunal had decided his case according to assumptions rather than evidence, finding that the appellant was in effect alleging that the Tribunal had not produced its own evidence to contradict that put up by the applicant, which it was not the Tribunal's duty to do. 19 The appellant then argued before the Federal Magistrate that the Tribunal had failed to comply with s 424A because it did not write to him before the decision was handed down. The Federal Magistrate apprehended that the appellant was in effect saying that he was entitled to be provided with some form of draft reasons which he could then argue against before the Tribunal made a final decision. His Honour held that there was no requirement for this to be done. The Federal Magistrate reiterated that it was for the applicant to satisfy the Tribunal as to his claims, and that it was clear that he had had an opportunity to convince the Tribunal that his claims were genuine. 20 The appellant's submission that the Tribunal fell into jurisdictional error by using irrelevant evidence which was out of date was rejected by the Federal Magistrate, as the Tribunal had not relied upon any independent country information but had decided the application purely based on the credibility of the appellant. The Federal Magistrate held that the Tribunal did not make any jurisdictional error, in the matter in which it made its decision in this particular case, and dismissed the application. The Tribunal had bias against me and did not consider my application according to S91R of the Migration Act 1958 . The Tribunal did not believe that I am a member of Falun Gong based on assumption, not evidence. The Tribunal failed to notify me the reason or part of the reasons for affirming the decision. The Tribunal did not consider my application in accordance with S424A of the Migration Act 1958 . The Tribunal had bias against me and did not consider my application according to S91R of the migration Act 1958. The Tribunal failed to consider my application in accordance with S424A of the Migration Act 1958 . I was not notified in writing the reason or part of the reasons for affirming the decision. The Tribunal failed to consider my claims. The appellant has provided no particulars nor pointed to any evidence to support this serious allegation. The record of the Tribunal's decision discloses nothing which would suggest the existence of bias. 24 As to the alleged failure to consider the appellant's application in accordance with s 91R of the Act, again no particulars have been provided. If it be that this aspect of the first ground relates to a failure to consider whether the appellant fell within the criteria in subsections 91R(1) or (2) of the Act, then in my opinion it fails. The Tribunal considered and addressed each of the matters raised by the appellant. Furthermore, any challenge to the conclusion reached by the Tribunal is, in effect, to seek an impermissible review of the merits of the decision: NAHI v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 10 ; Chan Yee Kin v Minister for Immigration and Ethnic Affairs [1989] HCA 62 ; (1989) 169 CLR 379 at 420. It cannot properly be asserted that there was no evidence upon which the Tribunal's decision was based: WAJS v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 139 at [11] . 25 If it be that this aspect of the first ground asserts a breach of s 91R(3) of the Act because the Tribunal took into account the failure of the appellant to practise Falun Gong after his arrival in Australia, then this too fails. Section 91R(3) of the Act has application only where an applicant seeks to rely on conduct in Australia in support of a claim to have a well-founded fear of persecution: SZHFE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2006] FCA 648 at [30] - [31] . That is not the case here. Ultimately the applicant told the Tribunal that he had not practised Falun Gong in Australia and the Tribunal so found. The assumptions upon which the Tribunal is alleged to have based its decision are not identified. 27 In any event I see nothing in the findings and reasons of the Tribunal to suggest that the Tribunal based its findings on any assumptions. The reasons of the Tribunal for its decision disclose that its findings were based on the evidence provided by the appellant. If this ground of appeal is taken to be an allegation that the Tribunal failed to investigate any matter or gather evidence, there was of course no obligation upon the Tribunal to do so: WAGJ of 2002 v Minister for Immigration and Multicultural & Indigenous Affairs [2002] FCAFC 277 at [25] ; Applicant S214 of 2003 v Refugee Review Tribunal [2006] FCA 375 at [34] , affirmed in Applicant S214 of 2003 v Refugee Review Tribunal [2006] FCAFC 166 at [26] ; S1194/2003 v Minister for Immigration and Multicultural Affairs [2006] FCA 1133 at [13] . 28 Accordingly this ground must also fail. No particular information is identified. At the hearing before me the appellant added that the Tribunal had taken irrelevant information into account but could not, when I asked him, identify what this information was. He was also not able to identify what information should have been given to him. He said that his submissions, which he read out at the hearing of the appeal, had been prepared by a Chinese friend. 30 The information relied on by the Tribunal for its decision was the appellant's oral evidence which was supplied by him for the purposes of the application for review. It falls within the exception under s 424A(3)(b) of the Act. There was accordingly no obligation upon the Tribunal under s 424A in relation to that information. 31 Finally the appellant has provided no particulars to support his assertion that the Tribunal failed to consider his claims. I am unable to discern ay such error from a consideration of the Tribunal's reasons and its decision. This ground also fails. Accordingly, the appeal should be dismissed with costs. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | appeal from decision of federal magistrate application for protection visa under migration act 1958 (cth) whether bias whether failure to comply with ss 91r and 424a of the act whether tribunal decision based on assumptions rather than evidence appeal dismissed no point of principle. migration |
He arrived in Australia on 9 December 2007 and applied to the Department of Immigration and Citizenship for a Protection (Class XA) visa on 8 January 2008. I am scared. That's why I left China. I hope Australian Government could protect me. An application was then lodged on 28 February 2008 seeking review of the delegate's decision by the Refugee Review Tribunal. By way of a decision signed on 28 May 2008 the Tribunal affirmed the delegate's decision. Jurisdictional error has bee made. RRT did not use favorable cases to my application. RRT failed to address me potential sur place claim that I would be exposed to a real risk of persecution in the future as I am devoted Christian. The Federal Magistrate's decision noted that each of the first two grounds relied upon was but a " bare assertion " and that no particulars were provided or submissions advanced in support of the assertions made. Nor did the then Applicant avail himself of an opportunity extended to him by the Federal Magistrate to file an Amended Application and further evidence. Notwithstanding the deficiencies in the Application as filed, the Federal Magistrate proceeded to address each of the grounds and satisfied herself that each of the grounds should be rejected. The Federal Magistrate further noted " [t]hese grounds have been seen regularly in this Court before[,] even to the spelling mistake in ground 1 in relation to 'bee' ". A Notice of Appeal was then filed with this Court on 13 January 2009. I gave all details about my claims but the Judge refused my application on my hearing date. It is not fair. I am Christian. I will be persecuted if I return to China. 3. I believe that my application was not considered reasonably by the Judge at the Federal Magistrates Court. I lodged my application to be reviewed at Federal Magistrates Court. The judge did not consider all information provided at my Hearing. I have no chance to provide more evidence and my case was dismissed. He has explained to the Court that the purported Grounds of Appeal were drafted by a " friend " and that he was unable to further expand on what was intended to be conveyed by those Grounds. He has further explained that the further evidence that he wished to adduce before the learned Federal Magistrate was evidence that: he had been detained by the police in China for a period of two days; and he had been fined RMB 5,000. The Appellant also stated that the contents of his Affidavit had not been translated to him prior to execution and that he was simply asked by a " friend " to sign the Affidavit . That was what he did, apparently not knowing what he was signing. The Appeal is to be dismissed. The first purported Ground of Appeal does not address any error said to have been committed by the Federal Magistrate. This Court has no jurisdiction to entertain an appeal from a decision of the Tribunal. The relevant jurisdiction is its appellate jurisdiction in respect to a decision of a Federal Magistrate. Moreover, the ground is misconceived. Neither the Federal Magistrates Court nor this Court on appeal can review a decision of the Tribunal simply upon the basis that it is said to be not " fair ". " The relevant appellate jurisdiction of this Court is that conferred by s 24(1)(d) of the Federal Court of Australia Act 1976 (Cth) and that jurisdiction does not extend beyond that conferred upon the Federal Magistrate. See also: Low v Commonwealth of Australia [2001] FCA 702 at [3] per Marshall J; WAJR v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 106 at [18] , [2004] FCA 106 ; 204 ALR 624 at 628 to 629 per French J (as His Honour then was); NADZ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 975 at [31] per Graham J; MZWDG v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 497 at [29] per Young J. The appellate jurisdiction of this Court has been conferred for the purpose of correction of any error in the decision of a Federal Magistrate, not to correct error on the part of the Tribunal. The second purported Ground of Appeal has been construed as a contention that the Federal Magistrate was provided with all of the materials relevant to the now Appellant's claim and that her dismissal of the Application was in such circumstances not " fair . " Again, the ground is misconceived. The task of the Federal Magistrate was not to conduct a merits review of the decision of the Tribunal and to itself consider whether it was " fair " to allow the now Appellant to remain in Australia. The final Ground of Appeal is also without substance. The Magistrate's reasons expose a careful account of the review undertaken by the Tribunal and an attempt to give content to otherwise " bare assertions ". Whatever may be the extent of the responsibilities entrusted to a trial judge to ensure that a hearing is fair, especially where there is an unrepresented party, there is no basis upon which any contention should be entertained that the present Appellant has not been treated fairly and in accordance with law. The reasons of the Federal Magistrate, indeed, go beyond the grounds of the Application being advanced by the unrepresented Applicant. Consideration was thus given to a possible argument not raised by the then Applicant, namely whether reliance upon 2003 country information exposed error in circumstances where the hearing was conducted in 2008. No jurisdictional error was discerned. Counsel for the Minister has again addressed this issue in this Court and correctly submitted that the decision of the Federal Magistrate was correct. The statement in the now Appellant's Affidavit that he had " no chance to provide more evidence " is an assertion without substance. Contrary to that which is set forth in his Affidavit , the Federal Magistrate's reasons expressly state that " the Applicant was given leave to file and serve an amended application giving complete particulars of each ground of review relied upon together with any evidence by way of affidavit ": [2008] FMCA 1669 at [26] . No further evidence was filed. Moreover, and, in any event, there was no need to file " more evidence ". The " more evidence " that the now Appellant wished to adduce was already in evidence. [XXX] signed a piece of paper, showing that he would no longer gather with us. [XXX] did this to protect us from police's persecution. As a result, we spent 2 days in the police station. We were released after paid RMB5,000. It also follows that the Tribunal does not accept that he was fined RMB 5,000 Yuan as he claims, as otherwise he would not have been allowed to legally depart China using a passport issued to him in his own name and with all his personal details and photographs in it. The assertion that the now Appellant was denied an opportunity to advance further evidence before the Federal Magistrate, accordingly, exposes no appellable error. None of the purported Grounds of Appeal , it should further be noted, comply with Order 52 r 13(2)(b) of the Federal Court Rules . It follows the Tribunal is also satisfied that the applicant does not have a well-founded fear of serious harm amounting to persecution for a Convention reason on this basis, and the Tribunal also does not accept this claim. It also follows that the Tribunal finds that this goes to the matter of credibility, and finds he is not a credible witness. Such findings make it difficult for an applicant to achieve success in the Federal Magistrates Court. In the present proceeding, those findings proved insurmountable. The Respondent Minister has sought an Order for costs fixed in the gross sum of $3,200 pursuant to Order 62 r 4(2)(c) of the Federal Court Rules . An Affidavit supports the appropriateness of that sum and such an Order should be made. The Appellant is to pay the costs of the First Respondent fixed in the sum of $3,200. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | impermissible merits review tribunal's adverse findings as to credit migration |
2 On 19 January 1995 Mildara Blass Limited purchased the Andrew Garrett wine business from the Wine Company Proprietary Limited. Thereafter, Mildara Blass Limited was entitled to a number of trademarks. That agreement also provided that Mr Garrett and entities associated with Mr Garrett, were also entitled to the ownership of certain trademarks. A dispute arose between Mildara Blass Limited and Mr Garrett, and entities associated with him, which resulted, in due course, in the execution on 26 July 2000 of a settlement deed. In that settlement deed, Mildara Blass Limited agreed to pay the trustees, who were then Mr Garrett and his wife, Mrs Averil Garrett of the Andrew Garrett Family Trust, the sum of $1.8 million. Mildara Blass Limited also agreed to pay those trustees the sum of $75,000 per quarter or a maximum of $600,000 per annum for the period between July 2000 and 30 June 2010. There were other provisions of the deed which required Mr Garrett to provide certain services, if required, by Mildara Blass Limited. Mildara Blass Limited has continued to pay the sums which it was obligated to pay by reason of that deed until events occurred in 2004. 3 The Andrew Garrett Family Trust was settled on 3 May 1993 and is a discretionary trust. The original trustees were Andrew Morton Garrett and his wife, Averil Garrett. They remained the trustees of that trust until 4 June 2004 when Evajade Pty Ltd became trustee. Evajade Pty Ltd is the second respondent in these proceedings. 4 However, in August 2003 the trustees of the Andrew Garrett Family Trust assigned all of the right and title of the debt owned by Mildara Blass Limited to themselves as trustees of the Andrew Garrett Family Trust No 2. That trust was established on 21 August 2003. As I have said, on 4 June 2004 Evajade Pty Ltd replaced Mr and Mrs Garrett as trustees of the Andrew Garrett Family Trust and on the same day that company also replaced Mr and Mrs Garrett as trustees of the Andrew Garrett Family Trust No 2. 5 A dispute arose as to who was entitled to what has been described as the income stream generated by the settlement deed. As a result, therefore, Berringer Blass Wine Estates Limited, the successor to Mildara Blass Limited, bought interpleader proceedings in the Supreme Court of Victoria in which the following further parties became parties. First, Universal Holidays Pty Ltd; secondly, Mr Shu Mu Tseng; thirdly, Evajade Pty Ltd, to whom I have already referred; and fourthly, Stephen James Duncan and Peter Ivan Macks who are respectively the trustees in bankruptcy of Mr and Mrs Garrett. On 24 September 2004 the Federal Magistrates Court made a sequestration order against Mr Garrett's estate. On 22 December 2004 Mrs Garrett became bankrupt. 6 Those proceedings continued in the Supreme Court of Victoria until 16 December 2005 when Harper J of the Supreme Court of Victoria made an order transferring those proceedings to this registry of the Federal Court pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). Pursuant to those interpleader proceedings, various sums had been paid into the Supreme Court of Victoria and, at the time that his Honour made the order to which I have referred, the sum of $128,000 plus accrued interest remained in that Court. That sum was transferred to this Court by the same order on the same day. 7 Shortly before that order was made, Mr Garrett had applied to be joined in the proceedings in the Supreme Court of Victoria but, again on the same day as the orders to which I have already referred were made, an order was made dismissing his application to be joined. 8 Further payments have been made into the Federal Court in accordance with Berringer Blass' obligations under the settlement deed and a sum far greater than the sum which was transferred to this Court now remains in this Court. 9 On 7 December 2005 the Andrew Morton Garrett Family Trust No 3 was created, of which Mr Garrett is the sole trustee. On 11 November 2005 Evajade Pty Ltd assigned to Mr Garrett, as trustee of the Andrew Garrett Family Trust No 3, the same debt which had been assigned to it as trustee of the Andrew Garrett Family Trust No 1, being the Berringer Blass debt. 10 The other matter of significance is that on 27 January 2006 Mr Garrett was appointed co-trustee with Evajade Pty Ltd of the Andrew Garrett Family Trust and the Andrew Garrett Family Trust No 2. Thus is it, at present, that there are three trusts. It is his case that the Andrew Garrett Family Trust No 3 is entitled to deal with that debt as it pleases and, indeed, the trustees have resolved to deal with the debt in certain ways since the constitution of the Andrew Garrett Family Trust No 3. 12 There are other proceedings in this Court in which the same parties are parties. The parties presently before me are also parties in action SAD 29 of 2005. That proceeding was originally commenced for the purpose of dealing with various assets said to be of the trusts. Later, a cross-claim was brought by the trustees in bankruptcy of Mr and Mrs Garrett claiming an entitlement to an indemnity from the assets of the Andrew Garrett Family Trust in respect of debts which had been incurred by Mr and Mrs Garrett as trustees of those trusts. 13 I have been attempting to resolve that matter over a period of time but there has been, at the very least, a flurry of documents filed in those proceedings and in other proceedings since that time which has interfered with my capacity to resolve the matter. This is another instance of the type of activity which has been generated in proceedings in this Court over the last 18 months or so. 14 Mr Garrett therefore seeks to be joined in these proceedings as the trustee of the Andrew Garrett Family Trust No 3. He does so in circumstances where his previous application was dismissed, with his consent, in the Supreme Court of Victoria, which is a relevant matter to which I should have regard but less relevant than another matter put by Mr Cudmore on behalf of Mr Duncan, the trustee of Mrs Garrett's bankrupt estate. 15 Mr Cudmore has reminded me that the issues which are to be resolved in action SAD 29 of 2005 ought to resolve who is entitled to the income stream which is the subject matter of these proceedings. These proceedings are, as I have said, interpleader proceedings. The purpose of these proceedings is to determine who is entitled to the income stream. The issues which were raised in the cross-claim by Mr Macks and Mr Duncan raise the same issue and upon which I am presently reserved. 16 He argued that, with the agreement I think of all of the other respondents, this application ought to be deferred so as to obviate further costs to the parties until such time as I have resolved the issues in action SAD 29 of 2005. That was put to Mr Garrett but he said that he wished to pursue the application. 17 In my opinion, Mr Cudmore's argument is correct. The issue in this case and the only issue in this case, is who is entitled to the income stream generated by the settlement deed. It is the same issue which is to be resolved in action SAD 29 of 2005 upon which I have heard argument and upon which I have reserved. I need first to give my decision in those proceedings before further considering any application by any party to be joined to these proceedings. It may be that my decision in those other proceedings might mean Mr Garrett might have to apply in these proceedings to be joined to these proceedings if in fact the argument which he advanced as trustee of the Andrew Garrett Family Trust No 3 in those other proceedings is accepted but that is to be determined after I have decided those other proceedings. 18 The application is dismissed. There will be an order that Mr Garrett pay the costs of the applicant and each other respondent except the second and fifth respondents. 19 During the course of argument, Mr Garrett also applied to be joined as co-trustee with Evajade Pty Ltd, which is the second respondent. In due course, probably that application might need to be addressed but, for the same reasons I have given, the application is premature and is dismissed. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for joinder application dismissed. practice and procedure |
The directors of KMF (being the first, second and third respondents) were at all material times legal practitioners and partners in the firm of "Phillips Fox ", lawyers, in Perth. The Scheme constitution was registered on 22 December 1999. Pursuant to cl 24 of the Scheme constitution, the investment strategy of the Scheme was the making of loans secured by mortgages over property and otherwise on terms and conditions specified by the responsible entity from time to time. Prior to 14 February 2000, the first applicant (Ashmere) had advanced the sum of $100,000.00 as part of a Scheme loan totalling $850,000.00 (Original Loan) to Fieldmont Holdings Pty Ltd (Fieldmont), which loan was managed by KMF. The balance of the Original Loan was advanced by other investors in the Scheme (those other investors and Ashmere are collectively referred to as the Original Investors). The Original Loan was repayable on or about 30 November 2000 and was secured by a second registered mortgage over various parcels of land owned by Fieldmont at Cockburn Sound and Peel Estate (Land). Shortly after 14 February 2000, by agreement, the Original Investors discharged the existing second registered mortgage over the Land and Fieldmont granted a new second registered mortgage to secure the Original Loan, as well as further advances from other investors in the Scheme, to secure a total sum of $1.1 million (Revised Loan). The Revised Loan was repayable on 5 November 2000. The Policy states that the period of insurance is from 17 December 1999 to 17 December 2001, but subsequent correspondence evidences that the period of insurance was from 17 December 1999 to 17 December 2000 (not 2001). The parties cannot agree on whether the period of insurance ended on 17 December 2000 or 17 December 2001, but agree that it is not material to the determination of the preliminary questions. Save for payments made to Ashmere prior to 5 November 2000 totalling $27,225.00, Fieldmont did not repay Ashmere any further part of the $100,000.00 loan from Ashmere, or any interest. In or about late 2001, the first registered mortgagee, National Australia Bank Ltd, sold the Land, but the proceeds of sale were insufficient to pay out the total indebtedness to National Australia Bank Ltd secured under the first registered mortgage. Ashmere did not receive any part of the proceeds of the sale of the Land. On 8 December 2006, KMF's liquidator asked Dexta whether the insurers would indemnify KMF under the Policy in respect of the Applicants' claims the subject of this proceeding. On 20 February 2007, the insurers refused to indemnify KMF under the Policy in respect of the Applicants' claims, relying on the endorsement to the Policy that excludes indemnity for any claim made against KMF, or any claim by KMF for indemnity under the Policy directly or indirectly arising out of the non-repayment of any loan which was originated or managed by KMF. In that regard, the insurers contended that the claims arose directly or indirectly out of the non-repayment of the loan to Fieldmont, which loan was originated or managed by KMF. On 11 September 2007, on the application of the applicants, the insurers were joined as the sixth and seventh respondents in this proceeding and the originating application and statement of claim were amended in terms of the minute of proposed amended originating application dated 13 April 2007 and the minute of proposed amended substituted statement of claim dated 13 April 2007, respectively. Some of the other clauses include cl 1.2.1 in relation to defamation and cl 1.2.2 in relation to intellectual property rights. The applicants contend that a claim against the fifth respondent in respect of alleged misleading or deceptive conduct in breach of s 995(2) of the Corporations Law (as it applied at material times) falls within the ambit of cl 1.2.3, because it is "similar legislation" to the Trade Practices Act 1974 (Cth), the Fair Trading Act 1987 (NSW) and the Fair Trading Act 1985 (Vic). The applicants' reasoning is quite simple. They say that the nominated trade practices legislation of the Commonwealth and the States of New South Wales and Victoria have to do with, amongst other things, misleading or deceptive conduct. In that regard, the particular provision of the Corporations Law that is s 995(2) is "similar legislation" because it provides that a person shall not in connection with any dealings in securities, amongst other things, engage in conduct that is misleading or deceptive or likely to mislead or deceive. The insurers, on the other hand, say that on a plain reading of the text of cl 1.2.3, the phrase "similar legislation enacted by any state or territory of Australia" means particular legislation such as the State and Territory's fair trading Acts (whether in force at the time or any subsequent replacement Acts). Additionally, the insurers contend that there is some relevance in the background law. They say the Policy in question was issued, that is to say the contract was made, on 18 February 2000. The Fair Trading Act 1987 (NSW), referred to in cl 1.2.3, was the result of agreements made between the Federal and State Consumer Affairs Ministers in 1983 that Australia should pursue a consistent national approach to fair trading through the adoption of uniform consumer protection legislation. As a result, the consumer protection provisions of the Trade Practices Act 1974 were chosen as the basis for achieving uniformity with mirror legislation: see Fair Trading Act 1987 , Door to Door Sales Act 1967, National Competition Policy Review (NSW), Department of Fair Trading, NSW Consumer Protection Agency, August 2000 at pg 6. The insurers point out each other State and Territory also enacted legislation that substantially mirrors the protection provisions of the Commonwealth Trade Practices Act 1974 . The insurers advance a further reason why s 995 of the Corporations Law (as it applied at material times) should not be considered within cl 1.2.3 of the Policy. They say that s 51AF(2)(a) of the Trade Practices Act 1974 came into force on 1 July 1998, before the Policy was issued. It excludes the application of Pt V of the Trade Practices Act 1974 to "financial services" but does not affect the application of the State fair trading Acts to financial services. The insurers say that at the time the Policy was issued, the State fair trading Acts applied to "dealings in securities" and therefore, operated co-extensively with s 995 of the Corporations Law . Section 995A of the Corporations Law , which excludes the operation of the State fair trading Acts in relation to dealings and securities, did not come into force until 13 March 2000, after the Policy was issued. The insurers say the Parties may be taken to have known these matters, but in any event, none of them assists the applicants' case that claims under s 995 of the Corporations Law fall within the ambit of cl 1.2.3. The insurers say that it may have been contemplated at the time the Policy was made that future claims based in some way on the conduct, might have been made under legislation other than the Trade Practices Act 1974 of the Commonwealth or State fair trading Acts, including claims under s 995 of the Corporations Law . Nonetheless the language used by the parties, having regard to the background matters explained above, discloses an intention that cl 1.2.3 (being in addition to the primary insuring clause) applies only to claims under the Trade Practices Act 1974 and the State and Territories fair trading Acts. The insurers say cl 1.2.3 must also be construed in the context in which it appears, that is as part of cl 1.2 extending cover to specific types of claims. The phrase "similar legislation" is nothing more than a shorthand way of referring to the State and Territories fair trading Acts. I must say I find the reasoning of the insurers unconvincing. While no doubt the background referred to by the insurers as a result of which a national consistent approach to fair trading legislation was developed within the Commonwealth of Australia, there can never have been any guarantee (at least none is suggested) that the consumer protection legislation that the various States and Territories, which the Commonwealth were intent on producing, necessarily had to be found in a particular statute called " Fair Trading Act " or in any one particular piece of legislation. It seems to me to be entirely consistent with the consistent national approach to fair trading agreed upon in 1983 that then, or subsequently, a particular State might decide to include some of its consumer protection legislation that helps to make up a uniform system within the Commonwealth, in legislation of another name or within different pieces of legislation. I am also unconvinced that because s 52 of the Trade Practices Act 1974 of the Commonwealth did not apply at material times to misleading or deceptive conduct in respect of securities, but s 995 of the Corporations Law did, after 13 March 2000, that the parties to the Policy should be taken to have intended that the reference to "similar legislation enacted by any state or territory of Australia" was not intended to apply to a misleading and deceptive conduct claim concerning securities to which s 995 of Corporations Law arguably applied. I therefore have little difficulty in finding that s 995(2) of the Corporations Law (as it applied at material times) is "similar legislation" for the purposes of cl 1.2.3 of the Policy. I can see no logical, textual or contextual reason for confining the term "similar legislation" to the Fair Trading Act of Western Australia in this case. To the extent there is any ambiguity, and I consider there is none or very little, then it ought to be resolved in favour of the Insured, so that the relevant term of the Policy is not unreasonably constrained: see McCann v Switzerland Insurance Australia Limited (2000) 203 CLR 579 at para 74(4). I am, however, not persuaded that this construction of cl 1.2.3 is also to be arrived at, as the applicants suggest, because liability for misleading or deceptive conduct is also the most obvious form of liability created by the three statutes mentioned in cl 1.2.3, to which KMF would be exposed in its "Professional Business" as a responsible entity. The applicants contend that liability for unintentional or misleading conduct in contravention of such statutes is "liability arising by an unintentional breach of" that legislation within the meaning of cl 1.2.3. The applicants say that, thereby, a statutory provision which creates liability for unintentional or misleading or deceptive conduct is "similar legislation" within the meaning of cl 1.2.3 of the Policy. I do not consider it necessary to undertake such an analysis in order to construe the meaning of "similar legislation enacted by any state or territory of Australia" in cl 1.2.3 to determine that s 995(2) of the Corporations Law is within the ambit of that clause. In any event, I accept in this regard the submissions of the insurers that cl 1.2.3 is an insuring clause. Except in the limiting circumstances set out in cl 1.5 (dealing with dishonesty), indemnity under the Policy is excluded in the case of dishonest conduct (see cl 3.3). The cover under cl 1.2.3 extends only to "unintentional" breaches (of any of the many provisions of the trade practices legislation referred to in cl 1.2.3 and "similar legislation enacted by any state or territory of Australia"). Otherwise it might be argued that the cover extends to intentional or dishonest breaches of those statutes. Accordingly, I do not think the expression "unintentional breach" was used as a synonym for misleading or deceptive conduct that is unintentional. The subtleties of that argument by themselves suggest it is to be approached cautiously. In any event, I do not accept that reasoning put forward on behalf of the applicants. In the result, the answer to Question 1 is "Yes". However, the answer to Question 1 does not necessarily mean that the answer to Question 2 is "No". I now turn to Question 2. It contains six Sections, a Schedule and a page of endorsements which are described as "Endorsements attaching to and forming part of" the Policy. Section 1 sets out the insuring clauses. Our aggregate liability for all Claims under this clause shall not exceed the Limit of Liability. It makes express provision that there is no indemnity for any claim "made against You, or any claim by You for indemnity under this Policy" in respect of a number of classes of claim, for example connected with asbestos (cl 3.1), dishonest or reckless acts (cl 3.3) and insolvency (cl 3.4). Section 4 deals with general conditions. Clause 4.4 deals with policy construction and interpretation. A number of expressions used in the Policy are defined, including "Claim", "claim", "Claim Costs", "We", "Our", "Us", "You" and "Your". "Claim" is defined to mean "the receipt by You of a demand for compensation made by a third party against You". "You" and "Your" mean a number of things including "the person, persons, partnership, company, corporation, statutory authority or other entity specified in the Schedule as insured". The Schedule identifies the Insured as Australian Managed Funds Limited, which as noted above is the predecessor to KMF. The applicants note that cl 1.1 and the Schedule relevantly provides indemnification for KMF up to the limit of $5,000,000 for a claim "[a]rising from Your [KMF's] civil liability for breach of professional duty arising from any act, error or omission wherever or whenever committed or allegedly committed by You [KMF] in the conduct of the Professional Business". In this regard "Professional Business" is defined by cl 6.15 to mean "the business or profession specified in the Schedule conducted by You in Your name, or on Your behalf". The "Professional Business" specified in the Schedule is "Responsible entity". In this regard, the parties agree that KMF was the responsible entity for the Scheme. The applicants do not accept, however, that the reference to the Professional Business of the Insured also included acting as a responsible entity for any managed investment scheme other than the Scheme. The applicants say there is no evidence of KMF having acted as the responsible entity for any other scheme and, in the absence of any evidence to the contrary, the insurers must be taken to have known the business of their insured. The applicants say that the object of the cover provided by cl 1.1 was that KMF should be indemnified against a liability for damages incurred in its capacity as acting as the responsible entity of the Scheme. The applicants further say the potential sources of liability of KMF as the responsible entity --- for breach of the duties imposed by s 601FC of the Corporations Law , for misleading or deceptive conduct, and for negligence --- are matters which the insurers must be taken to have known. The applicants say the investment strategy of the Scheme was the making of loans secured by mortgages over property and otherwise on terms and conditions specified by the responsible entity from time to time. The applicants say that KMF's liability as the responsible entity was likely to arise in circumstances such as those alleged in the present case, that is, where investors are induced to advance loans by reason of the conduct of KMF and suffer loss or damage when the loan is not repaid. The applicants also say the extent of cover in this regard is accentuated by the scope of cl 1.2.3 which covers misleading and deceptive conduct. The primary submission made by counsel on behalf of the applicants is that the claim of the applicants against KMF is not one that arises out of the non repayment of the loan in question. Rather the claim arises out of the conduct of the relevant respondent complained of, relating to the parties entry into the transaction. Counsel says that in these circumstances the non repayment of the loan is in fact not the more remote consequence that is intended to be picked up by the exclusion clause, but in fact is something that happened after the event. The insurers by contrast, emphasise that cl 1.1 of the Policy relevantly provides indemnity for "Claim Costs" of a "Claim" arising from KMF's civil liability for breach of professional duty arising from any act, error or omission committed or allegedly committed by KMF in the conduct of its business as a responsible entity. "Claim Costs" is defined in cl 6.4 to mean "the amount paid or payable to the party that has made the Claim against you, to dispose of the Claim. It includes any judgment or settlement amount, interest on that amount, and the claimant's costs. " The word "Claim" is defined as set out above. The insurers point out that cl 1.2 to cl 1.9 provide other forms of indemnity and that cl 1.10 and cl 1.11 provided optional covers that were not taken up. So far as the exclusion clause is concerned, the insurers refer to and rely upon the fact that this excludes indemnity for any "Claim" made against KMF or any "claim" by KMF for indemnity under the Policy, "directly or indirectly arising out of ... 2) the non repayment of any loan originated or managed by You [KMF]". In relation to the word "claim" this word is defined in cl 6.3 of the Policy as "a claim by You [KMF] for indemnity under this Policy". The insurers say that under the Policy, KMF's "professional business" was defined as "responsible entity" which, in the context in which the Policy was formed, would be understood to mean the responsible entity of a managed investment scheme or schemes under Ch 5C of the Corporations Law . Accordingly, the phrase "breach of professional duty" in cl 1.1 is not limited to the conduct of a learned profession. The core activities as responsible entity, can be understood as carrying on a profession for the purpose of the Policy. The insurers say that although at the time the Policy was formed KMF was acting as the responsible entity for the Scheme only, the Policy cover was not confined to that Scheme alone. Further, cl 19 of the constitution of the Scheme expressly provided that KMF was at liberty to act as a responsible entity to other managed investment schemes. Accordingly, the insurers say that in the circumstances the indemnity under cl 1.1 is relatively broad. Additionally, the insurers draw attention to indemnity for various claims not ordinarily considered to be in the nature of "professional indemnity", such as claims for defamation and breach of intellectual property rights, which are also covered by the Policy. The insurers emphasise that the endorsements are terms specifically negotiated by the parties to suit the facts and circumstances as they are known to them. The terms were selected by the parties themselves and so should have a greater effect attributed to them than standard policy wording. The insurers say this explains why (1) of the exclusion clause excludes "any Claim made against You, or any claim by You for indemnity under this Policy directly or indirectly arising out of work performed for or on behalf of Philips Fox (sic) Solicitors". Thus the intention of the parties can be understood to be that the insurers were not to be at risk in relation to the business of Phillips Fox. The insurers further say that having regard to the fact that KMF originated and managed secured loans under the Scheme, (2) of the exclusion clause excludes indemnity under the Policy for "Claims" (against KMF) arising out of the non repayment of any such loan. In that respect the intention of the parties can be understood simply to be that the insurers were not to be at risk in relation to unpaid loans. The insurers say it does not matter that the non repayment of the loan may not have been the proximate "cause" of an investor's loss (in any subsequent claim against KMF). The use of the words "directly or indirectly arising out of" means that once there is some causal or consequential relationship between the non repayment of the loan and a claim, there is no indemnity under the Policy. Therefore Ashmere's claim against KMF has directly or indirectly arisen out of the non repayment of the loan by Fieldmont and there is no indemnity under the Policy. The applicants say that the construction put forward by the insurers would have the effect of substantially defeating the indemnity granted by cl 1.1 and would render the cover practically illusory. As a matter of construction, the applicants say that it would be surprising if the parties to the Policy (which of course the applicants are not) intended an apparently "miscellaneous" provision to in fact undermine the fundamental object and purpose of the cover provided by the Policy. The applicants say the words in the exclusion "directly or indirectly arising out of the non repayment of" are inapt to describe the nature of KMF's liability to investors such as the applicants here. The applicants' claims are based on the premise that, but for the conduct of KMF complained of in the statement of claim, investors would not have entered into the loans at all (or in the case of the first to fifth applicants would not have rolled-over existing loans). The non repayment of the loans is, in one sense, a necessary condition to the existence of the loss in the context of these particular claims. But the language of the exclusion is more apt to describe the claim of a lender on the loan agreement, rather than the claim of an investor in the Scheme against KMF, based on the fact the investor was induced to make the loan (or rollover an existing loan) which it would not have done but for the impugned conduct of KMF, where the non repayment of the loan is merely the fact that gives rise to loss and damage rather than the basis of the cause of action. Consequently, the applicants contend that the preferable construction of the exclusion is that it was intended to exclude from the scope of cover any loss that might be suffered by KMF "as lender", through the non repayment of a loan. KMF might conceivably be the lender whether by way of direct investment by KMF, or as trustee for investors. The applicants also contend that the relevant exclusion in (2) relied upon appears in the immediate context of the exclusion in (1) with respect to any claim directly or indirectly arising out of work performed for or on behalf of Phillips Fox solicitors. The applicants say that the policy covered the directors of KMF. It is difficult to see in what context KMF would have performed work, particularly in its capacity as the responsible entity, for Phillips Fox. The presence of that exclusion reveals a "belt and braces" approach on the part of the insurers to make it clear that such liability was not covered, even though it would not have fallen within the scope of the cover provided in any event. The applicants say that similarly although cl 1.1 of the Policy would appear unlikely to cover KMF against loss suffered through the non repayment of loans to KMF in its capacity as lender, the effect of the exclusion is to make that clear out an abundance of caution. The applicants say that an alternative construction, again preferable to that propounded by the insurers because it preserves the fundamental object or purpose of the Policy, is to read the exclusion clause as operating to exclude claims for losses caused by non repayment of the loan in the sense of losses consequential upon the non repayment of the loan, but not otherwise. Alternatively, the applicants contend that if contrary to the applicants' contentions, the Court is of the view that the insurers contended construction reflects the plain meaning of the exclusion, the Court ought to decline to give effect to that meaning because it would be an absurd construction which could not have been intended by parties to the Policy. In my view, the construction of the exclusion clause contended for by the applicants is hard to sustain. In construing a policy of insurance, it is understood that, as in the case of any commercial contract, the policy should be given a businesslike interpretation, requiring attention to the language used by parties, the commercial circumstances which the document addresses and the objects which it is intended to secure: McCann 203 CLR 579 at para 22; Wilkie v Gordian Runoff Limited [2005] HCA 17 ; (2005) 221 CLR 522 at para 15. It is also understood and accepted that the construction of the written contract involves the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were, at the time of the contract; that knowledge may include matters of law: International Air Transport Aviation v Ansett Australia Holdings Limited [2008] HCA 3 ; (2008) 234 CLR 151 at para 53; Maggbury Pty Limited v Hafele Australia Pty Limited [2001] HCA 70 ; (2001) 210 CLR 181 at para 11. It is also accepted that generally a so called "liberal approach" will be adopted in the construction of insurance contracts in favour of an insured, and that in the case of ambiguity the contra proferentem rule is applied against the insurer: Maye v The Colonial Mutual Life Assurance Society Ltd [1924] HCA 26 ; (1924) 35 CLR 14 at 22; Halford v Price [1960] HCA 38 ; (1960) 105 CLR 23 at 30, 34; McCann 203 CLR 579 at para 74(4). It is also understood and accepted that an exclusion is to be construed in the context of the policy as a whole including the relevant insuring clause: FAI General Insurance Co Ltd v Maracorp Financial Services Ltd [1994] 1 VR 455 at 470, 478; Wilkie 221 CLR 522 at para 16. Further, it is understood and accepted that a court will endeavour in construing an exclusion to construe it in a manner consistent with the commercial purpose of the contract of insurance and where possible to avoid the exclusion operating so as to substantially defeat the indemnity granted by the policy and render the policy "practically illusory": Alex Kay Pty Ltd v General Motors Acceptance Corporation [1963] VR 458 at 462 --- 463; Fraser v BN Furman (Productions) Limited [1967] 1 WLR 898 at 905 - 906. Accordingly in some cases, the Court may be required to give an apparently "strained" meaning to words used in a contract of insurance in order to give effect to the object or purpose of a policy: Fraser 1 WLR 898 at 905 --- 906; Suncorp Metway Insurance Ltd v Landridge Pty Ltd [2005] VSCA 223 ; (2005) 12 VR 290 at para 24. Indeed, the Court also accepts and recognises that in some circumstances, as part of the process of construction, the Court may decline to give effect to the apparent literal meaning of words used in a contract where to do so would result in an absurd construction which the parties cannot have intended: see for example Carlingford Australia General Insurance Ltd v EZ Industries Ltd [1988] VR 349 at 352; Australian Paper Manufacturers Ltd v American International Underwriters (Australia) Pty Ltd [1994] 1 VR 685 at 695. Having regard to these various principles of construction, none of which are unknown or novel in the construction of insurance contracts in particular, the starting point is the exclusion actually provided for by the exclusion clause in question. The words "arising out of", which are used in this exclusion, plainly require some causal or consequential relationship with the subject matter that follows --- in this case, the "non repayment of any loan which was originated or managed by You". The words however do not require a direct or proximate relationship between any Claim made against the Insured, or any claim made by the Insured for indemnity under the Policy. The test posited by the words 'arising out of' is wider than that posited by the words 'caused by' and the former, although it involves some causal or consequential relationship between the use of the vehicle and the injuries, does not require the direct or proximate relationship which would be necessary to conclude that the injuries were caused by the use of the vehicle. All that is necessary is that there be some 'non-coincidental nexus' between the peril and the loss. As noted above, the applicants strongly contend that if the exclusion applies so as to not cover the claim the applicants make against the Insured in this case, then the cover provided by cl 1.1 of the scheme is "practically illusory". While the cover may be more limited than what the applicants would hope for does not of itself provide a reason for ignoring the plain and obvious construction of the exclusion endorsement in question. From the applicants' point of view, as noted above, the contention that the cover provided would be illusory is also strengthened by their view that the Policy is confined to the conduct by the Insured as a responsible entity of the Clifton Partners Scheme. However, in my view, there is nothing in the terms of the Policy that so limit it. While it is the case that one of the surrounding facts and circumstances, at the time the contract of insurance was made, was that the Insured acted as the responsible entity of the Scheme, there is nothing to suggest that it would only ever act as the responsible entity of that Scheme and no other scheme. Indeed, as the insurers point out, the constitution of the Insured makes it clear that it can act generally as the responsible entity of managed investment schemes. I also accept the submissions of the insurers that there may have been any number of possible claims in respect of the Scheme, that had nothing to do with the non repayment of the Scheme loans in any event. The nature of insurance is such that premiums are paid for cover against risks that may never eventuate. Further, insurance does not usually provide cover for all risks. The fact that the Policy does not respond to the applicants' claim does not mean that the cover was "practically illusory". The Policy did, during the period of insurance, provide cover for a number of possible claims. Notwithstanding that the loans are repaid and the investors receive a return of 6%, those investors may have foregone investing their money elsewhere and be able to claim a relevant loss, where for example they could prove that they might have achieved a rate of return of 9%. ● Claims by investors where the borrower has repaid the Scheme loan but before the money is returned to the investors, as a result of poor internal control or checking procedures, an employee of KMF steals the money and absconds before the theft is detected. ● Claims by investors where the borrower has repaid the Scheme loan and KMF pays the loan to a third party who then disposes of the funds. ● Claims by employees or prospective employees for misleading conduct where KMF represents the availability of the terms of employment. ● Claims by a third party for defamation where, for example, a third party provides poor services and KMF subsequently defames that party. ● Claims by a third party for an infringement of intellectual property rights where, for example, KMF publishes and distributes product disclosure statements using artwork that KMF is not licensed to use. In the end, it is to the terms of the contract here that one must have particular regard. The clear intent of the parties, who negotiated the relevant endorsement containing the exclusion, is that claims made against the insurer or claims by the insurer for indemnity that "directly or indirectly arise out of the non repayment of any loan which was originated or managed by You", were not covered. As to exactly what cover was provided may be argued about, but it does not seem to me, in light of the clear words used in the exclusion negotiated by the parties, that the exclusion can be ignored simply because the cover provided by the Policy in the light of the exclusion appears to be relatively minimal, from the present applicants' point of view. Nor do I think that the applicants' submission that because the exclusion appears as an endorsement "at the back of" the Policy should have some bearing on the proper construction of the exclusion. The endorsements are expressly stated to form part of the Policy. The particular location of the exclusion within the endorsements of the Policy document is, in my view, of no relevance. Similarly, the fact that the exclusion appears in an endorsement headed "Other Exclusion" is also irrelevant. Apart from anything else, as noted above, cl 4.4.2 makes it clear that headings are included for descriptive purposes only and do not form part of the Policy for the purpose of its construction or interpretation. So far as the fundamental object and purpose of the insurance cover provided is concerned, in my view, that "fundamental object and purpose" must be ascertained by reference to the terms of the contract of insurance as a whole, including the relevant exclusion, not by an appeal to what may now seem fair, unfair or reasonable or absurd. To accept the applicants' submissions would be in effect to rewrite the contract of insurance, or rectify it, when there is no such claim before the Court. I also do not accept the applicants' contention that the non repayment exclusion should be construed as excluding cover only for any "loss that might be suffered by KMF, as lender, through the non repayment of the loan". I accept the insurers submission that such a construction assumes that the Policy provides cover to KMF for its own losses. As the insurers point out the applicants' contentions fail to have proper regard to the language of the non repayment exclusion which provides that there is no indemnity for any "Claim" made against KMF or any "claim" by KMF for indemnity under the Policy directly or indirectly arising out the non repayment of any loan "which was originated or managed by You [KMF]". The non repayment exclusion focuses on excluding indemnity for "claims", not losses, where the claims directly or indirectly arise out of the non repayment of any loans. I consider the non repayment exclusion clearly contemplates loans being made against KMF by investors where they suffer an actual or alleged loss following the non repayment by a borrower of a loan under the Scheme. Finally, I do not consider that the exclusion in (1) of the exclusion clause of work performed for or on behalf of Phillips Fox Solicitors materially assists the construction contended for by the applicants. Pursuant to s 6.2 of the Policy, the directors of KMF were covered by the Policy. They were also partners of Phillips Fox. The parties no doubt were aware that without the inclusion of an express exclusion similar to that included in the endorsement, it was possible that the insurers could be required to provide covers for the directors of KMF for claims against them. It was clearly not the intention of the parties that the Policy would provide cover for directors in relation to professional legal services performed in connection with the business of Phillips Fox. Phillips Fox would no doubt have their own professional indemnity insurance. However, it was contemplated that "claims" may be made against KMF in certain circumstances where it may be unclear that work performed by the directors, or by other persons at the direction of the directors, with professional legal work or responsible entity work. In such circumstances the parties have agreed that in the event of any such claim, the insurers are not to be at risk and can end their involvement at the outset relying on facts that can objectively be established without the need to prove or disprove the exact nature of the work performed, the losses and their proximate cause. Counsel for the applicants ultimately emphasises that if the exclusion clause is given the meaning contended for by the insurers then it will deny any primary cover provided by cl 1.1 and the additional insuring clauses that the Policy purportedly provides, cl 1.2.3. Counsel for the applicants points out that the process of construction is such that courts ordinarily endeavour to avoid what might be considered irrational consequences that the parties cannot have intended. In this regard, counsel refers to a number of authorities, including Carlingford Australia General Insurance Ltd v EZ Industries Ltd VR 349. In that case, the claim for indemnity arose out of the unloading of a shipment of lead concentrate extracted by the second named respondent at its New South Wales mine and shipped to a Californian port. The discharge operation caused dust which was blown by the wind and a number of persons were affected by the lead concentrate dust. Gobbo J considered this postulated a "surprisingly wide ambit" for such a clause. In such a situation, ordinary principles as to resolution of ambiguities come into play. Thus the present exclusion clause is capable of excluding any liability in relation to any release of any liquid or vapour. Strictly speaking, this would exclude any spillage from any cause, since the words liquids and vapours are capable of such wide operation as to be wholly uncertain in the ambit of their meaning. It is not necessary that an exhaustive definition be attempted that overcomes possible irrational and unjust effects, any more than one should set the outer limits of the clause on the basis of giving it the widest possible operation. The difficulty with the application of this principle or approach in relation to the exclusion clause under analysis in this case, is that there really is very little room, in my view, for ambiguity as to what the relevant words mean, notwithstanding the considerable efforts of the counsel for the applicants to isolate that ambiguity. The critical question is what the expression "directly or indirectly arising out of the non repayment of any loan which was originated or managed by [the Insured]" means in this case. Counsel for the applicants says that the claims made by the applicants against the Insured are not claims "arising out of the non repayment of any loan which was originated or managed by [the Insured]". Rather the proper characterisation is that the claim is one "arising out of the misleading or deceptive conduct or negligence of the Insured". In my view, for the reasons given and by reference to the authorities referred to above, the expression "arising out of", in most contexts, has a much wider application. In view of the authorities cited, I have little hesitation in concluding the exclusion clause in this case has a plain meaning and applies to the circumstances of this case notwithstanding that the Policy may have application in relatively few commercial or other instances. The claims of the applicants against the Insured plainly "arise out of" the non repayment of the Fieldmont loans. In my view, to adopt the approach to construction and outcome contended for by the applicants would effectively involve the Court rewriting the terms of the otherwise clear and plain words used in the exclusion clause. That is not the function of the Court. For these reasons, I consider that the relevant exclusion means that the Policy does not respond to the claims made by the applicants against KMF. Therefore, the answer to Question 2, whether the endorsement excludes any indemnity that might otherwise be available to KMF under the Policy in respect of Ashmere's claim against KMF, is "Yes". I will now hear from the parties as to what orders should be made in light of these findings. 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 Barker. | preliminary issues construction of insurance policy fair trading acts misleading and deceptive conduct s 995(2) of corporations law similar legislation interpretation of exclusion clause not the function of the court to re-write clear and plain words used in exclusion clause trade practices |
Essentially Mr Horn contends that the voting compartment should have a door, screen or curtain on the front of it to screen the voter. He contends that the respondent Commission has failed to comply with the provisions of the Commonwealth Electoral Act 1918 (Cth) in that regard. These proceedings have been listed urgently as the Federal Election is scheduled to be held tomorrow. The proceedings were heard by Justice Nicholson who dismissed them on 19 December 2006 ( Horn v Australian Electoral Commission [2006] FCA 1778). In the initial proceedings two issues were raised. The first was whether there were reasonable prospects of success in arguing that non-compliance had occurred. The second issue was whether or not there was a justiciable controversy. The question was whether Mr Horn at that particular time held a sufficient material interest in the subject matter of the action such as to warrant the grant of the relief claimed. 5 His Honour held that Mr Horn did not have the requisite interest because his interest in the subject matter of the action was contingent on the occurrence of future events. Specifically, in December last year Mr Horn did not have a sufficient material interest that would warrant the relief he was claiming even if he were otherwise entitled to it. While he may presently have the view that he will not vote in a booth the same as or similar to that present at the 2004 federal elections in the Manjimup Town Hall, that would not warrant the grant of the relief claimed until at least the issue of the writs for the next federal election and more probably not until he determines his view on facing the booths provided at the polling place which he attends on the occasion of that election. The structure, layout and appearance of the election booths at the next election cannot be prejudged; until a federal election day there is nothing that can found a basis for a claim that the respondent has failed to comply with the Electoral Act . If s 206 arguably gives rise to a right or duty, it could only do so when Pt XVI has application to a polling; that is, after the issue of writs for an election. Presumably the proceedings have been commenced in such close proximity to the election date in light of the reasons expressed by his Honour in the initial proceedings. Nevertheless, the Commission still contends that Mr Horn does not yet have standing to seek relief in these proceedings as there is no justiciable controversy until, at the earliest, he has declined to vote without good cause at the election. I will come to that argument shortly. In particular he has sought an example of each kind of electoral polling booth containing voting compartments that it intends to provide at the Manjimup Town Hall. This is the relevant polling place for Mr Horn for the Federal Election for the Senate and House of Representatives to be held tomorrow. The Commission agreed to comply with that request and has now produced items sought by Mr Horn to his apparent satisfaction. The information supplied has enabled him to advance his argument on the basis of the actual situation which will prevail at the Election tomorrow. 8 In the substantive relief, Mr Horn seeks a declaration that the Commission, in using polling booths of the kind described to the Court has failed to comply with ss 206 and 233 of the Electoral Act . It is asserted they fail to comprise separate compartments constructed and arranged in such a manner as to screen voters from observation while marking their ballot-papers so as to allow a voter to mark his or her vote on the ballot-paper in private. Mr Horn also seeks a declaration that he may decline to vote under s 245(1) of the Electoral Act without incurring a threat of penalty for breach of s 245(8) of the Electoral Act . He further seeks an order in the nature of mandamus against the officers of the Commonwealth who comprise the Commission and who are to administer the polling at the polling place. Against those persons orders are sought requiring that they provide polling booths that comply with the relevant provisions. 9 Following the filing and service of the application by Mr Horn, the Commission also filed a motion to dismiss the proceedings pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) and O 20 r 5 of the Federal Court Rules on the grounds that Mr Horn has no reasonable prospect of successfully prosecuting the proceedings and that they are frivolous, vexatious or an abuse of process of the Court. 10 The Commission has proceeded with the motion to dismiss the proceedings. At the same time in light of the urgency of the matter, given the imminence of the Federal Election, I allowed Mr Horn's opposed application to determine the substantive final hearing of the application as a matter of urgency. I agreed to this course as the evidence was of relatively narrow compass and as Mr Horn was and is genuinely concerned as to his rights and obligations in the immediate future at this election. If I were to conclude that the dismissal motion should not be allowed, Mr Horn would still have been left with uncertainty as to his rights and obligations. Quite properly, that motion did not, in these proceedings, raise the statutory construction point. By hearing and concluding the matter, both he and the Commission will know where they stand. Mr Horn's notice was directed to the argument that a construction and application of ss 206 and 233 (1)(a) of the Electoral Act must be compatible with the Commonwealth Constitution . In particular, it must be compatible with the terms 'directly chosen by the people' in ss 7 and 24 of the Constitution . The Commission's notice goes to the question of whether Mr Horn has standing in the sense of whether there is a justiciable controversy for the purposes of Ch III of the Constitution . I am satisfied in the unusual circumstances that there has been sufficient time for the purposes of s 78B(1) of the Judiciary Act for each notice. I am particularly mindful that each of the Attorneys has responded to each notice indicating that there is no wish to intervene. On 7 September 2007 Mr Horn wrote to the Commission seeking to inspect examples of the kind of polling booths that it would provide at nominated polling places within the division of Forrest as well as plans of the relevant layout of those polling places. On 18 September 2007 the Commission's Chief Legal Officer declined Mr Horn's request regarding information about the details of the polling booths to be provided at the 2007 Federal Election and refused to engage in further correspondence on the matter. Accordingly he has issued these proceedings. As observed by Heerey J in Duncan v Lipscombe Child Care Services Inc (2006) 150 IR 471, s 31A of the Federal Court Act 1976 (Cth) was introduced to establish a lower standard for strike outs (either of claims or defences) than that previously laid down by the High Court's decisions in Dey v Victorian Railway Commissioners [1949] HCA 1 ; (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125. Nevertheless, while the test is lower, as Barrett J in Degiorgio v Dunn (No 2) [2005] NSWSC 3 ; (2005) 62 NSWLR 284 held, for the purposes of the comparable provision in New South Wales ('without reasonable prospects of success') meant 'so lacking in merit or substance as to be not fairly arguable'. The word "real" distinguishes fanciful prospect of success or ... they direct the court to the need to see whether there is a "realistic" as opposed to a "fanciful" prospect of success. The Commission contends in its dismissal motion that there is no present obligation to vote (and, as yet, no refusal without good cause to vote). It follows, it is said, that no 'matter' for the purposes of s 76 of the Constitution has arisen and the Court therefore has no jurisdiction. 16 The Court has jurisdiction to resolve the whole of a dispute in circumstances where a Commonwealth statute is involved in the dispute (s 39B(1A)(c) of the Judiciary Act ). This general conferral of non-criminal federal jurisdiction suffices to support jurisdiction so long as there is actually a 'matter' in dispute. (Section 39B(1A)(c) is authorised by s 77 of the Constitution when read together with ss 75 and 76 ). 17 What is in dispute in this challenge by the Commission is whether there is a 'matter' where that expression is used in the sections of the Constitution to which I have referred. The Commission is quite correct in saying that the Court cannot merely give an advisory opinion. The Court is not empowered to give merely advisory opinions because its jurisdiction emanates from Ch III of the Constitution , specifically ss 75 and 76 which empowers the Court to resolve 'matters'. 18 It was established in Re Judiciary and Navigation Acts [1921] HCA 20 ; (1921) 29 CLR 257 (the Navigation Act case) at 264-266, that there can be no 'matter' unless there is '... some immediate right, duty or liability to be established by the determination of the Court'. But as observed by Griffith CJ in The State of South Australia v The State of Victoria [1911] HCA 17 ; (1911) 12 CLR 667 at 675, 'the word "matter" was in 1900 in common use as the widest term to connote controversies which might come before a court of justice'. 19 There is no dispute about the basic principle. The issue is whether the declaratory relief now sought by Mr Horn is in the nature of an 'advisory opinion'. 20 What is instructive, in my view, is that a very short time after the Navigation Act case, the Court did pronounce on the validity of the amendments to the Navigation Act . In the Newcastle and Hunter River Steamship Co. Ltd. v Attorney-General for the Commonwealth [1921] HCA 31 ; (1921) 29 CLR 357, the plaintiff ship owners and the State of Western Australia, sought a declaration from the Court as to the invalidity of those amendments. They asserted that their specific rights (the right to carry on shipping operations without incurring the expense required to comply with the amendments) were under threat as the Commonwealth proposed to take action in respect of their failure to incur the expense. The action at that point had not been taken but was 'imminent'. 21 The argument that there was not yet any 'matter' was not raised in the sequel. The Court proceeded to deal with the argument on its merits. There could be little doubt that it was mindful of the recent jurisdictional debate, but appeared to accept that a threat to take action was sufficient an interest. 22 As held by Brennan CJ, Dawson and Toohey JJ in Croome v Tasmania [1997] HCA 5 ; (1997) 191 CLR 119 at 125 it is a misconception of the principle in the Navigation Act case to suggest that, in proceedings for a declaration of invalidity of an impugned law, no law is administered unless the Executive Government has acted to enforce the impugned law. 23 In this regard I particularly have in mind the imminence of the Federal Election and the inference I draw from the evidence discussed below that in the absence of a ruling from the Court, it is presently more probable than not that Mr Horn will not vote tomorrow. He will expose himself to a penalty. The facts as to the details of the booths, the compartments, the general lay-out of the polling place, the directions given to polling officers and many other matters are now clearly known. Mr Horn asks the Court to rule that on that evidence there will be non-compliance with ss 206 and 233. He seeks that ruling so that by not voting tomorrow he will not be exposed to a penalty. 24 I consider it is at least arguable that there is now an impending personal liability (in the sense discussed by the High Court in Croome 191 CLR at 126-127 per Brennan CJ, Dawson and Toohey JJ and by Gaudron, McHugh and Gummow JJ at 136) so as to constitute a 'matter'. In any event I would not dismiss the proceedings on this ground. I am satisfied that Mr Horn's concerns are genuinely held, well articulated and have been ventilated in a responsible manner historically and through these proceedings. In that regard I also take into account some of the unchallenged background to his concerns. I have not brought these proceedings, the prior proceedings giving rise to the decision of Justice Nicholson ( Horn v Australian Electoral Commission [2006] FCA 1778) , or any of my related complaints and concerns communicated to the Respondent, lightly. I am pursuing these grievances in the forum that I sincerely consider to be appropriate because the sanctity of the secret ballot is to me, such an indispensable part of a proper and fair system of representative democracy that I can see no other alternative. To properly explain the importance of this issue to me, it is necessary for me to say some more about my background, beyond the matters contained in my earlier affidavit. I was born in an eastern suburb of Berlin (Rűdersdorf) in 1938. Then there was only one Germany under Hitler. I lived there until 1944. Because of the many bombs falling everywhere my family moved to live with relatives about 100km from Berlin. As the Russian front approached our location we kept moving from one town to the next as refugees in a westerly direction to avoid having to live under communist Russian rule. Many refugees were in that stream towards the West. At the River Elbe we were caught in between the American and Russian forces with the German army in between. I was in the middle of the fighting and saw many dead soldiers. A few days later in May 1944 (sic) the war ended. We kept walking towards the West but still in the Russian occupied zone. We lived under the Russian occupation in East Germany for only several weeks until we managed to cross by night over the boarder (sic) at the river Werra into the West Germany. From then on we lived in a small village in West Germany. I emigrated from West Germany to Australia in 1962. Although I never voted in any election in East Germany, nor did I live in East Germany after I moved to West Germany, I came to develop a strong understanding of the highly unfair and oppressive regime that was in power there from what I was told by friends and relatives who still did live there under the Communist regime. This life experience, and accumulation of understanding about how undemocratic some governments can be, led me to form the view that the institution of free elections must be held sacrosanct. There were no free elections in East Germany. Communist party officials and Stasi agents would intimidate voters during the voting process, and the election outcome was always vastly in favour of the Communist party, although the population hated the communist regime. The theme of free elections was always discussed in East and West Germany and I grew up with the conviction that free elections are the main prerequisite and guarantor for a free democratic society. If a person is not allowed to vote in private in a closed voting compartment, the potential exists under certain political circumstances that others might be in a position to intimidate the voter and influence his vote though actual or perceived supervision. This cannot occur when closed voting compartments are provided. It is vital that supervision or any other kind of observations do not occur while a voter is doing anything connected with preparing to vote and marking his or her ballot paper. He became a naturalised Australian citizen in 2001. At the last federal election held on 9 October 2004 he attended to vote at an authorised polling place at the Manjimup Town Hall in Western Australia. He found that the way in which the polling booths were constructed, assembled and arranged at that location did, in his view, not adequately screen voters from observation. By this he means that other persons in the vicinity of the polling booths could observe voters while they were marking their ballot-papers. 29 The compartments of the polling booths at the Manjimup Town Hall did not have a door or screen to adequately prevent other persons including electoral officers or persons associated with political parties from standing near or behind voters marking their ballot-papers and/or from observing the physical movements of voters in the booths. 30 Marking the ballot-paper he says involves the writing of details of voting choices and also the arranging and examining of how to vote cards supplied by political parties when marking the ballot-papers. He said further that the physical walls of the voting booths at the sides of the shelf of the booths were not sufficiently extensive to screen voters from being observed when they marked their ballot-papers. 31 He formed the opinion that he had been provided with a voting compartment where he could not mark his ballot-papers in private. For that reason he left the polling place without casting a vote. He explained that he regards the right and obligation to vote in strict accordance with the Electoral Act as essential to maintaining the secrecy of the ballot. Clearly he regards the issue importantly and this is why he has, amongst other steps, issued two sets of proceedings in relation to his rights and obligations. His attempts to voluntarily obtain from the Commission the documents to which I have referred were unsuccessful. That is why he issued proceedings to have such material produced. 32 Mr Ian Stringall is the Director of Operations for the Commission in Western Australia and has held that position since 2005. He is clearly experienced having been involved with or having conducted as a returning officer at least eight federal elections, two constitutional referendums and five national Aboriginal and Torres Straight Islander elections. He described the statutory responsibility for the Commission to conduct federal elections and to administer compulsory enrolment and compulsory voting. 33 The Commission's resources including manpower and funding are presently committed to preparation for the 2007 Federal Election which is a nation wide project and 'an enormous logistical, complex and costly undertaking with a public expectation that it will be conducted on 24 November 2007 fairly, impartially, effectively and efficiently'. At the 2007 Federal Election 13.6 million Australians are eligible to vote compared with a little over 13 million for the previous election. 34 The Commission's role is also to gather information and to evaluate each electoral event and if there are any electoral matters or issues arising after an election the Commission is required to report them to the Joint Standing Committee on Electoral Matters. The Joint Standing Committee in turn has a role of enquiring into and reporting the matters relating to electoral laws and practices. As far as Mr Stringall was able to ascertain no one other than Mr Horn has ever made a complaint relating to structure, lay-out or appearance of voting compartments at any time to the Commission in federal election history. As to privacy generally however, insofar as any invasion of voting privacy is concerned, the evidence from the Commission is that it has developed polling place procedures which are issued to polling officials providing a step-by-step guide to assist them in every phase of the election process. All polling officials receive a copy of the procedures appropriate to their duties. That gives them procedural information for their respective roles. It is a condition of their employment that they also attend a formal face-to-face training session prior to the election. 36 Those polling officials comprise several levels, first, the divisional returning officer responsible for the conduct of the federal elections for an electoral division, then the officer in charge who is responsible for the management of a specific polling place and then the polling place officials who are assigned specific duties. These include ordinary vote issuing officers, ballot box guards and queue controllers. They are responsible to the officer in charge. Every officer in charge in turn is charged with a duty of setting up the polling place on polling eve and the Commission's procedures issued to the officer in charge give lay-out guidelines and examples. Those documents were produced to the Court. The divisional returning officer provides a plan for the lay-out of a specific polling place which the officer in charge is expected to follow as closely as possible following inspection of the polling place. Modifications can be made if the officer in charge considers there are good reasons to do so and after discussion with the divisional returning officer, if appropriate. 37 In the case of a polling official assigned to the duty of an ordinary vote issuing officer, the duties include ensuring that ballot-papers are issued to each voter only when and not before there is a vacant polling compartment available for that voter to immediately occupy. 38 The queue controller as the title suggests has the duty to manage the queue of voters. This includes organising them into a single queue, directing them to the voting issuing points, identifying voters who require assistance and assisting them if necessary or referring them to the enquiry officer. The effect of this control is to ensure that the flow of electors through the polling place is conducted in an orderly manner and there are not crowds milling around locations such as the voting compartments. 39 The actual voting compartments to be used after they have been delivered to the polling places throughout the country for use tomorrow have dimensions of a depth of 420 mm, a width of 580 mm and a height of 1800 mm. The sides to the compartment are almost a complete rectangle. The depth is such that the ballot-paper can be the best part of 420 mm away from the front of the compartment. A person would have to be well and truly over a height of 180 cm to be physically able to view the contents of a ballot-paper from an adjacent booth assuming he or she were not restrained from doing so. Even then that would require that the voter marking the ballot-paper took no steps to shield the mark while it was being applied. 40 The totality of these measures is such that I could see very little risk that a voter taking ordinary steps to mark the ballot-paper (that is to say, not taking particular caution) could have his or her marking of the ballot-paper viewed by another person. In effect, Mr Horn contends there should be a door or curtain covering the front of the booth. 42 In the initial proceedings, the Court rejected the Commission's submissions that there was no reasonable prospect of success insofar as his construction of s 206 of the Electoral Act was concerned. The Commission argued that s 206 of the Electoral Act is in its terms referable to 'marking' of ballot-papers so that the protection sought to be provided by the section was not against general observation of the voter at the moment in time of marking the ballot-paper but specifically against how the ballot-paper is marked. The Commission repeats these arguments now and contends that this construction is supported by s 233(1)(a) where there is a further reference to marking of the ballot-paper. The Commission also relies on s 338 providing a penalty in respect of any unauthorised person marking a vote or making any mark or writing on a ballot-paper of any elector. Section 348 of the Electoral Act gives a power to control behaviour at polling booths. It follows, according to the Commission, that s 206 needs to be read so that the expression 'screen the voters from observation while they are marking their ballot-papers' means only screening the specific act of marking the ballot-paper by the voter. 43 The argument advanced by Mr Horn, however, is that the purpose of s 206 is to provide protection to voters while they are in the compartment in relation to all of the actions which give rise to and lead up to the specific marking of the ballot-paper. . 44 This is substantially a case about statutory construction. 45 The literal approach as defined and explained by Higgins J in Amalgamated Society of Engineers v Adelaide Steam Ship Co Ltd (the Engineers case) [1920] HCA 54 ; (1920) 28 CLR 129 at 161-162 is an appropriate starting point. The qualifying words 'while they are marking their ballot-papers' suggest not only that the screening is to occur at that particular time but also for that particular purpose. Therefore the question is whether the steps to be taken do achieve that purpose. 47 In my view a literal approach does not aide the construction which Mr Horn seeks to advance. Both s 206 and s 233 could easily have specifically required that the Commission fit the compartments with doors and/or curtains or screens if that was the legislative intent. There does not appear to be any compelling reason to depart from the literal approach and in the absence of some absurdity or repugnance or inconsistency with the balance of the statute, a departure seems unnecessary. 48 I consider the clear, ordinary meaning of the words of ss 206 and 233 (1) indicate that the purpose of the provisions is to enable voters in private to mark their vote on the ballot-paper, to do so alone without any interference, and to conceal their vote both in the course of marking it and after it is marked on the ballot-paper. Accordingly, the process of voting as set out in s 233(1) is designed to achieve these objectives. 49 Other provisions of the Electoral Act including s 338 which precludes a person other than the voter unlawfully marking the ballot-paper and s 348 which enables the Commission to control behaviour at polling booths are also consistent with the purpose of secrecy of the vote-casting in the manner I have described. I am satisfied that the voting compartments to be used as well as the proposed lay-out of polling places during the 2007 Federal Election and the relevant polling place procedures for controlling of queues and the ballot-paper issuing points are suitable to meet the requirements of the Electoral Act in s 206 and to assist voters to comply with s 233(1) by marking their ballot-papers alone and in private and concealing the vote that they have made. 50 Mr Horn contends that the literal approach to construction of the sections which he favours is reinforced by a purposive and contextual approach. The context, he says, requires consideration of the existing state of the law and the mischief which one may discern the statute was intended to remedy. Moreover, the context should be evaluated as a first step: (see Newcastle City Council v GIO General Ltd [1997] HCA 53 ; (1997) 191 CLR 85 per McHugh J at 112). For the purposive approach he relies on s 15AA of the Acts Interpretation Act 1901 (Cth) and Mills v Meeking [1990] HCA 6 ; (1990) 169 CLR 214 at 235. Those principles are not in doubt but the application of them is the focus of the dispute. In that regard reliance is placed on the Commission's own publicly available material acknowledging the starting point of the process of the federal electoral reform which describes the initial legislation as providing for, amongst other things, a secret ballot for both the Senate and the House of Representatives. It is said then that any construction of s 206 which undermines or minimises the operation of the two provisions effecting the purposes of the secret ballot ought not readily be adopted. I consider that little weight can be placed on this material as it depends on what the author meant by 'secret ballot'. The author may well have been describing the process which the Commission presently adopts and by which the Commission contends that the secrecy as to how a person votes is preserved. 52 The right to participate in the franchise, that is, to vote and the exercise of its significant components constitute a fundamental right. The High Court has stressed that a clear indication of statutory intent must be demonstrated to abrogate or curtail a fundamental right (in Coco v R [1994] HCA 15 ; (1994) 179 CLR 427 at 437 per Mason CJ, Brennan, Gaudron and McHugh JJ). Mr Horn says the text of ss 206 and 233(1)(a) of the Electoral Act does not manifest any sufficient intention to displace the presumption in favour of participation in the franchise in a manner that properly gives effect to a secret ballot. This may also be so but the question remains whether there is any curtailment. 53 Mr Horn contends that both the purposive and contextual approach to interpretation of the sections shows that they have been breached. 54 This argument, however, depends upon a conclusion being reached that a purpose of the Electoral Act is to provide a secret ballot in the manner for which Mr Horn contends. The difficulty with this argument is in defining what is meant by 'secret ballot'. The expression secret ballot is not used anywhere in the Electoral Act but the Electoral Act does refer to privacy. I am unable to discern from the Act itself a purpose that a person who is voting should not be able to be observed at any time after entry into the separate voting compartment. In my view the meaning attaching to '... so as to screen the voters from observation while they are marking their ballot-papers ... . ' in s 206 is amplified by the words in s 233. This requires the voter on the receipt of the ballot-paper to without delay retire alone to some unoccupied compartment of the booth and there, in private, mark his or her vote on the ballot-paper. If it is legitimate to identify as a purpose or part of the context that the ballot should be secret, I consider that secrecy attaching to 'secret ballot' means secrecy as to the manner in which a person has voted. I equate 'in private' in s 233 to 'secret' in that sense. 55 It is accepted by Mr Horn that no explicit purpose is expressed in the Electoral Act but he stresses that the achievement of a secret ballot was one of several important purposes behind the enactment of the Electoral Act and its predecessor the Commonwealth Electoral Act 1902 (Cth). In my view this may or may not be so but it all depends upon the proper meaning of 'secret ballot' in the context. 56 While it is clear that the right to vote or the franchise is a fundamental right which in the absence of a very clear indication of statutory intent should not be abrogated, I am unable to discern any curtailment of or derogation from that fundamental right by the Commission's approach to s 206. 57 Much of Mr Horn's argument turned on the fundamental right to a secret ballot. That term was not defined but in reality the argument kept coming back to the need for a door, screen or curtain to the open side of the voting compartment. The need for that addition was said to be supported by the requirement that there be a 'secret ballot'. But this in turn again raises the question of what constitutes a 'secret ballot'. 58 There is no legislative or constitutional requirement in express terms for a 'secret ballot' in this Election. The history of legislative and judicial approaches to the requirement for secrecy in voting demonstrates variations in understanding of the necessary elements of a secret ballot. The different approaches to very similar voting arrangements adopted by Gray J. in Pullen's case and Olney J. in Brahim suggest that contemporary views of what is necessary may differ according to the circumstances of the case. Accepting that there is a range of possible voting systems which would answer the description "secret ballot", the question is what are the minimum necessary conditions to be met before a voting system can be so characterised. It must be answered by reference to the purpose of the secret ballot. In relation to parliamentary, local government and union elections, that purpose is to encourage voters to exercise a choice for their preferred candidate free from the possibility that any social, economic, physical or other sanctions may be applied to them for voting or not voting in a particular way. Where the vote cast cannot be known, promises to vote in a specific way cannot be verified. In the absence of information about the vote cast, threats and inducements have little or diminished force. Having regard to the purpose of the secret ballot, the mechanism adopted must enable the elector to cast a vote in private, that is to say without disclosing it to any other person, and must enable the anonymity of that vote to be protected. This may be achieved by methods which would be described as physical or mechanical. They may be supported by the imposition upon electoral officials of appropriate statutory duties of non-disclosure. The question whether a given mix of techniques constitutes a secret ballot involves an assessment of the extent to which it achieves the objectives of a private vote and protection of anonymity. What is clear, in my opinion, is that despite the use in Victoria in 1856 of a system under which the voter's electoral number appeared on the ballot paper, that would not be accepted as a secret ballot today. Physical isolation of the voter and a system for separating or keeping separate the voter's identity and the record of the vote cast are essential elements of the modern understanding of the secret ballot. The provisions under which blind, illiterate or incapacitated electors cast their votes with the assistance of an electoral official is a compromise adapted to the particular class of case. It would not be understood as a secret ballot if applied to the wider population of electors. 60 Mr Horn relied upon an article by Dr Peter Brent in the Australian Journal of Political Science, in which the author made the point that Australia introduced the concept of government issued ballot-papers and concepts such as particular secrecy above and beyond that available in certain other countries. In that article he also compared a 'secret ballot' with other methods of voting such as voting by a show of hands, on the voices or on a signed voting paper. In my view such a comparison is not only correct but illustrates the accurate meaning of 'secret ballot', namely, a ballot by which the manner in which the voter has voted is secret, private or confidential. 61 It follows that even if Mr Horn's argument that the franchise must include and mean a 'secret ballot' is accepted, that the secrecy is not lost by the absence of a door or curtain to the compartment. The secrecy attaches to the actual vote itself. There is no evidence that any risk to that secrecy will occur by the absence of a door or curtain. 62 Even if the secrecy of the vote is an ingredient of the fundamental right to vote, in my view the secrecy of the vote is preserved in all the methodology pertaining to the vote which the Commission intends to adopt. 64 Although Mr Horn has raised this constitutional point, it is accepted that courts will generally decline to decide a case on constitutional grounds unless it is necessary to determine the matter between the parties. Considerable emphasis was placed by Mr Horn on the significance of ss 7 and 24 of the Constitution and in particular the words 'directly chosen by the people' in those provisions. Reliance was placed on the conclusion in various cases by the High Court that these words entrenched in the Constitution principles of representative democracy (see Australian Capital Television Pty Ltd v Commonwealth [1992] HCA 45 ; (1992) 177 CLR 106 and Nation Wide News Pty Ltd v Wills [1992] HCA 46 ; (1992) 177 CLR 1). Even in McGinty v Western Australia [1995] HCA 46 ; (1996) 186 CLR 140 the High Court while rejecting the proposition that those provisions viewed in their context entrenched a system of relative voting equality amongst federal electorates, reinforced repeatedly the manner in which the Constitution provided for representative democracy. 65 I have difficulty in accepting that the Constitution itself entrenches a secret ballot, in the manner contended for by Mr Horn, as well as entrenching the right to vote. Indeed, as Mr Horn acknowledges, there are a number of statements of the High Court to suggest that that is not the case. For example, the contrary view was expressed by McHugh J at [63]-[65] in Mulholland v Australian Electoral Commission [2004] HCA 41 ; (2004) 220 CLR 181 and by Gummow and Hayne JJ at [154]. Similarly Gummow J again expressed the contrary view in McGinty 186 CLR at [58]. While it may be that these observations were not essential to the issues to be determined in those cases, they are nevertheless very persuasive. 66 Mr Horn placed heavy reliance on the recent decision of Roach v Electoral Commissioner (2007) 239 ALR 1 in which there were numerous statements by the High Court reinforcing the fundamental nature of a system of representative government and a citizen's right to vote. In doing so, the Court made it clear that the Constitution left it to Parliament to define the nature and extent of exceptions to the fundamental individual right but in doing so stressed that Parliament's power was not unconstrained because the franchise was critical to representative government lying at the centre of the concept of participation in the life of community and its citizenship (Gleeson CJ at [7]-[9]). Similar statements were made in the joint judgment of Gummow, Kirby and Crennan JJ at [43] but, of course, Roach 239 ALR 1 was a case in which the franchise was to be totally removed for a certain class of voters. This is a very different case. In my view there will be no curtailment at all of the fundamental right to vote. 67 For Mr Horn's argument to succeed at any level it seems to me that he must satisfy the Court that a secret ballot is something which not only preserves the secrecy as to how a vote has been exercised but also precludes anyone from observing any aspect of the exercise of the vote even if it cannot be seen how the vote itself is being exercised. I recognise that Mr Horn says that the latter is the proper literal meaning to be attached to s 206 but I can not agree. In my view s 206 is not intended to prevent the voter from being observed in all the ancillary and preparatory steps to marking the ballot because it would be impossible to say when those steps start. There is no greater justification for saying that the ancillary steps to marking the ballot commence on entry into the voting compartment than there is in saying that the ancillary steps commence on collection of the ballot-paper. Clearly the Act was not intended to preclude someone being observed on collection of the ballot-paper. To the contrary, as part of that process the voter needs to identify himself or herself to a Commission officer. Consistently with this, in my view the screening of voters from observation referred to in s 206 is intended to ensure privacy of the way in which voters have marked the ballot-paper. 69 Neither of the sections, in my view, could reasonably be thought to be guaranteeing voters total privacy in relation to all of the acts leading up to voting, such as adjusting how to vote papers within the booth to examine them before marking the ballot-paper. 70 Equally carrying only one how to vote document (from one candidate or one party) may be identified from the moment the voter enters the polling booth. It is open for a voter to take a number of different such documents. Some may decide to take none. Those who are not troubled by such appearances may take just one. But whatever such documents are taken, initially or into the compartment, the manner in which the ballot-paper itself is marked remains private. 71 There is no reason why the fact that a voter is in a booth marking a ballot-paper as required by law should in itself be the subject of privacy. There is every reason, however, to guarantee privacy of the manner in which the vote is exercised. In my view that is the purpose to which the Electoral Act is directed and is consistent with both a purposive and a literal reading of the words of the two sections when taken together. As I am completely satisfied that there is no foreshadowed breach of the Electoral Act by the Commission, it is unnecessary, given the urgency of this matter, to consider this submission. Indeed he says the Election would not be able to proceed because the Commission would not have the funds nor would it have sufficient time to arrange the manufacture and delivery of new voting compartments for the thousands of polling places across the nation in time for the Election. 74 The voting compartments which have been produced cost $891,092 inclusive of GST. In addition, other expense has been incurred in the production of voting screens that the Commission produces such as tabletop voting screens and disabled access voting screens. The amount spent in distributing the voting compartments from the production point to the different State offices is over $136,000. That is a sum which does not include the cost of distributing the compartments from the State offices to the polling places which clearly can also be substantial. 75 Of its annual appropriation from Commonwealth Parliament of $145 million (for all activities of the Commission) already at least $95 million has been spent or allocated towards the 2007 Federal Election alone as at the date of swearing Mr Stringall's affidavit. He makes the point that a substantial portion, if not all of those costs, which are public funds would be thrown away if the election did not proceed. 76 Those matters would appear to go to the exercise of the Court's discretion in granting declaratory relief. It was suggested that I should or could adopt a middle ground of making a declaration only as to Mr Horn's rights. On the other hand, the Commission is a public body and says that it would be required to consider urgently whether it was acting lawfully if the Court had held otherwise. Such consideration would require a little time and, realistically, quite possibly more than the bare day now remaining before voting commences. 79 There is a risk that the relief realistically could not be confined in its effect to Mr Horn and the polling place at the Manjimup Town Hall. Every polling place in Australia is set up in much the same manner. Nevertheless, if I am wrong about my conclusion as to the non-compliance by the Commission with the Electoral Act, then I would exercise my discretion to decline relief for the reasons set out above. I will hear counsel on the question of costs. 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. | application to dismiss proceeding obligation on australian electoral commission to screen voters from observation when marking ballot-papers whether application relating to imminent likely repeated refusal of voter to vote gives rise to a 'matter' whether applicant has sufficient material interest obligation to screen voters from observation while they are marking the ballot paper whether obligation requires provision of enclosed booths whether a secret ballot is entrenched in the constitution whether a secret ballot requires voters to be screened from observation while marking ballot papers whether secrecy of how the ballot paper is marked suffices alternative discretionary factors election imminent consequence to applicant of alleged breach compared with potential widespread cost of disruption to federal election procedure electoral law constitutional law declaratory relief |
The Tribunal had affirmed a decision of a delegate of the Minister to refuse to grant a visa to the appellant. 2 When the appeal was called on for hearing this morning, there was no appearance by the appellant. I invited counsel for the first respondent to indicate whether he wished to proceed under s 25(2B)(bb)(ii) of the Federal Court Act 1976 (Cth) and seek an order dismissing the appeal, or proceed under O 52 r 38A(1)(d) of the Federal Court Rules 1979 (Cth) and have me proceed with the hearing generally in relation to the appeal. He asked that I proceed with the hearing, which I have done. 3 The appellant was born on 1 May 1984 and is a citizen of the People's Republic of China. On 27 June 2003 she applied for a Partner (Temporary) (Class UK) visa and a Partner (Residence) (Class BS) visa. A delegate of the first respondent refused the application for the visa on 19 October 2004. On 16 November 2004 the appellant applied to the Tribunal for a review of that decision. 4 The appellant entered Australia as the holder of a Subclass 571 (Schools Sector) visa on 12 May 2002 which ceased on 29 May 2002. On the same day she was granted a further Subclass 571 (Schools Sector) visa which was due to cease on 12 April 2004. However, on 29 December 2002 the appellant departed Australia. She returned on 11 February 2003. On 27 June 2003 when she lodged the application she was granted a bridging visa which was due to cease on 30 July 2003. On that day she again departed Australia and returned on 14 August 2003. She was subsequently granted a bridging visa pending the disposal of her application for these visas. 5 The appellant's sponsor on this application was her husband, William Tam who was an Australian citizen who was born in Sydney on 21 March 1983. 6 The appellant and her husband were interviewed by the delegate on 12 November 2003. The appellant was interviewed again on 1 October 2004. On 19 October 2004 the delegate refused the visas. 7 The appellant and her husband were married on 7 May 2003 in New South Wales. The delegate was under an obligation to consider the criteria in clause 820.211 of Schedule 2 of the Migration Regulations 1994 (Cth) (the Regulations) and, in particular, determine whether the appellant was the spouse of an Australian citizen who was not prohibited from being a sponsoring spouse. Mr Tam was both an Australian citizen and not prohibited from being a sponsoring spouse so the question before the delegate, and ultimately the Tribunal, was whether the appellant was the spouse of Mr Tam for the purpose of the Migration Act 1958 (Cth) (the Act) and the Regulations. The delegate allowed the appellant and her sponsor time to address those issues. A number of documents were provided in response. 13 The delegate addressed the criteria in the Regulations and concluded that the appellant and her husband did not live together and had no commitment to each other. The delegate was not satisfied that the documents demonstrated a genuine and ongoing marital relationship. The delegate was not satisfied that the appellant and her sponsor were in a genuine spousal relationship. The applicant does not satisfy the requirements of 820.211 as described by Regulation 1.15A. 15 Two weeks later, on 15 April 2005, the Tribunal wrote to the appellant pursuant to s 359A of the Act. 17 The letter asked for any written information and comments be provided within 28 days of the date of notification of the invitation. Regulation 4.17(4) governs the prescribed period for giving information and in the case of s 359B(2) it is 28 days after the day on which the invitation is received. This notice complied with that regulation. 18 In its reasons, the Tribunal records that it did not receive the requested comments within the prescribed time limit and it proceeded to make a decision on the material before it. 19 Section 359C(2) of the Act permits the Tribunal to make a decision on the review without taking any further action to obtain the applicant's views on the information sought in the s 359A notice if the person does not give the comments before the time given him has passed. Moreover, s 360(2)(c) provides that the obligation under s 360(1) that the Tribunal must invite the applicant to appear before the Tribunal to give evidence and present arguments does not apply if s 359C(2) applies. 20 In those circumstances, the Tribunal, if it did not receive the requested comments within the prescribed time, was entitled to proceed to make a decision without inviting the appellant to appear before the Tribunal and without taking any further steps to obtain the appellant's comments on the information contained in the s 359A notice. 21 The Tribunal considered the evidence which had been put before the Department and the delegate and considered the criteria relevant to clauses 820.211 and 820.221 of Schedule 2. 22 It accepted that the appellant and the sponsor were married to each other on 7 May 2003 and that the marriage was recognised as valid for the purposes of the Act. 23 It discussed the financial aspects of the relationship and noted that the sponsor's wages were paid into an account in his name alone, and the statements were addressed to his parents' home address. It also noted there were copies of bank statements of a joint account for the period 20 May 2003 to 19 November 2003. 24 It discussed the nature of the household and the inconsistencies in relation to that aspect. It had regard to the social aspects of the relationship and, again, a number of inconsistencies in relation to that matter. It discussed the nature of the commitment of the appellant and the sponsor to each other. The Tribunal has had regard to the evidence relating to the considerations for a spousal relationship set out in regulation 1.15A and is not satisfied that the visa applicant was or remains in a genuine spousal relationship with the sponsor at the time of application or the time of decision. In making this finding, the Tribunal was particularly influenced by the lack of evidence that the parties have ever lived together as husband and wife, as well as the lack of evidence relating to the other mandatory considerations set out in subregulation 1.15A(3), as summarised under the above headings. The Tribunal therefore finds that the visa applicant does not meet subclauses 820.211(2) and 820.221(1) of the Regulations. 31. Given these findings, and earlier observations in respect of the other subclasses, the Tribunal has no alternative but to affirm the decision under review. The visa applicant does not meet essential criteria for the grant of a Class UK visa. It follows that as the visa applicant does not meet essential criteria for a Class UK visa, the visa applicant does not meet the criteria for a Class BS visa. The application was supported by an affidavit in which the appellant deposed that she had (through her migration agent) sent a fax to the Tribunal requesting more time for getting her documents ready. 27 In the proceeding before the Federal Magistrate the first respondent tendered the affidavit of Rachel White, senior legal officer in the employ of the second respondent. She deposed that she had inspected the Tribunal's file and found a facsimile appointing a new migration agent dated 30 May 2005 and a cover letter of the same date. However, there were no facsimiles from the appellant or her agent requesting that the Tribunal give the appellant more time to provide documents or otherwise respond to the Tribunal's letter of 15 April 2005. 28 The appellant called before the Federal Magistrate Mr Min Wang, who was an assistant employed by the appellant's migration agent. Mr Wang said that the documents were sent on 30 May 2005 together with a facsimile which included a request for additional time to respond to the s 359A letter. Mr Wang said that the Tribunal contacted his employer and said that although the request was out of time there should not be a problem and the Tribunal would be in contact later to advise whether or not the extension of time had been granted. He said that there was no further contact from the Tribunal. 29 Ms White's evidence was accepted by the Federal Magistrate and the Federal Magistrate preferred the evidence of Ms White to that led by the appellant which, in my opinion, he was entitled to do. In doing so, he noted that there was no independent record of the conversation and nor was the person who was said to have had the conversation, Mr Wang's employer, Ms Cao, called. In my opinion, the Federal Magistrate was entitled to make that finding. The Federal Magistrate found that the Tribunal did not receive the request on behalf of the appellant for an extension of time within which to respond to the s 359A letter. The Federal Magistrate found that, in those circumstances, the Tribunal was entitled pursuant to s 359C to make a decision without taking any further action to obtain the appellant's views on the information. The Tribunal was also not required to invite the appellant to appear before the Tribunal as a result of the operation of s 360 of the Act. 30 On the Federal Magistrate's finding the decision is undoubtedly correct and the Tribunal proceeded in accordance with the provisions of the Act. 31 In any event, even if the appellant's evidence was correct and that on 30 May 2005 a request was made for more time, the Tribunal would still have been entitled to proceed as it did. The request for more time on 30 May 2005 did not comply with a request that comments be received within 28 days of 26 April 2005. The Judgment made by the Federal Magistrate Court on 23/7/07 was only based on the selective evidence provided by the Minister's representative. It has been a Jurisdictional error made by the Judge of the Federal Magistrate Court to make the judgment without further examining the phone call made to the appellant's agent in relation to the contents of the s.359A letter by MRT. It is clearly a jurisdictional error to make a judgment before all the evidence in relation to the case was carefully examined. 2. The evidence (fax record) provided by Ms White alone could not be used to support the finding of facts since there has been more evidence that could offset the evidence (the phone calls made to the migration agent of the appellant by the MRT officer in relation to the s.359 letter). 3. The Judge has completely ignored the appellant's witness for requesting MRT to provide phone call record as evidence to support her review application. This is another jurisdictional error made by the Federal Magistrate Court to deprive the appellant's right of cross examining the respondents' evidence. 4. The Judgment to pay $8.500 dollars is not in accordance with the Federal Court Rules. 5. It has been a Jurisdictional error for the Federal Magistrate Court not refer any legal aids program to the appellant. It is absolutely unfair for the Federal Magistrate Court to make the Judgment while the appellant has not any legal assistance in the court. There is no doubt some confusion on the role of the Federal Magistrate. The Federal Magistrate had before him the evidence of the appellant which was hearsay and the evidence of Mr Wang, which was also hearsay. On the other hand, he had the evidence of Ms White who had searched the relevant file and been unable to find the documents which were said to have been sent. 34 The Federal Magistrate was perfectly entitled to accept the evidence of Ms White and reject the hearsay evidence, especially where the hearsay evidence was not corroborated by the person who was said to have had the telephone call and independent documentary evidence which ought to have existed. 35 In any event, there is no question of the Federal Magistrate having committed any jurisdictional error. An appeal from the Federal Magistrates Court would lie even without establishing jurisdictional error. However, in this case, it was in my opinion clearly open for the Federal Magistrate to make the finding that he did. 36 It was contended by the first respondent's counsel that the Tribunal's conclusions are factual and not subject to review by either this Court or the Federal Magistrates Court: The Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259. That submission must be accepted. There can be no doubt that the Federal Magistrates Court and this Court has no jurisdiction to enter into the merits of administrative decision making. The merits of administrative decision making are for those who have the relevant power to make the decisions. 37 An administrative decision maker does not make an error of law by making a wrong finding of fact: Waterford v The Commonwealth [1987] HCA 25 ; (1987) 163 CLR 54 at 77; Abebe v The Commonwealth [1999] HCA 14 ; (1999) 197 CLR 510 at [137] . Insofar as the Tribunal concluded that there was no genuine spousal relationship, that was a conclusion of fact which is not subject to review by the Federal Magistrates Court or by this Court on appeal. 38 It is suggested that the Federal Magistrate should have issued subpoenas or made some other enquiries. Whilst the proceedings before the Tribunal were inquisitorial, by the time they came to the Federal Magistrate on judicial review they were adversarial. 39 It was for the parties to adduce whatever evidence they wished in support or contradiction of the claims presented. It was for the appellant, as applicant in the Court below, to present whatever evidence she wished to rely on. If she thought there was evidence available to her in the hands of the first respondent or the second respondent or some third party, she was entitled to endeavour to obtain that evidence for the purpose of submitting it to the Court. It was not for the Court, however, to run her case. 40 I do not accept that the Federal Magistrate was in error in failing to refer any legal aid program to the appellant. I am not sure what application was made by the appellant for legal aid and how it might have been provided by the Federal Magistrate or by the Federal Magistrates Court. In any event, the Federal Magistrate was under no duty to ensure that the appellant was provided with legal aid. 41 The question of costs was one for the Federal Magistrate in the exercise of his discretion. The amount is higher than normal but that is explained by the fact that this was the second proceeding in the Federal Magistrates Court and the costs include the costs ordered by Emmett FM on 28 February 2007. Given that Emmett FM originally ordered that the applicant pay the Minister's costs in the amount of $5,500 and that since then there has been an application to set that dismissal aside and the matter has also gone to a hearing today I am satisfied that the Minister's application for costs of $8,500 dating back to the commencement of these proceedings is reasonable and that the amount is a reasonable amount to award. Further, to the extent that it is necessary and for abundant caution I will set aside Emmett FM's order number 3 dated 28 February 2007 when her Honour awarded the Minister his costs up to that point. Nor, in my opinion, can there be any criticism of the Federal Magistrate's award of the sum of $8,500 in the circumstances explained by the Federal Magistrate. 44 In my opinion, there is no discernable error in the Federal Magistrate's reasons and the appeal must be dismissed. The appellant must pay the first respondent's costs. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | whether tribunal entitled to make decision without a hearing whether federal magistrate entitled to prefer evidence of one witness over another whether federal magistrate required to make further enquiries whether federal magistrate was under a duty to ensure that the appellant was provided with legal aid appeal dismissed. migration |
Today I have heard evidence from the respondent both on affidavit and in the witness box relating to the circumstances in which the contempts occurred and his current attitude in relation to the subject matter of those charges. The applicant accepts that the respondent is now complying with the orders made by Wilcox J on 15 December 2005 and as I understand he has complied since at least I gave judgment on 9 May 2006. Although the applicant has filed an affidavit of Ms Than on 16 May 2006 which refers to a Mr Dennis Henry Monamy, owning some property, the respondent is Dennis Alfred Monamy and no suggestion was made when the respondent was being cross-examined that he was the owner of any property. In his evidence the respondent has deposed to commencing work in around 1990 as a contractor with the applicant installing floor coverings on a regular basis. That relationship ended in around 1995 when he was unable to agree on further terms with the applicant. He said he began trading under the business name Simply Natural Floorcoverings in around 1995 and created a web site for that purpose. During the middle of 2005 the applicant and the respondent began a series of communications that ultimately led to the litigation and mediation in this court resulting in the orders made by Wilcox J on 15 December 2005. The respondent had legal representation in December 2005 when attending a mediation with mediators being registrars of the Court on 12 December 2005. His solicitor then was a Mr Leamey. Mr Leamey and the respondent according to the respondent's evidence, did not see eye to eye on how the mediation was to proceed and the respondent asserts that he was not fully comprehending of what the terms that were ultimately signed by him entailed or meant. He says that he signed the heads of agreement on 12 December 2005, in effect because, he would want me to accept, his solicitor told him to do so. In his affidavit he says that Mr Leamey during the course of the mediation left the room for a short time, returned and said to him words to the effect: 'They are not willing to budge. As I told you before if you do not sign this you may lose everything. ' The respondent then said that he signed the document but did not believe that by doing so it would be the end of the matter. The respondent asserted that the heads of agreement were, as he understood, the start of a process and that he intended to get advice from someone other than Mr Leamey. He then went to Murwillumbah in the early morning of 13 December 2005 and received emails from Mr Leamey concerning the formulation of the orders that were ultimately made. He emailed Mr Leamey on 14 December 2005 saying that he intended to seek alternative legal advice but that Mr Leamey responded to him telling him that it was too late and that he could not 'welch on the deal'. He asked Mr Leamey to stand the matter over but Mr Leamey the next day signed the consent orders which Wilcox J ultimately made. I am not in a position to adjudicate upon whether or not, when Mr Leamey signed the consent orders and agreed to the court making them, he was instructed to do so and I make no findings about that matter other than that at this stage I can only proceed on the basis that the orders are valid and binding on the respondent until they are set aside and that he was obliged to obey them from the time they were made. The respondent explained that he visited the registry shortly afterwards and sought advice as to how to obtain orders setting aside the orders made by Wilcox J. He then said he engaged new solicitors, Frankel Lawyers, to act on his behalf. They advised me I should expeditiously attend to separating the words "floorcoverings" wherever it appears on my web site. He said that on 13 March 2006 he was served with a motion for contempt and was very upset on receiving it because he could not understand that action in light of the fact that he had been moving as expeditiously as he could through his web site and had spent many weeks going through the process in an effort to comply with the orders. I saw the contempt application made by the applicant as just a further step by it against me in the proceedings which I thought were unjustifiable. I thought that if I challenge the source of the problem, being those infringement allegations, then the rest of the problem would also go away. The Senior Counsel who has been found for me through the New South Wales Bar Association has made the gravity of my conduct clear to me in forceful terms. I sincerely apologise to the Court for my conduct which I now understand was contempt. This is something I am deeply sorry about, not just because of the consequences to myself, but because I never intended, by any of my actions, to disobey the authority of the Court. I accept the apology that the respondent has proffered to the court, albeit belatedly but with the assistance of counsel who have appeared for him today pro bono. I am satisfied that I should proceed to convict the respondent on the four charges, being charges 6, 8, 9 and 11 which I found proved beyond reasonable doubt in my judgment of 12 April 2006. No argument was addressed to me that I should not convict him. In my opinion the charges involve conduct that was protracted and intentional and such as the court ought mark by convicting by reason of their objective seriousness. SUBMISSIONS ON PENALTY I am not satisfied that I have had fully explained in evidence the respondent's financial position. His affidavit contains a mere assertion that he lacked resources and cannot pay the applicant any money or afford legal representation. It is common ground that currently there is returnable before the Federal Magistrates Court an application by the applicant to make the respondent bankrupt for failure to comply with the order made by Wilcox J on 15 December 2005 that he pay the applicant $10,000. That matter is returnable before the Federal Magistrates Court on 13 June 2006 at which time the applicant intends to proceed to seek orders for the sequestration of the respondent's estate for failure to comply with the court order. It is suggested by the applicant that that circumstance should weigh with me in determining the penalty to be imposed and in particular whether the imposition of a fine might mark the court's disapprobation of the conduct of the respondent in a way that has no real impact upon him because the sequestration of the respondent's estate, were it to occur, would substantively suggest that, there being no money with which to pay, the fine will have no effect. The respondent accepts that there ought be an order for costs to be paid by him on an indemnity basis in respect of the proceedings up to the conclusion of the hearing on 12 April 2006. The respondent does not seek costs for 9 or 12 May 2006 notwithstanding his ultimate success today on charge number 2 with which both those days were substantively concerned. The applicant seeks some costs for those days on the basis that the respondent protracted the proceedings, as I think it may fairly be said he did, and by causing disruption through having said he required no one for cross-examination and then requiring both Ms Than and Mr Dowe to attend, which they did, on 12 May 2006. COSTS Doing the best I can it seems to me that in relation to the costs of the matter it would not be fair or appropriate to the parties to engage in a complex division up of the hearing time and efforts to bring the matter to hearing on 12 April 2006 if I were to try to segregate out the costs in relation to charge 2. While I recognise that the respondent did perhaps unnecessarily protract the hearing of charge number 2 at the end of the day he has ultimately succeeded on that, albeit on a legal ground perhaps not articulated by him which was certainly taken by senior counsel when he appeared today on the respondent's behalf. I think that the appropriate order I should make in relation to the costs is that the respondent pay on an indemnity basis the costs of the proceedings up until and including 12 April 2006 and the costs of today on a party/party basis, and the other costs of the proceedings on a party/party basis, except that there should be no order as to costs for the hearings on 9 and 12 May 2006 and the preparation for those hearings. PENALTY The question then arises as to what fine I ought impose on each of the counts that I have found proved and for which I have convicted the respondent. Charge 6 involved the use of the business name Simply Natural Floorcoverings with 'floorcoverings' as one word on the web site for a period that commenced at least on 19 January 2006 and continued at least to 2 March 2006, as I found in Natural Floor Covering Centre Pty Ltd v Monamy (No 1) [2006] FCA 518 at [37] and [38]. I am of opinion that that was conduct which was quite clearly against both the spirit of the heads of agreement and the terms of the consent orders. While I cannot take account of the heads of agreement in imposing penalty, I am entitled to have regard to the fact that the respondent had urged that the orders were ones that he did not believe he needed to obey within any particular time. The fact is that by 2 March 2006 he had applied to and succeeded in changing his business name to separate the word 'floorcoverings' into two separate words. It was plain, in my opinion, that that should have been done a long time before, at least no later than when he was served with a properly endorsed set of orders on 19 January 2006. I do not think that this contempt has been satisfactorily explained. It is appropriate that the court, in addition to requiring a payment of costs, should impose a penalty by way of a fine. In all the circumstances, I will impose a fine of $1500 for that breach. The next charge is charge 8, which has a cognate character with charge 6 in that Wilcox J's order number 4 required the respondent to change his registered business name to separate the word 'floor' from the word 'coverings' as two words. Again, for the period between 19 January 2006 to 1 March 2006, the respondent did not do so, and I am not satisfied that there is any good reason why he did not. In light of the fine that I have imposed for the contempt in respect of charge 6, I am of the opinion that an appropriate fine, having regard to the principle of totality, for the breach of charge 8 should be $500. In relation to charge 9, that from no later than 19 January 2006 to 2 March 2006 the respondent used the business name Simply Natural Floorcoverings with 'floorcoverings' as one word on his website, again I see this as having a cognate character with charges 6 and 8. And again, it seems to me appropriate that in light of what I have said before, I should impose a fine of $500 on that charge. Charge 11 involved the use of the HTML meta tag which I described in Natural Floor Covering Centre Pty Ltd v Monamy (No 1) [2006] FCA 518 at [41] - [47] . That conduct was engaged in between at least 1 March 2006, as I found ([2006] FCA 518 at [47]), and at least no later than 24 April 2006, which is the date Ms Than refers to in par 5 of her affidavit of 15 May 2006 as the date on which the disclaimer was noted by her to appear. The period to which I have regard in imposing the fine in respect of charge 11 should, I think, reflect most prominently the use of the meta tag in the period between 1 March 2006 and the date of my finding of guilt on 12 April 2006, which is a period of almost six weeks. In my opinion, this breach was quite flagrant, as I described in Natural Floor Covering Centre Pty Ltd v Monamy (No1) [2006] FCA 518. It was a deliberate attempt to evade the very clear order requiring an active communication by the respondent of the dissociation of his business from the applicant's. The use of the meta tag was calculated to avoid giving effect at all to the order. It was an attempt to disguise the very thing the order required be revealed: namely, the dissociation of the businesses. I do not accept any explanation that the respondent has sought to give of that behaviour. In the witness-box today he asserted that he had put the meta tag there knowing, as he said, that it would not be visible to the ordinary viewer of the webpage but that it might be seen in some web browsers. The reason he gave for putting the disclaimer in a meta tag, was that he thought that that was above the fold referred to in the order. For the reasons that I gave in Natural Floor Covering Centre Pty Ltd v Monamy (No 1) [2006] FCA 518 , the use of the words 'above the fold' makes no difference to the proper construction of the orders or the flagrancy of the evasion which the use of the meta tag involved. In my opinion, that behaviour was quite contumacious and deliberate, as well as being 'clever' in both senses of that word. I think I should mark the court's disapprobation of that conduct by imposing a fine of $2500. In reaching the view which I have expressed, at this stage tentatively, as to the appropriate fines to be imposed I have had regard to the nature and circumstances of each offence as I have outlined already. I have also had regard to the matters referred to, although I may not necessarily be required to do so, in s 16A of the Crimes Act 1914 (Cth) in relation to sentence. In particular, each of the offences is related to the others and forms part of an ongoing course of conduct which ultimately came to an end with the recognition that the respondent has now given that his conduct was wrong and in breach of the orders. The applicant has called no evidence of any damage it has suffered in relation to the breaches of the order. It is entitled, of course, to uphold the law by taking these proceedings but I am mindful that it is not suggested that there has been any substantive injury to the applicant in its business by reason of the breach. The respondent has shown contrition for the offence, although at a late stage and in circumstances in which, as I have set out, in his affidavit he recognises that what he did was wrong, having now had the benefit of legal advice. I am mindful that the respondent has hitherto not really co-operated with the applicant in dealing with the offences, although he has now complied with the orders. I think that the deterrent effect of the fines which I have suggested should be imposed will bring home, not only to the respondent, but to others that the court's orders ought be obeyed. I am mindful that the respondent has said that he is of limited means and there is some evidence to support that, although, as I have earlier indicated, he has not gone into great detail about those matters. Nonetheless, it seems to me that this is not a matter in which the only other relevantly available remedy which the court might have, namely that of imprisonment, would be appropriate in all of the circumstances. There is no suggestion that the respondent has any previous criminal history or history of contempt of court orders. He is a man of obvious intelligence and ability, being in appearance of middle-age, but apparently reasonably healthy physically and mentally. I am satisfied that he will take seriously the penalty that is to be imposed and that it will be of use in his rehabilitation. There is no evidence or other material before me that there is any family or dependent of the respondent who would be affected by the sentence imposed. I therefore do not need to have regard to that issue. Subject to hearing further from the parties as to the proposed penalties that I would impose and the time in which they might be paid, I think I should proceed to make formal orders. THE COURT DECLARES THAT: The respondent is not guilty of contempt of court as alleged in respect of order 2 made by Wilcox on 15 December 2005. The respondent is guilty of contempt court in that in breach of order 3 made by Wilcox J on 15 December 2005 in that since 19 January 2006 up to 2 March 2006 he used the business name 'Simply Natural Floorcoverings' (with 'floorcoverings' as one word) on his website. The respondent is guilty of contempt of court in that in breach of order 4 made by Wilcox J on 15 December 2005 he had from no later than 19 January 2006 up to 1 March 2006 failed to change his registered business name to 'Simply Natural Floor Coverings' (with 'floor coverings' as two words). The respondent is guilty of contempt of court in that in breach of order 4 made by Wilcox J on 15 December 2005 he had from 19 January 2006 up to 2 March 2006 used the business name 'Simply Natural Floorcoverings' (with 'floorcoverings' as one word) on his website. The respondent is guilty of contempt of court in that in breach of order 5 made by Wilcox J on 15 December 2005 he had from no later than 1 March 2006 up to 12 April 2006 failed to publish in the words drafted in the applicant's solicitor's letter to the respondent dated 22 February 2006, a disclaimer on his website that his business was not associated with that of the applicant in font size 12 on the first page of the webpage in a prominent position above the fold or at all. In respect of the contempt referred to in paragraph 3 above, the respondent be fined in the sum of $500. In respect of the contempt referred to in paragraph 4 above, the respondent be fined in the sum of $500. In respect of the contempt referred to in paragraph 5 above, the respondent be fined in the sum of $2500. The respondent pay the fines imposed in orders 6, 7, 8 and 9 on or before 29 May 2007 in default of which the District Registrar bring to the attention of a judge of the court the default of the respondent to comply with orders 6, 7, 8 and 9. The respondent pay the applicant's costs of the proceedings up to and including 12 April 2006 on an indemnity basis and, subject to order 11, the costs of and incidental to today's hearing on a party/party basis. There be no order as to the costs of and incidental to the hearings on 9 and 12 May 2006. | imposition of sentence individual guilty of multiple counts of contempt of court considerations relevant to penalty respondent apologised to court contumacious contempt where no injury to applicant financial position of respondent contempt |
When the matter was called this morning neither respondent appeared. I have before me in evidence letters from the Registry of the Federal Court to each of the respondents notifying them that the matters had been listed for hearing at 10.15 am today. Further, it is clear from the Court's file that the respondents were aware of the proceedings against them, as various documents have been filed presumably in anticipation of a hearing. The applicant requested that the matters proceed in the absence of the respondents, given the circumstances to which I have referred. In my view, it was appropriate to proceed in the absence of the respondents and the hearing therefore has taken place today on that basis. The applicant has filed helpful written submissions which summarise the applicant's basic position. In short, in each of the proceedings NSD 217 of 2009 (Deputy Commissioner of Taxation v Zdenek Simandl) and NSD 218 of 2009 (Deputy Commissioner of Taxation v Heather Jane Simandl) the applicant moves on a creditor's petition dated 14 August 2008. In each proceeding, the applicant, the petitioner, applies for a sequestration order pursuant to s 43(1) of the Bankruptcy Act . In each proceeding, the acts of bankruptcy upon which the petitioner relies are the failure by the respondents to comply with bankruptcy notices served on them, or to satisfy the Court of the existence of any relevant counter claim, set-off or cross demand. As the applicant's submissions note, such a failure is an act of bankruptcy under s 40(1)(g) of the Bankruptcy Act . The bankruptcy notice to the respondent in proceeding NSD 217 of 2009 (Mr Zdenek Simandl) was issued on 9 January 2007, whereas the bankruptcy notice addressed to the respondent in proceeding NSD 218 of 2009 (Ms Heather Jane Simandl) was issued on 20 February 2007. The applicant has read a number of affidavits and tendered documents in each proceeding addressing the matters required by r 4.06 of the Federal Court (Bankruptcy Rules) 2005 (Cth) and s 52 of the Bankruptcy Act . In proceeding NSD 217 of 2009, the affidavits of Matthew Ellsmore and Colin Stapley, sworn 12 December 2008 and 10 February 2009 respectively, establish service of the creditor's petition and other documents in accordance with an order of the Court of 19 November 2008 for substituted service. Further, the affidavit of Emma Whan sworn 25 May 2009 deposes to her search of the National Personal Insolvency Index. Finally, the affidavit of Joanne Clarke sworn 25 May 2009 deposes to the fact that each debt on which the applicant relies is still owed. These affidavits in proceeding 217 of 2009 satisfy the requirements of r 4.06 of the Federal Court (Bankruptcy) Rules and s 52 of the Bankruptcy Act . Consistent with the submissions of the applicant, it is immaterial that the affidavit verifying the creditor's petition which is annexed to the affidavit of Matthew Ellsmore refers to the respondent having failed within 21 days after service of the bankruptcy notice to pay the debt or make an arrangement to the applicant's satisfaction for payment of the debt, in circumstances where, in fact, by reason of orders made by Cowdroy J on 12 May 2009, the time for compliance with the bankruptcy notice was extended up to and including 5 May 2008. The reason that this is immaterial is, as the applicant submitted, the affidavit of Joanne Clarke in paragraph 5 deposes to the fact that the respondent failed to pay the debt claimed in the bankruptcy notice or to make an arrangement to the applicant's satisfaction for payment of the debt on or before 5 May 2008, being the time to which compliance with the said bankruptcy notice had been extended. I should also note in relation to proceeding NSD 217 of 2009 that the applicant filed notice of a constitutional matter, in accordance with s 78B of the Judiciary Act 1903 (Cth) and read an affidavit of Vivienne Inns sworn 20 May 2009 establishing service of the notice of the constitutional matter on the relevant Attorneys General, as well as any responses received. This was done by the applicant because documents filed by the respondent in the proceeding raised various constitutional issues, including issues concerning the jurisdiction of this Court to deal with the matter. In all of the circumstances to which I have referred, I am satisfied that in proceeding NSD 217 of 2009, r 4.06 of the Federal Court (Bankruptcy) Rules and s 52 of the Bankruptcy Act are satisfied. There is no reason that I should not make a sequestration order against the estate of the respondent in this proceeding. A similar position arises in relation to proceeding NSD 218 of 2009. The applicant read the affidavits of Matthew Ellsmore and Colin Stapley, sworn 12 December 2008 and 10 February 2009 respectively, establishing service in accordance with the orders for substituted service made by the Court on 19 November 2008. The applicant also read an affidavit of Emma Whan, sworn 25 May 2009, deposing to her search of the National Personal Insolvency Index, as well as an affidavit of Joanne Clarke sworn 25 May 2009 deposing to the debt, on which the applicant relies, still being owed. Consistent with the observations made above, the affidavit verifying the creditor's petition in proceeding NSD 218 of 2009 also refers to the respondent's failure to pay the debt or make an arrangement to the applicant's satisfaction for payment of the debt within 21 days after service of the bankruptcy notice. In accordance with the position in proceeding of NSD 217 of 2009 identified at [9] above, that is immaterial because Ms Clarke's affidavit in paragraph 5 deposes to that situation remaining the same as at 5 May 2008, being the time to which compliance with the bankruptcy notice had been extended by orders of Cowdroy J on 5 February 2008. In common with the position in proceeding NSD 217 of 2009, the applicant in proceeding NSD 218 of 2009 has given notice of a constitutional matter, in light of the documents filed by the respondents in anticipation of the hearing. The applicant has read an affidavit of Vivienne Inns, sworn 20 May 2009, setting out her compliance with the requirements for service in relation to the notice. In proceeding NSD 218 of 2009 it follows from matters to which I have referred that I am satisfied that there has been compliance with r 4.06 of the Federal Court (Bankruptcy) Rules and s 52 of the Bankruptcy Act . There is no matter arising which would indicate that it is inappropriate for me to make a sequestration order against the estate of the respondent who is the debtor in that proceeding and accordingly I so order. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | applications for sequestration orders bankruptcy |
The orders are in the nature of freezing orders. Order 25A rule 2 sets out the purpose of orders of that kind. The application is brought by the respondents to the proceeding and I shall continue to refer to them as the respondents. The applicants to the proceeding claim that they entered into three agreements with the respondents for the purpose of exploiting certain intellectual property interests and with a view to marketing, selling and installing modular accommodation units in Western Australia and the Northern Territory. There was a joint venture and a shareholders agreement which were entered into on 23 November 2007, and a rights agreement which was entered into on 19 December 2007. The applicants claim that they paid a sum of $1.7 million to the respondents in accordance with their obligations under those agreements. It is the applicants' case that the three agreements together constituted a "franchise agreement", which gave rise to a "franchise system" within the meaning of the Trade Practices Act 1974 (Cth) (the Trade Practices Act ) and the Franchising Code of Conduct which is a schedule to the Trade Practices Industry Code's Franchising Regulations 1998 . It is claimed by the applicants that Time 2000 Systems (Australia) Pty Limited was a franchisor and Time 2000 West Pty Limited was a franchisee. The applicants claim that the applicants became franchisees within the meaning of the Code. They claim that Embleton Limited and Mr Donovan, the fourth and fifth respondents to the proceeding, were associates of Time 2000 Systems (Australia) Pty Limited, within the meaning of the Code. It is the applicants' claim that the respondents breached the Code in not providing documents to the applicants as required by the Code. The applicants claim that there was a breach of s 51AD of the Trade Practices Act . The applicants seek various declarations in the proceeding but they also seek an order that the money paid by the applicants by the respondents be repaid to them. The respondents deny that the three agreements constituted a franchise agreement or gave rise to a franchise system. Alternatively, the respondents allege that at no time did the applicants request the relevant documents. They say the applicants were provided with such information as was necessary to make an informed decision. The respondents plead by way of further alternative an estoppel alleging that the applicants were not entitled to rely on any breaches of the Code or, in the alternative, they have waived any rights in relation to the Code. The applicants applied by way of notice of motion, for orders that Gemhall Holdings Pty Ltd (Gemhall Holdings) and Time 2000 Pty Ltd (Time 2000) pay the proceeds of the sale of property of those companies into an interest bearing account and that they be further restrained from disposing of the moneys in those accounts to the extent of $1.7 million which is the claim for damages brought by the applicants in the proceeding. The applicants also sought an order that the second to fifth respondents file affidavits disclosing assets owned by each of them to meet a judgment in favour of the applicants. Gemhall Holdings is the trustee of the Stephen Donovan Family Trust which is a discretionary trust, the beneficiaries of which include the respondent, Mr Donovan, his parents, any future spouse and child or children of Mr Donovan, any charity and any school body, institution corporation or foundation established for education purposes. Mr Donovan is named in the trust deed as the appointor. On or before 10 or 11 December 2008, Mr Donovan was the sole director and sole shareholder of Gemhall Holdings. Gemhall Holdings, at the relevant time, owned property at Level 1, 529 Chapel Street, South Yarra in the State of Victoria. Time 2000 is the trustee of a unit trust, the Diamante Trust, of which all units are owned by Gemhall Holdings. On or before 10 or 11 December 2008, Mr Donovan was the sole director of Time 2000. Time 2000 owns property at 291 Beaconsfield Parade, Middle Park in the State of Victoria. On or about 10 or 11 December 2008 Mr Donovan's then fiancé and now wife, was appointed a director of each of Gemhall Holdings and Time 2000. She was also appointed to replace Mr Donovan as the appointor under the Stephen Donovan Family Trust. Evidence was adduced before Besanko J that the property owned by Gemhall Holdings was advertised for sale by auction, the date of which was to be 11 December 2008. There was also evidence before Besanko J that the property owned by Time 2000 was advertised for sale seeking expressions of interest which were to close on 10 December 2008. It was undisputed before Besanko J that Gemhall Holdings and Time 2000 had each been paid $250,000 by the respondents' solicitors on or about 31 December 2007. The respondents adduced evidence that in October 2007 Gemhall Holdings had lent $310,000 to the respondent, Time 2000 Systems (Australia) Pty Limited (Time 2000 Systems) in a number of separate loans and that the payment of $250,000 on 31 December 2007 was a partial repayment of those loans. Evidence was led that in October 2007 Time 2000 also lent, in a series of loans, the sum of $310,000 to Time 2000 Systems and that, like in the case of Gemhall Holdings, the payment of $250,000 on 31 December 2007 was a partial repayment of those loans. It would seem to be undisputed that, as at the date of the hearing before Besanko J, if those loans had been made by Gemhall Holdings and Time 2000 the sum of $120,000 remained outstanding to those two entities. The respondents led evidence that Gemhall Holdings was required to sell its property in order to raise money to repay its mortgage, which was then paid until December 2008, but for which, it was said, Gemhall Holdings would be unable to pay beyond 2008 if the property were not sold. Gemhall Holdings and Time 2000 are not respondents to the proceeding and were not respondents at the time the matter came before Besanko J. Notwithstanding they were not respondents, the orders sought by the applicants included orders against those entities. Gemhall Holdings Pty Limited ACN 065 106 381 by itself, its directors, officers, employees, agents or otherwise be restrained until further order from disposing of or otherwise dealing with $1.7 million of the monies in the accounts referred to in order 1 and 3. Time 2000 Pty Limited ACN 079 316 224 is to pay the net proceeds of any sale or settlement of the property described in Victorian Certificate of Title Volume 8193 Folio 672, being the property situate at 291 Beaconsfield Parade, Middle Park in the State of Victoria into an interest bearing account, net of the amount used to discharge or reduce the sum secured under any existing mortgage on that property or the property referred to in Order 1, and net of the usual costs incurred in the course of sale, the details of which account are to be notified by an affidavit filed and served within seven days of settlement. Time 2000 Pty Limited ACN 079 316 224 by itself, its directors, officers, employees, agents or otherwise be restrained until further order from disposing of or otherwise dealing with $1.7 million of the monies in the accounts referred to in orders 1 and 3. Until further order, the Fifth Respondent is to notify the solicitors for the Applicants in writing of any proposed change in the shareholding or directorships of Gemhall Holdings Pty Limited or Time 2000 Pty Limited or any proposed change to the Appointors, trustees or beneficiaries of the Stephen Donovan Family Trust or the Diamanti Trust ten business days prior to the making of any such change. The Second to Fifth Respondents file affidavits within twenty-one days disclosing the assets available to each of them available to meet a judgment in favour of the Applicants. Until further order, the Fifth Respondent is to notify the solicitors for the Applicants in writing of any proposed mortgage or encumbrance, or proposed variation of an existing mortgage or encumbrance, of the assets available to Gemhall Holdings Pty Limited or Time 2000 Pty Limited ten business days prior to the making of any such change. The Second to Fifth Respondents pay the Applicants' costs of and incidental to the hearings on 12 and 19 December 2008, certified fit for Counsel. Except as provided in order 8, the costs of and incidental to the Applicants' Notice of Motion dated 5 December 2008 are reserved. The Second to Fifth Respondents, Gemhall Holdings Pty Limited and Time 2000 Pty Limited and the Applicants may agree in writing that orders 10 (a), (b) or (c) are to be varied. In that case the Second to Fifth Respondents must as soon as practicable file with the Court and serve on the Applicants a minute of a proposed consent order recording the variation signed by or on behalf of the Applicants and the Second to Fifth Respondents, Gemhall Holdings Pty Ltd and Time 2000 Pty Ltd, and the Court may order the variation of the order accordingly. Liberty to apply on short notice to vary or discharge this order. There be a directions hearing on Friday, 13 February 2009 at 9:30am. The respondents, with the exception of the first respondent (Time 2000 West Pty Limited), have applied for leave to appeal against those orders. As it happens it is only paragraphs 5 and 6 of those orders which affect the respondents. Paragraph 5 requires Mr Donovan to give the notice mentioned in the order. Paragraph 6 requires the second to fifth respondents to file affidavits disclosing the assets available to each of them to meet a judgment in favour of the applicants. On a directions hearing, prior to this hearing, on the application of counsel for the respondents and for Gemhall Holdings and Time 2000, I made an order joining Gemhall Holdings and Time 2000 as applicants to the application for leave to appeal. It seemed to me that they needed to be applicants to the application so that they could advance their contentions that those paragraphs of the order which affected them ought to be the subject of leave. No objection was taken to the joinder of the non-parties to the proceeding as parties to the application for leave to appeal. To avoid any doubt, I did not make any order joining them as parties to the proceeding as no order of that kind was sought by the respondents, Gemhall Holdings, Time 2000 or the applicants. Although paragraphs 5 and 6 of the orders are the only orders which affect the respondents, it was accepted on all parties' part that if paragraphs 1 to 5 and paragraph 7 were set aside on appeal, that paragraphs 5 and 6 would also have to go because there would be no reason for those orders to stand. The primary judge gave reasons for his decision. He identified the evidence which had been adduced by the applicants and the evidence adduced by the respondents. No complaint is made by the respondents and Gemhall Holdings and Time 2000 in relation to the facts which his Honour identified. In particular, no complaint is made that his Honour failed to have regard to any relevant fact or had regard to any irrelevant fact. Next, his Honour considered the law. He noticed that the Court had power under s 23 of the Federal Court of Australia Act 1976 (Cth) to make Mareva orders or, as they are referred to in the Rules, freezing orders, and he had regard to the decisions of the High Court in Jackson v Sterling Industries Limited [1987] HCA 23 ; (1987) 162 CLR 612 and Cardile v LED Builders Pty Ltd [1999] HCA 18 ; (1999) 198 CLR 380. He observed that the joint reasons of the majority in Cardile [1999] HCA 18 ; 198 CLR 380 raised a number of propositions. First, that an order should not be made against a non-party to a proceeding "where judgment has not been obtained or execution recovered or not holding, controlling or capable of disposing of the property of a party in that proceeding". Secondly, he observed the general proposition that the grant of freezing orders against a third party "is not limited to cases in which the third party holds, or is about to hold, or dissipate, or further dissipate property beneficially owned by the defendant in the substantive proceedings". In our opinion such an order may, and we emphasise the word "may", be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which: (i) the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including "claims and expectancies", of the judgment debtor or potential judgment debtor; or (ii) some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against that actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor. Whether the applicant has a cause of action against the third party. His Honour turned his attention to the resolution of the issues. He said that although neither party made detailed submissions on the question as to whether the applicants had a good arguable case, he was of the opinion that such a case existed. Issue was taken in relation to that holding by the respondents and Gemhall Holdings and Time 2000 on this application. They said that his Honour ought not to have found that there was a serious question to be tried. However, it is clear that the case which is raised by the applicants against the respondents will be determined upon a construction of the various agreements which, undoubtedly, were entered into by the parties. Although the respondents deny that those agreements amount to franchise agreements or give rise to a franchise regime, it cannot be doubted, I think, that as between the parties there is a serious question to be tried. His Honour addressed the question as to whether there was a danger that a prospective judgment in favour of the applicants against the respondents would remain unsatisfied or partly unsatisfied if recovery is restricted to the assets of those respondents. That proposition was criticised by Mr White, counsel for the respondents on this application. But I think that his Honour was merely considering whether there was any need for a freezing judgment at all because if there was not any risk that a prospective judgment against the respondents would remain unsatisfied, or partly unsatisfied, there would be no reason to make a freezing order against any non-party. I think there is nothing, with respect, in that criticism. His Honour concluded, however, that that submission was not fatal to the applicants' application. In my opinion, his Honour was right to approach the matter in the manner in which he did. First, to remind himself, as he did, that the respondent, Mr Donovan, has no proprietary interest in the trust assets of Gemhall Holdings or Time 2000. He was also right, in my opinion, to conclude that that was not fatal to the applicants' application. That follows, it seems to me, from the judgment of the majority in Cardile [1999] HCA 18 ; 198 CLR 380 and, in particular, at 401-402, and at [45]. His Honour also said it followed from the provisions of O 25A r 5(5) itself and, I think, in that respect, he was also right. In my opinion, that subrule supports the contention that it is not fatal to the applicants' application that Mr Donovan has no proprietary interest in the trust assets. It was said that his Honour posed for himself a test which was merely speculative and whether it was possible or not the event might occur was an irrelevancy. I think, without doubt, that the test which his Honour was addressing was the test which was referred to in Cardile [1999] HCA 18 ; 198 CLR 380 and in the Rules, and also in the cases to which his Honour referred. He concluded that there was a possibility that Mr Donovan may receive an interest under the Stephen Donovan Family Trust and, in those circumstances, he was entitled, notwithstanding the criticism made by Mr White, to conclude that orders ought to be made of the kind which were made. On an application of this kind an applicant must address the test laid down by the Full Court of this Court in Décor Corporation Pty Limited v Dart Industries (1991) 31 FCR 397. In that case, and in many cases subsequent to it, the Full Court of this Court and members of this Court have said that leave to appeal will only be granted if the decision from which leave is sought to appeal is attended with sufficient doubt to warrant the same being reconsidered and substantial injustice will result if leave were to be refused, supposing the decision to have been wrong. The two tests are cumulative in the sense that both must be established before leave ought to be given. In my opinion, the applicant has failed to satisfy the test that the decision from which leave is sought to appeal is attended with sufficient doubt. Moreover, in my opinion, the applicant has failed to satisfy the second limb of Décor 31 FCR 397. The second limb assumes that the decision is attended by doubt and the inquiry is whether substantial injustice would result if leave were to be refused. As I pointed out during argument, the orders which were made by his Honour require Gemhall Holdings and Time 2000 to pay the moneys which they receive on the sale of their property into an interest bearing account and to hold $1.7 million in that account until further order. The sum of $1.7 million, as I have said, is the sum of the claim by the applicants against the respondents. I was told on this application by both parties that, in fact, the properties which were advertised for sale and for expression of interest in December 2008 did not sell. In those circumstances, the orders in paragraphs 1 to 5 made by his Honour do not presently operate to inhibit Gemhall Holdings or Time 2000 at all. In those circumstances, they would suffer no substantial injustice, even assuming his Honour's decision to be wrong. Moreover, no prejudice to Gemhall Holdings and Time 2000 accompanies the making of the orders. There is no obligation on the part of Gemhall Holdings or Time 2000 to tell anyone of the existence of the orders. The only notification provision in the orders is that contained in paragraph 5 and that relates not to the assets of Gemhall Holdings or Time 2000 but to the constitution of the shareholding or directorships of those companies. There is a notification order in paragraph 7 that requires that Mr Donovan to notify the applicants' solicitors of any proposed mortgage or encumbrance or variation of any existing mortgage or encumbrance. There is, however, no injunction restraining Gemhall Holdings or Time 2000 from varying their existing borrowings or taking any further mortgages or encumbrances. In my opinion, because the orders presently do not in any way affect Gemhall Holdings or Time 2000, it cannot be said that those companies, which are applicants on this application, would suffer any substantial injustice by reason if leave were refused, even assuming the decision to be in error. Moreover, I do not think the respondents would suffer any substantial injustice by being required to file affidavits which would disclose the assets available to them to meet a judgment in favour, again, upon the assumption that the decision complained of was wrong. I do not think that would give rise to any substantial injustice on those parties' part. For all of those reasons, in my opinion, the application for leave to appeal should be dismissed. There will be an order that the respondents to the proceeding, except the first respondent, and the two additional applicants, Gemhall Holdings Pty Limited and Time 2000 Pty Limited on the application for leave to appeal pay the applicants' to the proceedings costs. I will discharge paragraph 6 of the order I made on 2 February 2009 and I will make an order extending the time within which the second to fifth respondents have to comply with the orders made by Besanko J on 19 December 2008 to Friday, 13 March 2009. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for leave to appeal freezing orders granted against non-parties to the proceeding pursuant to o 25a r 2 of the federal court rules principles to be followed in granting mareva relief against third parties primary judge addressed the correct test decision not attended with sufficient doubt to warrant it being reconsidered third parties would suffer no substantial injustice application dismissed. practice and procedure |
The taxpayer is a resident in Australia for the purposes of s 6-5 of the Income Tax Assessment Act 1997 (Cth). 2 In the 2005 and 2006 tax years the taxpayer received the respective amounts of $4,728,917 and $634,500. The monies were paid into a bank account in Australia in the taxpayer's name. The respondent Commissioner has assessed these amounts as ordinary income within the meaning of s 6-5(2) on the basis that they were administration fees to which the taxpayer was entitled as "Administrator" under a business scheme relating to "service warrants". The taxpayer, however, says that it received these amounts in its capacity as an agent, as first as an agent for the persons paying the monies and then as an agent for PPP. PPP agrees to pay the taxpayer "Commission" in accordance with terms previously agreed (cl 2.6). The taxpayer may appoint any solicitor, barrister, accountant or other professionally qualified person and incur "Collection Expenses" in the course of performing its obligations under the deed (cl 3.7) and may issue legal proceedings (cl 3.8). 6 The Collection Agency Deed recites in cl 2.1 that the taxpayer has been established to act as the "independent collection and administrative agent" to facilitate clients in Australia dealing with PPP. It is therefore "acknowledged" in cl 2.2 that the taxpayer will, as a necessary consequence of such a role, also be required to be the agent and attorney of persons in Australia seeking to acquire the services of PPP and have responsibilities to such persons until such time as PPP makes direction for payment. 7 Clause 4.2 provides for a "Collection Account". 8 Clause 4.2(b) and (c) have the effect that until a "direction" is given by PPP, funds in the account are held on behalf of the client and after such a direction they are held "on trust for" PPP. The taxpayer is to account to PPP in respect of all monies received each month within five business days of the end of the month and pay on direction of PPP within three days from such direction (cl 4.2(f)). 10 Clause 4.2(g) is important for the present case. They were to be in effect retailers of the warrants, although it was apparently contemplated that they might also pay for and use warrants themselves. Such an agreement, dated 2 June 2005, was in evidence. The Business Agent is in the business of providing professional services for cash and interests in causes of action and seeks to use the Pre-Paid Professionals Business Plan and business model to access service providers and service packages as a means of providing those services and seeks to develop and expand the business concepts by entering into its own specialised markets for professional services and litigation funding. B. For the purpose of administering the Business, the Business Agent wishes to engage the Administration Services of the Administrator and to appoint the Administrator as its Agent and attorney to undertake all the administrative issues necessary and convenient to conducting its business in accordance with the Business Agent's instructions SUBJECT ALWAYS that nothing said in this agreement removes or mitigates the overriding day to day control exercised by the Business Agent over the Administrator by the provision of instructions sought by the Business Agent. C. The Administrator is prepared to provide its Administration Services on the terms and conditions set out in this Agreement. 12 By cl 2.1.1 the Business Agent appointed the taxpayer as "Administrator of the Business". 13 Clause 5 provided for "Minimum Deposit Accounts". 14 By cl 5.2 the taxpayer "as Administrator of the Business shall pay, direct or disburse the full 15% amount as a part payment for the entire amount of pre-paid services irrevocably committed to by the Business Agent to (PPP)". 15 Clause 6 sets out the entitlement of the taxpayer to fees. It provides for alternative methods: a percentage of the value of warrants committed, or a percentage of "gross business income". 6.3 The Administrator may exercise an overlap election by electing to instead of receiving the fees it is entitled to in clause 6.1, to receive in substitution the administration fees in clause 6.4 and hence the fees in clause 6.1 have not arisen. 6.4 Upon the exercise of an election pursuant to clause 6.3 by the Administrator, the Administrator may instead be entitled as administration fees, to 30% of the gross business income from the proceeds of the endorsement of the service warrants. While its primary contention is that this question is irrelevant, the taxpayer contends in the alternative that there has been such an election. As with any new business, the owners face a real commercial risk. However, because of the strategic alliances that are set in place there already exists such a demand for services that will exceed the expectations of the business. Therefore, the owners can anticipate that they will sell all of their pre-paid contracts before the commencement of the next financial year. The business is professionally managed by PPPA who sells these services on behalf of the dealership or partnerships. PPPA will charge commissions but has undertaken in order to get your business going (and in anticipation of greater fees once it is growing) only to charge reasonable administration charges from profits. That is, to help you get started, PPPA will waive its administration fees if you do not make a profit. Mr Watkins came to Brisbane in May 2005 and worked there for about eight weeks setting up the taxpayer's business. 18 According to Mr Watkins' affidavit, the taxpayer would obtain powers of attorney from "clients" (presumably the "Business Agents") appointing the taxpayer their attorney for dealing with PPP. The taxpayer would collect funds and issue tax invoices for the receipt of funds by PPP. 19 Mr Watkins said in evidence that the number of Business Agents during the period he was working in Brisbane was "well into the hundreds". 20 The taxpayer maintained as the Collection Account an account with the Brisbane branch of HSBC. Statements of that account in evidence show on 2 August 2005 a debit of $3,628,118. 21 On the same day the sum of $3,584,000.09 was credited to PPP's Australian dollar account with the Auckland branch of HSBC. The taxpayer was identified as the source of that credit. The following day $3,580,022.46 was transferred from PPP's New Zealand account to the account of Atlas Trustee Limited, to be held on behalf of PPP. (That is on the assumption the Business Agent made a commitment to acquiring warrants; if it decided not to acquire any warrants there would be no obligation to pay anything). Once a commitment is made, the Business Agent is also obliged to pay the remaining 85 per cent; only 15 per cent however is required to be paid before the end of the financial year. 23 Turning to the Collection Agency Deed, counsel submitted that the effect of cl 4 was that when funds were received by the taxpayer from a Business Agent they were held by the taxpayer on the Business Agent's behalf. 24 The term "relevant fees" in cl 4.2(g) of the Collection Agency Deed, it was argued, does not denote the fees referred to in the Administration Agreement, which is an agreement between the taxpayer and the Business Agent. There was "just no linkage", counsel said. "Relevant fees" referred to the relevant collection expenses that the taxpayer was entitled to deduct. In any event, the taxpayer does not raise any issue as to the receipt of the funds which the Commissioner has assessed as ordinary income. 26 Given therefore that the taxpayer received the funds in question, has the taxpayer made out its case that it held the funds purely as agent on behalf of the Business Agent and then PPP? 27 If the taxpayer held funds to which, or to any part of which, it was beneficially entitled by way of fees or commission, it would pro tanto have derived ordinary income. It is not necessary for the taxpayer to have made some appropriation or earmarking of the funds to which it was entitled. Nor does it matter if for some reason such as mistake, or surprising generosity, the taxpayer in fact passed on all funds it received to PPP. 28 The taxpayer not having raised any issue as to whether the end of the financial year had arrived, the conclusion to be drawn is that the taxpayer became entitled to the administration fee specified in cl 6.1 of the Administration Agreement. By that clause the taxpayer was entitled to such fee as against the Business Agent. As against PPP the taxpayer was entitled to deduct the fee by virtue of cl 4.2(g)(ii) of the Collection Agency Deed. 29 The taxpayer has not raised any issue of apportionment of the monies received so as to distinguish between fee entitlements and the remainder. 30 The term "relevant fees" in cl 4.2(g)(ii) the Collection Agency Deed plainly includes the fees to which the taxpayer was entitled under the Administration Agreement. The two documents must be read together. They relate to the same business operation. They form part of the same legal and commercial landscape. Indeed cl 2.2 of the Collection Agency Deed explicitly refers to and acknowledges the relationship that the parties (PPP and the taxpayer) contemplate that the taxpayer will have with Business Agents. 31 As to election under cl 6.2 or 6.3 of the Administration agreement, there is simply no evidence of any such election being exercised on behalf of the taxpayer. None of the witnesses called by the taxpayer said there had been any election. Such an election would have to be communicated to the Business Agent. Clause 20.1 of the Administration Agreement requires any "notice or other communication" connected with this agreement to be in writing. Methods of service --- pre-paid post, fax or delivery --- are provided for: cl 20.2. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. | united states corporation carried on business of selling warrants which entitled bearer to pre-paid professional service taxpayer acted as agent of us corporation and also provided administration services to "business agents" who retailed such warrants taxpayer collected monies from business agents and on-forwarded same to us corporation taxpayer entitled to fees from business agents whether amounts received from business agents constituted ordinary income of taxpayer taxation |
I will refer, in these reasons, to the land and buildings there as "Subiaco Oval". CSA markets corporate hospitality packages in conjunction with major sporting events. The ARU is the peak body administering Rugby Union in Australia, and is responsible for organising and promoting the Perth Test. It issues all tickets for the Perth Test. CSA in its application refers to this as the SFC Contract. For ease of understanding I will do likewise but this should not be taken as an acceptance that the relationship, in this respect, between CSA and the SFC is contractual as distinct from a mere arrangement. It is a condition of the SFC Contract that the SFC not provide any of those tickets to CSA ("the SFC Contract Condition"). The SFC had, however, in early November 2007 agreed to sell to CSA a minimum of 125 of its hospitality packages, each of which includes a ticket for the Perth Test. The SFC did not at that time have any tickets but reasonably expected that in due course it would obtain some from the ARU. CSA, it appears, has sold these tickets to corporate clients as part of its own hospitality packages. It is a wide-ranging challenge to the way that the ARU conducts its business. However the application for urgent interlocutory relief concerns only s 45 of the Act . In short, CSA alleges that the SFC Contract Condition is an exclusionary provision and is a contravention of s 45(2)(a)(i) and s 45(2)(b)(i) of the Act . It further contends that the SFC Contract Condition would have or is likely to have the effect of lessening competition in contravention of s 45(2)(a)(ii) and s 45(2)(b)(ii) of the Act . 4 The application for urgent injunctive relief arises in the following circumstances. The ARU insists upon the SFC observing the SFC Contract Condition. If some, or all, of the 125 tickets sold by the SFC to CSA were, in turn, to be provided to corporate clients of CSA the ARU would either cancel them or, in any event, would not recognise any right in the ticket-holders to be admitted to the Perth Test. The second of these alternatives, it seems, is because of conditions attaching to each ticket which, if breached, would result in the automatic termination of the conditional licence of the ticket bearer to be admitted to the Perth Test. Such termination entitles the ARU, in its discretion, to deny admission to the bearer of the ticket. I will refer to this in more detail below. There is also some evidence that the ARU has notified some of CSA's clients that CSA has no entitlement to supply tickets to the Perth Test. 5 The interlocutory relief sought by CSA addresses each of these matters. This decision, in its application to this case, is to the effect that each ticket comprises a licence from the ARU to the bearer for admission to Subiaco Oval for the purpose of watching the match, in consideration of payment of the ticket price. The case did not concern s 45 of the Act . The ARU has the right to deny admission if the licence has terminated. 8 The Ticket Condition prohibits the resale of the ticket at a premium, that is, at a price higher than the amount for which it was sold by the ARU, as well as use of the ticket for commercial purposes, without the prior written permission of the ARU. If the condition is breached, the ARU is entitled to deny admission to any bearer: Hospitality Group at [103]-[105] and [136]. 9 There is an immediate and direct relationship between the Ticket Condition and the SFC Contract Condition. The SFC Contract Condition amounts to a pre-emptive refusal on the part of the ARU to give permission to the SFC to use the tickets to be provided under the SFC Contract for commercial purposes by way of supplying them to CSA. Such permission under the Ticket Condition is necessary before tickets can be used for commercial purposes. The use of tickets for commercial purposes without such permission constitutes a breach of the Ticket Condition. 10 The written evidence of Mr Eddie Moore, Head of ARU's Operations, as to the justification for the Ticket Condition and its enforcement by the ARU, is to the following effect. It is to ensure that the purchaser of a ticket to the Perth Test or any Rugby Union test match does not pay more than the face value price appearing on the ticket. This objective is consistent with the ARU's responsibility to promote and advance the sport of Rugby Union because it maximises public access to Rugby Union tests through the various channels available to a wide cross-section of the public. In addition, the Ticket Condition assists the ARU in protecting an important revenue stream from the sale of hospitality packages which is in turn invested into the Rugby Union game. These packages vary in price, type of function and feel. The ARU tries to have a cross-section of these available for each game. They usually include premium tickets to the match, pre-match and post-match hospitality, guest speakers and general entertainment. The ARU sells these hospitality packages both directly and through official hospitality agents. 12 The ARU uses official hospitality agents to help it sell off-site hospitality packages. This means that the people attend the hospitality function at a venue adjacent to or near the stadium and then travel a short distance to the stadium to see the game. The current official hospitality agents for ARU events in Australia are, International Quarterback Pty Limited, Match Point, MBM, and Southern Cross Sports Marketing. 13 Historically official hospitality agents have been paid a commission based upon a profit share with the ARU. 14 The ARU sells on-site hospitality packages, known as "Platinum Plus Dining", without the assistance of its official hospitality agents. In 2008, there has been a change to this arrangement. Official hospitality agents are now offered, in addition to off-site functions, an opportunity to sell the Platinum Plus Dining packages. In this case, official hospitality agents are to receive a flat rate commission on these sales, rather than a commission based upon a profit share. 15 The agents, under the terms of their agency requirements are obliged to deposit into a nominated bank account, established in the name of the ARU, all money received from purchasers of hospitality packages. These agreements also require the agent to procure the signing of the ARU's Rugby and Hospitality Terms and Conditions by the purchasers of hospitality packages. It is clear from the agreements and these Terms and Conditions that the contract for the sale of the packages, including the ticket, is between the ARU and the purchaser of the package. 16 Previously, CSA was an official hospitality agent of the ARU in the period to 30 September 2007 pursuant to a written agreement dated 23 December 2005. This agreement and the agency thereby created, terminated on 30 September 2007. Since 30 September 2007, CSA has ceased to be authorised by the ARU to provide services as agent to the ARU in connection with hospitality events associated with Rugby Union test matches, including using tickets for such hospitality events. 18 In order to provide tickets to the Perth Test in connection with its hospitality packages for its corporate clients, CSA entered into an agreement with the SFC in November 2007 to purchase a minimum of 125 hospitality packages, which includes a ticket to the Perth Test, for $280, subject to variation, for the years 2008-2010. Its agreement with the SFC to acquire these tickets was for its own commercial purposes. This was done without the knowledge or approval of the ARU, which CSA knew was contrary to the Ticket Condition. 19 The SFC is a local Australian Rules football club which enters a team in the West Australian Football League. The Western Australian Football Commission ("WAFC") is the lessee of and manages Subiaco Oval. The ARU have an agreement with the WAFC which provides access for the ARU to the Subiaco Oval grounds and certain facilities. The SFC is the sub-lessee of part of Subiaco Oval. SFC has in the past assisted the operation of ARU matches by granting the ARU access to the SFC's locker room and car parking facilities. Historically the ARU has in return made 200 to 300 tickets available to the SFC for the rugby test matches held at Subiaco Oval. This arrangement, it appears, was partly in lieu of rent for the use by the ARU of the SFC facilities. 20 The expectation of the SFC was that it would receive tickets from the ARU for its members including corporate clients to attend the Perth Test. These tickets would form part of hospitality packages for an associated SFC hospitality event in the President's Room at Subiaco Oval. These packages have been made available by the SFC for the past seven rugby seasons. They are less expensive than the ARU hospitality packages. 21 CSA's intention was not to on-sell the SFC hospitality packages. I infer from this that CSA had, in effect, agreed to acquire the 125 tickets from the SFC at a significant premium which is a further breach of the Ticket Condition. CSA has put together its own corporate hospitality packages. These include a ticket to the Perth Test and amongst other things, a three course "silver service dinner", different speakers, entertainment and service. It appears that the pre-match functions for both the CSA and the SFC will be held in the same venue, though they have been advertised as the "Presidents Room" and the "Presidents Lounge" respectively. The packages organised and priced by CSA have not been subject to the control of the ARU. These have been marketed in packages for ten guests at $9,900 + GST, that is $990 + GST for each package. 23 By a letter dated 21 December 2007, the ARU notified WAFC that it would not provide SFC tickets for the Perth Test. This meant that the SFC would not be able to provide tickets to the CSA pursuant to their contract of November 2007 and that, in turn, CSA would not be able to provide any corporate packages for the Perth Test or tests in 2009-2010. SFC now clearly understands that ARU does not want us to deal with CSA. SFC has taken action in that regard...". The WAFC confirmed this outcome in a letter dated 18 April 2008 sent to the SFC. It set out the terms on which the tickets would be supplied and in particular a term that tickets were not to be supplied by the SFC to CSA. Note --- SFC has some 2500 members, of which approx. 900 are children) - SFC will provide ARU with a list (attached) of our corporate clients who purchase AFL hospitality. If ARU has any concern with any of these companies please let me know asap. - No advertising of the availability of these tickets will occur outside our membership database. - Members will be advised of the tickets availability via our website www.subiacofc.com.au and corporate clients will receive via email a flyer (attached). - Tickets are not to be provided to Corporate Sports Australia. 27 CSA, in its statement of claim, characterises the SFC Contract Condition, that the tickets not be supplied to CSA, as a "Re-sale Condition". CSA in its statement of claim pleads [34] that the Re-sale Condition is an exclusionary provision for the purposes of s 45(2)(i) of the Act in that the SFC and the ARU are competitive with each other in the provision of corporate hospitality services in respect to international rugby union test matches in Western Australia and the effect of the Re-sale Condition is to restrict or limit the supply of tickets in conjunction with corporate hospitality. I take it that in its pleading CSA intended to refer to s 45(2)(a)(i) of the Act . 28 They plead further and in the alternative that if ARU gives effect to the Re-sale Condition it will give effect to an exclusionary provision for the purposes of s 45(b)(i) of the Act . I take it that this provision pleaded at [35] is meant to refer to s 45(2)(b)(i) of the Act . 29 It is then pleaded that the Re-sale Condition is a restrictive trade practice for the purposes of s 45(a)(ii) of the Act in that it has the purpose of substantially lessening competition in the Perth market. Again I take this provision pleaded at [36] as intended to refer to s 45(2)(a)(ii) of the Act . 30 Further and in the alternative it is said that if the respondent gives effect to the Re-sale Condition it will be engaging in restrictive trade practices for the purposes of s 45(2)(b)(ii) of the Act . 31 CSA also pleads that the ARU has threatened to rely on the Ticket Condition to cancel any tickets to the Perth Test sold to it by the SFC whether in conjunction with the President's Room packages or otherwise. It pleads that if the ARU were to do this it would be engaging in restrictive trade practices for the purposes of s 45(2)(b)(ii) as the ARU would be giving effect to the provision of the contract and that provision has or is likely to have the effect of substantially lessening competition. Section 4D , the relevant part of which is set out below, defines what amounts to an exclusionary provision for the purposes of the Act . In turn it involves a consideration of whether the relevant parties are competitive with each other. 35 The ARU says that CSA's submission that there are only four suppliers of corporate hospitality for international and national sporting events in Perth is not supported by the evidence. It submits that apart from the issue of whether the ARU competes with Matchpoint or any other of its authorised suppliers of hospitality and SFC, CSA's submission does not take account of the suppliers of hospitality for golf, air racing, AFL, rugby league, provincial (Super 14) rugby union, basketball, cricket, soccer, horse racing, bike riding and motor sport (touring car racing and speedway racing) and yet all of these events and associated hospitality services occur in Perth. This submission is based upon the documents contained in the ARU's Tender Bundle to which I refer below. By virtue of s 45(3) "competition" for the purposes relevantly of s 45 means competition in a "market". 37 CSA alleges that the market for the purposes of the operation of the Act , is and was, in respect of the Perth Test, the market in which the respondent supplies or is likely to supply Rugby Union test match tickets for re-sale in conjunction with corporate hospitality packages. It was pleaded that, with respect to the Perth Test, the market is the market for corporate hospitality packages to international sporting events held in Western Australia alternatively, corporate hospitality packages to international events including international cultural events held in Western Australia. 38 CSA sought to read the affidavit of Dr Raymond Peter Challen affirmed 10 June 2008. There was a challenge to the receipt of this affidavit, on the basis that it purports to be expert evidence in chief which was not provided for in the pre-trial directions, and in the urgent circumstances in which the matter has been brought on for hearing, the ARU has had no opportunity to obtain any expert evidence on market issues including by way of response to Dr Challen. CSA had offered to delay the hearing of its interlocutory application to enable the ARU to put on responsive material. This offer was not taken up. 39 I do not think that even had an adjournment been allowed to attempt to enable that to occur, that it could have been done. Dr Challen's evidence is itself only provisional. It is highly unlikely, I think, that the necessary investigations required in order to establish the facts upon which a final opinion might be expressed, could have been done in the time available. I am prepared nonetheless to receive Dr Challen's affidavit. I will also receive the ARU's Tender Bundle which contained material which it says is relevant to the market question. 40 In light of Dr Challen's evidence and for the purposes of these interlocutory proceedings, CSA contended that the market should relevantly be taken to be on a prima facie basis the Perth metropolitan market for prominent international and national sporting events for the sale of corporate hospitality packages. 41 Dr Challen deposed that this is the most likely market. That opinion however needs to be considered in context. Dr Challen said that the definition of the relevant market, in the circumstances of the proceedings commenced by CSA against ARU and as relevant to the meaning of "competition" under s 45 of the Act , is a matter of empirical fact that can only be determined by studies of the preference and behaviours of the producers and consumers of corporate hospital services. Dr Challen had not had the time to undertake the necessary studies and accordingly had not formed a definitive view as to the relevant market. His opinion extends only to what he considers to be the likely outcome of such empirical studies. 42 The ARU denies that the market is as contended for by CSA. It points to the public documents in its Tender Bundle which it submits tend to show that the pleaded markets are unsupportable. This material, it submits, suggests that, leaving aside geographical issues, there may arguably be a market for hospitality packages but for a plethora of events, sporting and cultural, in which the ARU does not operate at all. It says that any analysis of market in the present case needs to consider the facts relating to the smorgasbord of national sporting and other events in which corporate hospitality services are provided, in particular AFL events where "home" and "away" corporate hospitality is provided by Perth based teams, as well as AFL teams in other States. It submits that CSA's evidence including Dr Challen's affidavit, its pleadings, submissions and case generally, in relation to markets, fail to address these issues. 43 The ARU submits that the documentary evidence reveals that there will be significant substitutability between corporate hospitality packages for Rugby Union test matches in Perth and many other events in Perth and interstate including national sporting events such as AFL games and cultural events such as ballet, musicals and opera. It submits that CSA has failed to establish, even on a prima facie basis, that any purchaser might only purchase corporate hospitality packages for Rugby Union test matches or other international sporting events in Perth. It says that even if this was the case, it would not prove the existence of the pleaded markets for corporate hospitality packages in international sporting or other events, as it would be necessary to show that this was the case for quite a substantial number of purchasers of such packages and that the ARU was able to discriminate against those purchasers. There is, it says, no evidence of this. 45 The requisite strength of the likelihood or probability which will be sufficient depends upon the nature of the rights asserted and the practical consequences likely to flow from the orders sought: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618 at 84 per Gummow and Hayne JJ. 46 Here the grant of the interlocutory injunctions sought would amount, in practical effect, to final relief in respect to the s 45 case at least so far as the Perth Test is concerned. In my opinion, there are serious issues to be tried in relation to the various elements which arise on CSA's s 45 case. Accordingly the balance of convenience now requires to be considered. 48 The following reasons should be read as stating my provisional view only as to matters of both law and fact, on the evidence available, as a way of evaluating the strength of CSA's case. In my opinion CSA has not discharged its burden in relation to its claims for interlocutory relief in respect to s 45 for a number of reasons. 49 First, I think that CSA's case that the SFC Contract Condition amounts to an exclusionary provision in contravention of s 45(2)(a)(i) of the Act has a very low prospect of success. The SFC Contract Condition complained of concerns the supply of tickets to CSA. The ARU and the SFC are not, for the reasons following, it seems to me, competitive with each other in relation to the supply of tickets for the Perth Test. Accordingly the threshold requirements for an exclusionary provision under s 4D(1)(a) and (2) of the Act are unlikely to be established. 50 The provision of the tickets by the ARU to the SFC arises in this way. The SFC receives certain tickets from the ARU by reason of the historical and ongoing support facilities provided by the SFC and its members to the ARU when rugby tests are played in Perth. The SFC has obtained the approval of the ARU to use the tickets provided by it for its own commercial purposes or to enhance the demand for other goods and services in respect to hospitality packages at Subiaco Oval on the evening of the Perth Test. The approval however is limited to such use related only to members of the SFC. This approval was obtained in accordance with the Ticket Condition. 51 Each ticket comprises a contract between the ARU and the purchaser of the ticket. The SFC is prohibited from advertising these for sale outside of its membership database. The correspondence to which I have referred between the WAFC and the SFC and between the SFC and the ARU speaks in terms of the "providing" or "issuing" of tickets by the ARU to the SFC for sale to its members. I consider that the likely characterisation of the relationship between the ARU and the SFC for the supply and sale of these tickets is one of agency. 52 CSA it would seem implicitly acknowledges this to be the position at law. Indeed it seems that CSA accepts that it also, so far as concerns the on-sale of the tickets, is acting as agent for the ARU. Condition 6 of its hospitality package sales contract entered into with corporate clients for the Perth Test expressly provides that in respect to the tickets which form part of the package, CSA acts only as agent between the client and the principal organisers of the event (the ARU) and that the client agrees to be bound by any terms and conditions that apply to the issue of the tickets. These are the tickets which CSA has contracted to acquire from the SFC. 53 However, CSA contends that the ARU and the SFC are in competition with each other not only in respect of tickets but also in the supply of hospitality packages and that the SFC Contract Condition relates in a derivative sense to hospitality packages. The SFC Contract Condition, it submits, is not referrable merely to tickets but rather to tickets as key ingredients of hospitality packages. It was this, according to CSA, which was the real substance of the SFC Contract Condition: a condition that CSA not be supplied with those key ingredients. Viewed in this way, CSA submits that the requirements of s 4D of the Act are met. 54 No doubt this gives rise to a serious issue. As matters stand I consider the analysis which I have set out above to be the better view, namely that the relationship, however it may ultimately be characterised relates only to the supply of tickets. 55 Second, the ARU submits that even if the ARU does supply SFC with tickets in SFC's capacity as principal, the ARU does so on condition that SFC will not re-supply those tickets except to a limited extent, being to members and specified clients: s 47(2)(f) of the Act . However, by operation of s 47(10) the prohibition on exclusive dealing will not apply to such an arrangement. It submits that by operation of s 45(6) , the prohibition against exclusionary provisions in s 45(2)(a)(i) does not apply to the alleged provision in ARU's arrangement with SFC: Visy Paper Pty Limited v ACCC [2003] HCA 59 ; (2003) 216 CLR 1 at [29] - [35] . 56 There was less than full argument on this submission. It is arguably correct. CSA did not persuade me that it was wrong or likely to be wrong. This is principally because it again would involve my being satisfied, to the necessary degree, that there was a substantial lessening of competition. For the following reasons I cannot be satisfied as to that. 57 Third, I have not been persuaded to the necessary degree of the likelihood that there has been the substantial lessening of competition in an identified market arising out of the arrangements between the ARU and the SFC or through the enforcement by the ARU of the Ticket Condition in contravention of s 45(2)(a)(ii) or (b)(ii) of the Act . 58 I am, in this respect, not able to be satisfied, to the requisite degree of satisfaction, as to the existence of the asserted market. The evidence does no more than identify serious issues to be tried going to the question of market including the associated concept of substitutability. 59 Furthermore, s 45(2)(a)(ii) and (b)(ii) require a consideration of "purpose". It is the subjective purpose of the ARU in seeking to enforce both the Condition in the SFC Contract as well as the Ticket Condition, which is relevant: News Ltd v South Sydney Football Club [2003] HCA 45 ; (2003) 215 CLR 563 at [18] . 60 I think it more likely than not that the ARU's subjective purposes are as deposed to by Mr Moore, which broadly, is to promote Rugby Union in Australia and to ensure that all members of the public are given equal access to rugby tickets so far as possible. I do not think it likely that the purpose was, as CSA contends, to "lock-out" CSA from supplying corporate hospitality at the Perth Test match. 61 CSA submits that it cannot be adequately compensated by an award of damages because it has entered into contracts to supply the tickets to third parties and without the aid of the Court it will be unable to supply these tickets. It says this will cause damage to its reputation which is incapable of accurate assessment and will also cause a windfall to the ARU by securing to itself, the SFC or to Matchpoint a transfer of the customers who would otherwise seek corporate hospitality packages from it. It also submits that there is no evidence that these third parties will be adequately accommodated or dealt with in a manner suitable to them. 62 It is relevant to consider the reasons why these third parties find themselves in this position. Paul Nash of CSA in his email of 22 October 2007 to Mr Matt Brand at the ARU made it clear in effect that it was not financially viable for CSA to continue its relationship with ARU. The ARU wrote a letter to CSA stating that ARU's contract with it had ended because its term had expired. The letter stated expressly, if it were necessary, that CSA's entitlement to market or sell hospitality functions packaged for rugby test match tickets and its rights to associate with ARU was at an end. However on 6 November 2007, CSA's agreement with the SFC to acquire a minimum of 125 packages for international rugby union test matches to be played at Subiaco including the Perth Test was confirmed in a letter from CSA to the SFC. The ARU did not know at that time that this had occurred. 63 Despite this, CSA, no doubt advisedly, decided to challenge what counsel for CSA described as the ARU business model. The challenge, as I have indicated, goes well beyond the immediate s 45 case in respect of the Perth Test. These proceedings are the manifestation of that decision. It was unnecessary in my opinion, in order to pursue such challenge, for CSA to enter into contracts with its corporate clients for the supply of hospitality packages, including tickets, for the Perth Test. The proceedings might simply have sought declarations without deliberately involving third parties. The proceedings could also have been instituted as early as November last year when CSA and the ARU terminated their contractual relationship, if it had wanted to obtain relevant discretionary relief in time for the Perth Test. There has been an unreasonable delay on the part of CSA in bringing this application. I would, for that reason alone, have refused to grant the relief sought: Carlton & United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1978) 76 ALR 633 at 638-9. 64 Further it is clear that when CSA entered into its contract with SFC for the acquisition of packages in order to access tickets, at a significant premium, for its own packages, it was aware that this was a contravention of the Ticket Condition. 65 The position of the purchasers of corporate hospitality packages from CSA is of course regrettable. However, there is a consideration which outweighs their personal position. In my opinion, a Court should be alert not to give weight to circumstances, deliberately and unnecessarily created by the moving party, which were then sought to be relied upon as a relevant ingredient in the consideration of the balance of convenience. I consider this to be so, even where it involves third parties. There may be occasions when, despite the wilful nature of the moving party's conduct that the position of third parties will nonetheless be a determining factor. This is not such a case. 66 The ARU made open offers to CSA to resolve the dispute on 12 and 30 May 2008 and 13 June 2008 the effect of which is that the ARU has offered to make available to CSA, tickets to the Perth Test in sufficient numbers to accommodate the members of the public to whom CSA has allegedly contracted to provide corporate hospitality services for these events. The ARU would also permit CSA to host corporate hospitality functions using those tickets in connection with the Perth Test in consideration of payments to the ARU equivalent to those which would have been payable by CSA if it had entered into the agency agreement proffered by the ARU. 67 By these offers the ARU submits that it has addressed any prejudice to the interests of third parties together with any alleged loss to CSA not compensable by damages. The difficulty with this submission is that the last and therefore, as I was told, the only presently effective offer contains a term which, upon acceptance of the offer by CSA, would require it to discontinue the present proceedings. Its refusal to accept the offer is understandable in the circumstances. 68 Nonetheless the ARU has advised CSA in writing that it has put aside 125 corporate hospitality packages at its "Gold Dining", Kitchener Park function for purchase by CSA clients who are said to have purchased packages from CSA for the Perth Test. The Gold Dining packages retail through the ARU's official hospitality agent for $825 inclusive of GST. These tickets are to be put aside until the determination of this interlocutory application or until the day of the Perth Test if necessary. This, whilst perhaps not ideal from the perspective of the third parties, nonetheless will ensure that they have access to corporate hospitality packages for the Perth Test. 69 This also addresses CSA's concerns, to an extent, as to its reputation, although as I have said, its commercial predicament is of its own making. Furthermore, it will still be able to prosecute its claim for damages. 70 The ARU submits that if the interlocutory injunctions are granted and it is unable to enforce the Ticket Condition, its losses, comprising the undermining of its objectives, to which I have already referred, will not be compensable in damages. This consideration, in my opinion, tends strongly in favour of the ARU on the balance of convenience. CSA should pay the ARU's costs. I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | interlocutory injunction to restrain respondent from enforcing condition of a contract or arrangement with non-party for supply of tickets for rugby union test match in perth condition prohibiting the provision of tickets by non-party to applicant whether serious issues to be tried condition alleged to be contravention of prohibition against exclusionary provisions in contract or arrangement condition also alleged to have purpose of substantially lessening competition trade practices act 1974 (cth) s 45 final relief in effect balance of convenience evaluation of strength of applicant's case interests of third party purchasers of tickets from applicant. exclusionary provision competition lessening of trade practices act 1974 (cth) s 45(2)(a) and (b). practice and procedure trade practices |
The appellant sought in those applications to have the decisions varied by allowing the objections to the extent of reducing the taxable income for each year to $392,183.00, $199.00, and $7,260.00 respectively by the remission of all additional tax and the re-calculation of the Medicare levy in each year. On 5 July 2006, the Full Court of the Federal Court (Dowsett, Allsop and Edmonds JJ) allowed the appellant's appeals in part: Pearson v Commissioner of Taxation [2006] FCAFC 111. The judgment of Edmonds J (with whom Dowsett and Allsop JJ agreed) said concerning this issue: On the hearing of the appeal, Senior Counsel for the appellant accepted that [22] and [92] accurately reflect what his Honour was asked to do. He also accepted, although as it subsequently transpired he should not have, that no submission, written or oral, was put below as to the absence of a basis for recklessness and moreover, that he did not even draw his Honour's attention to the allegedly live question of additional tax. He said that the matter was raised as an issue in the initiating application to the Court, although it seems it was not raised as an issue in the statement of facts, issues and contentions filed by the parties as part of the interlocutory processes. If these were the only facts then, in my opinion, by the time the case came on for hearing before his Honour below, the issue of additional tax was no longer a live discrete issue; it may have remained an issue in name, but only on the basis that it stood or fell by reference to the outcome of the substantive issue. While, on the hearing of the appeal, Senior Counsel for the appellant did not accept this view of the matter, he did accept that it would be more appropriately framed as an application for leave to agitate the issue rather than as a challenge to his Honour's disposition of the matter. I tend to agree and on those facts and concessions, I would not be prepared to grant leave. The transcript of closing submissions of the trial of the matter, make it plain that it was contended for the appellant that there had been neither recklessness on her part, nor hindrance of the Commissioner on her part. Hence the remission to me to enable discrete findings concerning additional tax to be made, independently of the substantive issues in the appellable objection decision applications. Consent orders were made for the filing of submissions, and the matter was to be determined on the papers. Written submissions by the appellant and the Deputy Commissioner of Taxation were filed in accordance with those directions, but at that time, the matter was not recorded as "judgment reserved" and remained recorded in the Casetrack as "adjourned pre-hearing". For this reason, the matter remained dormant until the status of the remitted matters was brought to my attention only at the end of March this year. In respect of the 1992 financial year, Jancy, by minutes signed by the Applicant's husband, Cyril Pearson, resolved that the income be distributed equally between Cyril John Pearson and Jeanette Ann Pearson ("the Appellant"). In the 1993 financial year the minutes of Jancy were unsigned and the unsigned copy distributed $9,000.00 to Jeanette Ann Pearson and the balance equally between Cyril John Pearson and Jeanette Ann Pearson. In the 1994 financial year the minutes gave 100% of the income to Jeannette Anne Pearson and were signed by the Appellant. The tax returns for the CFNUT were not signed by the appellant for any of the applicable financial years. The CFGUT return is only applicable with respect to the 1992 year and it also is not signed by the Appellant. The Jancy income tax returns were not signed by the Appellant. The Appellant was a director of Jancy Pty Ltd as was her husband, Cyril John Pearson, in each of the relevant tax years. The Appellant signed her income tax returns in respect of each of the three financial years in question. A statement as to a particular view of the proper operation of the law is not false or misleading even though it may be inaccurate. In context, and as a matter of the proper interpretation of the expression 'false or misleading statement', it is clear that the legislature is directing its attention to statements of fact that are false or misleading and not to statements as to the application or interpretation of the law. A taxpayer who claims a deduction under a particular description, and who does so in a way that is not, having regard to the disclosure made, false or misleading in relation to the facts, will not incur a penalty even though the amount may not be deductible as a matter of law. While there will be some situations where the distinction is not entirely clear, it is unlikely to be difficult to make in the vast majority of practical situations. Where there is some doubt, fine distinction s are not to be made and the statement should be treated as one of law and not penalisable. The contention by the appellant in relation to the remitted matters is: There is no factual basis presented to the Court by any documentation or evidence whatsoever by which the Commissioner might impose the additional 20% under Section 226X. Indeed, the history of this matter clearly indicates that the taxpayer had no knowledge of the matters upon which the assessable income of either CFGUT, CFNUT or Jancy was increased. A consequence of the Full Court decision is that it is now only the penalty tax applicable to the increase in the CFNUT assessable income which is relevant. The adjustment in the taxable income arises not from any action or omission whatsoever on the part of the Appellant. In supporting its argument for the additional tax based on recklessness, the Commissioner relied upon the decisions of Reed (Albert E) and Co Ltd v London & Rochester Trading Co Ltd [1954] 2 Lloyds Report 463 at 465 and Shawinigan Ltd v Vokins & Co Ltd (1961) 3 All ER 396 at 403. These identify that the requisite recklessness be gross recklessness. At the trial, there were several items for each of the income years in question entitled "Increase in Proprietorship Account" for Jancy, which was conceded by the appellant as being correctly assessed. Having regard to the provisions of s 223(7), an omission of assessable income from a return is taken to be a statement that the income was not derived. In omitting to make a statement about income, the appellant was making a statement that she did not receive such income. The word "false" in the former s 223 means "wrong": Reliance Finance Corporation Pty Ltd v FCT (1987) 87 FLR 305. It is not necessary for the respondent to show that the statement was deliberate or fraudulent: Federal Commissioner of Taxation v Turner (1984) 15 ATR 379. In my opinion, the omission of assessable income derived by the appellant (including the CFNUT income) is to be treated as a false statement within the meaning of s 223(1)(a)(i). The statutory scheme set up by the former s 223 was the automatic imposition of 200% penalty tax, following which the Commissioner could exercise a discretion to remit some or all of the additional tax payable. Here the Commissioner decided to remit the penalty to 70%. The provisions of s 223 apply even if the appellant was ignorant of the accounting matters giving rise to the additional income of the Jancy Trust: Kajewski v FCT (2003) ATC 4375. In my opinion, it is not competent for the Federal Court to conduct a merits review of the exercise of the discretion by the Commissioner to remit. As my reasons at first instance indicate, the appellant was actively involved with Jancy Pty Ltd, the trustee of the Jancy Trust, of which she was the primary beneficiary. She had extensive involvement in the refinancing of property owned by Jancy Pty Ltd with the ANZ Bank. By the operation of the former s 223, the appellant falsely stated her income in her tax returns for the years 1992 to 1994. In respect of the income distributed to her by the Jancy Trust (putting to one side the CFNUT distributions), the appellant failed to disclose those distributions. That failure was the result of negligence in attending to the affairs of the trustee company, or alternatively, in accepting without any inquiry the documents her husband and tax agent placed before her. In all the circumstances, the appellant has not shown that the discretion of the Commissioner to remit the penalty from 200% penalty tax to 70% miscarried. In my opinion, this additional tax was correctly raised. So understood, the proscribed conduct is more than mere negligence and must amount to gross carelessness. In the light of the way the issues were in fact litigated, it seems to me inappropriate now to consider whether some penalty interest should be imposed on the basis of a failure to exercise reasonable care pursuant to s 226G of the Act. Finally, on the question of whether the appellant took steps to hinder the Commissioner, the Commission relies on a critical lack of documentation available to the auditors to enable them to complete the audit process. As to the appropriate orders that should be made, I direct the parties to bring in short Minutes of Order to give effect to these reasons for judgment for each of the income years 1992, 1993, and 1994. I will hear the parties on costs. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender . | penalties appeal against objection decision whether commission's decision to remit was correctly raised whether behaviour of the appellant constituted recklessness held not competent for the court to conduct a merits review of the exercise of the discretion to remit held recklessness not established parties to provide short minutes of order giving effect to the reasons for judgment taxation |
The relevant periods are identified at para 2 of the affidavit of Mr McCart, a director of the taxpayer, sworn and filed on 13 November 2009. During the GST periods, Meridien reported GST payable in respect of its supply of berths in a marina by way of 20-year leases and a supply related to an outgoings levy charged under the leases. The rental consideration payable under each lease for the entire 20-year term was paid as a single or "up-front" pre-payment to Meridien by each lessee. The GST reported by Meridien in respect of the 20-year leases was calculated on the basis that the value of the supply was reduced by 50% of the price that would otherwise apply (namely, the 20-year pre-payment in respect of 118 leases) in reliance upon the provisions of Division 87 of the GST Act. On 19 September 2008, the Commissioner issued a notice of assessment of the net amount of GST payable by Meridien on the supply of berths under the 118 leases in issue of $662,411.00, on the footing that GST was payable on the whole of the price of each supply (eg the whole of the lease pre-payment) and not simply 50% of that price. On 10 October 2008, Meridien objected to the assessment and on 14 January 2009, the Commissioner disallowed Meridien's objection in full. The only adjustments made by the Commissioner arising out of the audit of Meridien's Activity Statements for the period, were to the amount of GST payable in respect of the 118 20-year leases. The principal question for determination is whether Division 87 of the GST Act applies to each pre-payment (including outgoings, levies or maintenance fees) with the result that s 87-5 of the GST Act reduces the value of the supply by 50% of the price that would otherwise prevail, thus reducing the GST payable on the supply. The application of Division 87 to a relevant supply is said to bring about what has been described as "concessional" GST treatment. The central contentions of the taxpayer, put simply, are these. Meridien operates a marina complex known as "Horizon Shores Marina" located at Steiglitz near the Gold Coast in Queensland. Meridien acquired the marina as a going concern on 30 November 2005. The marina now consists of, among other things, 555 "wet berths" for ships, available for lease to the public. Since acquiring the marina, Meridien has entered into 118 long-term leases (that is, leases with a term of 20 years) of wet berths in the marina. There are five versions of the lease instrument. The foundation lease was adopted by Meridien in October 2006 and new versions were adopted in May 2007, November 2007, June 2008 and September 2008. Under the foundation lease, the permitted use of a wet berth was "a mooring berth for a private vessel". Although the foundation lease contains a prohibition upon the lessee (described in the lease instrument as the tenant) using the berth as a residence (cl 2.1(c)(iii)), the lessee was also required to comply with "Marina Rules" made by Meridien from time to time. Those rules recognised that although the lessee was permitted to use the berth to moor a vessel, the owner had to ensure that the vessel was not used as a "permanent place for human habitation", without "first obtaining the written consent of Meridien": cl 8.1.10, Marina Rules. Subsequent versions of the lease provided, at cl 2.1(d), that the tenant must not use the berth as a residence without obtaining the prior written consent of Meridien which would not be unreasonably withheld. Under each 20-year lease, the total rent payable for the entire term was payable in advance. Meridien contends that prior to the acquisition of the marina, some tenants of wet berths had taken up residence aboard vessels moored at leased berths. Such ship residents (including ship residents who are rental pool tenants from lessees) are called "Liveaboards" and Meridien charges them a Liveaboards "fee" to offset their demand for additional marina resources. Since acquisition of the marina by Meridien, between 24 and 28 Liveaboards have resided on vessels moored at leased berths during the period 1 December 2005 to 31 January 2008. These rental pool arrangements are explained at para [30] of these reasons. Meridien contends that it operates "commercial residential premises" for the purposes of the GST Act because it operates a "marina" at which "one or more of the berths are occupied, or are to be occupied, by ships used as residences": s 195-1. It says it supplies "commercial accommodation" as that term is understood in s 87-15 of the GST Act because it supplies under each lease and the Marina Rules, the "right to occupy the whole or any part of commercial residential premises". It says it provides that right to occupy wet berths as part of the marina on the footing that the lessee whether an individual or an individual in a particular capacity such as a trustee, or a corporation providing a right to occupy to individuals associated with it, is provided with the right to occupy for a continuous period of 28 days or more and thus, Meridien is providing "long-term accommodation" as that term is defined by s 87-20 of the GST Act. Meridien says the marina is operated "predominantly for long-term accommodation" as that term is understood by s 87-20(3) of the GST Act because at least 70% of those individuals who are provided with a "right to occupy" a berth in the marina are provided with that right for a continuous period of 28 days or more. It follows, it is said, that Meridien is engaged in a taxable supply of "commercial accommodation" that is provided in "commercial residential premises" that are "predominantly for long-term accommodation", and the commercial accommodation is provided to individuals either in their own right or in a particular capacity such as a trustee of a family trust or by reason of their association or connection with a corporation, as long-term accommodation, with the result that s 87-5 applies to reduce the value of the taxable supply by 50% of what would be the price of the supply if Division 87 of the GST Act did not apply, resulting in a reduced net price. The Commissioner contests Meridien's construction of the provisions of Division 87 and contends that Division 87 must be read and construed recognising its relationship with Division 40 of the GST Act in order to give coherence and purpose to the statutory scheme of either reducing by 50% the value of a taxable supply of long-term accommodation to individuals in commercial residential premises under Division 87, or, at the election of the supplier, input taxing under Division 40 a supply if it is a supply of residential premises by way of lease, hire or licence in circumstances where the supply is other than a supply of commercial residential premises or a supply of accommodation in commercial residential premises in the relevant circumstances; or the supply is of commercial accommodation and Division 87 would apply: s 40-35(1)(a) and (b). Similarly, because s 40-35(1A) addresses the input tax treatment of a supply of a berth at a marina by way of lease, hire or licence if the berth is occupied or is to be occupied by a ship used as a residence; and the supply is of "commercial accommodation" as that term is defined in s 87-15; and Division 87 would apply subject to s 87-25, the Commissioner contends that there is a symmetrical relationship between Division 40 and Division 87 which needs to be taken into account in giving a purposive construction to the provisions of Division 87. The Commissioner says the "right to occupy the whole or any part" of a marina contemplated by the definition of "commercial accommodation" in s 87-15 can only sensibly mean as an applied practical business matter, a right to occupy a berth at the marina with a ship on which a person resides or is to reside, in fact, rather than a simple right or entitlement to occupy. Further, the Commissioner says that the vast majority of the 118 leases were entered into prior to May 2007 on the terms of the foundation lease which contained a prohibition upon use of the vessel as a residence and, in any event, residential occupation of the vessel must be coterminous with the vesting of the right to occupy at the moment in time of the taxable supply. Meridien was incorporated on 26 October 2005 for the purpose of acquiring and operating the Horizon Shores Marina complex at Steiglitz near the Gold Coast in Queensland. The acquisition involved the purchase of land (five lots) and buildings (such as an administration building and marina berths sales office) and other facilities such as hardstand areas comprising a shipyard of 17,200 square metres with a capacity for 65 boats. The acquisition also involved the purchase under a business contract of 28 October 2005 of a marina complex consisting of plant, equipment, dry land and areas described as "wet" land on which the marina was located. Those areas of marina wet land are described as "wet berths" where boats can be moored. At the time of acquisition the marina consisted of 500 wet berths. By early 2008, Meridien had installed 130 new wet berths and 75 unsuitable wet berths had been decommissioned with the result that 555 wet berths were available for lease to the public. Mr McCart gave evidence that these berths were leased for varying periods ranging from short term leases for one month to long term leases up to 20 years. At the date of acquisition by Meridien, 136 long term leases were in place. Between 30 November 2005 and "early 2008" Meridien entered into 118 long term leases of 20 years. These leases are the subject of these proceedings. The first lease instrument was adopted in October 2006 (the "Foundation Lease"). The lease was registered in the Queensland Land Registry under the Land Title Act 1994 (Qld) as a lease of an interest in fee simple of part of the land upon which the marina is located. Each berth is an allotment of land on a subdivisional plan giving rise to an estate in fee simple. The allotment is inundated rendering it a "wet berth" in a marina complex. The description of the leased premises is by reference to a plan, with the words "also known as Berth #". The schedule describes the dimension of the berth and the rent per annum. Clause 1.2 provides that the lessee, described as the tenant, must pay the rent for the entire term of the lease to Meridien in advance on or before the commencement date of the lease. By cl 2.1(a), the lessee must only use the berth for the "Permitted Use". By cl 14.1, "Permitted Use' means the use of the berth for the purpose specified in Item 8 of the Reference Table and Item 8 describes the purpose as "mooring berth for a private vessel". The lessee may nominate only one boat or vessel to use the berth at any time: cl 2.1(b)(i). By cl 2.1(c)(iii), the lessee must not use the berth as a residence. Residence is an undefined term in the lease. By cl 2.3(d), the lessee must comply with the "Marina Rules" made by Meridien from time to time. By cl 5.6(a), Meridien may make Marina Rules as it considers appropriate having regard to the four categories of subject matter in cl 5.6(a). By cl 5.6(b), the Marina Rules bind the lessee when notice of them is given. By cl 5.6(c), the Marina Rules "must not conflict with [the lease] except to the extent to which [Meridien] has made them pursuant to a requirement of a Government Authority or of [Meridien's] mortgagee, in which case the Marina Rules will prevail to the extent of any inconsistency. By cl 5.7(a), the lessee must at all times observe and comply with the Marina Rules and by cl 5.7(b)(ii) a failure on the part of a lessee to observe and comply with the Marina Rules constitutes a breach of the terms of the lease as if the Marina Rules were contained in the lease as covenants with the Landlord. Mr McCart gave evidence that Meridien brought into existence a document described as "Marina Terms and Conditions" (the "Marina Rules") relating to, among other things, wet berths. There is no evidence of when the document was brought into existence. Only one version of the Marina Rules was put into evidence. The version is undated. It may not be the version that applies to the Foundation Lease. The document, to the extent that it applies to the Foundation Lease, changes the emphasis in the absolute prohibition on a lessee using a berth as a residence. It recognises by cl 1 that the terms apply to any agreement made between Meridien and a "boat owner" for the rental of a berth and the terms are taken to be incorporated in the agreement. Clause 2 describes "owner" as the party in Item 2 although the document does not contain a schedule of items. Presumably Item 2 is the boat owner. The reference to Item 2 is not a reference to Item 2 in the Reference Table to the schedule to the lease. Clause 2 recognises that "Permitted Use" means the mooring of a vessel at a berth. Clause 8 deals with "Use of Berth". It provides, among other things, that the owner must ensure that the vessel is moored within the boundaries of the berth and that the vessel is not used as a "permanent place for human habitation without first obtaining the written consent of [Meridien]". Accordingly, the lessee might seek a relaxation of the prohibition in the lease upon use of the berth as a mooring for a vessel as a residence by requesting Meridien's consent to the use of the vessel at its berth as a permanent place for human habitation. There may arguably be an inconsistency between the lease and the Marina Rules and if so, a question of paramountcy arises. The lease is the primary instrument governing the allocation of the rights and obligations of the parties. The Marina Rules are primarily the administrative or operational rules dealing with the day-to-day activities at the marina premises. However, the Marina Rules have been elevated by the lease instrument to the status of covenants of the lease in favour of Meridien. Two things should be noted. Firstly, as a question of construction of the two documents, the lease and the Marina Rules are not inconsistent. The prohibition cast upon the lessee of use of the berth as a mooring for a vessel for use as a residence or a place of human habitation remains a covenant of the lessee under both the lease and the Marina Rules although Meridien may, if it chooses, give its consent to the lessee to use the berth to moor a ship or vessel as a residence. Thus, the Permitted Use under the lease includes a use of a berth as a mooring for a vessel used as a residence if authorised by Meridien and the effect of the Marina Rules, elevated into the lease, is to extend the scope of the Permitted Use. Secondly, the requirement for first obtaining Meridien's consent in writing , is inserted solely for the benefit of Meridien and the requirement for writing might be waived as Meridien determines appropriate. Mr McCart says the Marina Terms and Conditions (the Marina Rules) are available to all marina berth tenants and the general public at the marina administration office. The second version of the lease was adopted in May 2007. The current version is September 2008. It contains cl 2.1(d). Annexed to the affidavit of Mr McCart sworn 17 July 2009 at "CRM11" is a bundle of documents consisting of a series of amendment schedules for each long-term lease in those cases where Meridien and the lessee have agreed to vary the terms of the lease document. The amendment schedules do not provide for any amendment of the clauses dealing with Permitted Use. At "CRM9" to Mr McCart's affidavit filed 20 July 2009, Mr McCart annexes a spreadsheet summary of the 118 long-term leases entered into by Meridien, showing each berth number, the lessee and the commencement and end dates of each 20-year lease. There are a range of individuals, trustees and companies as lessees. The parties agree that the segmentation is this: 38 lessees are corporations; two leases have been made with an individual and a company jointly; 26 leases are in favour of corporate trustees; two leases are made with an individual as a trustee; and 50 leases have been granted to individuals in their own right. Mr McCart has no personal knowledge, subject to the circumstances of use by Mr Jack Hutchinson concerning berth AO3 leased to J Hutchinson Pty Ltd, of the day-to-day exercise of a right to moor a vessel at any of the berths in the spreadsheet; whether lessees who are individuals reside or authorise others to reside on vessels moored at their berths; or, whether the other categories of lessees authorise any individuals to reside on vessels moored at their berths. Mr McCart says that marina berth tenants who choose to make their primary residence on their vessel while moored in a wet berth at the marina are called "Liveaboards". Since the acquisition of the marina by Meridien, there have been approximately 20 Liveaboards in the marina at any one time. At July 2009, there were 26 Liveaboards in the marina. Annexure "CRM1" to Mr McCart's affidavit sworn 27 November 2009 is a spreadsheet setting out the total number of Liveaboards on boats moored at the marina during the period 1 December 2005 up to and including 31 January 2008 across the 12 relevant periods the subject of these proceedings. There were approximately 56 Liveaboards in the marina throughout the entire period although the monthly average ranged between 24 and 28. For example, Clifford Wells was a Liveaboard in the marina for each of the 12 periods. So too were Clive Crosse, David Firth and Ian and Judy Gabriel, among others. Annexure "CRM1" also sets out the additional fees charged to those living onboard a vessel in a marina berth. Liveaboards are charged a separate and distinct onboard residence fee in consideration of the additional marina resources consumed by those living aboard a vessel moored at a berth. Mr McCart caused a spreadsheet summary, Annexure "CRM3" to his affidavit filed 13 November 2009, to be prepared that identifies for each of the 12 relevant periods between December 2005 and January 2008 the total berths in the marina; the number of rental agreements less than 28 days (short-term rentals); the number of long-term rental agreements (greater than 28 days); and the percentage of berths that are subject to long-term rental arrangements as a proportion of total berths rented in the marina. During the 12 relevant periods from December 2005 to January 2008, the total number of berths in the marina ranged from 451 to 532. In each of the 12 periods, the percentage of berths occupied whether under short-term or long-term rental arrangements ranged from 70% in December 2006 to 95% in January 2008. The number of berths occupied in each of the 12 periods on either a short-term or long-term basis ranged from 368 berths in December 2006 to 428 berths in January 2008. The number of short-term rentals in each period ranged from one berth in August 2007 to 10 berths in May 2007 and the number of occupied berths that were the subject of long-term leases in each period ranged from 362 berths in December 2006 to 426 berths in January 2008. Mr McCart says that the percentage of berths so occupied as a proportion of total berths rented on any basis was never less than 94.6% in any of the 12 relevant periods and ranged from 94.6% in December 2005 to 99.8% in August 2007. The spreadsheet at "CRM3" is a calculation of the percentage of long-term lease agreements as a proportion of total berths rented. The statistics do not reveal the percentage of long-term lessees who, in fact, reside on their vessels for periods of 28 days or more as a proportion of total berths rented to those who, in fact, reside on their vessels for any period. Meridien contends, in effect, consistently with its submissions, that such a statistic is irrelevant as the relevant matter is the percentage of long-term leases that confer "a right to occupy" a berth at the marina, as a proportion of total berths rented. Some of the long-term lessees have entered into a "letting agreement" with Meridien under which their leased berths are placed in a rental pool managed by Meridien. An example of such an agreement is Annexure "CRM15" to the affidavit of Mr McCart sworn 27 November 2009. Annexure "CRM15" is a copy of a Letting Agreement between Meridien and Michelle Leanne Mitrovski in respect of Berth 21. Ms Mitrovski is noted on the schedule at "CRM9" of the affidavit of Mr McCart sworn 17 July 2009 as the long-term lessee of Berth B21. Under the Letting Agreement, Ms Mitrovski exclusively appointed Meridien (cl 2.1) for the letting period from 1 January 2008 to 31 December 2008 (and any extension of that period) to manage Berth B21 and exercise "absolute control" over the berth as the lessee's duly authorised agent for the purposes of negotiating and entering into rental arrangements in respect of the berth and to allocate the use of the berth to visitors to the marina on a temporary or intermittent basis and levy such rent as is commonly charged by Meridien for the temporary or intermittent renting of berths within the marina complex from time to time. Meridien is, as manager, entitled to an administrative charge of 10% of the gross rent collected and received by it for the letting of the berth. Some of the lessees who have entered into a letting agreement, have also entered into a rental guarantee deed, usually for 24 months, by which Meridien guarantees to pay an agreed amount to a lessee and retains itself the gross rentals from letting the lessee's berth through the letting pool. Mr Shane Hay is the general manager of the marina. He has held that position since September 2004 and commenced employment at the marina in July 2003. Mr Hay says he is intimately familiar with the manner in which tenants use the marina as he lived in a house at the marina from early 2005 until early 2007 and he is responsible for twice-weekly inspections of the marina, called "dock walks". The aim of the dock walks is, in part, to gather information about daily happenings at the marina; the vessels moored at berths; and whether tenants are living aboard vessels. Mr Hay estimates that more than 90% of Liveaboards use houseboats which are permanently moored at berths in the marina, as residences. The remainder use converted trawlers, yachts or cruisers. Mr Hay has annexed to his affidavit photographs of 12 examples of vessels used by Liveaboards in the marina some of which have been used by Liveaboards since Mr Hay commenced employment at the marina in July 2003. It is common ground that from 1 December 2005 Meridien was registered for GST purposes pursuant to subdivision 25-A of the GST Act. It is also common ground that Meridien reports GST on a monthly basis and accounts for GST on an accruals basis. In relation to each relevant month, Meridien treated the consideration it received from the supply of marina berths under long-term leases, including that received under the 20-year leases, together with the consideration it received as maintenance fees under those leases, as consideration for taxable supplies for GST purposes. It is also common ground that Meridien elected to apply s 87-5 of the GST Act so that it included only 50% of the value of those supplies in its Activity Statement for each relevant month. I find as facts, those matters of fact recited at paras 9 to 32. I find that there is no evidence that establishes that any of the berths leased to the lessees under the 118, 20-year leases entered into by Meridien were occupied by a ship used as a residence or to be used as a residence, by any of those lessees , subject to the evidence of short-term stays by Mr Jack Hutchinson on his vessel from time to time. I further find that there is no evidence that establishes that any of the Liveaboards (see "CRM1", McCart affidavit, 27 November 2009; "CRM9", McCart affidavit, 17 July 2009; evidence generally) is a lessee under any of the 118, 20-year leases. I find that some of the long-term lessees have placed their leased berths in the rental pool and some of those berths have been rented to individuals who have moored ships or vessels at berths in the marina for use as residences for 28 days or more. The Commissioner contends that there is no evidence of Meridien providing consent in writing to the 118 lessees under the long-term leases, to use their berths as residences. In written submissions, Meridien contended that of the 254 long-term lessees of berths in the marina, 151 lessees (that is, 59.4%) had entered into letting agreements with Meridien under which their leased berths had been placed in the rental pool managed by Meridien. Some of those lessees were said to have also entered into the rental guarantee deed arrangements. In addition, Meridien publishes a "wet berth storage" price list which identifies the pricing arrangements for "Live-aboards". I find that Meridien has given its consent to those long-term lessees who have elected to place their berths in the rental pool, for use of the berth for the mooring of a vessel for use as a residence as, at any moment in time, the lessee's berth might be rented to a person for such use in accordance with the published Liveaboard arrangements available at the marina. The lessee's berth may also be rented simply for use as a mooring for a vessel without any residential use by anyone. However, since there is a possibility that the berth may be the subject of a mooring of a vessel for residential use (on either a short-term or long-term basis), Meridien must be taken to have consented to such use in respect of those lessees who have elected to enter the rental pool. Meridien has a commercial interest in bringing such berths within the rental pool. The rental pool arrangements are managed by Meridien and it derives management fees from doing so. A more difficult question arises in relation to whether those members of the cohort of lessees represented by the 118, 20-year leases, who have not chosen to become members of the rental pool, have acquired a right to occupy a berth with a vessel or ship for use as a residence or for the purpose of human habitation. Clause 8 of the Marina Rules (which are incorporated within the Foundation Lease) is not qualified by the notion that Meridien's consent will not be unreasonably withheld. Nevertheless, it seems to me that the provision should be read and construed as incorporating an obligation that Meridien's consent will not be unreasonably withheld. The two compliance qualifications ultimately adopted in cl 2.1(d) of the second version of the lease referred to in these reasons ought to be regarded as factors also influencing the determination of whether, in any case, Meridien's consent has been unreasonably withheld. Even assuming that construction, however, a long-term lessee does not acquire a right to occupy a berth with a vessel for use as a residence or for the purpose of human habitation unless and until the lessee obtains Meridien's consent. No right to occupy for such a purpose crystallises until the consent is obtained which would then elevate such use to a "Permitted Use" for the purposes of the foundation lease, incorporating the Marina Rules; and any subsequent version of the lease. It seems to me that, those long-term lessees who have taken up the rental pool opportunity involving the potential for "Liveaboard" use in accordance with the published "Wet Berth Storage Price List" enjoy a consent or permission, either actually or constructively, from Meridien for the use of their berths for the mooring of a vessel for use as a residence (not necessarily by them) notwithstanding that any particular transactional rental of a berth from the pool, from time to time, may simply involve use of the berth for the mooring of a vessel. The consent given to those long-term lessees is conditional only, that is, conditional upon their placing their berths in the rental pool. The difficulty, however, is this. At para 26 of the applicant's outline of submissions reference is made to 151 long-term lessees having entered into letting agreements with Meridien to place their berths in the rental pool. The reference is supported by footnotes 20 and 21 which refer to the affidavit of Mr McCart dated 26 November 2009. However, Mr McCart's November affidavit is sworn and filed 27 November 2009. In the course of giving evidence, Mr McCart had with him and referred to a copy of his November affidavit which he described as his affidavit dated 26 November 2009. In the course of the hearing, I pointed out that Mr McCart's affidavit is sworn and filed 27 November 2009. Mr McCart was asked whether the version of the affidavit he had with him was in the same terms as his affidavit in evidence, sworn 27 November 2009. He said that it was. The affidavit of 27 November 2009 does not refer to 151 long-term lessees having brought their berths within the rental pool. On 16 December 2009, the Court requested the applicant's advisers to indicate a source of the reference in the evidence of Mr McCart to 151 long-term lessees placing their berths within the rental pool. On 17 December 2009, the applicant's lawyers wrote to the Court advising that the reference to 151 cases of tenants of 20-year lessees entering into letting agreements for their berths with Meridien was based on an earlier draft of Mr Cart's affidavit of 27 November 2009 (dated 26 November 2009) and therefore "should be disregarded". I accept entirely that this anomaly is simply due to the settling of the final form of Mr McCart's affidavit ultimately sworn and filed on 27 November 2009. If the evidence had demonstrated that 59.4% of the long-term lessees of marina berths had elected to place those berths within the rental pool arrangements, an argument might have arisen that an inference ought to be drawn that the remaining cohort of long-term lessees enjoy an implied or constructive permission from Meridien to use their berths as a residence or for human habitation. However, there is no evidence of which long-term lessees or how many of them elected to place their berths within the rental pool. It is not possible to say which long-term lessees have obtained the actual or constructive consent of Meridien for that use. In any event, since the consent is directly related to and conditional upon entry of the berth into the rental pool, an inference as to the remaining members of the cohort would be unlikely to be drawn. Moreover, Mr McCart has not given evidence that Meridien has granted its consent to all of the 118, 20-year lessees, to use their berths for the mooring of a vessel for use as a residence or for human habitation thus bringing each of the 118 long-term leases within the Permitted Use. I infer that those lessees within the cohort of 118, 20-year lessees, who have not brought their leases within the rental pool, do not have the consent of Meridien to use their berths for the mooring of a ship for use as a residence or human habitation, in the absence of any evidence that Meridien has given its consent, which is expressly required. Accordingly, the evidence is confined to establishing that each of the 118, 20-year long-term lessees, has acquired a right to occupy their berths for the mooring of a vessel and, in respect of an unidentified and unparticularised number of those long-term lessees, Meridien has given its consent for the use of their berths within the rental pool for use as a mooring for a vessel for use as a residence or for human habitation, subject to the transactional arrangements which may be put in place from time to time in the management of the rental pool. This requires the Court to identify that purpose, both by reference to the language of the statute itself and also any extrinsic material which the Court is authorised to take into account. In Saga Holidays Ltd v Commissioner of Taxation [2006] FCAFC 191; (2006) 156 FCR 256 (Gyles, Stone and Young JJ), Stone J (Gyles J agreeing) made these observations at [29] --- [30]: The Court has tended to adopt a purposive approach to the interpretation of the GST Act, rejecting strict grammatical analyses in favour of a consideration not only of the syntax but also of "the policy and the surrounding legislative context" of the relevant provision; HP Mercantile Pty Ltd v Commissioner of Taxation (2005) 143 FCR 553 at [66]. Consideration of these aspects of the GST Act has [led] to the tax being described as "a practical business tax"; Stirling Guardian Pty Ltd v Commissioner of Taxation (Cth) (2005) 60 ATR 502 at [39]. The description is appropriate because it draws attention to two related aspects of the tax. The fact that liability to pay the tax is imposed at various stages of the supply chain means that it is a tax on business but, importantly, one that is designed, where practicable, to quarantine business from the ultimate burden of the tax. This and other aspects of the tax legitimately form part of the context in which the language of the GST Act is interpreted and explains, at least in part, why the description "a practical business tax" seems to be appropriate. This does not mean, however, that there is some special canon of construction [emphasis added] that should be applied when interpreting the GST Act. This approach to construction is an applied example of the Court's role in seeking to adopt a broader purposive approach to interpretation consistent with Newcastle City Council v GIO General Ltd (1997) 191 CLR 85; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 and Network Ten Pty Limited v TCN Channel Nine Pty Limited (2004) 218 CLR 273. The approach to construction involves examining the legislation in its overall context to isolate the statutory purpose sought to be served by the Act in question, at the outset. The Court will seek to identify the objects of the Act and, where relevant, the particular problem or vice an Act might be seeking to address as an expression of the Parliament's solution to a particular problem. Plainly, the legislative instrument ought to be approached on the footing that the Parliament adopted the particular provisions in the Act so as to give effect to the statutory goals. Thus, the meaning attributed to the provisions, where possible, ought to maintain the unity of purpose of the statutory instrument. Nevertheless, the actual language selected by the Parliament is critical and must be examined, in context, so as to give meaning to each word of the provisions in question whilst striving to avoid a construction which irrationally constrains the field of operation of the relevant provisions or renders a particular provision of no practical effect ( Project Blue Sky ). The point of departure between the parties on the question of construction is whether the reference to "concessionary treatment" in para 6.135 of the Explanatory Memorandum for the 1998 Bill explaining the intersection between Divisions 40 and 87 of the GST Act, and in particular the intended operation of Division 87 of the GST Act, imports a clear purpose of conferring beneficial treatment upon a supplier of commercial accommodation provided in commercial residential purposes otherwise meeting the statutory integers of s 87-5 of the GST Act. The applicant contends that a purposive construction should embrace a beneficial construction which seeks to make practical the concession conferred by Division 87 and thus an unduly technical or constraining approach to the language of Division 87 ought not to be adopted as such an approach would frustrate the intention of the legislation. The respondent contends that the treatment adopted in Division 87 of the GST Act is not concessional or concessionary in any beneficial sense but is simply, administratively concessional, in the sense that the division provides the taxpayer with an opportunity of avoiding the difficulties of apportionment and calculation of input tax credits in the context of providing long-term accommodation in commercial residential premises mixed with other supplies where input tax credits would need to be differentiated between the various categories of supply. GST is a tax imposed on supply (leaving aside the rules in relation to importation) except to the extent that the supply is input taxed (leaving aside a "GST -free " supply). GST is payable, by s 7-1 of the GST Act, on "taxable supplies". Section 9-5 provides that "you" make a taxable supply if "you" make the supply for consideration; the supply is made in the course or furtherance of an enterprise carried on by "you"; the supply is connected with Australia; and, "you" are required to be registered under the Act. However, the supply is not a taxable supply to the extent that it is "input taxed": s 9-5. The reference to "you" in s 9-5 or otherwise in the GST Act, is a reference to "entities generally": s 195-1. An entity means, among other things, an individual; a body corporate; a partnership; or trust: s 184-1. A supply is any form of supply whatsoever including the grant of a right and a grant of real property: s 9-10. Consideration includes any payment: s 9-15. An enterprise includes any activity or series of activities done in the form of a business: s 9-20. A supply is "input taxed", relevantly, if it is input taxed under Division 40; or, the supply is a supply of a right to receive a supply that would be input taxed under Division 40: s 9-30(2). A person who makes a taxable supply must pay the GST arising on that supply: s 9-40. The GST Act recognises that enterprises make and sell goods, services and things in the course of engagement with an upstream supply chain. The supplier to an enterprise will include an amount of GST in the price of things (inputs) supplied to that enterprise and account to the Commissioner for the GST, which is done by accounting for the net amount of GST, input tax credits and adjustments, attributable to the relevant tax period. The enterprise will normally be entitled to an input tax credit from the Commissioner for the amount of the upstream GST included in the input supply price. The enterprise will normally include an amount of GST in the supply price to its consumer and similarly account to the Commissioner for the amount of the GST. However, some supplies such as some financial supplies (subdivision 40-A of the GST Act); the supply of residential premises for rent (subdivision 40-B); the sale of residential premises (subdivision 40-C); the supply of precious metals (subdivision 40-D); the supply of food through school tuck-shops and canteens (subdivision 40-E); and supplies in connection with fundraising events conducted by charitable institutions (subdivision 40-F), are "input taxed" under Division 40 and thus the supply is not a "taxable supply" under s 9-5 with the result that no GST is payable on the supply because s 7-1 has no application. If a supply is input taxed under Division 40, no GST is payable on the supply to the consumer and the supplier cannot claim input tax credits for the GST paid to upstream suppliers on the various business inputs acquired by the enterprise in making, producing and providing the relevant supply. The enterprise simply pays the GST to the upstream supplier who accounts for the tax to the Commissioner in the way described earlier. No GST will be payable on the supply of residential premises and you are not entitled to input tax credits for your acquisitions that relate to the supply. However, the residential premises will only be input taxed to the extent that the premises are to be used predominantly for residential accommodation. For example, if you have a flat on top of a shop, the supply of the shop will be taxable. The term "land" in this definition in conjunction with the notion of occupation or intended occupation as a residence, has been held to mean land capable of providing some shelter and basic living facilities: South Steyne Hotel Pty Ltd v Commissioner of Taxation (2009) 71 ATR 228; South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation [2009] FCAFC 155. The notion inherent in the description "residential premises" was occupation as a residence or an intention to occupy as a residence. Section 40-35(1)(a) expressly excluded "commercial residential premises", from input tax treatment of residential premises. The statutory characterisation of premises as commercial residential premises suggested residential use as part of a related commercial activity. So far as "residential premises" were concerned, the Federal Court per Dowsett, Hely and Conti JJ in Marana Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 307; (2004) 141 FCR 299, in construing the terms "residence" and "reside" concluded that those terms suggested a permanent, or at least long-term, commitment to dwelling in a particular place. Amendments to the GST Act, mentioned later, sought to broaden the meaning of those terms beyond that understanding. Although the supply of commercial residential premises was taken outside the scope of residential premises, for input tax treatment under s 40-35(1)(a), the supply of commercial accommodation was treated as input taxed and thus not a taxable supply. Under s 40-35(1)(b), a supply "of premises" by lease, hire or licence was input taxed if the supply was of "commercial accommodation" and Division 87 would apply to the supply but for a choice by the supplier under s 87-25 of the GST Act. Under s 40-35(1)(b) the relevant supply was not simply a supply of commercial accommodation (subject to the second limb of the section) but rather a supply of premises if the supply of those premises was "of commercial accommodation", that is, a supply of premises coupled with a right. The question was whether there is a supply of premises that confers a right to occupy the whole or any part of particular premises described as commercial residential premises. Section 40-35(1) as framed drew an apparent distinction between the supply of residential premises (exclusive of commercial residential premises) characterised by occupation or intended occupation as a residence on the one hand; and the supply of premises characterised by something apparently less immediate, namely, a right to occupy the whole or any part of the premises, on the other hand. The second limb of s 40-35(1)(b) asked whether Division 87 would apply to the supply but for the supplier exercising a choice under s 87-25. Division 87 addresses, according to its heading, "Long-term accommodation in commercial residential premises" and recites, "Long-term stays in commercial residential premises are given a lower value than would otherwise apply, reducing the amount of GST payable". The Division engages a "taxable supply" of commercial accommodation of a particular character in particular circumstances and selects that class of taxable supply for a 50% reduction in the value of the supply. If the statutory integers defining the class of taxable supply attracting the operation of s 87-5 are not engaged, the "taxable supply" will attract GST in full. If Division 87 does apply to a taxable supply of commercial accommodation, the supplier may choose not to apply the division to any such supplies. If the supply is of commercial accommodation and Division 87 would apply and the supplier has elected under s 87-25 not to apply Division 87, the supply will be input taxed to the extent of that supply. The supplier would then be required to isolate all of the input tax credits referable to other features of a taxable supply associated with the input taxed supply, in determining the net amount of the supplier's liability to the Commissioner. The supplier might, however, choose to apply Division 87 provided the statutory integers are properly engaged. Section 87-5. During the remainder of the stay (if any), the value of the supply of commercial accommodation is 50% of the price if this Division did not apply. Section 87-10. Premises used to provide accommodation in connection with primary or secondary schools only are also included in the definition. You provide commercial residential premises predominantly for long term accommodation where at least 70% of the individuals who you provide with commercial accommodation in the premises are provided with commercial accommodation for a period of 28 days or more. Rather than simply input tax the supply of commercial accommodation (in the same way as residential premises) which would require the supplier to attribute GST payments on inputs in an enterprise comprising the supply of commercial accommodation and other activities constituting taxable supplies, so as to isolate input tax credits referable to the other activities apart from the supply of commercial accommodation, Division 87 seeks to avoid difficulty by a "concessionary treatment of long-term accommodation". Section 40-35(1)(b) treats that part of such a supply as input taxed, although the supplier may elect to avoid the difficulties of segmentation, attribution and calculation by applying Division 87 to reduce the value of the supply by 50%. If the statutory integers of s 87-5 are not engaged, Division 87 will simply not apply and thus no concessionary treatment is available and no election arises. Prima facie, Division 87 provides (illustrated with the following example), concessionary treatment of a taxable supply of a right to occupy the whole or any part of commercial residential premises (s 87-15) (the inn or room in the inn) in circumstances where the right to occupy the room is provided to an individual, that is, a natural person (s 195-1) for a continuous period of 28 days or more (s 87-20) and the right to occupy the room is provided in an inn in which at least 70% of the individuals who are provided with a right to occupy rooms in the inn are provided with that right to occupy for continuous periods of 28 days or more. The Commissioner says that Division 87 addresses long-term accommodation in commercial residential premises and the short statement of the subject-matter of the division at s 87-1 under the heading "What this division is about" makes it clear that Division 87 addresses "long-term stays in" such premises. Although s 87-15 defines commercial accommodation as "the right to occupy" it must therefore mean "the right to stay in" the inn or a room in the inn, it is said, and the use of the word "stay" connotes a purposive objective of providing a reduction in GST if an individual stays in the premises or a part of the premises for 28 days or more in circumstances where at least 70% of the people (natural persons) who stay in the inn do so for continuous periods of 28 days or more. The definition of commercial accommodation does not use the terms "stay" or "occupied" or "intended to be occupied" or "reside in". Residential tenants in "residential premises" as defined also acquire a right to occupy premises by force of agreements to rent those premises, yet "residential premises" are defined in terms of land or a building, occupied or intended to be occupied as a residence. Prima facie, commercial accommodation is framed simply in terms of "the right to occupy" the whole or any part of the premises, as the boundary of that which is supplied. That right must be provided to an individual as long-term accommodation in premises in which at least 70% of the individuals who are provided with that right are provided with it for 28 days or more. 3) Act 2006 , No. 80 of 2006 (the "2006 Act"), repealed the above definition and replaced it with a definition that was intended to remove the constraint of permanence or long-term commitment to dwelling in a particular place found by the Full Court of the Federal Court in Marana Holdings Pty Ltd v Commissioner of Taxation (supra) to be inherent in the terms "reside" and "residence". 8) 2000 , No. Meridien operates a marina at which one or more of the berths are occupied, or are to be occupied, by ships used as residences. The Commissioner also accepts that each of the 118, 20-year leases confers a right to occupy the berth. However, the Commissioner contends that the conferral of that right does not satisfy the description "commercial accommodation". The amendment to s 40-35(1)(a) removes from the input tax treatment of a supply of residential premises, a supply of commercial residential premises or a supply of accommodation in commercial residential premises to a natural person by the owner or controller of the commercial residential premises (relevantly here, the marina). The supply of premises consisting of a supply of commercial accommodation in the circumstances of Division 87 (subject to the supplier's election) remains input taxed to the extent reflected in s 40-35(2). Having brought a marina at which at least one berth is or is to be occupied by a ship used as a residence, within the definition of commercial residential premises, the Parliament elected to frame a further class of input taxed supply related to a supply of a berth at a marina. By s 40-35(1A) a supply of a berth at a marina by way of lease, hire or licence, is input taxed if the berth is occupied or is to be occupied by a ship used as a residence ; and the supply is of commercial accommodation and Division 87 would apply (but for the supplier's election under s 87-25). The integers of a supply within s 40-35(1A) are a supply of a berth which is occupied (or to be occupied) by a ship used as a residence, consisting of a supply of commercial accommodation attracting the application of Division 87. The Parliament may have thought that it was necessary to frame supply by reference to a berth occupied or to be occupied by a ship used as a residence, in addition to the integer of a supply of commercial accommodation as defined, and the application of Division 87, on the footing that a reference to a supply of commercial accommodation did not engage a requirement of occupation (or a berth to be occupied) of a berth for use as a residence . Rather, "commercial accommodation" simply engages a "right" to occupy. The definition of commercial accommodation is not concerned with actual use or an act of occupation of the whole or any part of the range of premises falling within the definition of commercial residential premises. Commercial accommodation is defined as the "right" to occupy the whole or any part of those premises which confers a right to stay as contemplated by s 87-1. The right to occupy, however, is necessarily given meaning by the context in which the definition operates, in conjunction with the other defined terms within Division 87 and the GST Act more generally. The right to occupy the whole or any part of the marina or any other premises falling within the definition of commercial residential premises is not a right to occupy at large , for the purposes of the definition of "commercial accommodation", in a way divorced from any corresponding purpose serving the statutory objectives of Division 87. Division 87 is directed to long-term accommodation in commercial residential premises which exhibit particular characteristics (normally, premises run by a controller for a commercial purpose; premises having multiple occupancy; premises so held out to the public; premises having central management; premises providing services in addition to commercial accommodation; and, premises normally used for the main purpose of accommodation). The definition of commercial accommodation is an inclusive one, bringing within the scope of the right to occupy, the supply of particular goods and services closely related to residential occupation of the premises, including cleaning and maintenance services; the supply of electricity, gas, air-conditioning or heating services; the supply of a telephone, television, radio or any similar thing (if such things are provided as part of the right to occupy). Although such things may not, in fact, be provided as part of a right to occupy, the definition of commercial accommodation seems to contemplate that such services might be provided as part of the right to occupy to an individual in the premises and those goods and services, as part of the right to occupy, bear the character of in-residence goods and services. Division 87 engages the notion of the provision of commercial accommodation to a natural person as a right to occupy for a continuous period of 28 days or more in premises which are predominantly provided to individuals as long-term accommodation. Section 87-5 engages the provision of a right in premises so characterised, to an individual. The "right to occupy" contemplated by the definition of commercial accommodation in the context of the division is properly understood as a right to occupy the marina or a berth in the marina as a residence, in the sense of a right to stay rather than in any sense of permanent or long-term residence, which is consistent with the notion that a marina satisfying the description of commercial residential premises is a marina at which one or more of the berths are occupied, or to be occupied, by ships used as residences. If the right to occupy were simply a clinical right of occupation at large, unconnected with any purpose, the supplier would be able to take advantage of the reduction in the price of the supply, under a division of the GST Act dealing with long-term accommodation in commercial residential premises, in circumstances where residential use of the commercial residential premises was either not permitted or expressly prohibited. That would be an odd result. Although the right to occupy is to be understood as indicated in [75], the term "commercial accommodation" is not concerned with actual occupation , as a residence, but with a right to occupy , as a residence, whether, in fact, the right is exercised or not, at any particular moment in time. Section 40-35(1A) is concerned with a berth occupied or to be occupied by a ship used as a residence as that section is seeking to isolate an analogue of a supply of residential premises, in the particular context of the supply of accommodation in commercial residential premises, conferred under a right to occupy a berth or all marina berths, in predominantly long-term accommodation, whereas s 87-5 is concerned with the conferral of a right to occupy as a residence, notwithstanding that the right to occupy as a residence may not be exercised or intended to be exercised at the time of the grant of the right that constitutes the supply. Meridien says the "right to occupy" contemplated by the definition of commercial accommodation is expressly confined, relevantly here, to a right to occupy a part of the marina, namely, the particular berths specified in each of the 118, 20-year, lease agreements, together with the right to share occupation of the common areas. Meridien says the actual use or non-use subsequently made of the berth by the lessee is irrelevant to the question of whether each lessee has been provided with a right to occupy a berth in the marina. Meridien says that this approach is consistent with the position adopted by the Commissioner in Goods and Services Tax Ruling GSTR 2000/20 ("GSTR 2000/20") in relation to caravan parks and camping grounds and that the principles reflected in that Ruling have equal force, analogically, in respect of marinas and berths in marinas. Therefore, Meridien contends that the position adopted in GSTR 2000/20 correctly identifies the legal test to be applied in determining the scope of a right to occupy, for the purposes of berths in a marina. There are some differences between the way these premises operate and the operation of hotels and the like. Guests may pay to stay in a caravan or demountable home, or a permanent cabin or villa on the site. Alternatively, they may pay a fee to park their own caravan or demountable home on a site. All of these supplies are taxable under the basic rules, but may also receive concessionary treatment under Division 87. When you provide a site for a caravan or demountable home for 28 days or more, it is a supply of long term accommodation. It does not matter whether your site is occupied for the whole period of the stay. If you supply long term accommodation in a caravan or home park, you may choose to input tax all of your supplies of long term accommodation. See also 'Long term accommodation in caravan parks and camping grounds' at paragraph 146. This includes a site in a caravan park or camping ground, or the hire of a ship. In the case of caravan parks and camping grounds, the 'premises' in question are the grounds themselves, rather than any specific accommodation in buildings. Thus, an owner who places their caravan on a site for a fee is occupying the premises. Whether or not they are physically occupying their caravan is, in this particular case, immaterial. For this they pay site fees regularly and have the right to use their caravan whenever they choose. In the case of a caravan park, the right to occupy is granted when a site is hired for a caravan, even if the caravan is left unoccupied for most of the time. This effectively means that the special GST treatment for long term stays applies to supplies made to those who leave their caravans on site at a particular park. If you choose not [to] apply the special rules, your supplies of long term accommodation are input taxed, under paragraph 40-35(1)(b). Any supplies of accommodation that you make of 27 days or less, will be taxable under the basic rules. Meridien contends that the views expressed in GSTR 2000/20 reflect the proper construction of "the right to occupy the whole or any part of commercial residential premises" with the result that once the right to occupy a site at a marina (or a caravan park) is granted, it does not matter whether a caravan, tent or a boat is physically present at the site or the use to which that part of the site is ultimately put. Meridien contends that, in the present case, it is irrelevant whether, subsequently to entering into a lease, the lessee places a ship at the berth or allows the berth to be used as part of the letting pool run by Meridien. Equally irrelevant, it is said, is whether the lessee actually uses a vessel moored at the berth as a residence. Paragraph 130 of GSTR 2000/20 recognises that there are some differences between the way premises falling within the definition of commercial residential premises operate. Paragraph 130 recognises that there are differences between caravan parks and camping grounds on the one hand and hotels, motels, inns, hostels and boarding houses, on the other. For example, a person seeking to stay in a caravan park or at a camping ground might elect to stay in a caravan, demountable home or permanent cabin or villa on a site. Alternatively, such persons might choose to pay a fee to park their own caravan or demountable home on a site. Paragraph 131 of GSTR 2000/20 provides that when a supplier supplies a site for a caravan or demountable home for 28 days or more, it is a supply of long-term accommodation and it does not matter whether the site is occupied for the whole period of the stay. Paragraph 138 of GSTR 2000/20 provides that in the case of caravan parks and camping grounds, the premises in question are the grounds themselves, and thus a tenant who places their caravan on a site for a fee, is occupying the premises, and whether the owner is physically occupying their caravan is, it is said, in the case of caravan parks and camping grounds, immaterial. The point of distinction between caravan parks and camping grounds on the one hand and marina berths on the other is that a caravan or a demountable home which might be the subject of a right of occupation of particular premises is entirely characterised by a facility for residential use at some moment in time. They represent, as para 130 of GSTR 2000/20 recognises, an alternative way that guests might stay in premises characterised as a caravan park or camping ground. The right to occupy the premises in question being the grounds or sites themselves, is necessarily linked to a right to occupy the site related to a purpose of using a caravan or demountable home at some time during the period of the right, as a residence, for short-stays or long-stays within the premises. Although physical occupation, in fact, of the caravan or demountable home is immaterial to the question of whether an owner of a caravan or a demountable home has been supplied with a right to occupy, the right is coupled with use of the caravan or demountable home as a structure designed to be occupied for residential purposes at some time even though left unoccupied for most of the time (para 147, GSTR 2000/20). Marina berths, caravan park sites and camping ground sites must share in common, in order to fall within the definition of commercial accommodation , the right to use the thing to be deployed in occupation of the site or berth, as a residence. The right to occupy must be a right to occupy the caravan site, camping site, marina berth or other premises falling within the definition of commercial residential premises, as a residence, conferred at the time of the taxable supply. The lessee of the site or berth need not actually occupy the site or berth as a residence or have an immediate intention to occupy as a residence and may elect to leave the site unoccupied for long periods of time throughout the supply term. Nevertheless, the right to occupy as a residence is the character of the right which must be conferred at the date of the supply, that is, the grant of the lease. In this case, the relevant lease is each of the 118, 20-year leases. The terms of the supply must confer, at the date of grant, the right to occupy the berth as a residence. The difficulty in this case is that there is no evidence which establishes which or how many of the long-term lessees at the date of grant of each lease acquired a right to occupy a berth with a vessel for use at some time throughout the period of the lease, as a residence. There is simply no evidence of a permission granted by Meridien to each of the lessees. There is evidence that Mr Jack Hutchinson uses his vessel for residential purposes for short periods of time together with his friends, from time to time. Annexure "CRM15" to the affidavit of Mr McCart sworn 27 November 2009 is a long-term letting agreement between Meridien and Ms Michelle Mitrovski, in respect of Berth 21. Ms Mitrovski elected to bring her leased berth within the rental pool for a period from 1 January 2008 to 31 December 2008 and thus she obtained the permission or consent of Meridien to use her berth for residential purposes through the mechanism of the rental pool. Since Meridien has failed to establish that each of the long-term lessees acquired, at the date of entering into the lease, being the date of the taxable supply, a right to use the berth as a residence during the period of the lease, Meridien has failed to establish that it has supplied commercial accommodation in commercial residential premises for the purposes of the GST Act. Section 87-5 contemplates a supply of commercial accommodation in commercial residential premises that are predominantly for long-term accommodation, and the right to occupy is provided to an individual as long-term accommodation. An individual is being supplied with long-term accommodation if the right to occupy is provided to that individual for a continuous period of 28 days or more: s 87-20. The premises are "predominantly for long-term accommodation" if 70% of the individuals conferred with the right in the marina are conferred with a right of long-term accommodation. Meridien has granted 118 long-term leases. Apart from these leases, Meridien has entered into other leases or tenancies of marina berths. Some are short-term tenancies. Of the 118 leases, 38 leases were granted to corporations; 26 leases were granted to corporate trustees; 50 leases were granted to individuals; 2 leases were made with an individual and a company; and two leases were made with an individual as trustee. The Commissioner contends that Division 87 necessarily requires by reason of s 87-5(1)(a) and (b) that commercial accommodation is provided in the relevant premises to an individual as long-term accommodation in circumstances where the commercial residential premises are predominantly for long-term accommodation. Because the term "individual" is defined in s 195-1 of the GST Act to mean a natural person, the Commissioner contends that the right to occupy must be conferred upon a natural person and thus the source of the right (in this case the lease instrument) must be struck between Meridien and an individual. It follows, according to the Commissioner, that since only 50 of the 118 leases are struck between Meridien and an individual, only 42.37% of those lessees conferred with a right to occupy, are individuals. Section 87-5(a) and particularly (b) are concerned with the provision of commercial accommodation to an individual in the sense that ultimately a person, that is, a natural person consistent with the definition of "individual" in s 195-1 of the GST Act, will occupy the whole or a part of the commercial residential premises. One example is the common case where a mining company might take a lease of all of the rooms in a motel proximate to a mining site, to be used by its employees from time to time. Some of those rooms might be used, some might not. The rooms when used will be allocated to individuals employed by the company. The supply of commercial accommodation is a supply to the corporation yet the particular rooms will be provided to individuals as the company determines. That analogue explains the operation of the section. It seems to me that marina berths might be the subject of long-term leases to trustees of family trusts, individuals, corporations or other legal entities. Section 87-5 does not require the supply of commercial accommodation to an individual in the sense that every lease, licence or agreement must be struck between the supplier and an individual. There may be a taxable supply of commercial accommodation to a range of entities, provided in commercial residential premises that are predominantly for long-term accommodation, in circumstances where a natural person exercises the right in every case. If each of the 118 lessees had obtained at the date of grant of each lease a right to occupy their berths as a residence at any time during the period of the 20-year lease, it would then be possible to use the proportion those leases bear to all leases conferring a right to occupy for residential purposes (short-term and long-term), to satisfy s 87-20(3), because Mr McCart's figures show that the 20-year leases constituted a consistently high proportion of total berth rentals, and they would therefore constitute an even higher proportion of residential berth rentals. Meridien has introduced into evidence a spreadsheet summary "CRM3" to Mr McCart's affidavit filed 13 November 2009 which demonstrates that the percentage of berths the subject of the 118, 20-year leases as a proportion of total berths rented on any basis was never less than 94.6% in any of the 12 relevant periods and ranged from 94.6% in December 2005 to 99.8% in August 2007. However, Mr McCart's calculation shows the percentage the 118, 20-year, leases conferring a right to occupy (absent any proven right to use the berth for any purpose of human habitation) bears to all leases or rentals on either a short-term or long-term basis which is not the calculation required by s 87-20(3). That section asks, were 70% of all individuals provided with a right to occupy a berth in the marina for use as a residence, provided with that right for 28 days or more. Having regard to all these matters, the application must be dismissed with costs. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of the application of division 87 of a new tax system (goods and services tax) act 1999 (cth) (the "gst act") to a marina consideration of the application of s 87-5 of the gst act and whether the marina operator was engaged in a taxable supply of commercial accommodation to an individual in commercial residential premises predominantly used for long-term accommodation consideration of the terms of art adopted by the gst act in division 87 consideration of the relationship between division 87 and division 40 of the gst act consideration of whether the right to occupy the whole or any part of a marina contemplates simply the right to occupy or whether the right to occupy is a right coupled with a purpose of residential use consideration of the purpose of division 87 within the context of the gst act and the description of the division as addressing long-term stays in commercial residential premises taxation |
2 Medicare Australia, of whom the fifth respondent is its chief executive officer, is the successor to the Health Insurance Commission (the Commission). In 2000 the Commission administered the Medicare Benefits Scheme. Like other medical practitioners, Dr Saint, in the course of his practice, claimed monies under Medicare Benefits Scheme in respect of services he provided to his patients. The Commission kept statistics of the claims made to Medicare made by medical practitioners in respect of the services provided by them and the nature of those services. In 2000, by reason of the high number of daily services provided by Dr Saint, the Commission became concerned that Dr Saint may have engaged in "inappropriate practice" as defined by the Health Insurance Act 1973 (Cth) (the Act), by failing to provide his patients with an adequate clinical input. 3 The Commission's concern about Dr Saint ultimately led to an enquiry being conducted under the Act by a committee comprised of the second, third and fourth respondents - all medical practitioners, with the third and fourth respondents being general practitioners. The committee was known as the Professional Services Review Committee 204 (the Committee). 4 In its final report issued on 7 July 2004, the Committee found that Dr Saint had, in the manner in which he had rendered some services to his patients, namely, services described as Medicare Benefit Schedule item 36 services, engaged in conduct which in the Committee's opinion was inappropriate practice. The Act states that a general practitioner engages in "inappropriate practice" as a general practitioner in relation to the rendering of services, if the conduct is such that a Committee could reasonably conclude that the conduct would be unacceptable to the general body of general practitioners. 5 Medicare Benefit Schedule item 36 services comprise the professional attendance of a general practitioner on a patient which involves taking a detailed history, an examination of multiple systems, arranging any necessary investigations and implementing a management plan in relation to one or more problems and lasting at least 20 minutes. 6 In summary, the Committee's finding was that Dr Saint had in rendering some of these MBS item 36 services engaged in inappropriate practice because he had failed to provide "adequate clinical input into the services" and/or he had "kept records that were deficient in essential clinical information". 7 The making of this final report by the Committee was the culmination of a statutory process which involved a number of prescribed stages. First, there was a referral of Dr Saint's conduct by a delegate of the Commission, Dr Mould, to the first respondent (the Director), called an investigative referral. Then there was the establishment of the Committee by the Director and a referral of Dr Saint's conduct, called an adjudicative referral, from the Director to the Committee. Thereafter, there was a hearing by the Committee and the issue of a draft report of its findings by the Committee. Finally, the Committee issued its final report. 8 By this proceeding, Dr Saint challenged the constitutional validity of statutory process referred to above. Further, Dr Saint also sought judicial review of the decisions made by the decision-makers at each of the steps in the statutory process referred to above; and the processes leading to the making of the decisions. Dr Saint sought the remedies under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) and s 39B of the Judiciary Act 1903 (Cth) . The newsletter was entitled "Inappropriate Practice and Counselling". The newsletter outlined a process which provided for a medical practitioner to be counselled in respect of his or her pattern of servicing and to be given an opportunity to change that pattern, before the Commission would take further action in respect of that pattern of servicing under the Act. Dr Saint said in evidence that he became aware of this newsletter in 1996. 10 On 14 February 1996, an officer of the Commission, Dr Patrick Hertnon, interviewed Dr Saint in relation to his practice statistics for the period 1 July 1994 to 30 June 1995. Dr Hertnon informed Dr Saint that based on his statistics the Commission had concerns that the high volume of patients seen by Dr Saint may indicate that he had engaged in inappropriate practice. Prior to that meeting, Dr Hertnon had written to Dr Saint providing him with his provider statistics. 11 On 29 October 1996, Dr Peter Laundy, another officer of the Commission, interviewed Dr Saint about the high level of services revealed by his practice statistics. Dr Laundy expressed to Dr Saint the high degree of concern which the Commission held that by reason of his high level of services, Dr Saint may be engaging in inappropriate practice. Dr Laundy told Dr Saint that the failure by him to alleviate the concerns of the Commission may result in a referral being made to the Director. Dr Saint told Dr Laundy that one of the problems was that one of the doctors in the practice who had formerly worked full-time was now working part-time. He said that he expected that the doctor would return to work full-time and that he was also expecting to engage a woman doctor to work part-time. 12 On 4 June 1997, the Acting Manager Professional Review Branch Western Australia sent Dr Saint a letter noting a change in his practice statistics and advising him that no further action would be taken at that time. 13 On 18 January 2000, Dr Saint was again interviewed by Dr Laundy. Dr Laundy prepared a report of the meeting. By a letter dated 25 January 2000, Dr Laundy forwarded a copy of that report to Dr Saint and invited comment on the report within 14 days. The report stated that Dr Laundy had advised Dr Saint of the Commission's concerns regarding his high level of services and that this many may lead to the making by the Commission of an investigative referral. It also said that Dr Saint had explained that the practice was very busy, he had difficulty in employing other doctors to work in the practice, there was a shortage of doctors in the area and that he liked working long hours. The meeting is referred to further below. 14 By letter dated 5 February 2000, Dr Saint responded to Dr Laundy's letter. Dr Saint stated that the record of interview failed to mention the fact that the surgery was open on Sundays and public holidays. Dr Saint also mentioned that one of the doctors at the practice, Dr Rae, who had been working "very part-time" would from February 2000 be working two days a week and that he expected that that would take some workload off himself. He also asked for the Commission to supply him with further statistics to ensure that Dr Rae worked "at a time when the practice had its greater workload. " Further statistics were subsequently provided to Dr Saint. 15 Dr Saint received a letter dated 23 March 2000 from Mr Neville Garrity, Manager of the Professional Services Review Branch WA, of the Commission. The Health Insurance Commission (HIC) notes with some concern that Dr Laundy and Dr Hertnon had already spoken to you of these issues several years ago and that a temporary decrease in servicing was followed by a gradual increase. The HIC will review your Provider Summary Statistics in approximately three months time looking for changes to your servicing levels, I will communicate further with you at that time. If significant changes do not occur, the papers may be forwarded to the Director, Professional Services Review Scheme. The Health Insurance Commission's concerns of possible inappropriate practice still remain. Your case is being referred to the Medical Director, Professional Review Division for further opinion. A referral of the case to the Director, Professional Services Review may follow. Further correspondence will be sent to you advising whether or not your case is proceeding to the Director, Professional Services Review. 194 of 7 June 2000 noted that Dr Warren Saint has been repeatedly counselled by Health Insurance Commission Medical Advisers particularly regarding high daily and high annual servicing of his patients. The CMC was of the view that Dr Warrant Saint's practice may still be considered as possibly inappropriate and is referring the matter to you with a view to onforwarding to the Director, Professional Services Review. 18 Dr Saint received a letter dated 19 July 2000 from Dr Janet Mould, Manager Professional Services Branch of the Commission. I have allowed a suitable period of time for your statistics to reflect any changes in your practice profile. A review of your practice statistics reveals that the HIC concerns remain. Subsequently, I wish to advise that I have decided to refer your practice to the Director of Professional Services Review for his consideration on whether you have engaged in inappropriate practice under the Professional Services Review Scheme. 19 On 21 August 2000, Dr Mould as a delegate of the Commission made an investigative referral to the Director, pursuant to s 86 of the Act, of Dr Saint's conduct in connection with rendering and initiation of services. 20 The referred services were described in the investigative referral as services rendered during the period 1 January to 31 December 1999 from his practice location in Bassendean. 21 The investigative referral together with its annexures was a lengthy document. It comprised two books and exceeded 220 pages and included a print out of a number of computer records recording the services rendered by Dr Saint. The referral also recorded the delegate's reasons for the referral. Dr Saint's practice statistics for the counselling period (1 January 1999 to 31 December 1999) were reviewed. A Medical Adviser from the Health Insurance Commission met with Dr Saint on the 18 January 2000 for the purposes of counselling under the Professional Services Review Scheme. Dr Saint had been previously counselled by the Health Insurance Commission on 14 February 1996 and again on 29 October 1996 in relation to his rendered services. At the meting [sic] on 18 January 2000, the Medical Adviser outlined the Health Insurance Commission's concerns and sought an explanation from Dr Saint as to why his practice appears to be different from that of other general practitioners. (A history of the contacts with Dr Saint since February 1996 is included in the Chronological Record of this Referral at E). After counselling, the Health Insurance Commission reviewed Dr Saint's practice statistics and other available information. The Health Insurance Commission determined there had been insufficient change to remove the overall concerns expressed above. The Health Insurance Commission is concerned that, at this level of servicing, Dr Saint may not have provided appropriate professional services to his patients. Further, or in the alternative, the Health Insurance Commission is concerned that Dr Saint may not have satisfied the requirements of the relevant items in the Medicare Benefits Schedule. Consequently, the Health Insurance Commission is of the view that Dr Saint may be practising inappropriately and that the matter should be referred for consideration by the Director of Professional Services Review. 22 The records of the interviews which Dr Hertnon had conducted with Dr Saint on 14 February 1996, and which Dr Laundy had conducted with Dr Saint on 29 October 1996 and 18 January 2000 were included in the materials comprising the investigative referral. Further, Dr Saint's letter of 5 February 2000 responding to Dr Laundy's record of interview of 18 January 2000, as well as subsequent correspondence arising therefrom, was also included in the documents comprising the investigative referral. 23 The investigative referral also identified under the heading "Specific Areas of Concern for the Investigative Referral" the practice area of "Rendered Services and Daily Servicing". Dr Saint's total services rendered are substantially above the 99th percentile (15,383) when compared with all active general practitioners in Australia. 24 The investigative referral also included as Table 5 a table of Dr Saint's servicing statistics for each quarter during the period 1 January 1996 to 31 March 2000. 25 Notice of the making of the investigative referral was given by the Commission to Dr Saint under s 88(2) of the Act. Dr Saint was invited to make written submissions to the Director within 14 days stating why the Director should dismiss the investigative referral without setting up a committee. Dr Saint was provided with a copy of the investigative referral. 26 On 12 September 2000, Dr Saint made a 14 page submission to the Director in response to the invitation issued to him under s 88(2) of the Act. (The document, which is Exhibit "A" in the proceeding, however, bears the mistaken date of 12 August 2000. I was "counselled" once on the 18th Jan 2000 and my figures have not increased since then. For the last two quarters of 1999 the total rendered services is 4,930 and 4,993 respectively. For the first quarter of 2000 the total rendered services was 4,563 which is in fact a reduction of 9% not an increase. During the "counselling" on the 18th Jan 2000 I asked if the HIC would like me to cut back my servicing. Dr Laundy replied that "The HIC was not asking him to cut back his services. " In relation to "counselling" I note that in an extract from CMC meeting No 194 of 7 June 2000 it states "SMA reports that he counselled Dr Saint under the provisions of the PSRS on the 18/1/2000" and then states "Dr Saint was previously counselled on 29/10/1996". The extract then goes on to state "In view of the multiple counsellings" when in fact there are only two, 29/10/1996 and 18/1/2000. Further, in the letter that Neville Garrity wrote to Dr Janet Mould dated the 3 July 2000 he states "The CMC meeting No 194 of 7 June 2000 noted that Dr Warren Saint has been repeatedly counselled by the Health Insurance Commission Medical Advisors...". This is not an accurate account of the CMC meeting No 194 of 7 June 2000 as reported. 27 Dr Saint also commented on each of the "Top 40" patients which were listed in a report known as the PIRT report, which also was included among the documents comprising the investigative referral. Dr Saint went on to explain in summary that he worked an average of 64.5 hours per week, enjoyed working long hours and that there was a high demand for medical services in the area. 29 The Director also recorded that pursuant to s 89(1), he had conducted an investigation into the referred services but that he had not dismissed the referral under s 91 of the Act. 30 The Director's report was an attachment to the adjudicative referral. 31 By an instrument dated 18 May 2001, Dr Holmes also established the Committee. 32 By a letter dated 13 September 2001, the Committee advised Dr Saint that it would hold a hearing on 1 November and 2 November 2001 at which Dr Saint would be required to give evidence. After this part of the sampling process, (the exploratory sampling stage) has been completed, the Committee will calculate the initial percentage of inappropriate practice (if any). Having determined the percentage of inappropriate practice in the exploratory sample, the Committee would then calculate how many additional services it needed to consider to reach a statistically valid finding of overall inappropriate practice. You would then be required to provide the Committee with whatever additional patient records were needed to complete this second stage of the sampling process. 34 On 1 November and 2 November 2001, the hearing was conducted. Dr Saint gave evidence and was questioned by the Committee. He was represented at this hearing by a legal practitioner. 35 On 26 November 2001, the second respondent, Dr Ruse, who was the Chairman of the Committee, wrote to Dr Saint's solicitor stating that in light of the decision in Pradhan v Holmes [2001] FCA 1560 ; (2001) 125 FCR 280 ( Pradhan ) the Committee's hearing into the conduct of Dr Saint would be suspended until "the legal position is clear". The Pradhan case had held that an investigative referral was invalid, because it had been made in terms which, relevantly, were the same as the referral made in respect of Dr Saint's conduct. 36 On 24 January 2003, the Director wrote to Dr Saint saying that recent amendments to the Act had validated Referral Number 204 together with a number of other referrals. The letter also stated that the Secretary for the Committee would contact him in due course to notify him of the resumption of the Committee's proceedings. 37 By a letter dated 7 February 2003, the Director advised Dr Saint that the Committee did not intend to examine any MBS item 35 services. 38 Further, in that letter the Director said that the Committee had to date employed sampling methodology in accordance with the Health Insurance (Professional Services Review --- Sampling Methodology) Determination 2000 (No 1). He said that if the Committee was to employ the sampling methodology in the determination it would require the Committee to examine a further 47 MBS item 36 services to obtain the final random sample. This was likely to require at least two further hearing days and additional medical records would need to be produced. Having regard to the time and cost implications for all concerned of continuing with the standard methodology outlined above, the Committee is considering an alternative whereby no further services would be examined but instead the confidence interval is recalculated for the existing results. However, before writing to Professor Nicholls, the Committee would like to know whether you have any comments on the proposal that the Committee concludes its sampling at this point and makes its findings on the 38 MBS Item 36 services already examined. This means there would be no need to produce additional records and possibly attend two further sittings for the Committee to examine an additional 47 services. The Committee would instead commence its draft report. I remind you also, that you will be given a separate opportunity to make further general submissions to the Committee in writing before it starts its draft report. You will also be given a copy of the draft report and you will have the opportunity to make further written submissions suggesting changes to it. 40 Dr Saint did not respond to the invitation to comment which was contained in the letter. 41 By an email dated 21 March 2003, the Secretary of the Committee wrote to Professor Nicholls in asking for his opinion as had been foreshadowed in the letter to Dr Saint referred to in [39] above. • From the class size of 932 services a random sample of 38 services have been examined and the Committee considers 14 of these unacceptable which is 36% (rounded down) of the sample. • If no further services are examined, applying appropriate statistical techniques it can be shown that we can be 95% confident that the true percentage of inappropriate practice lies between 36% +/- 16%, that is the lower 95% confident limit is 20%. This value (20%) is to be chosen as the level of inappropriate practice (rather than 36%), not 21% as you have indicated (the difference being as a result of appropriate rounding to benefit the person under review). • In accordance with the methodology in the Determination, a further 47 services would need to be examined. Had a further 47 randomly selected services been examined, the percentage of inappropriate practice based on the sample of 85 would have been expected to be 36% (rounded down) so that the final percentage of inappropriate practice would have been 26% (36%-10%). By choosing the smaller sample of 38 rather than 85, half the width of the 95% confidence interval has increased from 10% to 16%. Since the lower confident limit is chosen as the percentage of inappropriate practice the person being reviewed will benefit from the approach based on the smaller sample. If you have any further queries relating to this matter please don't hesitate to contact me. 43 The Committee did not conduct any further hearings and proceeded to prepare a draft report on the basis of the sample it had examined. 44 Under cover of a letter dated 14 October 2003, Ms Kaylene Horler, the Secretary of the Committee, forwarded to Dr Saint a copy of the draft report of the Committee. The draft report stated that the Committee proposed to find that, in rendering services to 14 identified patients, Dr Saint had engaged in inappropriate practice. The letter invited Dr Saint to provide, within 21 days, written submissions suggesting changes to be made to the draft report. Dr Saint responded to the invitation by making detailed submissions in respect of the draft report. 45 On 7 June 2004, the Committee made its final report. A copy of this report was forwarded to Dr Saint under cover of a letter dated 8 June 2004 from Ms Horler. As previously mentioned, it found that Dr Saint had engaged in inappropriate practice. Further or alternatively, it was claimed that s 106U of the Act purported to confer the judicial power of the Commonwealth on persons who had not been appointed under s 72 of the Constitution and was invalid. 47 There was no argument advanced at the hearing in support of this ground of challenge. Dr Saint said that there were two cases which were then pending on appeal before the Full Court which had raised the same grounds of challenge as relied on by Dr Saint. These cases were Selim v Lele [2006] FCA 126 ; (2006) 150 FCR 83 and Dimian and Wong v The Commonwealth of Australia , an application which was remitted to the Federal Court by the High Court. 48 The parties reserved their respective positions until the outcome in these two cases. Accordingly, the only evidence advanced and contentions made at the trial by each party related to the second ground of challenge relied on by Dr Saint, namely, judicial review. At the end of the argument on the judicial review ground of challenge, I adjourned the hearing to a date to be fixed so as to accommodate the position that the parties may wish to make submissions in relation to the constitutional challenge after the Full Court had handed down its decision. 49 The Full Court delivered its decision in Selim v Lele [2008] FCAFC 13 on 27 February 2008 dismissing the constitutional challenges. Both parties advised my Associate that they did not wish to make any further submissions in relation to that ground of challenge. Following receipt of this information, I then formally reserved my decision on 28 March 2008. 50 Following the decision of the Full Court, I dismiss the claims for the declarations sought by Dr Saint based on the constitutional challenge pleaded at [ 70] to [98 ] of the further re-amended statement of claim. His main affidavit was sworn on 21 April 2006 and his second affidavit was sworn on 26 May 2006. Dr Saint also relied upon two affidavits of Dr John Henstridge sworn on 23 June 2006 and 5 December 2006 respectively. In addition, Dr Saint gave short oral evidence. He was not cross-examined. 52 The first affidavit of Dr Saint comprised 509 paragraphs and 174 pages. There were 166 annexures. There were two annexures to Dr Saint's second affidavit. Among the annexures to the affidavits was correspondence between Dr Saint and officers of the Committee responsible for processing applications made under the Freedom of Information Act 1982 (Cth) (the FOI Act). Dr Saint made a number of requests under the FOI Act and the correspondence annexed to his affidavit included schedules of documents compiled by officers of the Committee in response to his FOI requests disclosing a list of the communications which had occurred between the Secretary and other officers of the Committee and the second third and fourth respondents before and after the hearing in November 2001. Dr Saint relied upon one of these schedules [annexure WJS 157] in his written submissions in reply, in support of his contention that the Committee acted unlawfully by not meeting to consider its final report and other procedural steps leading up to the making of the final report. [See [135]-[140] below]. In addition to the schedules, the annexures to the affidavits also included copies of letters between the Secretary of the Committee and the members of the Committee and drafts of the draft report and the final report of the Committee. Thus, Dr Saint's second affidavit annexed a copy of a draft of the draft report of the Committee and a covering letter from Ms Horler dated 1 September 2003 addressed to each of the third respondent and the fourth respondent. There was also annexed to that affidavit a copy of a draft of the final report of the Committee. There were also documents which Dr Saint had prepared which contained information obtained from his FOI requests, disclosing the process whereby the Committee had reached its decision. Annexure WJS154 to Dr Saint's first affidavit is an example of this kind of document. 53 Counsel for the respondents objected to the admissibility of a large number of the paragraphs in the affidavits of Dr Saint on the grounds of going mainly to relevance, comment and the argumentative nature of the material. Further, counsel objected to the tender of any evidence which exposed or purported to expose the decision making process of the Committee, for the purpose of impugning the decision of the Committee. This objection was based on the principle of judicial immunity. The parties accepted that the hearing should proceed and that I would rule on the challenges to the admissibility of the evidence in my reasons. 54 I deal first with the objections to Dr Saint's evidence on the grounds of other than judicial immunity. As a general rule, new evidence is not permissible on the hearing of an application for judicial review. The evidence which will be admissible is that which is necessary in order to make good a contention that raises a relevant question of law. Much of the affidavit of Dr Saint did not observe these rules of evidence, addressing many issues going to the merits of the decision or containing comment, contentions and arguments. Senior counsel for Dr Saint accepted that paragraphs 89 to 381 and 389 to 480 of Dr Saint's affidavit were inadmissible on this ground. However, it was accepted that the documents referred to as annexures in those paragraphs could be tendered only in so far as they comprised documents that were before the Committee or contained extracts of the transcript of the Committee's hearing. The remainder of my rulings are set out in the schedule to these reasons. In my ruling in the schedule, I refer to some objections as having been "conceded". I have included under that category any response by the applicant to an objection, in the terms that the document is "read as a submission only". I reject the application to read those documents as a submission. 55 Counsel for the respondents also submitted that evidence such as the communications between Ms Horler, the Secretary of the Committee, and the members of the Committee about drafting the reports, drafts of the reports and documents prepared by Dr Saint derived from these documents, was inadmissible because it was advanced to show the means whereby the Committee made its decision, with a view to impugning of the lawfulness of the decision of the Committee. The respondents contended that each of the members of the Committee enjoys judicial immunity by reason of s 106F(1) of the Act. This section provides that each member of the Committee has, in the performance of his or her duties, the same protection and immunity as a Justice of the High Court. It follows, said the respondents, that it is not open to the applicant to seek to advance evidence of the means whereby the Committee members came to their decision, because the immunity is an absolute immunity and if the Committee members had to answer allegations about how they came to their decision, they would lose the immunity. Dr Saint argued that the judicial immunity would only preclude from admission into evidence documents or other evidence which exposes the actual thought processes of the Committee. 56 In the case of Herijanto v Refugee Review Tribunal [2000] HCA 49 ; (2000) 170 ALR 379 , Gaudron J held that the entire general protection and immunity of a Justice of the High Court is conferred on a member of the Refugee Review Tribunal by s 435(1) of the Migration Act 1959 (Cth). 57 In Herijanto v Refugee Review Tribunal (No 2) [2000] HCA 21 ; (2000) 170 ALR 575 ( Herijanto (No 2) ), the plaintiffs in that case were seeking to undermine a statement made by the Tribunal in its reasons for rejecting a visa application, that it had considered certain specified documents stored in a computer database before making a decision. The protection afforded to individual members of the tribunal by s 435(1) of the Act would be illusory if, although they could not be compelled to disclose their decision-making processes, those processes could be revealed by analysis of computer records. In my view, the protection and privilege conferred by s 435(1) of the Act extends not merely to disclosure by the individual member concerned, but the revelation, by whatever means, of any aspect of his or her decision-making process. This seems to have been the basis for the decision in Zanatta v McCleary. In that case the evidence of counsel was not admissible to prove an out of court statement by a judge as to his decision-making process. And it may also be the rationale for the decision of the Privy Council in Ramlochan v R in which it was held that a defendant in criminal proceedings was not entitled to production of the notes of the judge who presided at a his previous trial. (Emphasis added. Footnotes omitted. This is because if evidence was admitted for that purpose the absolute immunity of the Committee from having to answer as to how they came to their decision, would be lost. I do not accept that the preclusion is limited to the class of evidence contended for by Dr Saint. Such a limitation is inconsistent with the width of the preclusion described by Gaudron J as "any aspect" of the decision-making process. Further, it is significant that in Herijanto (No 2) the plaintiffs were not seeking access to documents and information disclosing the thought processes of the Tribunal, but discovery of the documents which the Tribunal had accessed before making its decision. Gaudron J refused discovery on the basis that the preclusion extended to "any aspect" of the decision making process. 59 It follows that I do not accept into evidence any of the documents including the documents compiled by Dr Saint from the derived information or any other evidence, on which Dr Saint sought to rely to expose the process whereby the Committee made its decision, for the purpose of impugning the Committee's decision on the grounds referred to in [129]to [140] below. 60 As will be apparent from these reasons, the expert evidence of Dr Henstridge, Professor Nicholls and Mr Clark did not loom large in the resolution of the contentions made before the court. However, notwithstanding this fact, and that the evidence did contain matters which did not go to the issues in contention between the parties, I will, nevertheless, admit the evidence in the affidavits of Dr Henstridge, Professor Nicholls and Mr Clark, reserving the question of the weight to be placed on that evidence. 62 Dr Saint contended that the Commission had represented that, before making an investigative referral, a medical practitioner would be counselled and given an opportunity to make adjustments to his practice to accommodate the concerns of the Commission. Dr Saint contended that this did not occur in his case and there was procedural unfairness because he was not given the opportunity to make submissions as to why the Commission should give effect to its representation and this failure by the Commission resulted in practical unfairness. 63 In support of this claim, Dr Saint referred to the following matters. 64 First, Dr Saint said that in the newsletter referred to in [9] above the Commission represented that, before making an investigative referral, it would, by counselling, warn a medical practitioner about its concerns, advise him or her of the risk of not adjusting his or her practice to accommodate those concerns, and give him or her an opportunity to make appropriate adjustments. Dr Saint also sought to characterise the statement in the newsletter as the publication by the Commission of a procedure, and he founded an alternative challenge on the basis that the Commission had not followed a published procedure. 65 Secondly , Dr Saint said that at the interview with Dr Laundy on 18 January 2000, Dr Laundy told him that the Commission was not asking him to cut back his services. 66 Thirdly, Dr Saint said that the letter from Mr Garrity dated 23 March 2000 set out at [15] above was a representation that the Commission would make a decision whether to make a investigative referral after reviewing his practice statistics for the second quarter of 2000. 67 Dr Saint contended that the Commission did not give effect to its representation, because he was not given an opportunity to make changes to his practice to accommodate the concerns of the Commission, before the investigative referral was made. This was because, said Dr Saint, the Commission had regard to his statistics for the first quarter of 2000 in assessing whether to make an investigative referral, notwithstanding that at the interview in January 2000 Dr Laundy had said that the Commission was not asking him to cut back his services, and Mr Garrity had said in his letter of 23 March 2000 that the Commission would review his statistics for the second quarter of 2000 for the purposes of determining whether to make an investigative referral. 68 In my view, Dr Saint was counselled and given an opportunity to make improvements to his practice before the Commission decided to make the investigative referral. The relevant counselling occurred at the meeting with Dr Laundy on 18 January 2000 and the Commission allowed Dr Saint until the end of March 2000 to demonstrate that he had made changes to his practice to meet the concerns expressed by at the meeting. 69 It is apparent from that record of interview of 18 January 2000 that Dr Laundy outlined to Dr Saint that the Commission was concerned that the high level of services he was providing may mean that he was engaging in inappropriate practice. The record of interview does record, as contended by Dr Saint, that Dr Laundy said that the Commission was not asking Dr Saint to reduce his services. However, it is also apparent, from the context in which Dr Laundy made that remark, that Dr Laundy was not thereby indicating that Dr Saint was at liberty to continue providing services at that level without the risk that his conduct would be referred to the Director and then to the Committee. The meaning of Dr Laundy's comment was that the high level of services carried with it a risk that he may be found to be engaging in inappropriate practice, but any finding that Dr Saint had engaged in inappropriate practice was a matter to be assessed by the Committee and not the Commission; and that the response made by Dr Saint to the expression of the Commission's concern, was a matter for Dr Saint and not the Commission. 70 Accordingly, in my view, the Commission complied with representation referred to in the newsletter, and, to the extent that the newsletter prescribed a procedure, the procedure so prescribed. 71 In any event, even if the decision to make an investigative referral by reference to Dr Saint's statistics for the first quarter of 2000 was a departure by the Commission from the representation or procedure, there was, in my view, no failure to accord procedural fairness. This is because Dr Saint did not suffer any practical unfairness by being denied an opportunity to make submissions as to why the effect should be given to the representation or procedure. Such a proposition is far too broad. There are undoubtedly circumstances in which the failure of an administrative decision-maker to adhere to a statement of intention as to the procedure to be followed will result in unfairness and will justify judicial intervention to quash the decision; but for the present applicant to succeed it would be necessary to conclude that such a result will follow in all circumstances. That cannot be correct. To begin with, it overlooks the discretionary nature of the remedies of certiorari and prohibition. 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. No practical injustice has been shown. The applicant lost no opportunity to advance his case. He did not rely to his disadvantage on the statement of intention. It has not been shown that there was procedural unfairness. And, as I have already indicated, there is no warrant for a conclusion that there was a failure properly to take into account the interests of the applicant's children. 74 Dr Saint said that the departure from the presentation or procedure without having an opportunity to make submissions, led to practical unfairness in three respects. 75 First, it was said that the investigative referral was made on the basis that he had been given an opportunity to improve after counselling, when this was not the case. It was Dr Saint's submission that the warning and accompanying opportunity to improve was only provided in Mr Garrity's letter of 23 March 2000. It followed that, if effect had been given to the Commission's representation, the Commission should have reviewed his statistics for the period 23 March 2000 to 30 June 2000 - and not for the first quarter of 2000, which was the period reviewed by the Commission. 76 The evidence does not support a finding that Dr Saint suffered any practical unfairness from the failure of the Commission to make an assessment by reference to Dr Saint's statistics for the period 23 March 2000 to 30 June 2000. Significantly, Dr Saint did not depose that in reliance on the 23 March 2000 letter from Mr Garrity, he had substantially changed his pattern of delivering services during the second quarter of 2000 in an effort to satisfy the concerns of the Commission. Further, there is no reference to Mr Garrity's letter of 23 March 2000 in the submissions which Dr Saint made to the Director in September 2000 to persuade him to dismiss the investigative referral. Nor is there any reference in those submissions to having made adjustments to his practice during the second quarter of 2000 in an attempt to meet the concerns of the Commission. Had Dr Saint, in reliance upon Mr Garrity's letter, substantially changed his pattern of delivering services during the second quarter of 2000, one would have expected that he would have referred, in those submissions, to Mr Garrity's letter and the adjustments which he made to his practice consequent upon Mr Garrity's letter. 77 It follows that even though the letter of 23 March 2000 by Mr Garrity was ambiguous and could be construed in the way Dr Saint contended in this case, the ambiguity of the letter led to no unfairness in respect of Dr Saint. 78 Secondly, Dr Saint said he also suffered practical unfairness in not being able to make submissions to the delegate of the Commission because the investigative referral was made on the basis that he had been the subject of "multiple" or "repeated" counselling, when, as he recorded in his submissions to the Director, he had only been counselled twice --- namely, 29 October 1996 and 18 January 2000. 79 In my view, Dr Saint suffered no practical unfairness by being deprived of the opportunity to point this out to the delegate of the Commission. The Commission's representation in the newsletter only referred to one counselling occasion and an opportunity to improve. Dr Saint accepted in his submissions to the Director (which were sent about a month after the Commission had made the investigative referral) that each of the interviews of 18 January 2000 and 29 October 1996 was a counselling occasion. 80 In any event, the delegate had before her the interview reports of each of the three meetings which Dr Saint had with Dr Hertnon and Dr Laundy. It was, therefore, open to the delegate to make her own characterisation of the content of the meetings which Dr Saint had with the Commission officers. 81 Thirdly, in the course of oral submissions Dr Saint said that the practical unfairness arose because at the time that he made his submissions to the Director, Dr Saint did not know that the delegate of the Commission had based her referral on his statistics for the period January to March 2000 figures and not on his statistics for the second quarter of 2000. I do not accept that submission. First, there was no evidence from Dr Saint that he held that belief when he made his submissions to the Director. Secondly, it is apparent from a perusal of Table 5 of the investigative referral that the Commission had reviewed statistics only for the first quarter of 2000 and not for the second quarter of 2000. Further, and significantly, Dr Saint, in his submissions in September 2000 to the Director, specifically referred to the statistics in that Table and expressly referred to the statistics for the "first quarter of 2000" when he compared those statistics with the statistics of "the last two quarters of 1999". [See [26] above]. I infer, therefore, that in commenting in that fashion upon the statistics in Table 5, Dr Saint closely perused the Table and appreciated that the period covered by the statistics figures ended in with the statistics for the first quarter of 2000. 82 For those reasons, in my view, Dr Saint suffered no practical unfairness, even if (contrary to my finding), by making an investigative referral on the basis of an assessment of Dr Saint's statistics for the first quarter of 2000, there was a departure by the Commission from its representation or procedure, in circumstances where Dr Saint was not given the opportunity to make submissions. 84 Dr Saint said that he gave an explanation for his high levels of servicing during his discussions with Dr Laundy on 18 January 2000. However, Dr Saint said, the delegate's reasons refer only to an explanation for the high level of services "having been sought" in the interview of 18 January 2000, and the reasons make no reference to the content of Dr Saint's explanation. It should be inferred, therefore, said Dr Saint, that his explanation was in fact not considered by the delegate of the Commission. Further, Dr Saint said that Dr Mould's reasons did not manifest a "proper, genuine and realistic consideration" of Dr Saint's explanation for the high level of servicing. 86 Dr Saint contended that although the 80/20 rule referred to in the observations in Kelly was not applicable in this case, the referral was based upon statistics reflecting a high level of servicing by Dr Saint. Therefore, said Dr Saint, the observations were equally applicable to his circumstances. 88 Branson J went on to observe at [35] that any other factors the Commission was bound to take into account in making a decision under s 86(1) were to be determined as a matter of statutory construction. Her Honour observed that as the Act did not expressly identify the considerations to be taken into account they may be implied from the subject-matter, scope and purpose of the Act. 89 I find it unnecessary to determine whether the Commission is required to take into account any statements made by a medical practitioner in an attempt to explain the level of services over the period in question, because I am satisfied that the delegate was aware of and took into account those statements. 90 In her reasons for the investigative referral, the delegate referred to the 18 January 2000 meeting between Dr Saint and Dr Laundy, and referred specifically to the fact that an explanation had been sought from Dr Saint. Dr Mould also referred to the fact that the record of interview of that meeting was an annexure to the referral. Dr Mould also included in the annexure to the investigative referral, the correspondence between Dr Saint and the Commission which ensued subsequent to his meeting with Dr Laundy. Among that correspondence was Dr Saint's letter of 5 February 2000 which expands upon the explanation given by Dr Saint at the meeting for his high levels of servicing. I infer from those facts (in particular, the inclusion as an annexure to the referral, Dr Saint's letter which expanded on Dr Saint's explanation given at the meeting) that the delegate was aware of, and took into account, the content of that material. 91 I do not accept the contention of Dr Saint that in order for the delegate to comply with her statutory obligation it was necessary for her reasons to manifest a "proper, genuine and realistic consideration" of Dr Saint's explanation made to Dr Laundy. First, the fact that the appellant had been counselled by the Commission's medical adviser in September 2000. Second, the fact that the appellant had been counselled by the Director in December 2000. Third, that he had restructured his practice and reduced his rate of servicing. In putting that submission, the appellant argued that the reasons given for the investigative referral, and in particular in para (c) of that referral, do not disclose that the Commission had regard to those three matters. In my opinion, the absence of a mention of those three matters in the reasons does not mean that the Commission did not have regard to those matters. The reasons which must be given by the Commission under s 86(4)(b) are "the reasons why the Commission considers the person under review may have engaged in inappropriate practice". The Commission does not have to give reasons why it has decided to make an investigative referral but only the reasons why it considers the practitioner may have engaged in inappropriate practice. The purpose of the Commission's reasons is to identify the matters into which the Director needs to inquire. In my opinion, the reasons which were advanced by the Commission were appropriate having regard to the reasons which the Commission had to give. In those circumstances, the appellant cannot, in my opinion, rely upon the Commission's failure to mention the three matters to which the appellant referred for arguing that the Commission failed to have regard to them. 92 I, accordingly, reject the contention of Dr Saint that the delegate improperly exercised power by failing to take into account the explanation of Dr Saint. Dr Saint relied upon the case of Greyhound Racing Authority (NSW) v Bragg [2003] NSWCA 388 ( Bragg) . Dr Saint went on to say that the delegate of the Commission took into account material which did not meet these requirements of adequacy and cogency and was, therefore, extraneous to the exercise of that power. These matters were inaccurate statistics and the number of times Dr Saint had been counselled. 94 In Bragg, Mr Bragg, a greyhound trainer, had faced disciplinary proceedings before the Regulatory Committee of the Greyhound Racing Authority (NSW) and, on appeal, the Greyhound Racing Appeals Tribunal. It was the function of each of the Regulatory Committee and the Tribunal to make factual findings in respect of the charge against Mr Bragg, which was the serious charge of bribery. The Regulatory Committee had imposed a penalty of 10 years disqualification and 10 penalty fine on Mr Bragg. The Tribunal dismissed an appeal from the decision of the Regulatory Committee. Mr Bragg challenged these decisions in the New South Wales Supreme Court by way of judicial review. He was successful at first instance. The Greyhound Racing Authority (NSW) appealed. 96 Dr Saint contended that these observations also applied to the Commission when deciding to make an investigative referral. 97 The function of the Tribunal in Bragg was to make factual findings in relation to a charge made against Mr Bragg of serious misconduct, and, if warranted, to impose penalties. By contrast, the function of the Commission at the stage of making an investigative referral is confined to posing a question for investigation. Its function does not even include formulating a charge, much less making findings of fact in respect of a charge, as the Tribunal was required to do in Bragg . At this initiating stage, the whole matter rests in inquiry rather than charge. A charge may never eventuate. For one thing, the Director's initial capacity to dismiss may be invoked (ss 89(1)(a) and 93(a)). 98 It follows that the policy considerations which underlie the observations by Santow JA in favour of a modified Brigginshaw principle, in respect of fact finding by the Greyhound Racing Appeals Tribunal, have no application to the Commission in making an investigative referral. The Bragg case is distinguishable. 99 It follows that I reject Dr Saint's challenge made on this ground. (italics added). 101 Mr Saint contended that the sentence in the investigative referral which is italicised above, is in the same terms as the sentence which was impugned in the Pradhan case and which led to the investigative referral in that case being declared invalid. 102 Dr Saint recognized that since Pradhan there have been observations made by the Full Court in the case of Grey and in the case of Freeman v Health Insurance Commission [2004] FCAFC 335 ; (2004) 141 FCR 129 ( Freeman ) to the effect that the presence of the impugned sentence in an investigative referral did not lead to the investigative referral and subsequent process being invalid. However, Dr Saint contended that those decisions were made without the benefit of the decision in SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 228 CLR 294 ( SAAP ). Dr Saint also said that the Full Court observations in Grey and Freeman were obiter. To this extent, we cannot, with respect, accept the general approach taken by Finn J in Pradhan. 104 In Freeman , Kiefel J (with whom Marshall J agreed) identified several grounds for distinguishing the decision in Pradhan . One ground was that the language of the investigative referral in Freeman was more specific than in Pradhan. In particular s 89(1) of the Act enables the Director to consider services not referred to in the Commission's reasons, when determining whether a Committee could reasonably find that there has been inappropriate practice. The Director may identify other relevant conduct by reference to the services and the focus of the inquiry might shift. The nature of the Director's inquiry may extend beyond the matters referred to in the Commission's reasons. There is however no denial of procedural fairness were the Director to identify other conduct as relevant. The Director's report is required to identify that conduct to the person under review: see ss 93(6) and 94(3). The ability of the Director to consider conduct other than that specified by the Commission and its relevance to the meaning of the statement were not considered in Pradhan v Holmes. Understood in the context of the Act, the statement did no more than remind the Director of the extent of his powers of inquiry. It follows, in my respectful view, that the construction given by his Honour to the statement should not be applied. 106 Thirdly, Kiefel J (with whom Marshall J agreed) adopted the observations of the Full Court in Grey referred to in [ 103 ] above and Downes J, the third member of the Full Court, also approved those observations. 107 In SAAP , the High Court held that the failure of the Refugee Review Tribunal to comply with the procedure prescribed in s 424A of the Migration Act invalidated the decision of that Tribunal. Dr Saint contended that the reasoning in that case applied equally to this case, such that a contravention to s 86(1) of the Act no matter in what form it occurred, invalidated the investigative referral, and the whole of the subsequent process. 108 I do not accept Dr Saint's contention that the observations in Grey at [103] above which were followed in Freeman , are undermined by the subsequent High Court decision in SAAP . The observations of the High Court in SAAP comprise an instance of the application of the principle in Project Blue Sky to the contravention of s 424A of the Migration Act. The case of SAAP considers legislative intention in relation to the consequences of non-compliance with a different process enacted under a different Act. By contrast, the Full Court in Grey applied the Project Blue Sky principles of statutory construction, to the same infringement of the same Act as is relied upon by Dr Saint in this case, and concluded that the defect, even if it is regarded as such, did not have an invalidating effect upon the statutory process. The SAAP case is distinguishable. 109 In my view, I am not justified in declining to apply the observations of two Full Courts, (as Dr Saint would have me do), whether they are obiter or not. 110 Further, and in any event, in my view, Dr Saint's challenge on this ground also fails for the reasons referred to by Kiefel J (with whom Marshall J agreed) in Freeman referred to at [105] above. 112 Dr Saint contended that the power of the Director to make an adjudicative referral under s 93 was subject to the power to dismiss conferred by s 91 of the Act. Dr Saint contended that the Director's consideration of whether to exercise his powers under s 91 of the Act was infected by a failure to accord procedural fairness, alternatively failure to observe mandatory procedures in the making of the investigative referral. This, so it was contended, meant that Dr Saint was unable to make meaningful submissions to the Director in the exercise of his right under s 91 of the Act. 113 It was said that the reasons for the investigative referral stated that after counselling the Commission had reviewed Dr Saint's practice statistics and that the Commission had determined that there had "been insufficient change to remove the overall concerns expressed above". It is submitted that Dr Saint erroneously understood that this statement indicated that Dr Mould had considered the Dr Saint's statistics for the three months following 23 March 2000. 114 As I have already found, the evidence does not support that submission. First, there was no evidence from Dr Saint that at the time of making his submissions to the Director he believed that Dr Mould had considered the statistics for the period from 23 March 2000 to 30 June 2000. In fact, there is no reference in Dr Saint's affidavit evidence to him having ever made the submissions to the Director. The submissions of September 2000 were tendered during the oral evidence given by Dr Saint at the trial. 115 Secondly, as I have also already found, Table 5 of the report which was part of the investigative referral identified the statistics that were reviewed by the Commission. There is no reference in those statistics to the statistics for the second quarter of 2000 -the statistics reviewed end at the first quarter of 2000. As previously mentioned, Dr Saint commented specifically on Table 5 in his submissions. 116 It was also contended that Dr Saint's ability to comment in a meaningful way was also affected by the fact that the statistics ruled on by the Commission were unreliable and inaccurate. I reject this contention. In his submission to the Director, Dr Saint referred specifically to certain inaccuracies in the figures. He also dealt with the question of the number of times he had been counselled. 118 In support of this contention, Dr Saint said that the Director had relied upon reports of investigations undertaken by Dr Christine Davidson, for the purposes of discharging his statutory duty of investigation under s 89(1) and that Dr Davidson's reports formed the basis for his opinion under s 93. Dr Saint went on to contend that that Dr Davidson did not identify in her reports any evidence of inappropriate drug prescription by Dr Saint in relation to MBS item 35 and MBS item 36, whereas the Director had referred to inappropriate drug prescription in relation to MBS item 35 and MBS item 36 services. It followed, said Dr Saint, that the Court should infer that there was no evidence for the Director's findings in relation to drug prescription by Dr Saint and/or those findings involved extreme irrationality or logicality. 119 In my view, Dr Saint's contention is not to be accepted. 120 As mentioned in [30] above, the Director's report to referred to four aspects of Dr Saint's practice to which the Committee should have regard when considering whether his conduct in connection with rendering MBS item 35 and 36 services may have constituted engaging in inappropriate practice. The third aspect was "prescribing drugs in the absence of accepted medical indications". 121 It is the case that the Director received reports of the investigations made by Dr Davidson in relation to the investigative referral. However, in his report, the Director expressly states that he has examined Dr Saint's clinical notes. The Director made reference to the range of the drugs and stated that most notable were injectable vitamin B12 and iron, soluble asprin, pethidine and antibiotics. The Director then said: "The wide range of drugs prescribed at greater than the 75th percentile suggested that the issuing of a prescription was the most common means of closing a consultation. This means of closing a consultation may be associated with rapid throughput, symptom oriented medical practice. " (b) As to MBS Item 36: "There were some indications of apparently clinically inappropriate use of antibiotics or other drugs....Morphine appeared to be used for migraine and antibiotics appeared to be used routinely for upper respiratory tract infections... . The management plans appeared to be mostly confined to drugs. " (c) As to MBS Item 35: "Again there were some suggestions that drugs were not always prescribed for clinically acceptable reasons or in accordance with accepted medical practice. It has been held that those provisions of the ADJR do not apply to the expression of opinion ( Australian Retailers Association v Reserve Bank of Australia [2005] FCA 1707 ; (2005) 148 FCR 446 at 588). 123 The Act did not require that the Director make any findings of fact, in relation to making the adjudicative referral. Section 91 of the Act provides that the enquiry which the Director must make is whether there are sufficient grounds on which the Committee "could reasonably find that the person under review has engaged in inappropriate practice. " Section 93(6) provides that in his report to the Committee, the Director must give reasons why the Director "thinks that conduct by the person under review....may have constituted engaging in inappropriate practice. The Director's observations are couched in language of opinion as to findings that may be open to the Committee. For example, the Director refers to "indications of apparently clinically inappropriate use of antibiotics or other drugs" and "some suggestions that drugs were not always prescribed for clinically acceptable reasons or in accordance with accepted medical practice". The Director's observations are, in my view, the expression of professional opinion based on what he said he had examined, namely, the pharmaceutical benefits prescribing data recorded in the investigative referral, Dr Saint's clinical notes and the reports of Dr Davidson. It follows that I reject the "no evidence" ground of review relied upon by Dr Saint. 125 Dr Saint also contended that findings of the Director involved extreme irrationality or illogicality. As previously mentioned, there is reference in the Director's report to having examined the pharmaceutical benefits prescribing data in the investigative referral which recorded that Dr Saint prescribed a wide range of drugs at greater than the 75 th percentile. Further, the Director stated that he had examined the clinical notes of Dr Saint. There is, in my view, no basis for concluding that the views expressed by the Director were irrational or illogical. I do not, therefore, accept the contention of Dr Saint. 126 Dr Saint also submitted that he relied on the accuracy of the Director's reasons to prepare his defence at the hearing before the Committee and this led to him being denied procedural fairness before the Committee. Neither in his oral nor his written submissions did Dr Saint refer to any passages in his evidence which identified the part of the Director's report he relied upon in the preparation of his defence. Nor was any reference made as to how he was prejudiced in that regard. Accordingly, I reject that ground of review. 127 In any event, the question of whether a party has been denied procedural fairness must be assessed by reference to the whole process ( Phan v Kelly (2007) 158 FCR 75) ( Phan ). The evidence discloses that Dr Saint had legal representation at the hearing before the Committee, that he was provided with a draft report by the Committee which clearly identified the issues in respect of which he was at risk of an adverse finding and that he made very extensive submissions in response to the draft report. 130 Dr Saint contended that the Committee had no power to have regard to the time that Dr Saint had spent in consultation with patients, because the adjudicative referral had not referred the question of whether Dr Saint had applied the correct MBS descriptor to the services he provided. However, said Dr Saint, the Committee had inquired into these matters and it should be inferred that the Committee has allowed these matters "to infect its final decision". The relevance of the issue arises because MBS item 36 prescribes a consultation period of at least 20 minutes. 131 In support of this contention, Dr Saint sought to rely upon statements made by Dr Ruse, the content of the draft report which contained references to the time taken by Dr Saint in consultations with patients, and the content of the final report, which did not contain those references. Dr Saint also relied upon evidence of the communications that took place between Ms Horler and members of the Committee before the preparation of the final report. 132 Dr Saint asked the Court to draw an inference from this evidence that despite the final report making no reference to the time Dr Saint had spent in consultation with patients than this matter had "infected" the Committee's decision in its final report. 133 I have already held at [59] above, that the evidence purporting to expose the manner in which the Committee reached its decision is inadmissible for the purpose of impugning the decision. In the absence of that evidence, there is no basis for drawing the inference contended for by Dr Saint. In any event, even if that evidence had been admissible, I would not have found that the Committee's decision was based on any consideration, other than those expressed in its reasons. 134 Accordingly, I do not accept Dr Saint's contention that the Committee had allowed matters outside the scope of the adjudicative referral to infect its final decision. Section 160KD of the Act provides that the Committee "prepare a written draft report". Likewise, s 106L provides that after the expiry of the requisite period and after taking into account any submissions made in response to the draft report, the Committee must "prepare a final report". In neither of these sections is there any requirement that the Committee meet to prepare, or meet in relation to the preparation of, either of the reports. The Act does, however, deal with the convening of meetings. Section 97(1) of the Act requires that the chairperson must convene the first meeting of the Committee within 14 days after the appointment of the Committee members. The fact that the Act expressly identifies only one occasion when a meeting is required to be held, namely, the first meeting, but has not expressly provided for the holding of a meeting in relation to the preparation of either report, is indicative of a legislative intention that it is no absolute requirement for the Committee to meet to perform those functions. Whether meetings, other than the first meeting, are to be held depends on what is necessary for the efficient conduct of the affairs of the Committee (s 97(3)). By legislating for the preparation of the two reports as part of the function of the Committee, without also specifying that the Committee must meet in relation to the performance of this function, it is apparent that the legislature did not intend that the efficient conduct of the Committee's affairs mandated that the Committee meet to carry out this function. 137 Further, Dr Saint relied upon the following observations of Fox J in Minister for Health v Thomson [1985] FCA 208 ; (1985) 8 FCR 213 at 217. It is not disputed that the Committee is one of experts. The Act requires that it comprise five medical practitioners. It seems reasonably clear that the intention of the Act is that the Committee sit as a Committee of the peers of the medical practitioner whose conduct is in question and exercise its own judgment in relation to the evidence before it, using its own collective knowledge in its evaluation. 138 These observations are in general terms and in my view have no application to the point in issue. 139 Accordingly, I dismiss this ground of review. 140 I would, however, add that, in support of this ground of review, Dr Saint again sought to rely upon evidence seeking to expose the process whereby the Committee prepared its draft report and its final report. As previously mentioned, I have found that evidence is inadmissible for the purpose relied upon by Dr Saint. In the absence of that evidence there is no basis on which I could have drawn any inference that the Committee had not met for the purposes referred to by Dr Saint. 142 The Committee in its final report found that the statutory definition of adequate record keeping in s 82(3) and s 81(1) of the Act as supplemented by the Health Insurance (Professional Services Review) Regulations 1999 ( Cth ) (the Regulations), did not apply to the conduct of Dr Saint under review. This was because, so the Committee said, the relevant legislative provisions only became effective on 1 November 1999, and the conduct under review predated those sections. The Committee considers that the subsequent introduction of this legislation essentially codified existing standards of the general body of practitioners. 143 Dr Saint contended that the transitional provisions of the amending Act which introduced the record keeping provisions state that those record keeping provisions apply in respect of investigative referrals which were made after the effective date of the amending Act. In this case, the investigative referral was made after November 1999. Therefore, said Dr Saint, the Committee should have applied the statutory record keeping provisions. 144 Dr Saint went on to say that, even if the Committee was right in finding that the record keeping provisions introduced with effect from 1 November 1999 did not apply to conduct engaged in before that date, some of Dr Saint's conduct which the Committee inquired into, post-dated 1 November 1999. So, even on the view taken by the Committee, the record keeping provisions of the Act and Regulations should have been applied by the Committee to that conduct. (e) The Committee considers that a clinical record would not be adequate unless it contained the elements outlined in points (c) and (d) above, and in its opinion, Dr Saint's records did not. 150 In my view, even if the Committee erred in law in concluding that the record keeping provisions did not apply to the conduct referred to it in the adjudicative referral, the Committee, nevertheless, applied the standard articulated in the statutory provisions in assessing whether Dr Saint had kept adequate medical records. There was, therefore, no error of law in the application of the correct standard for record keeping. However, if I am wrong in this characterisation and there was such an error of law made by the Committee, the error made no difference to the outcome for Dr Saint because there was no material difference in the standards and, therefore, I would in the exercise of my discretion withhold relief in respect of that error ( VAAD v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 117). 151 The standard of adequate record keeping referred to Regulation 5(c) is that the entry provides "clinical information adequate to explain the type of service rendered or initiated" (emphasis added). The standard referred to in Regulation 5(d) is that the entry be " sufficiently comprehensible that another practitioner relying on the record, can effectively undertake the patient's ongoing case" (emphasis added). 152 The use of the language in the terms italicised manifests a parliamentary intention that the Committee is to determine the adequacy of records by reference to the standard of the general body of general practitioners. Thus, for example, Reg 5(d) requires that the Committee is to determine whether the record was adequate by reference to what the general body of general practitioners would regard as an entry that was "sufficiently comprehensible" to permit another practitioner relying on the record to effectively undertake the patient's ongoing care. The standard set out in subparas 38(c),(d) and (e) of its final report, by the Committee is the standard of the general body of general practitioners. Accordingly, when the Committee assessed the adequacy of Dr Saint's records, it assessed them by reference to the statutory standard described in the Act and Regulations, notwithstanding that it did not expressly recognize that it was doing so. 153 It follows that I reject Dr Saint's challenge founded on this ground of review. Thus, for example, it was contended that if the input was deficient then that might constitute failing to provide adequate clinical input, but failing to record what was not provided would not comprise failing to keep a proper record. 155 The Committee found that in respect of all 14 services where in its opinion there was inappropriate practice, Dr Saint kept inadequate records. In respect of eight of those services, the Committee also found that Dr Saint had failed to provide an adequate clinical input. There were, therefore, six services in respect of which the Committee's finding of inappropriate practice was founded only on the basis of inadequate record keeping. These were services Nos 7, 16, 18, 21, 29 and 36. 156 In my view, the Committee did not fall into the error which Dr Saint said that it did. 157 I have reviewed each of the six services in respect of which the finding of inappropriate practice was based only on a finding of keeping inadequate records. I am satisfied that in making the findings the Committee was aware of, and applied, the distinction to which Dr Saint has referred. It is not necessary to refer to all of these services to demonstrate the Committee's appreciation of the distinction. It will suffice to illustrate the point that I refer to some of the findings in respect of these services, by way of example. Dr Saint advised that the patient had told him her shortness of breath had been increasing over the previous few weeks and that she was having pain in her legs. These are important positive symptoms that were not recorded. 158 By this finding, the Committee has demonstrated that the vice was Dr Saint's failure to record what he had been told by the patient. If Dr Saint did perform the examination which he stated he did, it was equally important to record the significant positives and negatives. 160 In relation to patient 18, the Committee found that Dr Saint was aware that the patient had a carer, but found that Dr Saint had not recorded that fact in the Health Summary. Such patients may need to be seen by another doctor at short notice and in conditions where a full and accurate history cannot be easily obtained. The fact that the necessity for a cross check with the carer was not recorded in the Health Summary and that he kept those important details in his head would be unacceptable to the general body of general practitioners. Dr Saint recalled but did not record that the patient was concerned about her skin. If he did perform an examination, it was not recorded. 163 Accordingly, Dr Saint's contention is not accepted. It was said that the Committee's finding that inadequate record keeping alone was sufficient to amount to inappropriate practice, was contrary to s 82(3) of the Act. This was because that section required that the keeping of the practitioner's records was just a relevant matter that had to be considered in conjunction with other relevant matters. It could not by itself found a finding of inappropriate practice. 165 In my view, the intention of s 82(3) of the Act is to emphasise, not diminish, the importance Parliament placed on the requirement that a medical practitioner keep adequate and contemporaneous records. The addition of the bracketed words " (as well as to other relevant matters) " in that section is not to be regarded as a requirement that a finding of inappropriate practice in respect of record keeping can only be made in conjunction with one or more other incidents of practice which would amount to inappropriate practice. The additional words are there to emphasise that record keeping is not the only matter to which the Committee should have regard in assessing inappropriate practice. This is because the advice given by Professor Nicholls did not comprise advice of the nature contemplated by s 106K(4). 169 Dr Saint contended that the advice provided by Dr Nicholls was not advice contemplated by the section because the letter was not addressed to the methodology as a whole; and that it was the "conclusion", as opposed to the methodology as a whole, which was certified as statistically valid. Dr Saint said that s 106K(4) should not be construed to permit the use of, what Dr Saint referred to as, "ad hoc" methodology or the "salvaging" of a partially completed sampling methodology set out in the Determination. The Committee found that of the remaining 80 services, 69 or 86% (rounded down) were considered inappropriate. • Applying appropriate statistical techniques it can be shown that we can be 95% confident that the true percentage of inappropriate practice lies between 86% +/- 8%, that is the lower 95% confident limit is 78%. This value (78%) is to be chosen as the level of inappropriate practice (rather than 86%). In conclusion, it is statistically valid to accept the conclusion based on the sample of 80 item 23 services that the level of inappropriate practice will be determined as 78%. I confirm that I am a statistician accredited by the Statistical Society of Australia Inc. as required under subsection 106K(4) of the Act. 171 There is, in my view, no relevant distinction between the nature of the certification given by Dr Nicholls in this case and that which he gave in relation to Phan . Further as he did, in Phan , Professor Nicholls stated in his report in this case, that the "approach" adopted by the Committee was statistically valid (Para 8 of Professor Nicholls' report dated 22 September 2006). 172 Dr Phan made an argument as to the defective nature of Professor Nicholls' opinion on similar lines to that made by Dr Saint in this case. Professor Nicholls' response to Ms Goodspeed's email dated 5 March 2004 clearly certifies that it was statistically valid for the Committee to accept the conclusion, based on a sample using 80 item 23 services, that the level of inappropriate practice would be determined at 78%. 174 Tamberlin J was, accordingly, satisfied that the language Professor Nicholls used in his letter that it was "statistically valid to adopt the conclusion" based on the alternative methodology referred to in the letter, was sufficient compliance with s 106K(4) of the Act. 175 Dr Saint also argued that the Determination is contained in a legislative instrument and this should be construed as indicative of a legislative intention to preclude the use of "ad hoc" methodologies which were not adopted before initial sampling was undertaken. I do not accept this submission because the legislature has by s 106K(4) expressly provided in the Act that there may be a departure from the Determination and there is nothing in s 106K(4) which places any limitation on the nature of the alternative sampling methodology that may be validated by the statistician, or at what stage it may be validated ( Phan at [58]). 176 Accordingly, I will follow Phan and hold that a certification in the terms given by Professor Nicholls in this case fell with the ambit of s 106K(4) of the Act. It followed, said Dr Saint, that the final report was invalid. 178 The Mathews' case is distinguishable. In Mathews , the Court was concerned with a different fact situation. In essence the Determination provides for a two stage process of producing the random sample of services which is examined by the Committee. The drawing of the sample known as the "preliminary random sample" is the first stage. The second is the drawing of the sample which is referred to as the "exploratory sample". This is a sample which is randomly drawn from the "preliminary random sample". 179 In Mathews the Committee had examined the first 30 services on the list of the preliminary sample. Mr Clark deposed that he had examined the computer files relating to the drawing of the samples in Dr Saint's case which were stored on the Commission's computer and by reason of that examination was able to say that the Commission by the application of the computer program randomly selected the "preliminary random sample", then by the application of the computer program, randomly selected from that preliminary sample the "exploratory random sample" of the 40 services. 180 In support of his contention, Dr Saint relied upon paragraph 7 of Dr Henstridge's affidavit of 5 December 2006. However, Dr Henstridge's evidence does not demonstrate that the sampling in Dr Saint's case exhibited the vice referred to in in Mathews . Nor does Dr Henstridge's evidence challenge the evidence of Mr Clark that the explanatory random sample was randomly selected in the manner described by Mr Clark. Dr Saint accepted that the question of how the explanatory sample was drawn was a factual question which turned on whether Mr Clark's evidence should be accepted. 181 Dr Saint submitted, that I should not accept the evidence of Mr Clark because there is an insufficient foundation laid for his evidence that in this case, namely Dr Saint's case, the Committee examined an "exploratory sample" that had been randomly drawn by the application of the Commission's computer program from the "preliminary sample". I do not accept that submission. Mr Clark deposed that he went back to the file stored on the Commission's computer to examine how the sampling had occurred in relation to Dr Saint's case and that based on that examination, he expressed the view set out above. In my view, that evidence affords Mr Clark a sufficient basis upon which to express the view that he expressed. 182 In my view, therefore, that the Mathews' case has no application to this case. It follows that I do not accept Dr Saint's contention. 183 It follows that Dr Saint's application is dismissed. Rulings on objections to Dr Saint's affidavit of 2 April 2006. Paragraph Part objected to Finding 2 The whole Objection upheld - the terms of the conversation irrelevant. 9 The second and third sentences Objection conceded. 11 The first and third sentences Objection conceded. The second sentence Objection upheld. The record of the interview is in evidence. 14 The third and fourth sentences Objection conceded. 15 The first second and third sentences Objection conceded. The second sentence Objection upheld --- comment. 16 The second sentence and WJS 7 Objection conceded. 17 The second sentence Objection conceded. 18 The first second and third sentences Objection conceded. The fourth and fifth sentences Objection upheld --- irrelevant. 19 The whole Objection upheld- irrelevant, evidence of uncommunicated state of mind, comment. 24 The whole Objection upheld --- argument. 25 The whole Objection conceded. 29 The words "the Fifth Respondent was apparently satisfied with the reduction in my servicing levels" Objection upheld --- comment. 30 The whole Objection upheld --- argument. 34 The first and second sentences Objection conceded. WJS 15 Objection upheld - documents irrelevant. 35 The whole WJS 16 Objection upheld --- irrelevant, paragraph deals with the 80/20 rule which was not applied in this case, comment. 36 The whole WJS 17 Objection upheld --- irrelevant. 37 The paragraph commencing "This appears to be an application..." Objection upheld --- irrelevant as 80/20 rule not considered, comment. 39 The whole Objection upheld - comment, argument. 40 The whole Objection upheld - argument, evidence not before the Commission and includes information which post dates the decision of the Commission. 41 Second sentence from the words "I was alarmed..." Objection conceded. 42 The whole Objection upheld --- comment. 43 First and second sentences Objection conceded. WJS 22 Objection dismissed - documents are relevant to contention by Dr Saint in respect of the exercise of powers by the Director. 44 The whole and WJS 23 Objection conceded. 45 The first sentence Objection conceded. The remainder of the paragraph Objection upheld --- comment. 46,47 The whole Objection upheld - comment, argument. 48 Sub paragraphs (2), (3) and (4) WJS 24 Objection upheld --- comment. Document not before the decision-maker. 49 The whole Objection upheld - comment and irrelevant. 50 The whole Objection upheld - the 80/20 rule was not relied upon. 53 The sentence beginning "I consider that..." Objection upheld - comment 55 The whole Objection conceded 56 The whole Objection upheld - irrelevant, immunity. 57 The whole Objection upheld - irrelevant, immunity. 58 The whole WJS 30 (mistakenly referred to as WJS 31) Objection upheld - irrelevant, immunity. 63 Second sentence Objection upheld --- comment. 64 The last sentence Objection upheld --- comment. 65 The whole Objection upheld --- comment. 66 The whole Objection upheld --- comment. 67 The whole Objection upheld - comment, argument. 68 The whole Objection upheld --- comment. 69 The whole Objection upheld --- comment. 70 The whole WJS 34 Objection upheld --- immunity. 71 The whole Objection upheld --- comment. 72 The whole Objection upheld - comment, the uncommunicated subjective belief of Dr Saint is irrelevant. 73 The whole Objection upheld --- comment. 74 The whole Objection upheld --- Dr Saint's uncommunicated belief is irrelevant. 75 The whole Objection upheld --- comment. 76 The whole Objection upheld in respect of first sentence - comment. 77 The whole Objection upheld in respect of first sentence - comment, uncommunicated understanding irrelevant. 78 The whole Objection upheld - comment, argument. 79 The whole Objection upheld - comment, argument. 80 The whole Objection upheld - comment, argument. 81 The whole Objection upheld --- comment. 82 The whole Objection upheld --- comment. 83 The whole Objection upheld --- comment. 84 The whole Objection upheld --- comment. 85 The whole Objection upheld --- argument. 86 The whole Objection upheld --- argument. 87 The whole Objection upheld --- argument. 88 The whole Objection upheld --- argument. 89 --- 381 The whole Objection conceded. Tender of annexures to these paragraphs accepted only in so far as they comprise documents that were before the Committee and do not fall within the ambit of the ruling on judicial immunity. 385 The whole WJS 151 Objection conceded. 386 The whole Objection conceded. 387, 388 The whole Objection upheld --- immunity, irrelevant. 389 - 480 The whole Objection conceded. Tender of annexures to these paragraphs accepted only in so far as they comprise documents that were before the Committee and do not fall within the ambit of the ruling on judicial immunity. 482 The whole Objection conceded. 484 The whole Objection upheld --- immunity. 485 The whole Objection upheld - immunity, comment. 489 The whole Objection conceded. 490 -498 The whole Objection upheld - irrelevant, comment. 504 The whole Objection upheld --- comment. 509 The whole Objection conceded. I certify that the preceding one hundred and eighty three (183) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | natural justice failure to give effect to the representation or procedure whether applicant suffered practical unfairness whether the decision maker took into account explanation given by medical practitioner for high level of servicing whether no evidence ground of review open in relation to adjudicative referral admininstrative law |
Wilson, within 42 days of the date of this order, establish a compliance policy and associated complaints handling system, training and review system for its security business (including its Patrol Services business) in Western Australia in accordance with the program set out in Annexure B (Compliance Program). Wilson maintain and operate the Compliance Program for a period of three years from the date of this order. Wilson pay the Applicant's costs of and incidental to the proceeding, to be taxed if not agreed. The Court declared that Wilson breached sections 52 and 53 (aa) of the Trade Practices Act 1974 (Cth) ( Act ). The Court found that, during the period October 2007 to June 2008, Wilson, in the provision of mobile security patrol services, made false and misleading representations to some customers by representing to those customers that Wilson had made the contracted number of security inspections ( Contracted Calls ) to their premises, when in fact, Wilson had not made all those Contracted Calls. Section 52 of the Act prohibits a corporation from engaging in misleading or deceptive conduct. Section 53(aa) of the Act prohibits a corporation from making false representations that services are of a particular standard, quality, value or grade. Since becoming aware that [insert customer name] has been overcharged as a result of missed calls, Wilson has sent [insert customer name] Adjustment Notes crediting you an amount equal to the number of contracted calls that [insert customer name] did not receive during the relevant period. Should you require any further information, please contact Wilson on [insert telephone number] . 2.2 Wilson will instruct the Compliance Advisor to conduct a Trade Practices Act 1974 (Cth) ( TPA ) risk assessment ( Risk Assessment ) in accordance with 2.2. 4.2 Wilson will ensure that the Compliance Program includes whistleblower protection mechanisms to protect those coming forward with trade practices complaints. Wilson shall use its best endeavours to ensure that these mechanisms are consistent with Australian Standard 8004, though tailored to Wilson's circumstances. 5.2 The training program will be designed to ensure the employees' awareness of the responsibilities and obligations in relation to sections 52 and 53 of the TPA. Wilson must ensure that the training is conducted by a suitably qualified compliance professional or legal practitioner with expertise in trade practices law. 5.3 Wilson will ensure that the Compliance Program includes a requirement that awareness of trade practices compliance issues forms part of the induction of all new employees whose duties could result in them being concerned with conduct that may contravene sections 52 and 53 of the TPA. 7.2 Wilson will implement promptly and with due diligence any recommendations the ACCC may make that are reasonably necessary to ensure that Wilson maintains and continues to implement the Compliance Program in accordance with the Court's Order. (b) Independence of Reviewer --- Wilson will ensure that the Reviews are carried out by a suitably qualified, independent compliance professional with expertise in trade practices law ( Reviewer ). (d) Wilson will ensure that the first Review is completed within one year and one month of the Court's Order, and that each subsequent Review is completed within one year thereafter for a period of three years. 9.4 Wilson will ensure that the Review Reports are completed and provided to Wilson within two months of each Review. 9.5 Wilson will retain the Company Compliance Program Review Report. Wilson will cause the ACCC Compliance Program Review Report to be provided to the ACCC within 14 days of receiving it from the Reviewer. 10.2 Wilson shall, at its own expense, if requested by the ACCC, provide copies of documents and information in respect of matters which are the subject of the Compliance Program. 10.3 In the event the ACCC has sufficient reason to suspect that the Compliance Program is not being implemented effectively, Wilson will, at its own expense and if requested by the ACCC, cause an interim or additional Review to be conducted, and will provide the resulting Review Report to the ACCC. What follows are the reasons for the making of those consent orders. In that regard, the parties through their solicitors signed a statement of agreed facts dated 4 December 2009. The Court received this statement of agreed facts at the hearing of the application. As explained further below it appears to the Court that it is appropriate to regard the statement of agreed facts in determining whether or not to make orders in the proceeding by consent of the parties. The statement of agreed facts provides as follows. The applicant is, and was at all material times, a body corporate established by s 6A of the Trade Practices Act 1974 (Cth) (Act). The respondent, Wilson Parking Australia 1992 Pty Ltd (Wilson), is, and was at all material times: a company duly incorporated and carrying on business in Australia; and a corporation within the meaning of the Act. Wilson is in the business of, among other things, providing mobile security patrol services (Patrol Services) to Customers in Western Australia through its security business division in Western Australia. Wilson performs Patrol Services by causing its patrol officers to conduct security inspections of Customers' premises (Calls). Typically, a patrol officer will be assigned a schedule (known as a "run") of premises to attend and inspect during a shift. That schedule typically includes premises owned by more than one Customer. On various dates, Wilson entered into Contracts (Contracts) for the supply of Patrol Services with each of the entities listed (Customers) in column A of the Schedule attached to the accompanying Minute of Consent Orders (Schedule). But not reproduced in these reasons. This clause of each Contract was referred to by Wilson and is generally known in the security patrol industry as a "shared services clause" (Shared Services Clause). The purpose of a Shared Services Clause is to provide for the possibility that a patrol officer may be delayed or prevented from making a call to one Customer's premises during a run because the patrol officer needed to respond to a break-in or other emergency at another Customer's premises. During the period October 2007 to June 2008 (Relevant Period), Wilson had an insufficient number of patrol officers to make all of the Contracted Calls for all of the Customers. The amount of each invoice corresponded with the amount chargeable for the Contracted Calls. By issuing each of the Invoices, Wilson represented to each Customer that it had made the Contracted Calls in the preceding month, save for any Permitted Missed Calls (Call Representations). In October 2007, Wilson operational management in Western Australia identified to Wilson senior management in Victoria that it had an insufficient number of patrol officers to perform the Contracted Calls for all of the Customers. In early November 2007, Wilson senior management authorised and directed operational management to raise and pay credits to Customers for Missed Calls which were not Permitted Missed Calls. Due to a failure at an operational management level in Western Australia, credits, while provisioned in November, were not actually paid. From July 2008, Wilson was made aware of the ACCC's investigation of the conduct that is the subject of these proceedings, including the failure to pay credits or inform Customers about any failure to perform the Contracted Calls. Credits were then raised and paid by Wilson to Customers, backdated to and including October 2007 for Missed Calls, which were not Permitted Missed Calls, between October 2007 and June 2008. The ACCC alleges that by making the Call Representations and refraining from informing its Customers of the true position, Wilson engaged in misleading or deceptive conduct in contravention of s 52(1) of the Act. It is understood that the conduct will be misleading if it induces or is capable of inducing error: Parkdale Custom Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191. It is not necessary to prove that anyone has in fact been misled. The ACCC further alleges that by making the Call Representations Wilson falsely represented that services were of particular value in contravention of s 53(aa) of the Act. A representation is false if it is contrary to fact. If the representation is not correct then it is false even if it is not false to the knowledge of the person making the representation: see Given v CV Holland (Holdings) Pty Ltd (1977) 29 FLR 212 , per Franki J at 217; Darwin Bakery Pty Ltd v Sully [1981] FCA 115 ; (1981) 51 FLR 90. In this regard the ACCC point to the Invoices issued by Wilson at material times that represented to Customers that they had received the security services bargained for. The Court accepts it is open to characterise the conduct of Wilson in the manner agreed by the parties. The ACCC advised the Court that it does not seek refunds or compensation orders under s 87 because: The ACCC suggests the Court may not make an order under s 83 of the Act, because this matter is proceeding on the basis of admissions rather than a contested trial and refer in this regard to Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559 ; (2002) 190 ALR 169 at 183 -184, per Finkelstein J. Whether or not his Honour's observations referred are intended to stand for such a hard and fast rule does not need to be determined here. The ACCC's enforcement mode in this case need not be questioned on the facts agreed. The Court also observes that the ACCC has not commenced proceedings under Pt VC of the Act and accordingly no pecuniary penalties may be ordered. The parties agree that declarations should be made in terms of proposed orders 1 and 2 of the minute of proposed orders. The Court has a wide discretion under s 21 of the Federal Court of Australia Act 1976 to make declarations of right. They will serve to mark the Court's disapproval of the particular conduct engaged in, in contravention of the Act. I am satisfied that the declarations should be made. To the extent that it is suggested that the Court should not make declarations in such circumstances, where public rights are an issue, unless there is "evidence" before the Court, I am satisfied that it is appropriate for the Court to make the declarations sought on the basis of the information currently before the Court, including the statement of agreed facts signed by the parties. See generally my observations in Australian Competition and Consumer Commission v Cosic Holdings Pty Ltd [2009] FCA 1579 at [49] --- [51]. So far as the injunctions are concerned, the Court has the power under s 80 of the Act to make them. In the nature of public interest injunctions. Consequently the injunctions are statutory in nature and not granted pursuant to the Court's equitable jurisdiction. As s 80(4) and s 80(5) of the Act suggest, the Court has a wider jurisdiction to grant the injunction under s 80 than at general law, although traditional equity principles are not irrelevant. See ICI Australia Operations Pty Ltd v Trade Practices Commission [1992] FCA 474 ; (1992) 38 FCR 248. Injunctions can be made under s 80 if it is in the public interest to do so: Australian Competition and Consumer Commission v 4WD Systems Pty Ltd [2003] FCA 850 ; (2003) 200 ALR 491 at [212] and [216]. The public interest may warrant the making of an injunction notwithstanding the contravener is not likely to repeat that conduct: see Trade Practices Commission v Mobil Oil Australia Ltd [1984] FCA 363 ; (1984) 4 FCR 296 at 300, per Toohey J; Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd (2001) ATPR 41 --- 811 at [32]. In this case an injunction is sought in the public interest to reduce the risk that Wilson will engage in similar conduct in the future that contravenes Pt V of the Act. I accept that the admitted facts disclose a sufficient nexus between the conduct alleged and the orders sought: see Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1987) 148 ALR 339. I also accept that the proposed injunction is sufficiently clearly and precisely stated to be capable of being complied with and would not require Court supervision: see Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18 ; (1999) 161 ALR 79 at [26] . The particular injunction sought to some extent requires Wilson to comply with the law, however it also has regard to the actual practices of the respondent and the circumstances in which it deals with Missed Calls. It provides for refunds to Customers in certain circumstances. It is apparent therefore that the injunction if granted does more than admonish the respondent to comply with the law. In the circumstances I consider the injunction to be appropriate. The parties also request the Court to make orders pursuant to s 86C that would cause Wilson to send a letter to Customers advising them of the Court's judgment, findings and the remedies granted and also requiring Wilson to establish and maintain a compliance policy for three years. The letter to Customers will achieve the result of advising them of the nature and extent of Wilson's conduct in contravention of the Act and the outcome of the proceeding. It will protect consumers by alerting them to the fact that the conduct occurred, increase their awareness of the type of conduct that may breach the Act and encourage Customers to ensure that they receive the services to which they have contracted, and it is appropriate for such orders to be made. The compliance policy is intended to prevent further incidence of the conduct in future by ensuring that Wilson has procedures in place to educate its employees about the type of conduct that may breach the Act. These compliance orders are consistent with the purpose of s 86C which is raising awareness of the type of conduct that may contravene the Act and as to the outcome of particular litigation: as to which see Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) ATPR 41 --- 517. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | breach of s 52 and s 53aa of trade practices act 1974 (cth) whether proposed consent orders that declarations, injunctions and non-punitive orders under s 86 should be made public interest consideration appropriate to make orders sought trade practices |
The second defendant (Mr Moodie) was excused from attending the hearing on the separate question. The answer to the separate question determines whether the plaintiffs were or were not entitled to vote at a meeting of creditors of the first defendant, Pisces Group Limited (Pisces), under s 439A of the Corporations Act 2001 (the Act) held on 10 July 2009. At that meeting the creditors resolved that Pisces execute a deed of company arrangement (DOCA). Pisces executed the DOCA on 16 July 2009. At the meeting, the chairman, Mr Moodie, decided that the plaintiffs were members not creditors (except to a minor and unimportant extent). The plaintiffs contended that they were creditors and entitled to vote as such. If their view had prevailed, the resolution in favour of the DOCA would not have been passed. The plaintiffs commenced this proceeding on 24 July 2009 seeking various declarations and orders, the foundation of which is the proposition that Mr Moodie erroneously classified the plaintiffs as members rather than as creditors. Whether Mr Moodie or the plaintiffs were right turns on some unhappily expressed documents. The second plaintiff, Pilmood Pty Limited (Pilmood), is a company associated with Steven Bruce Troughton (Mr Troughton), who is a director of Pilmood. Kandelka as trustee of the Kraa Family Trust and Pilmood as trustee of the Troughton Family Trust were formerly the owners, by way of equal shareholdings, of a company called Mortgage Data Solutions Pty Ltd (MDS). In 2006 and early 2007 negotiations took place for the sale of MDS by Kandelka and Pilmood to Pisces. Pisces was then known as Fusion Operations Solutions Pty Ltd (I will refer to "Pisces", not "Fusion", although certain documents to be quoted from below may refer to Pisces as "Fusion"). In the Heads of Agreement, Kandelka, Pilmood, Mr Kraa and Mr Troughton were each called "the Vendors" but I will refer only to Kandelka and Pilmood below. The Share Sale Agreement will be a more detailed document and the parties agree that this Heads of Agreement is not a legally binding document. It is however clearly the intention of all parties that the sale will proceed and both parties agreed [sic - agree] to discuss in "Good Faith" any issues that arise in compiling the more detailed legally binding document. One of those terms was that Pisces was to issue 1.5 million convertible redeemable preference shares (CRP Shares) at $1.67 per share with voting rights. The CRP Shares were to be convertible to 1.5 million ordinary shares at any time on or before 1 September 2008. The Heads of Agreement provided for what was to happen if Mr Kraa or Mr Troughton or their respective nominees elected not to convert the CRP Shares to ordinary shares. In that case Pisces was to "pay the sum of $1.67 per share on 1 September 2008 to redeem, buy back and cancel such redeemable preference shares" (cl 1(a)). There is a separate statement (cl 1(d)) that Mr Kraa or Mr Troughton or their respective nominees might elect not to take ordinary shares in Pisces, in which case the CRP Shares were to be redeemed by Pisces on 1 September 2008. There is a statement (cl 1(e)) that under a separate agreement, Kandelka and Pilmood were to grant Pisces a loan of $2.5 million or part thereof (being the balance of the number of shares not converted by Kandelka or Pilmood) payable to each of them or their respective nominees over three years from 1 September 2008 at interest of 10% per annum payable monthly on balances outstanding on the loan. The Loan Agreements were not to be secured by any form of guarantee by Pisces or its shareholders. Finally there was a provision (cl 1(f)) that if the shareholders in Pisces did not authorise the issue of CRP Shares, Pisces would issue convertible notes to Kandelka and Pilmood which were similarly to be convertible by them to 1.5 million ordinary shares in Pisces on or before 1 September 2008. If Kandelka and Pilmood did not convert the notes into ordinary shares, they were to "convert to a loan for the sum of $2.5 million" from Kandelka and Pilmood to Pisces. That loan was, like the one referred to at [15] above, to be repayable over three years from 1 September 2008 bearing interest at 10% per annum payable monthly on outstanding balances of principal. As will appear below, the date 1 September 2008 became 1 January 2009 in the Share Sale Agreement which the parties were finally to execute. A minor point may be noted here. There is embedded in certain statements an erroneous arithmetical assumption that 1.5 million shares at $1.67 per share = $2,500,000. In fact, however, the product is $2,505,000. The Heads of Agreement did not provide for the possibility that redemption by Pisces might fall foul of s 254K of the Act, although it did provide for the possibility that the Pisces shareholders might not authorise the issue of the CRP Shares. Section 254A provides in subs (1) that a company's power under s 124 to issue shares in the company includes the power to issue preference shares (including redeemable preference shares). Subsection (2) of s 254A provides that a company can issue preference shares only if the rights attached to them with respect to certain matters specified in the subsection are set out in the company's constitution (if any) or have been otherwise approved by special resolution of the company. In the present case it is the special resolution that is relevant. Section 254K provides, relevantly, that a company may redeem redeemable preference shares only if the shares are fully paid and "out of profits or the proceeds of a new issue of shares made for the purpose of the redemption". The plaintiffs contend that Pisces assumed an absolute obligation to redeem, whereas Pisces contends that its obligation to redeem was subject to the availability of profits or of the proceeds of a new issue of shares made for the purposes of the redemption. Section 254L(1) provides that if a company redeems shares in contravention of ss 254J or 254K, the contravention does not affect the validity of redemption or of any contract or transaction connected with it, and the company is not guilty of an offence. However, s 254L(2) provides that that any person involved in the contravention contravenes the subsection; and the subsection is a civil penalty provision: see s 1317E. Moreover, under subs (3) of s 254L, a person commits an offence if the person is involved in a company's contravention of ss 254J or 254K and the involvement is dishonest. The new constitution provided in cl 7 for Pisces to be able to issue preference shares on the terms that they were, at the option of Pisces, liable to be redeemed. Clause 7 also provided that the preference shares might confer on their holders the right to convert them into ordinary shares on a basis determined by the board of directors. Finally, cl 7 provided that the board might determine the rights of the holders of preference (referred to as "preferential") shares to receive a dividend, whether cumulative or not, out of the profits of Pisces. The constitution so adopted was in force at all material times. It referred to the agreement of Pisces to issue 1.5 million CRP Shares to acquire all of the issued shares in MDS, and then stated: "The Convertible Redeemable Preference Shares are issued on the following terms and conditions". The Convertible Redeemable Preference Shares shall be fully paid. The Convertible Redeemable Preference Shares shall be redeemed at the Company's option or converted at the Shareholders' option. The Convertible Redeemable Preference Shares shall have the same voting rights as the Ordinary shares, the same rights to any dividends and the right to receive notices, profit and loss accounts or balance sheets. The Convertible Redeemable Preference Shares may only be redeemed out of profits or out of the proceeds of a new issue of shares made for the purpose of redemption. The Convertible Redeemable Preference Shares shall be cancelled when they are redeemed. The conversion rate or conversion value of each Fusion redeemable preference share shall be $1.67 per share at the time of redemption. This sum has been determined by dividing the sum of $2.5 million by 1.5 million shares. On 25 January 2007, Pisces as purchaser, Kandelka and Pilmood as vendors, and Messrs Kraa and Troughton entered into the Share Sale Agreement. Kandelka and Pilmood agreed to sell, and Pisces agreed to buy, all the shares in MDS for the purchase price and otherwise on the terms and conditions of the Share Sale Agreement (cl 2.1). Clause 3.2 provided that the parties' obligations to complete did not become binding unless on or before the "condition satisfaction date" each of the conditions set out in Pt 2 of Sch 6 was fulfilled (or waived under cl 3.4). The expression "condition satisfaction date" was defined in cl 1.1 but the date was left blank. Nothing was made of this omission and it seems not to have assumed importance. One of the conditions set out in Pt 2 of Sch 6 was the "Issue of Convertible Redeemable Preference Shares authorised by the members of the Purchaser on agreed terms and conditions and annexed hereto". This would lead one to expect the annexure to replicate the terms and conditions stated in the annexure to the minute reflecting the special resolution referred to at [26]-[27] above. It did so - more or less (see below). Clause 3.4 provided that a condition referred to in cl 3.2 was waived if and only if either the parties agreed in writing to waive it or, where the condition was expressed to be for the benefit of a particular party, that party gave notice of waiver to the other party. The issue of the CRP Shares was stated in Pt 2 of Sch 6 to be for the benefit of Kandelka, Pilmood and Messrs Kraa and Troughton. They did not give a notice of waiver. Another condition specified in Pt 2 of Sch 6 was "Loan Agreement from Vendors to Purchaser" and this was said to be for the benefit of the purchaser, Pisces. Pisces did not give a notice of waiver. Clause 5.1 provided that completion was to take place on a date which was left blank in the document except for the year "2007", in Sydney, or at a time or place agreed in writing by the parties. Clause 5.2 set out the obligations of Kandelka and Pilmood as vendors at completion. In summary, they were to transfer their shares in MDS and to take other steps directed to ensure that Pisces had the benefit of MDS's business. Clause 5.3 provided that at completion Pisces must deliver, and if necessary execute, the securities (if any) specified in Sch 7 for payment of the "deferred price". The shares are entitled to be converted to 1.5 million ordinary shares. This does not include the revenue generated by the E-App software, which belongs to the Purchaser. For the third year or part thereof a sum of $70,000 is payable. Annexed to the Share Sale Agreement were: a Broker Tool Fee Schedule (apparently intended to be an annexure to Sch 7 to the Share Sale Agreement); a document headed "Convertible Redeemable Preference Shares (to be inserted in Sch 7 in Share Sale Agreement)"; and an executed Loan Agreement dated 25 January 2007 between Pisces as "Borrower" and Kandelka as "Lenders" (the plural "Lenders" was used in the document). The heading of the second document suggests that that document was intended to replace or supplement part of Sch 7 and in any event that it was intended to be part of that schedule. Nothing turns on this. The appropriate view to take is that the second document was incorporated by reference into Sch 7. The second document is very similar to the document that was attached to the special resolution of 8 September 2006 noted at [27] above, but there are some differences which make it desirable to set out the relevant parts of the second document. The Convertible Redeemable Preference Shares shall be redeemed at the Company's option or converted at the Shareholders' option. The Convertible Redeemable Preference Shares shall have the same voting rights as the Ordinary shares, the same rights to any dividends and the right to receive notices, profit and loss accounts or balance sheets. The Convertible Redeemable Preference Shares may only be redeemed out of profits or out of the proceeds of a new issue of shares made for the purpose of redemption. The Convertible Redeemable Preference Shares shall be cancelled when they are redeemed. The conversion rate or conversion value of each Fusion redeemable preference share shall be $1.67 per share at the time of redemption. This sum has been determined by dividing the sum of $2.5 million by 1.5 million shares. When such redemption occurs at Fusion's election before 1 January 2009 then Fusion shall pay the sum of $1.67 for each share redeemed at the time of redemption. It is common ground that there was a loan agreement of the same date executed by Pisces as Borrower and Pilmood as Lender. The parties approached the matter on the basis that the two documents were in the same form, although I note that the Kandelka document uses the plural "Lenders" to refer to Kandelka whereas the Pilmood document uses the singular "Lender" to refer to Pilmood. The Loan Agreement (for convenience I will refer to the Loan Agreement with Kandelka alone) recited the Share Sale Agreement. It recited that Pisces had issued 750,000 CRP Shares to Kandelka as consideration for the purchase of Kandelka's shares in MDS; that the CRP Shares were convertible by Kandelka to ordinary shares on 1 January 2009 and that in the absence of such a conversion, "then the shares will be redeemed by the Borrower on 1 January 2009" (Recital B). The Principal Sum will be determined by multiplying the sum of $1.67 by the number of Convertible Redeemable Preference shares that are not converted to Ordinary Shares. Recital D, in which the definition of 'Principal Sum' is found, was that Kandelka had agreed to advance to Pisces on 1 January 2009 "the sum of $1.25 million or part thereof ( Principal Sum )" upon having the repayment of the Principal Sum with interest in the manner set out in the Loan Agreement. (The equal monthly instalments will be determined by dividing the amount of the Principal Sum at the time of advance by the amount of months from the date of advance up to 1 January 2012). On no reckoning was any money advanced on the date borne by the Loan Agreement, namely 25 January 2007. The evidence does not reveal the date of issue. On 16 February 2007 Pisces' then name of "Fusion Operations Solutions Pty Ltd" was changed to "Pisces Group Pty Ltd", and on 7 September 2007 the company became an unlisted public company under its present name "Pisces Group Ltd". It may be that 16 February 2007 was the date of completion. The Share Sale Agreement seems to have anticipated an early date of completion. By notices dated 19 December 2008, each of Kandelka and Pilmood gave Pisces notice that on 1 January 2009 it elected not to take ordinary shares in Pisces and "wishe[d] to redeem all 750,000 of the Convertible Redeemable Preference shares it [held] in Pisces... in accordance with the Share Sale Agreement dated 25 January 2007. " Of course, Kandelka and Pilmood could not redeem their CRP Shares - only Pisces could do so. Pisces did not pay any money to Kandelka or Pilmood on or after 1 January 2009. On 19 January 2009, Mr Kraa sent an email on behalf of Kandelka and Pilmood to Selva Thiru, the General Manager of Finance for Pisces, asserting that the principal was to be repaid on each loan at a minimum rate of $34,791.67 per month on the last day of each month, and that in addition interest on the outstanding balance was to be paid on the same day and that the interest for January 2009 was $10,637.67 ($1,252,500 @ 10% (per annum) for 31 days) unless any amount of principal was paid earlier. The email furnished particulars of Kandelka's and Pilmood's bank accounts. On 3 February 2009 Selva Thiru replied to the effect that Pisces would seek to redeem the shares as soon as it made a profit, and that market conditions had made it not possible to raise money for the specific purpose of redeeming preference shares. On 29 May 2009 Pisces appointed Mr Moodie administrator of Pisces pursuant to s 436A of the Act. In a report to creditors dated 25 June 2009 Mr Moodie indicated, inter alia , that a certain DOCA proposed by the directors of Pisces was in the best interests of creditors and would provide unsecured creditors with at least 10c in the dollar. The second meeting of creditors to which I referred earlier was held on 10 July 2009, having been adjourned from 3 July. Kandelka and Pilmood sought to lodge proofs of debt totalling over $2.5 million (representing money said to be owing under the Loan Agreements, including interest) and to vote at the meeting. Mr Moodie did not accept the proofs of debt for the full amounts of them, but admitted each of Kandelka and Pilmood to vote for $65,907.00 --- a total of $131,814.00. Apparently Mr Moodie allowed that they were creditors in respect of certain interest owing under the Loan Agreements. The solicitor for Pisces objected at the meeting, referring to Heesh v Baker (2008) 67 ACSR 192 (see below), while the solicitor for Kandelka and Pilmood distinguished that case as not having involved a loan agreement. In fact four creditors voted against the DOCA totalling $143,826.00 by value. Twenty four creditors voted in favour of the DOCA, totalling $2,111,187.74 by value. Kandelka and Pilmood each sought to prove for a total of $1,315,907.51 representing $1,252,500 for principal and $63,407.51 for interest. If their proofs had been admitted in full they would have voted against the DOCA to the full combined extent of $2,631,815.02 and the resolution in favour of the DOCA would not have been passed. If their proofs had not been admitted at all, the amount voted in favour of the DOCA would have remained $2,111,187.74 but the amount voted against it would have been only $12,012.00. The DOCA was executed on 16 July 2009. It is arguable that it confines attention to the terms and conditions set out at [27] above, being the terms and conditions in the document that was attached to the special resolution of 8 September 2006. According to that approach, evidence of the Share Sale Agreement and the Loan Agreements would be irrelevant and inadmissible and the reference to them in the separate question would be only by way of identification of the CRP Shares. Neither party approached the matter in that way. The parties referred freely to all of the documents. Indeed, for the terms and conditions on which the CRP Shares were issued, they referred primarily to the document that was attached to the Share Sale Agreement (set out at [40] above) and referred to in Sch 7 to that Agreement. Another problem is that the separate question does not allow for the possibility that each of Kandelka and Pilmood was both a shareholder and a creditor, as Mr Moodie, the Chair of the Second Meeting of Creditors, had thought. According to the submission of Pisces, Kandelka and Pilmood are not entitled to be paid the principal totalling $2,500,000 unless and until there are profits or the proceeds of a new issue of shares made for the purpose of the redemption (the severity of the position may be mitigated by an ill-defined implied "best efforts" obligation). A consequence of the position taken by Kandelka and Pilmood is that apparently they would simultaneously have the benefit of the Loan Agreements and also remain the owners of the CRP Shares until the latter are redeemed, after which they would remain creditors under the Loan Agreements (the severity of the position may be mitigated by some ill-defined implication, the nature of which is not obvious). Senior counsel for Kandelka and Pilmood disavowed any suggestion that his clients would enjoy both the status of the holders of CRP Shares and lenders, but apart from referring to a "cancellation" of the CRP Shares, he did not attempt to explain the mechanism by which they would cease to enjoy the former. In Heesh v Baker , above, Barrett J had to consider whether, in the circumstances of that case, the holders of redeemable preference shares were "creditors" of the company concerned for the purposes of Pt 5.3A of the Act. The terms of the issue of the shares, as set out in the prospectus, provided that the company was to pay a fixed dividend and that distribution rates might vary from time to time depending on the sufficiency of profits. If there should be insufficient profits to pay fully the distribution entitlement, any shortfalls were to carry forward to a successive period until payment was made. It should be acknowledged at once that in that case there was no loan agreement and that the possibility of unavailability of profits was addressed in relation to a different issue. Barrett J referred to certain cases as authority for the proposition that a company was or could be subject to an absolute obligation to redeem notwithstanding a provision similar to s 254K of the Act ( UOB Venture Investments Ltd v Tong Garden Holdings Pte Ltd [2001] 1 SLR 362 at [20]; Mutual Life and Citizens Assurance Co Ltd v Mosgiel Ltd [1994] 1 NZLR 146 ; Re Dividend Fund Incorporated (In Liquidation) [1974] VR 451 at 454-6; TNT Australia Pty Ltd v Normandy Resources NL (1989) 53 SASR 156 at 206; and Re Marra Developments Ltd and the Companies Act (No 2) (1978) 3 ACLR 798. It cannot be doubted that, upon and by virtue of subscription for and allotment of redeemable preference shares, a contract comes into existence between the company and the shareholder. The contract may or may not impose what the Singapore court found to be an absolute obligation to redeem (or, for that matter, to pay specified dividends at specified times). If the obligation is absolute, a breach of contract occurs when the company fails to perform; and this is so even if the failure is because of unavailability of a fund from which payment may lawfully be made. There are then questions about remedies, a matter to which I shall return. When regard is had to the content of each, the contract is seen to be of the kind described in Coppleson above [discussed below], both as to default in the payment of dividends and as to default in redemption. The contract requires only such performance as is consistent with the statutory constraints. There are no absolute obligations. Bowen CJ, Franki and Fisher JJ said that they thought that those words added nothing. Both parties contracted on the basis of the law and part of that law is s 61 of the Companies Ordinance [comparable to s 254K of the Act]. The parties cannot be presumed to have assumed obligations which it is unlawful for one of the parties to fulfil. It is not a case where supervening legislation operates to make the fulfilment of its obligations by one party unlawful. Rather, the parties are contracting on the basis of a given law. In these circumstances, failing the availability of one or both of the funds specified in s 61(3), the company is not in default under its contract with the holders of redeemable preference shares if it fails to redeem after receipt of the requisite notice. I do not understand Coppleson, which is binding on me for what it decided, to be inconsistent with that limited proposition. I treat Coppleson as warning, however, that a conclusion that a company has undertaken an absolute obligation to redeem should not be lightly reached. Difficult questions would arise if the construction arrived at was that there was an unqualified obligation to redeem. Clearly, the remedy of specific performance of such an obligation would not be available if its effect was to require a contravention of s 254K. Nor would a judgment in debt or for damages in those circumstances. A winding up on the "just and equitable ground" may be the only appropriate remedy available to the holder of the redeemable preference shares. I need not discuss all of the issues that would or might arise, in view of the conclusion that I reach below that, as a matter of construction, Pisces did not assume an absolute obligation to redeem. I now turn to the question of construction of the Share Sale Agreement and the Loan Agreements. For convenience I will number the points to be made. The elimination of the inconsistency would have to be looked for elsewhere. (2) The waivers provided for in cll 3.1-3.4 and Schedule 6 are problematical. By waiving the provision for the issue of the CRP Shares, the vendors and Messrs Kraa and Troughton would forego the consideration that Pisces had agreed to give for the transfer of the shares in MDS. Likewise if Pisces waived the benefit of the Loan Agreement, apparently it would be notionally excised from the Share Sale Agreement and there would be no deferral favouring Pisces. But deferral of what? It is difficult to see, putting to one side the Loan Agreement, what obligation to pay burdened Pisces apart from any that might by found in an undertaking to redeem by a certain date (see below). (3) The third paragraph in Sch 7 (set out at [37] above) states unequivocally that the loan from Kandelka and Pilmood to Pisces was to be made from the proceeds of the redemption of the CRP Shares. That is to say, there was to be a redemption followed by a "loan back" of the proceeds of the redemption. Absent a redemption, the Loan Agreement would not become operative. (4) The first sentence in the terms and conditions document annexed to the Share Sale Agreement (set out at [40] above) speaks in mandatory terms of conversion or redemption at a fixed time (three times are stated and the parties treated the earliest, 1 January 2009, as the relevant one --- I will say nothing of the second bullet point or the date 25 January 2009 to which it impliedly refers). Standing alone, this provision seems to mean that failing conversion on 1 January 2009, Pisces must redeem the CRP Shares on that date no matter what. (5) The statement in that document that the CRP Shares "shall be redeemed at the Company's option or converted at the Shareholders' option" is problematical. The "Shareholders' option" is a true option. It may be that "the Company's option" is also, and reflects s 254A(3)(b) of the Act. The expression "at the Company's option" could be read down as meaning simply "by the Company". I do not find the reference to "option" alone determinative, but in the light of other indicia think it refers to a true option. (6) The statement in the same document that the CRP Shares "may only be redeemed out of profits or out of the proceeds of a new issue of shares made for the purpose of redemption" expresses an agreement that there is to be no redemption in fact if there are not profits or the proceeds of the new issue of shares made for the purpose of redemption, available to enable the redemption to take place lawfully. This is a clear acknowledgment that Pisces is not to be obliged to redeem unless and until it can do so lawfully under s 254K. Pisces led evidence of a lack of profits available to fund the redemption and asserted that it was difficult in the current economic climate to raise funds for that purpose by an issue of shares. There was no attempt by Kandelka and Pilmood to prove that the lack of profits or the proceeds of a new issue of shares made for the purpose of a redemption, by the date of the second meeting of creditors on 10 July 2009, was in some way attributable to the fault of Pisces. A possible construction of the statement consistent with an absolute obligation to redeem is that while Pisces will not actually redeem (in contravention of s 254K of the Act), Kandelka and Pilmood are allowed to resort to the remedies they would enjoy for a failure to redeem other than of recovering the redemption money of $2,500,000, however described. This construction would not, however, make Kandelka and Pilmood creditors of Pisces. (7) In the first paragraph of the terms and conditions document commencing "In the event that ...", it is stated that absent an election to convert into ordinary shares, "the sum of $1.67 per share shall be payable on or after 1 January 2009" (my emphasis). This suggests that redemption on 1 January 2009 is not an absolute obligation of Pisces and is consistent with the idea that the obligation to redeem becomes absolute only once a fund of either kind mentioned is available. (8) The second paragraph commencing "In the event that ..." also accepts that redemption will not necessarily take place on 1 January 2009. The expression "or part thereof" suggests that there may be a partial redemption on 1 January 2009. This is consistent with the expression in that paragraph "on any sums outstanding until Fusion is able to redeem all the preferential shares with the issue of shares made for the purpose of redemption or out of profits". Accordingly, both the opening and closing elements of the paragraph accept that there is not an absolute obligation on Pisces to redeem on 1 January 2009. Counsel for Pisces points to the reference to "interest", which is problematical. Interest suggests a loan, not the holding of shares. Yet the paragraph is directed to the holding of CRP shares "until redemption. " I think "interest" is to be read as a slip or error and as if it were "a dividend". There is to be a dividend of 10% per annum on the amounts of any CRP Shares that remain unredeemed for as long as they remain unredeemed after 1 January 2009. (9) In my opinion, in the light of (3), (5), (6), (7) and (8) above, the Loan Agreements are to be read on the assumption that there has been a lawful redemption on or by 1 January 2009 by Pisces. On that assumption, a loan by each of Kandelka and Pilmood to Pisces of $1,250,000 or part thereof for the purpose of conducting the business of Pisces makes sense. The reference to "or part thereof" allows for two possibilities: first, that there has been no conversion but there has been a partial redemption (see above); second, that somehow prior to 1 January 2009, some of the shares have been converted to ordinary shares and the remainder have been redeemed (see the second note ** set out at [40] above). (10) As noted earlier, the expression "this day advanced" in cl 2 of the Loan Agreement (set out at [45] above) is problematical. The expression "the Principal Sum" is defined in recital D as being "$1.25 million or part thereof". It may be that "this day" was intended to mean 1 January 2009 on the basis that a total redemption and "loan back" occurred on that date. On the other hand, the expression may have a distributive meaning, as was suggested by counsel for Pisces. According to this meaning, the expression would refer to any date when, from time to time, the amount of the Principal Sum altered as a result of a partial redemption and "loan back". Because of the view I take otherwise, I favour the latter construction. While the question of construction is difficult, I think that on the proper construction of the documents there was no absolute obligation to redeem undertaken by Pisces. On the contrary, I think that on the proper construction of the documents, its undertaking to redeem was subject to the availability of either kind of fund referred to in s 254K of the Act. I refer in particular to the considerations referred to at [74](3), (5), (6), (7) and (8) above. Assume, contrary to my view, that there was an absolute obligation to redeem on 1 January 2009. By what mechanism, it may be asked rhetorically, did the CRP Shares cease to exist by the time of the meeting on 10 July 2009? Apparently there would have had to be a redemption of them unlawfully funded by Kandelka's and Pilmood's loans. The preferable view, I suggest, is that there was no unlawful redemption and no loan. In the result, Kandelka and Pilmood were not creditors for the purposes of Part 5.3A of the Act in the two sums of $1,250,000 at the time of the meeting of creditors of Pisces held on 10 July 2009. I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | convertible redeemable preference shares (crp shares) issued by company (pisces) whether plaintiffs/holders of such shares qualified as creditors for purposes of meeting of creditors of pisces held under s 439a of corporations act 2001 (cth) contract by which plaintiffs sold their shareholdings in another company (mds) to pisces in return for issue of crp shares in pisces whether terms of issue of crp shares and associated documents had effect that pisces was under an absolute obligation to redeem by a certain date whether loan agreement between plaintiffs and pisces had been activated in absence of redemption. corporations |
The Fund was established by trust deed dated 24 March 1995 ('the 1995 Trust Deed'). On 31 August 2000 it was altered to enable the Fund to pay an allocated pension, and the name of the Fund was changed ('the 2000 Trust Deed'). The respondent was the complainant to the Tribunal. • 24 March 1995 --- the Fund was established, with the respondent as the sole member. This was the respondent's 65 th birthday. • 18 October 1999 --- following an inquiry from the respondent, the applicant wrote to the respondent and advised that reg 7.04(1C) of the Superannuation Industry (Supervision) Regulations 1994 ('the SIS Regulations') restricted the acceptance of contributions by a superannuation fund in respect of members over age 70 and that, in accordance with this regulation, a regulated superannuation fund may accept contributions made in respect of a member who has reached age 70 only if the contributions are mandated employer contributions. • About February 2000 --- the applicant's Account Manager telephoned the respondent. We had at least three telephone conversations over the next two week period. 24 March 2000) and, as he was selling his business, he advised the Account Manager that he wanted to receive the minimum pension entitlements. The 'Investment Strategy' elected (by a tick) on the form was 'Growth Equities' and the form indicated (again by a tick) that the applicant would provide a tailored investment strategy. It was decided if I signed a form and sent it immediately, he would get it next morning and he would complete the application. • 16 March 2000 --- the applicant alleged that on 16 March 2000 the respondent executed an Allocated Pension Application Form ('the second application form'). The form appeared to have been signed by the respondent and the 'Investment Strategy' elected (by a tick) on the form was 'Growth Equities'. There is a reason for me not completing the application form. This should have been done by [the Account Manager]. This is not [the Account Manager's] writing. I am quite sure and the indication showing growth equities, you would need a magnifying glass to see it. Someone else has done this. Based on the fund value of $380,141.44 as at 16 March 2000 you are entitled to draw a pension within the range of $7,959.91 and $15,919.82 during the current financial year. I am very familiar with these forms having completed many Allocated Pensions for [another named financial services organisation]. • 27 March 2000 --- the respondent completed a Pension Payment Details Form and requested an annual pension amount of $8,000. • 27 March 2000 --- the applicant alleged that the respondent completed an Annuity and Superannuation Pension Declaration Form and provided a copy of this form to the Tribunal. I would like to have it examined by an expert because of my serious doubts and also this doesn't look like an original application form. If it was an original, where the lines have faded the ink lines would also have faded, and this is not the case. The respondent was paid pension payments totalling $8,000 gross in May/June 2000. A further pension payment was made in July 2000 but some of this was subsequently returned to the Fund by the respondent at the applicant's request. • 15 August 2000 --- the applicant alleged that the respondent was advised by telephone that the Fund was overdrawn by approximately $65,000 and the respondent was to notify the applicant of his intended course of action. I'm recovering from neurosurgery and I don't want to talk now. Please show me the documentation to this effect. • 4 September 2000 --- the applicant notified the respondent of the overdrawn daily administration fee to apply from 1 October 2000 and that to comply with the Superannuation Industry (Supervision) Act 1993 (Cth) ('the SIS Act') it may sell assets to clear any overdrawn accounts that were not promptly returned to a positive balance. • 7 December 2000 --- the applicant wrote to the respondent about new investment strategies for its 'DIY Trustee Service'. • 6 February 2001 --- the applicant wrote to the respondent 'regarding the ongoing negative cash position of your superannuation fund' and advised that the applicant had sold all assets of the Fund and that the amount overdrawn was $8,161.30. Cashing of benefits at or before age 70. 2. Implementation of the respondent's investment choice. 3. Formulation of the Fund's investment strategy. As to issue 2 --- implementation of the respondent's investment choice --- the Tribunal found that the information supplied by the parties was inconsistent. There was evidence to support both versions of events. The Tribunal concluded that it was unnecessary for it to decide whether the applicant's failure to convert the respondent's investments to a secure investment based on his alleged instructions was fair and reasonable in its operation in relation to the respondent in the circumstances. This was due to the Tribunal's conclusion in respect of the third issue. As to issue 3 --- formulation of the Fund's investment strategy --- the Tribunal thought that there were two sub-issues: The right of a member to give directions with respect to the investments and the formulation and maintenance of the investment strategy. As to the first sub-issue, the Tribunal observed that as the Fund had only one member (i.e. the respondent), the Tribunal accepted that the trust deed was able to provide that the respondent, as a member, could direct the applicant, as trustee, with respect to matters such as investments without infringing s 58 of the SIS Act. The Complainant submitted that the Trustee was in breach of the SIS Act by adopting an investment strategy for the Fund that permitted him (at aged 70) to elect for up to 98% of the Fund to be invested in highly speculative stock. This required consideration of matters including the risk involved in holding the entity's investments having regard to its objectives and its expected cash flow requirements and the diversity of investments. In other words, allowing member-directed investments did not obviate the need for the Trustee to devise and adhere to an investment strategy that was correctly formulated. Any investment option offered to members of a fund on an investment menu could only be offered [if] it was consistent with a properly devised strategy. Trustees are not responsible for the actual strategy/ies a member may adopt provided all the requirements for choice of strategies are complied with (refer paragraphs 53 to 59) and each investment strategy offered has been properly formulated and implemented (see paragraphs 13 to 38). reports from investment advisers) and the actual wording of the strategy that they have considered, at a minimum, the specific issues that must be taken into account under the investment covenant [ie s52(2)(f)]. The Tribunal observed that the applicant, as trustee, had power to pay a benefit to the respondent under its compromise power in rules 9.7(d) of the 1995 Trust Deed and 10.7(d) of the 2000 Trust Deed and the relevant state's Trustee Act. Whether this observation is correct or not is an issue raised on the appeal. The Tribunal further observed that subs 37(4) of the Complaints Act requires the Tribunal to make a determination that places the respondent as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the applicant's decision that is the subject of the complaint, no longer exists. The Tribunal concluded that the investment strategy of the Fund was not fair and reasonable in its operation in relation to the respondent in the circumstances, at least after the time that the respondent turned 70 (i.e. 24 March 2000). The members constituting the Tribunal were not able to reach a unanimous decision in respect of the decisions under review. In the guidelines issued pursuant to the provisions of subss 9(2A) and 9(4) of the Complaints Act and dated 30 June 2005, the Chairperson determined that where the Tribunal is constituted with two members and they disagree on the determination, then the decision of the Presiding Member is taken to be the decision of both of them (cl 7(3)). In this case, the decision of the Presiding Member is that the decision under review was not fair and reasonable in the circumstances. Accordingly, that became the decision of the Tribunal. (b) The Tribunal erred in law concluding that the respondent had made a 'claim' within the meaning of cl 10.7(d) of the 2000 Trust Deed. (c) The Tribunal erred in law in concluding that cl 10.7(d) of the 2000 Trust Deed authorised the applicant personally to compensate the respondent for breaches of covenants implied into the 1995 Trust Deed by the SIS Act. (d) The Tribunal erred in law in concluding that a decision by the applicant to pay the respondent compensation for breaches of covenants implied into the 1995 Trust Deed by the SIS Act would be a decision 'to administer the Fund and comply with Superannuation Law' within the meaning of cl 10.7 of the 2000 Trust Deed. (e) The Tribunal erred in law in concluding that the Tribunal had jurisdiction by reason of s 37(1)(a) or s 37(3) of the Complaints Act to substitute its decision that the applicant should pay the respondent $380,000 pursuant to cl 10.7(d) of the 2000 Trust Deed. (f) The Tribunal erred in law in concluding that, if the Tribunal did not err in concluding that cl 10.7(d) authorised the applicant to pay the respondent compensation, the Tribunal adopted a correct approach to exercising the discretion to 'compromise' thereby conferred. On the basis that the applicant adhered to his intentions in this regard, subs 46(5) of the Complaints Act prohibits the Court making a costs order against the respondent. (h) The Tribunal erred in law by acting in a way which gave rise to an apprehension of bias by consulting with APRA. (i) The Tribunal erred in law by failing to accord the applicant procedural fairness by not disclosing to the applicant the matters which passed between it and APRA. (j) The Tribunal erred in law by consulting with APRA when s 37 of the Complaints Act did not authorise it to do so. Ground (f) --- the discretion to 'compromise' does not encompass a payment of 100% of the claim. Ground (g) --- even if cl 10.7(d) did confer a power on the trustee to compromise a claim against itself, the exercise of that power by the Tribunal would involve an exercise of judicial power. Grounds (h), (i) and (j) --- consultation with APRA involves a reasonable apprehension of bias; the non-disclosure of such consultation evidences a breach of the rules of procedural fairness; and the statutory function under s 37 of the Complaints Act miscarried. That the Tribunal be given leave, in accordance with any directions made by the Court, to make written and oral submissions on the questions of law identified as (g), (h), (i) and (j) raised by the applicant in its amended notice of appeal dated [21] June 2006. The costs of the motion, and the costs occasioned by the joining of the Tribunal as a party and the making of submissions on the questions of law referred to in para 2 above be reserved for argument consequent upon the handing down by the Court of its judgment in this proceeding. Such further or other orders as the Court sees fit. Nevertheless, the Tribunal's oral submissions on ground (g) of the amended notice of appeal did raise certain matters common to grounds (a) to (e). The applicant submitted that the Tribunal's finding that the investment strategy did not comply with the SIS Act amounted to a finding that there was a breach of trust. The covenants referred to by the Tribunal in its deliberations, namely those in subss 52(2)(b) and 52(2)(c) of the SIS Act, in so far as they are not contained in the governing rules of the Fund, are incorporated into those rules by force of subs 52(1) of the SIS Act. While the applicant did not accept that there was a breach, its complaint, as embodied in grounds (a) to (e), was with what the Tribunal then proceeded to do with that conclusion. The applicant referred to the right of the respondent to complain to the Tribunal conferred by s 14 of the Complaints Act and to the powers of the Tribunal conferred by s 37 in dealing with such a complaint. Rather, it empowers the Tribunal to exercise afresh, discretionary powers that the applicant in question had. By that structure, the Tribunal does not exercise the judicial power of the Commonwealth: Attorney-General v Breckler [1999] HCA 28 ; (1999) 197 CLR 83. In order, therefore, for the Tribunal to be able to substitute its decision, it was necessary for it to identify a discretion, which the applicant had exercised, which was not 'fair and reasonable' and which the Tribunal could then re-exercise. The 1995 Trust Deed was not on foot at the time the Tribunal purportedly re-exercised the power (or at the time of the trustee's decision). The applicant submitted that it is apparent that cl 10.7 confers powers on the applicant to do things on behalf of the Fund, in its capacity as trustee of the Fund, 'to administer the Fund'. None of the matters set out in cl 10.7 in any way relate to the rights of the applicant, in its private capacity, to do or not do something. The reason for that is obvious, so the submission went; the authority of the applicant to take steps in its private capacity is not governed by the terms of the trust under which its trusteeship is established. If a person who was a trustee decided that it was liable to a beneficiary for a breach of trust, its power and authority to pay the beneficiary compensation for that breach of trust springs from its right, as a private person, to make payments. In the case of the applicant, the right to make a payment as compensation comes from s 124 of the Corporations Act 2001 (Cth) which gives the applicant, as a corporation, all the powers of a natural person. The applicant submitted that the word 'claim' in cl 10.7(d) should bear the same meaning as it bears in cl 10.7(c). It would be curious if the effect of cl 10.7(c) was to empower the applicant as trustee to submit to arbitration any claim for compensation brought by a beneficiary against it. In conclusion, the applicant submitted that these points underscore the fact that the power in cl 10.7 is a power conferred on the trustee 'to administer the Fund'. Once that is appreciated, it is plain, it was submitted, that the claims contemplated in cll 10.7(c) and 10.7(d) are claims brought on behalf of the Fund or against the Fund. This argument corresponds to grounds (a) to (e) in the notice of appeal. In the alternative, the applicant submitted that, by reference to ground (f) in the notice of appeal, assuming grounds (a) --- (e) are not correct and that the Tribunal was entitled to compromise a claim by the respondent against the applicant as trustee, the Tribunal has compromised the claim on the basis that the respondent is entitled to 100 per cent of his claim. The applicant submitted that whilst there may be circumstances in which it is appropriate that a claim be compromised for its full value, it is also true that a proper exercise of the discretion would involve a consideration of the relative strengths and weaknesses of the claim; so much is contemplated by the expression 'compromise'. Yet, arbitrarily, the Tribunal undertook no such process of analysis simply ordering the claim to be paid at its face value. In that circumstance, the applicant submitted that the Tribunal committed an error of law by failing to take into account relevant matters, namely, the strengths and weaknesses of the claim. On the other hand, I see no warrant for confining the operation of cl 10.7(d) of the 2000 Trust Deed by concluding that it does not empower a trustee to compromise a claim by a beneficiary relating to the beneficiary's entitlement to trust property. This was certainly the view of the Queensland Supreme Court (Lee J) in Re Irismay Holdings Pty Ltd [1996] 1 Qd R 172, criticising statements to the contrary in Re Earl of Strafford deceased; Royal Bank of Scotland Ltd v Byng [1980] Ch 28 at 32 --- 33, albeit in relation to the Queensland statutory equivalent of s 49(d) of the Trustee Act 1925 (NSW). I agree with that criticism. The real issue in the context of these grounds of appeal is whether the respondent's claim is a claim against the Fund or a claim against the applicant. If it is a claim against the Fund, then the applicant is empowered, but not obliged, to compromise it pursuant to cl 10.7(d) of the 2000 Trust Deed. A discretion is involved and the exercise of that discretion by the applicant, as trustee, is within the Tribunal's jurisdiction of review without involving the Tribunal in the exercise of judicial power. Only in discretionary cases would questions as to the unfairness or unreasonableness of the decision under review arise for the Tribunal's determination. Upon this issue the dissenting judge reached the same conclusion. He relied on the fact that "[i]n the case of non-discretionary decisions the Tribunal is denied that ability [of determining whether or not the decision is unfair or unreasonable] by s 37(5)". That is the subsection which forbids the Tribunal from doing "anything ... that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract". Having established that the jurisdiction of the Tribunal was so confined to functions arguably apt to a non-judicial body engaged in broad evaluation of merits (as distinct from the determination of purely legal rights) the point of difference between the majority and dissentient in the Full Court was reached. In this regard, it is important to bear in mind that the applicant's decision which the Tribunal concluded was not 'fair and reasonable' was the decision of the applicant not to compensate the respondent for his loss in the face of the Tribunal's finding that the investment strategy of the applicant, as trustee, did not comply with the SIS Act, specifically the covenants in subss 52(2)(b) and 52(2)(c) of that Act. So much is to be gleaned from the last paragraph of the extract from the Tribunal's observations set out at [13] above. A person who suffers loss or damage as a result of contravention of a covenant contained, or taken to be contained, in the governing rules of a superannuation fund, may recover the amount of the loss or damage by action against the person who engaged in the contravention. It also accords with the reality of the situation that by the time the claim was made (29 April 2004) there was no fund; the Fund had been wound up. In its submissions in relation to ground (g) of the notice of appeal, the Tribunal submits that this issue --- whether the respondent's claim is a claim against the Fund or whether it is a claim against the applicant --- is to be determined by reference to whether or not the applicant, as trustee, has a right of indemnity against the trust assets. In other words, a right to indemnify itself in respect of the loss it will suffer as a result of payment of compensation. If it does, then the claim, so the submission goes, is a claim against the Fund; if it does not, so the submission goes, then the claim is a claim against the applicant. That is for suit in a court (which may, in the end, be the only appropriate forum in which to vindicate her position). Rather it is a decision whether, despite the lack of entitlement under the policy, it is appropriate for the Trustee to compound Ms Crocker's claim and, if it is, in what amount. (See cl 5.1(a)(i) or (ii) of the trust deed. ) If so, then it is probably not a claim "against the Plan" (ie the trust) for the purposes of cl 7(c) because the Trustee, in these circumstances, has no right of indemnity against the trust assets. If not, it probably is such a claim, "against the Plan", for the purposes of cl 7(c), because the Trustee would have a right of indemnity. I agree with the Trustee's submissions in this regard. Ms Crocker's complaint was that the trustee had refused to pay her a benefit in consequence of her being totally and permanently disabled. The trustee determined that she was not. The Tribunal decided otherwise and remitted back to the trustee quantum related issues. Allsop J accepted that the Tribunal's reasoning that Ms Crocker was within the definition of totally and permanently disabled was wrong and he set it aside ([100] --- [111]). The Trustee refused that claim. That decision was correct (by reference to the terms of the insurance policy). It was said that the question as to whether the Trustee would be entitled to use cl 7(c) and thereby trust funds to settle a different claim --- one for damages or compensation based on its conduct towards Ms Crocker in circumstances predicated upon her lack of entitlement, has not been the subject of a decision, or indeed a claim. Thus, it was said, to the extent that the tribunal dealt with that subject matter in respect of the second unit, it impermissibly embarked on an adjudication of the rights of the parties, not upon review of a decision; reference was made to Briffa v Hay at 444. Thus, so the argument ran, this infringed the requirement that the Tribunal not deal with the adjudication of the rights of the parties. To do so would, in all likelihood, see it purport to engage in the exercise of judicial power. Rather, the Tribunal's task was confined to the role given to it by the Act. At this point I gratefully adopt the description of the legislative scheme set out by the full court in National Mutual Life Association of Australia Ltd v Campbell [2000] FCA 852 ; (2000) 99 FCR 562 at 565-68 [10] to [20]. This relieves me of referring to the Superannuation (Resolution of Complaints) Act 1993 (Cth) , other than to the provisions essential to these reasons. His Honour circumvented this problem by holding that the compromise clause applied because Ms Crocker's claim was against the fund and was not a personal claim against the trustee. That is, it would have been open to the Trustee to consider whether, in the circumstances, it was appropriate to compound the claim of Ms Crocker under cl 7(c). If it were to be concluded that the exercise of the power could possibly be made (that is, bearing in mind cl 5.1, it would not be an exercise in self dealing by the Trustee) any such decision would then have raised questions about the merits of the claim --- both factually and legally. In these circumstances these questions would not be arising in the context of the Trustee deciding the rights of Ms Crocker against itself, but in the context of making a decision as to whether or not it should compound the claim. His Honour then reasoned that the Tribunal had not considered the re-exercise of this power and remitted the matter back to it for it to do so ([135] --- [137]). Understanding the observations of his Honour at [140] and [141] extracted at [47] above in this context, what his Honour was considering at [141] was whether a claim, which was clearly a claim 'against the Plan', was a claim against the trustee because of the lack of any indemnity against the trust assets. That is not this case. Here the claim of the respondent is clearly a claim against the applicant and not against the Fund. In any event, there is no right of indemnity against the trust assets because by the time the claim was made there were no trust assets. It was tentatively suggested by Senior Counsel for the Tribunal that the applicant would have been insured against any loss it suffered as a result of paying compensation to the respondent and in that sense the applicant had the benefit of an indemnity. But even if the applicant carried such insurance, it would be an indemnity sourced outside its position as trustee of the Fund and nothing that was said in the passages extracted from Crocker would work a conversion of the claim from one against the applicant to one against the Fund. On the view I take, the respondent's claim is against the applicant and not against the Fund. As such, the provisions of cl 10.7(d) of the 2000 Trust Deed and s 49(d) of the Trustee Act 1925 (NSW) have no relevance or role to play. The decision under review, namely the applicant's refusal to compensate the respondent for his loss alleged to result from the applicant's contravention of SIS Act covenants in the investment strategy it adopted, was not a decision the Tribunal had jurisdiction to review under s 37 of the Complaints Act. In the circumstances, it is not necessary to consider ground (f). The determination of the Tribunal dated 20 February 2006 must be set aside and, in lieu thereof, the respondent's complaint to the Tribunal be dismissed. On the views expressed in [40] --- [54] above, the ground does not arise. At the resumed hearing on 11 October 2006, following the grant of leave to the Tribunal to intervene and make written and oral submissions on the grounds raised by the applicant at paras (g), (h), (i) and (j) in its amended notice of appeal, both the applicant and the Tribunal made substantive submissions in respect of these grounds. While these submissions and my conclusions in respect of them can have no bearing on the outcome of the appeal, they do impact on the issue of costs, in particular the order that should be made in respect of the costs of the Tribunal's motion and, in consequence of the grant of leave in terms of the order set out in [25] above, costs in relation to the resumed hearing, including the preparation of submissions in respect thereof. I therefore propose to address them and indicate my conclusions thereon. Since that referral, I have had several telephone conversations with Suzette Wilson of your office in relation to issues involved in the complaint. I suggested to Ms Wilson that it would be mutually beneficial if she could visit the Tribunal in Melbourne to examine the file and to engage in detailed discussion with us in relation to the complaint issues. We feel that Ms Wilson's experience and expertise could assist us in identifying all possible issues and gathering all relevant information before the matter is listed for a review determination. In addition, of course, Ms Wilson's examination of the file and discussions with us would assist APRA in determining whether there has been a breach of a law or whether serious prudential issues are evident. At the initial hearing of the appeal the applicant submitted that it is apparent from the face of Ms McDonald's letter of 1 June 2005 that the Tribunal engaged in an ex parte communication with the regulator on topics at the very heart of the matter as it concerned the Tribunal. Neither the fact that this had occurred nor the substance of what passed between Ms Wilson and the Tribunal was disclosed to the applicant. The applicant submitted that there are a number of difficulties which, therefore, arise. First , the fact that the Tribunal was consorting with APRA and taking advice from it about the complaint gives rise to a reasonable apprehension of bias. Second , the communications were obviously relevant and probative to the issues about which the applicant was making submissions so that their non-disclosure evidences a breach of the rules of procedural fairness. Third , the Complaints Act does not contemplate that APRA should form part of the statutory decision-making processes of the Tribunal, therefore the statutory function under s 37 miscarried. As to the first point, the applicant submitted that a fair-minded lay observer seeing the letter might reasonably apprehend that the Tribunal might not bring an impartial mind to bear on the issues before it. The situation it was said is not analytically different from a Supreme Court judge trying a criminal case seeking advice from the police. For that reason a case of apprehended bias is made out: Ebner v Official Trustee in Bankruptcy [2000] HCA 63 ; (2000) 205 CLR 337 at 344 [6] . As to the second point, it was submitted that it is obvious that the communication was relevant to the inquiry being undertaken by the Tribunal. A decision-maker is obliged to disclose adverse information that is credible, relevant and significant to the decision to be made: Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 190 ALR 601 at 631 [123] , per McHugh J and 1005 [227], per Kirby J; Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 at 629; Minister for Local Government v South Sydney City Council [2002] NSWCA 288 ; (2002) 55 NSWLR 381 at 438 [260] , per Mason P. Accordingly, a breach of the rules of procedural fairness occurred. By failing to afford the applicant procedural fairness, the Tribunal committed an excess of jurisdiction and hence an error of law. As to the third point, the applicant submitted that there is nothing in s 37 of the Complaints Act which conferred any power on the Tribunal to consult with APRA as to the disposition of the complaint. In seeking to consult with APRA the Tribunal committed an error of law since it acted in excess of any authority conferred on it by s 37. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an "interest" in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed. The test is 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: see Re Refugee Review Tribunal; Ex parte H [2001] HCA 28 ; (2001) 75 ALJR 982, at [27] per Gleeson CJ, Gaudron and Gummow JJ. As their Honours observed, this rule may be expressed differently when applied to administrative proceedings, in order to take account of the nature of the decision-maker and its proceedings. "[R]egard must be had to the statutory provisions, if any, applicable to the proceedings in question, the nature of the inquiries to be made and the particular subject matter with which the decision is concerned": see Ex parte H , at [5]. Whether or not that be the appropriate formulation, there is, in our view, no reason to depart from the objective test of possibility, as distinct from probability, as to what will be done or what might have been done. To do otherwise, would be to risk confusion of apprehended bias with actual bias by requiring substantially the same proof. Accordingly, the Court must consider the nature of the Tribunal, the issues before it, and the conduct of all relevant participants in the proceeding. (b) Although it has the power to conduct oral hearings, it generally does not, but rather decides matters 'on the papers'. (c) It decided this matter on the papers. (b) It has a place within a complex regulatory scheme over superannuation entities, and although its review function is independent, it is, for example, supplied with staff by the Australian Securities and Investment Commission ('ASIC'): see subs 62(2) of the Complaints Act. (c) Its secrecy provisions have an express exemption for disclosure of information where the Tribunal is requested to do so by ASIC or APRA: subs 63(3) of the Complaints Act. (d) Sections 64 and 64A of the Complaints Act impose statutory obligations of notification to ASIC and APRA on the Tribunal. It is said to be the writing of a letter by the Director of the Tribunal, Ms McDonald, to APRA inviting assistance from APRA. This letter follows a s 64 referral. (b) What is the 'logical connection between the matter and the feared deviation from the course of deciding the case on its merits'? No such connection has been articulated by the applicant. It is difficult to see what the connection could be, given that the author of this letter is a staff member of the Tribunal, and not one of the two members appointed pursuant to s 7 and constituted pursuant to s 9 to conduct this review. More so because the person who made the referral was the Tribunal Chairperson himself, and not one of the two constituted members. Moreover, taking into account the factors set out above, the Tribunal submitted no fair-minded lay observer, informed of the nature of the Tribunal's jurisdiction, the way it conducts its hearings and the presence of its obligations under ss 64 and 64A of the Complaints Act, combined with other features of its legislative scheme, would apprehend that contact by Tribunal administrative staff would mean that the two Tribunal members constituted to deal with this review would not bring impartial minds to the review. Further, no such fair-minded lay observer, properly informed, would apprehend that a referral made by the Tribunal Chairperson pursuant to a statutory duty would mean that the two (other) Tribunal members constituted to hear this review would not bring impartial minds to their task. As to the denial of procedural fairness ground, the Tribunal submitted that, once the subject matter of the s 64 referral is understood, it cannot sensibly be argued that whether APRA's investigations would or would not ultimately determine that the applicant had breached the standards set out in reg 4.15 was in any remote way 'relevant and probative to the issues the applicant was making submissions about'. There were no findings about a breach of such standards made by the Tribunal, nor were those standards put in issue. Accordingly, there was no occasion at all for disclosure of the referral to the applicant. In any event, so the submission went, there is no substantive unfairness because the applicant was aware of the referral to APRA. By an email dated 3 June 2005 (that is, two days after the letter of 1 June 2005 [57]), Mr Ian Yard-Smith, counsel for the applicant, stated that he had 'just been discussing this matter with Suzette Wilson from APRA'. The Tribunal submitted that there is no suggestion that the s 64 referral to APRA entered in any way into the deliberations of the two Tribunal members and that the applicant was plainly aware of the s 64 referral and had spoken to Ms Wilson from APRA about it; in those circumstances, the applicant could not be said to have been denied any opportunity to put whatever it wanted to put to the Tribunal about the s 64 referral if it had seen anything about the alleged breach of reg 4.15 as relevant to the issues before the Tribunal. As to the ground that the Tribunal's statutory function under s 37 miscarried, the Tribunal submitted that a referral made under s 64 in relation to a particular complaint cannot deprive the Tribunal of authority to exercise its powers under s 37. Section 64 is an integral part of the legislative scheme established by the Complaints Act. There is no textual or contextual reason why the statutory obligation is inconsistent with the exercise by the Tribunal of the powers given to it under s 37. If any such inconsistency had been an intended part of the scheme, s 64 would have contained a provision to the effect that if a referral were made to APRA or ASIC under the section the review by the Tribunal would be stayed pending the outcome of any investigations by APRA or ASIC. In reply, the applicant submitted that the suppressed premise in the Tribunal's position is that, following a complaint, APRA and the Tribunal are lawfully authorised to have a discussion with each other. The statute, and in particular s 63, does not authorise this. Even if it did, however, it is tolerably clear that the discussion would be about the matters notified so that the regulator could take whatever steps it wished to take in relation to those notified breaches. It does not, however, appear that this was what the discussion was about. The letter, referred to at [57], suggests that the discussion was, in part, about how the Tribunal should deal with the respondent's complaint and not with how APRA should deal with the applicant. The applicant submitted that the answers to the two rhetorical questions at [69] which the Tribunal asked itself were: The conduct which gives rise to the apprehension of bias is the invitation to the regulator to be involved in the process of adjudication. The connection between that conduct and the feared deviation from deciding the case on the merits is that the regulator had already been informed by the Tribunal that there were possible breaches by the appellant. The Tribunal was not, therefore, asking for the assistance of a neutral third party --- it was asking for the assistance of the body to which it had just reported the applicant for breach and whose function it was to consider what steps under law should be taken against the applicant. By contrast, APRA had no such relationship with the respondent. Finally, the applicant submitted that the argument advanced by the Tribunal that there was no denial of procedural fairness was outside the grant of leave that was afforded to the Tribunal to make submissions about the matters in R v Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13 ; (1980) 144 CLR 13. The Tribunal, by making this submission, enters the arena properly occupied by the applicant and the respondent; it is difficult to see how the submission is one which is limited to the Tribunal's powers and procedures. The applicant submitted that by making this submission, the Tribunal has taken the respondent's side in the case. The 'ambulatory' nature of the Tribunal which has intervened means that the apprehension of bias which arises cannot be resolved by reconstituting the Tribunal in a different way. Apart from that difficulty, according to the applicant, the submission is without merit. The Tribunal argues that there is no substantive unfairness because the applicant was made aware of the notification to APRA, in an email dated 3 June 2005. However, the applicant continued, the apprehended bias case was not based on the notification to APRA. It was based on the discussions which may have taken place between APRA and the Tribunal after that notification. It invited discussion not on possible contravention by the applicant of reg 4.15 of the SIS Regs but in assisting the Tribunal in identifying all possible issues and gathering all relevant information before the matter (the respondent's complaint) was listed for a review determination. For that reason, I do not agree with the Tribunal's submission that the Tribunal's statutory functions and procedures, in particular the requirement in s 64 to refer matters to APRA, informs or circumscribes the practical content of the requirement to avoid apprehension of bias. Nor do I think the rule of necessity operates in the present case to prevail over and displace the application of the rules of natural justice to ensure that the Tribunal is not disabled from performing its statutory functions, cf., Laws v Australian Broadcasting Tribunal (1990) 93 ALR 435 at 448, 449. The letter at [57] and the subject matter of the invitation it contained had nothing to do with the statutory functions of the Tribunal under s 64. However, there are a number of difficulties in the way of the applicant succeeding on this ground and the next --- an alleged failure to accord the applicant procedural fairness. First, the letter at [57] was not sent by the members who constituted the Tribunal for the purpose of hearing the respondent's complaint. Indeed, it was not even sent by the Chairperson who made the s 64 referral. It was sent by a staff member of the Tribunal holding the position of Director. Second, there is no evidence that any meeting or discussions took place in response to the letter and even if a meeting or discussions took place, there is no evidence as to who participated at that meeting or in those discussions. Third, if a meeting or discussions took place in response to the letter, there is no evidence of the subject matter of the meeting or discussions. Now, I can't prove that those recommendations end up in the hands of the Tribunal members or whether they form an integer in the Tribunal member's reasoning process. I can't prove that but what I'm inviting your Honour to do is to draw the inference that they do end up as an integer in the Tribunal member's reasoning process. It proceeds from the premise that the staff member has been tainted from his contact with an employee of APRA, a premise which may fall within the spectrum of reasonable hypothesis, but which has no provenance to support its status as fact. In my view, the ground that the Tribunal erred in law by acting in a way which gave rise to an apprehension of bias by consulting with APRA cannot succeed. The same difficulties beset ground (i) --- the Tribunal erred in law by failing to accord the applicant procedural fairness by not disclosing to the applicant matters which passed between it and APRA. The applicant's counsel acknowledged as much. An essential step in this argument is that there was adverse material which passed between the Tribunal and APRA which was taken into account by the Tribunal but which was not communicated to the applicant. But at the outset, there is no evidence that there was any adverse material, leaving to one side the absence of any evidence that, if there was, it was taken into account by the Tribunal. So there is that difficulty and another difficulty is that ... it is the staff rather than the members. If I get over those two points then the way the argument works is that your Honour should infer the existence of the adverse material, and it seems clear it wasn't put to Mr Yard-Smith. Ground (j) --- that by consulting with APRA when s 37 of the Complaints Act did not authorise it to do so the statutory function under s 37 miscarried --- was not pressed by the applicant at the resumed hearing on 11 October 2006. In any event, even accepting the letter at [57], there is no evidence that any organ of the Tribunal, let alone the members constituting the Tribunal that heard the respondent's complaint, 'consulted' with APRA. The ground cannot be sustained. While the applicant has been successful in having the Tribunal's determination set aside and, in lieu thereof, the respondent's complaint to the Tribunal dismissed, by virtue of the provisions of subs 46(5) of the Complaints Act and what was said at [20] above, there can be no costs order against the respondent. This leaves the issues of costs of the Tribunal's motion and costs of the resumed hearing on 11 October 2006 following the grant of leave to the Tribunal to intervene and make submissions on grounds (g), (h), (i) and (j) of the amended notice of appeal. It seems clear that the Tribunal would not have sought leave of the Court to intervene after the initial hearing but for the applicant seeking and being granted leave on that day to amend its appeal by the addition of grounds (g) to (j) inclusive. Alternatively, had that latter leave been sought and granted in advance of the initial hearing in sufficient time to enable the Tribunal to make its application for leave to intervene on a timely basis, all these issues could have been disposed of at the initial hearing. Additionally, on the Tribunal's motion for leave to intervene, which the applicant opposed when it could have consented to it or abandoned the additional grounds of appeal, leave was ultimately granted to the Tribunal to intervene and make submissions on grounds (g) to (j) inclusive. I am of the view that the Tribunal should have its costs of the motion paid by the applicant. However, I am not persuaded that the Tribunal's intervention and subsequent submissions on grounds (g) to (j) inclusive contributed to the outcome in terms of the conclusion reached by the Court on those grounds. While the Tribunal succeeded in the sense that the applicant failed on those grounds, in my view nothing was put by the Tribunal which resulted in an outcome different from that which the Court would have arrived at without the benefit of the Tribunal's submissions. In these circumstances, I think the applicant and the Tribunal should pay their respective costs of the resumed hearing. | review of determination of superannuation complaints tribunal jurisdiction of superannuation complaints tribunal under s 37 of superannuation (resolution of complaints) act 1993 (cth) whether power conferred on trustee by trust deed to 'compromise' claims is confined to a claim against the fund and not against the trustee but if it extends to the latter, whether exercise of the power is reviewable under s 37 of the superannuation (resolution of complaints) act 1993 (cth) relevance of right of trustee to be indemnified out of trust fund apprehension of bias denial of procedural fairness miscarriage of statutory function of superannuation complaints tribunal administrative law |
The decision of the Commissioner, served on the applicant on 15 September 2005, disallowed in full the applicant's taxation objection against the private ruling issued to the applicant for the FBT years ended 31 March 2006 to 31 March 2011. Short Minutes of Orders in Respect of Costs were provided in Court by the Commissioner, noting that the applicant and the Commissioner have entered into an arrangement under the Commissioner's Test Case Litigation Program under which the applicant is not required to pay the Commissioner's costs, and under which the Commissioner has agreed to pay the applicant's costs on an agreed basis. 3 Appeals against appealable objection decisions to the Federal Court are permitted by s 14ZZ TA Act , in accordance with Pt IVC Div 5. In proceedings on an appeal in relation to matters other than assessment, the taxpayer bears the onus of proof that the decision should not have been made or should have been made differently (s 14ZZO(b)(iii) TA Act ). Where the Court hears an appeal it may make such order in relation to the decision as it thinks fit, including an order confirming or varying the decision (s 14ZZP TA Act ). Further, the applicant is asking the Court to require the Commissioner to rule in accordance with that interpretation. The foundation of this interpretation is in the judgment of Kiefel J in Essenbourne Pty Ltd v Commissioner of Taxation [2002] FCA 1577 ; (2002) ATC 5201; (2002) 51 ATR 629 where her Honour held that the definition of 'fringe benefit' as defined by subs 136(1) Fringe Benefits Tax Assessment Act 1986 (Cth) (' FBTAA ') requires reference to a particular employee in connection with the benefit said to have been provided. In the absence of reference to a particular employee in connection with the benefit, the benefit provided is not a 'fringe benefit' for the purposes of the FBTAA . 5 I have referred to four cases in which this interpretation has been applied. Caelli Constructions (Vic) Pty Ltd v Commissioner of Taxation [2005] FCA 1467 ; [2005] 147 FCR 449; (2005) 60 ATR 542; (2005) ATC 4938 (a decision of Kenny J). He has made submissions to this effect, referring to Australian Taxation Office Media Release Nat 03/30. Further, in the Explanation attached to the Private Ruling provided to the applicant, the Commissioner confirmed that his views as expressed in Taxation Ruling 1999/5 remained the ATO position notwithstanding the decision in Essenbourne . The Commissioner in the case before me is asking the Court to reconsider the interpretation of 'fringe benefit' articulated in Essenbourne . Should this Court apply the interpretation of 'fringe benefit' as applied in Essenbourne , specifically that there will be no fringe benefit unless there is identification of particular employees in connection with the receipt of the benefit? 2. If the Court should apply that interpretation, was a fringe benefit provided within the meaning of s 136(1) FBTAA in the case before me? ABC is a wholly owned subsidiary of ABC Public, a listed public company. 12 Each RMC employs its own staff to operate childcare centres. ABC Public wished to establish an employee share scheme offering shares in ABC Public to current and future employees of the RMCs. The vehicle to achieve this was a discretionary deed of trust --- the CSP --- administered by a professional trustee. A copy of the CSP Deed was filed with this Court in accordance with O 52B r 5A (a) Federal Court Rules . Information the trustee would require included length of employee service and employment status. However, it appears that the trustee would expect to obtain this information from the licence operator, ABC. ABC would have this information because of the services it provided to the RMCs under the licence agreements between ABC and the RMCs. A key service provided by ABC to the RMCs included managing the pay-rolls of the RMCs. ABC Public did not claim any tax deductions for issuing fully paid ordinary shares. The employees who received the shares were expected to include the value of those shares in their assessable income when received. 17 The answer provided by the Commissioner in relation to Question 1 forms the basis of this appeal. Instead, the CSP acted as a true incentive to the employees to remain in employment with an RMC because an employee could only benefit if and when the trustee of the CSP exercised its discretion in his or her favour. Such schemes are specifically excluded from being a 'fringe benefit' by par (ha) of the definition. This document was attached to the Notice of Private Ruling Authorisation Number 53514, which was in turn sent by letter dated 30 June 2005 under the hand of Mr Duffus of the Australian Taxation Office to Harris Black Chartered Accountants. In the Commissioner's analysis with respect to whether an ABC entity could be 'an arranger' for the purposes of par (e), the Commissioner refers to 'ABC issu(ing) shares to the trustee of a trust' and 'ABC intends to issue shares to the trustee for the benefit of the RMCs employees', when the entity actually issuing the shares was ABC Public. Where the information was provided to the trustee by ABC, the RMCs are still considered to be participating in or facilitating the issue of shares to the trustee and participating in or facilitating the CSP, because it is only as a result of their agreement with the ABC (under the Licence Agreement) that ABC is able to provide this information'. This reasoning was further explained by the Commissioner in the letter of 13 September 2005 to Harris Black Chartered Accountants, setting out the Reasons for Decision of the Commissioner in finding against the applicant in relation to its Notice of Objection Against Private Ruling. In his view the CSP operated as an employee incentive scheme providing rewards to RMC employees for services they provided as employees. In particular, the Commissioner noted that cl 36 app 4 to the Application for Private Ruling stated that the initial issue of ordinary shares by ABC Public would be calculated by reference to the number of employees who had signed an AWA, held positions as set out in that document and had served a certain full-time period in that position at an ABC centre. The Commissioner said that therefore, it was arguable that the shares issued to the trustee of the CSP were shares provided in respect of the employment of particular employees. TR 1999/5 explains the approach of the Commissioner to circumstances where property is gifted to a trust and an employee who is a beneficiary of that trust is able to benefit from that gift. As explained by par [1] of TR 1999/5, the Ruling considers, inter alia , whether a payment by an employer of money (which does not constitute salary or wages or an exempt benefit) to the trustee of a trust or non-complying superannuation fund is a fringe benefit, and the value of that benefit. The view was expressed in the Explanation that the Ruling applied to the circumstances of this case, and that further for reasons outlined in pars 45-49 of TR 1999/5 a fringe benefit could arise notwithstanding that a benefit provided to a trust was not provided in respect of a specific employee. It is considered that there will be a fringe benefit, notwithstanding the payment of the money to the trust is not in respect of a specific employee. Such a construction is the natural consequence of the use of the indefinite article "an". It is sufficient if the benefit is provided in relation to employees generally. As outlined above, we do not accept this view. As I noted earlier in this judgment, the Commissioner disallowed the objection in a letter of 13 September 2005 containing the Notice of Decision on Objection. 24 An Application was then filed with this Court whereby the applicant appealed against the appealable objection decision. This Part was repealed by Sch 2 of Tax Laws Amendment (Improvements to Self Assessment) Act (No 2) 2005 (No 161 of 2005). The submissions of the parties in this case have been on the basis of this superseded legislation, and to the extent necessary I shall apply those provisions. In any event, the framework for private rulings delivered by the Commissioner (which continues now in Sch 1 Div 359 TA Act, legislation not relevant to this application) is well known. As Hill J noted in CTC Resources NL v Commissioner of Taxation (1994) 48 FCR 397 at 423, the legislation confers upon a person the right to apply to the Commissioner for a private ruling upon the way in which, in the Commissioner's opinion, a tax law would apply (cf s 14ZAF TA Act ). 27 The key legislative provision for the purposes of this application is s 136(1) FBTAA , specifically the definition of 'fringe benefit'. ' Benefit ' is defined broadly in s 136(1) FBTAA as are numerous types of benefits to which reference is made in that Act. 30 In the case before me the employers are clearly the RMCs. The nature of the benefit provided --- the ABC Public shares provided to RMC employees --- is not in dispute. Whether the benefit constitutes a 'fringe benefit' is in contention. 31 The Commissioner has submitted that the trustee of the CSP was the 'associate' of the employees as referred to in s 136(1) FBTAA . It is useful therefore to consider the case and the principle articulated by Kiefel J, currently in dispute. 35 In Essenbourne , the employer was a family company which owned a motor dealership in Queensland. The three key employees were three sons of the Marino family, which controlled Essenbourne Pty Ltd. The sons received low salaries in keeping with the corporate strategy of coping with periods of business downturn, and enabling surplus funds to be re-invested in profitable years. In light of the low salaries, a superannuation fund, an employee share fund and an employee incentive trust were established to provide benefits primarily to the three employees of Essenbourne Pty Ltd who were family members. This was in addition to the salaries they received, and in order to retain their services. 36 Various capital contributions were made to each entity, however the critical payment for present purposes was a contribution by Essenbourne Pty Ltd of $252 000 to the employer incentive trust on 30 June 1997. This sum was calculated on the advice of the solicitor of Essenbourne Pty Ltd, and was equivalent to the sum which could be contributed to the superannuation fund on the basis of the age of all members of the superannuation fund. On the same day, the three key employees were allotted each one third of the Employee Units in the trust, ie 84,000 units each. The employees were not required to pay for those units. 37 The Trust Deed of the employee incentive trust provided that the Trust was to provide benefits and incentives to employees, and that the employer (Essenbourne Pty Ltd) was to make contributions for the benefit of 'its employees generally' (cl 5.1). Further, the Deed allowed the trustee to issue Bonus Units in respect of Employee Units to the holders of those units on such basis as the trustee, with the consent of the employee, might determine (cl 10.1). 38 Essenbourne Pty Ltd claimed a deduction for the contribution of $252 000 for that income year, which was disallowed by the Commissioner of Taxation. 41 As Kiefel J noted, the Commissioner had not suggested the three brothers, employees of Essenbourne Pty Ltd, were entitled to the trust money or the property in which the money was invested. Her Honour also observed that under the Trust, the brothers had only the prospect of Bonus Units issuing (par 50). 42 While Kiefel J accepted the Commissioner's proposition that it was not necessary that an employee be in receipt of a benefit where it has been provided to an associate of that employee, the fact of provision of a benefit to an associate is not enough in itself to make that benefit a 'fringe benefit' within the meaning of the FBTAA . The statute may deem a benefit to be provided to an employee where it is provided to the employee's trustee, but this would not obviate the apparent necessity to identify the employee in question. The definition of 'fringe benefit' would appear to require the identification of the employee to whom the benefit is provided. This is the principal contention of Essenbourne. This requirement of the definition was not, in Kiefel J's view, satisfied in Essenbourne . This is reflected in the references to a benefit being "provided to the employee or to an associate of the employee" and to the benefit being provided "in respect of the employment of the employee" (emphasis added). The latter reference, in particular, can only be to a particular person's employment. The Commissioner submitted that the reference to "an employee" in the definition should be read as "employees", in the case of certain benefits, as s 23 Acts Interpretation Act 1901 (Cth) would permit. In my view the Assessment Act requires that the particular employee be identified in connexion with the benefit. It is their employment which, after all, provides the necessary "link" to the benefit: see J & G Knowles & Associates Pty Ltd v FC of T [2000] FCA 196 ; (2000) 96 FCR 402. The definition does not admit of a reference to a number of employees in connexion with the benefit, the subject of the assessment. It arises because of the words 'in respect of the employment'. A mere causal link with the employment of the employee will not be sufficient. Essenbourne submits that, at least until the issue of Bonus Units, there is not a sufficient connexion with the brothers' employment. It seems to me that the substantial link at this point is as between the payment and the deduction sought by Essenbourne. It is not necessary for me to further consider the point for, in my view, the payment by Essenbourne to the trustee does not qualify as a fringe benefit as it is defined. 46 In Walstern , Hill J decisively and unambiguously agreed with Kiefel J in Essenbourne on this issue. On this point the case is not distinguishable. Further, far from being of the view that her Honour was clearly wrong, I am of the view that her Honour was clearly right. The definition of "fringe benefit" in s 136(1) of the FBTA Act makes clear the importance of identification of the employee. The benefit itself is one which is said to be "in relation to an employee". The benefit is required to have been provided to the employee (or associate of the employee) and is required to be in respect of the employment of the employee. The definition of "property fringe benefit" (if that is the kind of benefit relied upon) requires relevantly provision of property to a particular person there referred to as "the recipient". The valuation formula relevantly here requires that there be a benefit provided "to a person" in respect of the employment of an employee. Any contribution made by an individual employee is taken into account in determining the taxable value of the benefit. Although not relevant in the present case, the exclusion of a benefit otherwise deductible to an employee contemplates taking into account the specific circumstances of the employee himself or herself. Income tax is a tax upon the taxable income of a particular employee. In Walstern...Hill J agreed with Kiefel J's view. In the present case, it is clear that when the benefit (that is, the $15 million contribution) was provided it was not provided, whether to "the employee" or to Spotlight Incentive as an "associate" of "the employee", in respect of the employment of any particular employee because the employees of Spotlight were not beneficiaries of the Incentive Trust at that time. The Commissioner contended that I should not follow Essenbourne or Walstern but I am not satisfied those decisions are clearly wrong and, accordingly, propose to follow them. It must follow that Spotlight is entitled to succeed in its appeal in relation to its FBT objection. Merkel J in Spotlight Stores did not need to discuss the Essenbourne case in great detail, however his Honour observed that he proposed to follow Essenbourne and Walstern as, notwithstanding the submissions of the Commissioner in Spotlight Stores , his Honour was not satisfied that those decisions were clearly wrong (at FCA par 121). Hill J in Walstern had also indicated that, as a matter of comity, he would have followed the decision of Kiefel J in Essenbourne unless he had formed the view either it was distinguishable or that the decision was clearly wrong, neither of which was the case (at par 87). It tends also to uphold the authority of the courts and confidence in the law by the value it places upon consistency in judicial decision-making and mutual respect between judges. And where questions of law, and statutory construction, are concerned the proposition that a judge who has taken one view of the law or a statute is 'clearly wrong' is one not lightly to be advanced having regard to the choices that so often confront the courts particularly in the area of statutory construction. Indeed, where a serious doubt arises on the part of one judge, about the correctness of the law as stated by another, in a matter of importance, it may be desirable for a case to be stated to the Full Court for early resolution of the question in contention. Similar observations have been made in many other Federal Court cases including La Macchia v Minister for Primary Industries and Energy (1992) 110 ALR 201 at 204 (per Burchett J), Bank of Western Australia v Federal Commissioner of Taxation (1994) 55 FCR 233 at 255 (per Lindgren J), Nezovic v MIMIA [2003] FCA 1263 ; (2003) 133 FCR 190 at 206 (per French J), and Koara People v State of Western Australia [2006] FCA 66 at par 29 (per Nicholson J). The principle of comity is applied in other Australian courts in respect of decisions of single judges: I note, by way of illustration, Durovic trading as Shell Tornik Roadhouse v Judge , unreported Supreme Court of New South Wales, Rolfe J, 25 February 1997; Zotovic v Dobel Boat Hire Pty Ltd (1985) 62 ACTR 29 at 32 (per Blackburn CJ); Anteden Pty Ltd v Glen Eira City Council [2000] VSC 366 par 25 (per Balmford J); McDermott Projects Pty Ltd v Chadwell Pty Ltd (2002) 2 QdR 363 at 365 (per Holmes J); and Swetnam Brothers Pty Ltd v Grundy , unreported Supreme Court of Tasmania, Wright J, 14 March 1997. The principle of judicial comity as between Courts of equal status is long-standing in the United Kingdom; the principle is discussed, with many case citations, in Halsbury's Law of England , 4 th Edition Reissue vol 37 at par 1244. I also note similar comments in A MacAdam and J Pyke, Judicial Reasoning and the Doctrine of Precedent in Australia (Butterworths, Sydney, 1998) at 179-180. 52 Accordingly, in my view it would be appropriate to follow the principle articulated in Essenbourne and followed by three other judges of the Federal Court before me, unless in my view the principle is clearly wrong, or the facts before me are distinguishable. With respect, there is little to add to the reasons provided by Kiefel J in Essenbourne or Hill J in Walstern which have been repeated in this judgment. I agree with the four judges in Essenbourne, Walstern, Spotlight Stores and Caelli Constructions that the identification of particular employees is a requisite element in the application of the definition of 'fringe benefit' under the FBTAA . Like the judges in Walstern , Spotlight Stores and Caelli Constructions I propose to follow the Essenbourne decision and, to the extent it is applicable to the facts of the case before me, apply it. KEY QUESTION 2: IF THE COURT SHOULD APPLY THAT INTERPRETATION WAS A FRINGE BENEFIT PROVIDED WITHIN THE MEANING OF SECTION 136(1) FBTAA IN THE CASE BEFORE ME? So far as is relevant in the context of this case, the question is whether the ABC Public shares, which are the benefits in question, have been provided in respect of the employment of a particular employee or employees . 56 The words 'in respect of the employment' in the context of the definition of 'fringe benefit' were explained by the Full Court of the Federal Court in J & G Knowles and Associates Pty Ltd v Commissioner of Taxation [2000] FCA 196 ; (2000) 96 FCR 402. Their Honours pointed out that what needs to be established is whether there is a sufficient or material causal connection or relationship between the benefit and the employment. Considering in individual circumstances whether the benefit is a product or incident of the employment is useful --- if it is not, then the benefit is likely to be extraneous to the employment and not bear fringe benefits tax, notwithstanding that the employment might have been a causal factor (at 410). 57 In the case before me there is clearly some connection between a beneficiary of the CSP receiving the ABC Public shares, and a beneficiary being an employee of an RMC who has satisfied nominated criteria. Further, on the facts of this case the trustee of the CSP appears to be an associate of the employees as defined by s 159 FBTAA . 58 If, as the applicant contends, the employees are not identified with sufficient particularity, in my view the question of the benefit being 'in respect of' their employment does not arise. 61 It is instructive to compare the proposal before me, the rights of the employees who are potential beneficiaries under the CSP Deed, and the extent to which they are identified, with the facts in Essenbourne . Indeed, the interpretation of 'fringe benefit' articulated by Kiefel J in Essenbourne appears even more relevant to the facts in this case before me than it was in Essenbourne . In my view the applicant's case before me is stronger than it was before her Honour. The relationship between the provider of the shares, ABC Public, the regional managers and the RMCs was within the framework of a franchise structure. Importantly, any future employees of existing RMCs, or of future RMCs which later came into existence and entered an arrangement with ABC Public, could also potentially qualify as beneficiaries of the CSP. This is clear from cl 3.3 and cl 4.4 of the CSP Deed. Although the trustee was required by cl 3.4 and cl 4.5 of the CSP Deed to act reasonably and to have regard to the selection criteria provided in the CSP Deed, in my view this did not override the discretionary powers of the trustee. The position of the trustee was reinforced by cl 8.7 of the CSP Deed, which provided that every trust, power, authority and discretion of the trustee was absolute and uncontrolled. This was similar to Essenbourne where the Trust Deed provided for the employer to make contributions for the benefit of 'its employees generally' and employees were entitled to subscribe for Employee Units, however distributions of income to employee unit holders was determined from time to time by the trustee. 64 The circumstances before me are in some ways comparable with those in Spotlight Stores . There Merkel J found that when the $15 million contribution which was the benefit was provided, it was not provided, either to the employee or to the trustee as an associate of the employee, in respect of the employment of any particular employee because the employees of Spotlight were not beneficiaries of the Incentive Trust at that time. Clause 10 criteria included the contribution made by the beneficiary to the revenues or profits of the employer and the business or operation of the employer, the extent to which the beneficiary had attracted new clients to the employer, the length of service with the employer, and the seniority of the beneficiary. 66 On the other hand, the facts of the case before me may be contrasted with those in Walstern and Caelli Constructions , where the Courts found against the respective applicants. The arrangement was for their benefit. This may be contrasted with the circumstances in the case before me, where, despite guidelines provided in the CSP Deed, several steps involving satisfaction of criteria and the exercise by the trustee of its discretion required completion, before a selection of potential beneficiaries could be made from the large group of existing (and future) employees of the RMCs. In no way were similar circumstances replicated in the case before me. This issue may be quickly dealt with. In my view the trust in favour of the beneficiaries in the case before me did not take immediate effect as a vested interest in equal shares. The beneficiaries are not implied takers in default. But that does not mean that he has an interest which is capable of being taxed by reference to its extent in the trust find's income. 75 The applicant has also submitted that the Commissioner was wrong to decide that he was not bound by previous decisions of the Federal Court following and including Essenbourne . On the facts of the case before me, it is unnecessary for me to consider this issue. The appeal against the appealable objection decision made by the Commissioner of Taxation under s 14ZY of the Taxation Administration Act 1953 (Cth) to disallow in full the applicant's taxation objection against the private ruling issued to the applicant for the FBT years ended 31 March 2006 to 31 March 2011 be allowed. 2. The Commissioner's decision be set aside, and substituted with the decision that the applicant's taxation objection be allowed in full. 3. The respondent pay the applicant's costs on the basis provided for in the Test Case Funding Deed. 5. In the event of a dispute between the parties as to the amount of the costs payable under the Test Case Funding Deed, then the applicant shall, pursuant to the Federal Court Rules , be entitled to costs ascertained in accordance with the Test Case Funding Deed, and such costs can be taxed accordingly. | taxation administration act 1953 (cth) fringe benefits tax assessment act 1986 (cth) definition of fringe benefit whether benefits provided in respect of the employment of the employee whether employees identified with sufficient particularity whether trust in favour of the beneficiaries takes immediate effect as a vested interest in equal shares judicial comity whether single judge should follow decisions of other single judges of federal court unless facts are distinguishable or judge satisfied that decisions were clearly wrong taxation precedent |
This proceeding concerns an advertising campaign conducted by Audi in relation to the Audi Q7 Series of motor vehicles, including the Audi Q7 3.6 SE motor vehicle. 2 The advertising campaign was conducted between 23 June 2007 and 18 August 2007 by way of seven advertisements on broadsheet pages in "The Age" and 3 half broadsheet pages in the "Sydney Morning Herald", a brochure entitled the "2006 Specification Brochure" available from its dealerships and on its website and, finally, the Audi website which included the 2006 Specification Brochure (collectively "the Advertising Material"). 3 By application dated 8 November 2007, the Australian Competition and Consumer Commission ("the ACCC") alleged that Audi, by publishing the Advertising Material, engaged in conduct in contravention of ss 52 , 53 (a), 53 (c) and 55 of the Trade Practices Act 1974 (Cth). On 27 November 2007, the ACCC and Audi agreed to compromise the proceeding and submitted to the Court orders which the parties sought by consent. The proposed orders were submitted by consent on the basis that Audi also gave certain undertakings to the Court. 4 As a general principle, a court does not make declarations on matters relating to public rights by consent or on admissions, but only if it is satisfied by evidence: ASIC v Rich (No 2) (2004) 22 ACLC 1232 at [10]; Williams v Powell [1894] WN (Eng) 141; Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221 at 225---227; Termijtelen v Van Arkel [1974] 1 NSWLR 525; Wallersteiner v Moir [1974] 3 All ER 217; Metzger v Department of Health and Social Security [1977] 3 All ER 444 at 451; BMI Ltd v Federated Clerks Union of Australia (NSW) Branch (1983) 51 ALR 401; Young P W, Declaratory Orders (2nd ed, 1984) [601]. 5 The evidence adduced in support of the resolution of the proceeding on the terms of the proposed consent orders was a copy of the Advertising Material. These reasons for decision record why, in my view, it is appropriate for the Court to make orders in terms of the proposed consent orders. The Advertising Material was published; each of the advertisements was published either in the Age or the Sydney Morning Herald, the 2006 Specification Brochure was available from Audi's dealerships and on its website and the 2007 Specification Brochure was available on its website. In reviewing the Advertising Material I had at the forefront the caution from Lindgren J in Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 at [47] regarding television advertising. Of course, similar caution must be adopted when reviewing the Advertising Material. The declarations in paragraphs 2 and 3 of the Orders are directed to these contraventions. The declaration in paragraph 4 of the Orders is directed to these contraventions. The proposed Orders also provide for a publication order pursuant to ss 86D(2)(a) and (b) of the Act and for Audi to pay the costs of the ACCC fixed in the sum of $25,000. In addition to the proposed Orders, Audi offered to give undertakings to the Court to the effect that it will not repeat the contravening conduct in respect of the Audi Q7 Series of motor vehicles and it will continue to administer and review its trade practices compliance program. 15 In my view, it is appropriate for there to be orders in accordance with the minute of proposed orders. The orders are within power and otherwise appropriate: ACCC v Target Australia Pty Ltd [2001] ATPR 41-840 at [24] and ACCC v Econovite Pty Ltd [2003] ATPR 41-959 at [12]. Moreover, in the circumstances, it is in the public interest that these proceedings be settled: see Kiefel J in NW Frozen Foods Pty Ltd v ACCC (1996) 71 FCR 285 at 291. 16 In the circumstances, I will make orders in accordance with the minutes of proposed orders in conjunction with the undertakings to be given by Audi to the Court. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. The Court also made declarations that certain statements and pictorial images on the Audi Australia website (www.audi.com.au ) and in the 2006 and 2007 Specifications brochures were in breach of the TPA. the reference to the additional fee or charge of $1,700 was not prominent or likely to come to the attention of persons reading the advertisements . Further, the Court declared that Audi Australia had represented that motor vehicles in the Audi Q7 Series had performance characteristics, uses or benefits that they did not have. Audi Australia has been ordered by the Court to publish this notice to raise general public awareness, as well as specific awareness within the market for the sale of motor vehicles, of the conduct that has contravened the TPA and to redress the breaches the subject of the civil proceedings brought by the ACCC. For more information on pricing of motor vehicles see the ACCC "Guidelines for Pricing in the Motor Vehicle Industry" available at ACCC website at www.accc.gov.au . The Court also made declarations that certain statements and pictorial images on the Audi Australia website (www.audi.com.au ) and in the 2006 and 2007 Specifications brochures were in breach of the TPA. the reference to the additional fee or charge of $1,700 was not prominent or likely to come to the attention of persons reading the advertisements. Further, the Court declared that Audi Australia had represented that motor vehicles in the Audi Q7 Series had performance characteristics, uses or benefits that they did not have. Audi Australia has been ordered by the Court to publish this notice to raise general public awareness, as well as specific awareness within the market for the sale of motor vehicles, of the conduct that has contravened the TPA and to redress the breaches the subject of the civil proceedings brought by the ACCC. For more information on pricing of motor vehicles see the ACCC "Guidelines for Pricing in the Motor Vehicle Industry" available at ACCC website at www.accc.gov.au . | misleading and deceptive conduct conduct liable to mislead the public false representations that goods are of a particular standard or quality false representations that goods have performance characteristics, uses or benefits when advertisement as to purchase price is misleading whether advertisement must state specified feature is non-standard declarations by consent or on admissions on matters relating to public rights where supported by evidence, within power, and in the public interest trade practices practice and procedure |
It arises in circumstances where there is presently before the Human Rights and Equal Opportunity Commission a complaint which is being conciliated under s 11 of the Act . The complaint concerns interviews conducted in May 2005 by officials from the Ministry of Public Security, People's Republic of China ("PRC"), with a number of immigration detainees who were or were thought to be nationals of the PRC, of which the applicant was one. As I understand it, the complaint also raises an allegation that the applicant and other interviewees were subsequently housed separately from other detainees. The applicant received a notice of removal from Australia this morning. The notice advised that he had been booked on a flight departing tomorrow. The applicant now seeks an order that the respondent be restrained from taking any further steps towards removing him from Australia pending further order of this Court. 2 Section 46PP of the Act relevantly provides that this Court may grant an interim injunction to maintain "the status quo, as it existed immediately before the complaint was lodged" or "the rights of any complainant". The case has been advanced on the basis that an injunction should issue to maintain the status quo and, as I understand it, additionally or alternatively to maintain the rights of the applicant, being a complainant. On what has been put, I do not consider that the status quo as identified by the applicant, namely his remaining in Australia, is the status quo of the type referred to in s 46PP of the Act . As I apprehend the section, it is directed to preserving a position that may have existed or did exist before the conduct which is the subject of the complaint. In this case, the status quo ante was that the applicant was in detention awaiting removal from Australia. 3 As to whether the complainant has the "rights" referred to in s 46PP(1)(b) , I am prepared to proceed on the basis that the rights comprehended by the provision would include the right to enjoy the benefit of conciliation under the Act . Given the scope and purposes of the Act , it ought be construed beneficially, and consistent with that approach, the expression "rights" should not be narrowly construed. However it is necessary to consider whether there is any real prospect of the complainant securing through the process of conciliation the outcome identified, namely a protection visa. 4 The legal representatives of the applicant have drawn attention to the fact that some of the individuals who were interviewed by the PRC officials were later given protection visas, and it is submitted that the circumstances of the applicant (that he was one of the group who were interviewed) are such that he might secure a similar outcome from conciliation. However, it is not apparent to me from the material to which I was taken that the circumstances of the applicant approximate the circumstances of the people who have enjoyed a favourable decision by the Minister. Indeed, the fact that the Minister has very recently considered the circumstances of the applicant (including the fact that he was interviewed) and has rejected submissions on his behalf made by his solicitor directed to obtaining a protection visa fortify my view, having regard to the material to which I was taken, the applicant is not likely to secure through the process of conciliation the result identified. The Minister is under a statutory duty to remove the applicant from Australia: see s 198 of the Migration Act 1958 (Cth), and also more generally, Li v Minister for Immigration and Multicultural Affairs [2001] FCA 1414 and Li v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 667. 5 In those circumstances it appears to me that as a matter of discretion, it would be inappropriate to grant an interim injunction under s 46PP and accordingly I dismiss the application. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore J. | application for interim injunction restraining minister from removing the applicant from australia order sought under s 46pp of the human rights and equal opportunity act 1986 (cth) where applicant in immigration detention where ongoing conciliation of a complaint made to human rights and equal opportunity commission against department of immigration and citizenship application for interim injunction under s 46pp of the human rights and equal opportunity act 1986 (cth) to restrain respondent from removing applicant from australia where applicant in immigration detention at time of acts complained of and since whether interim injunction sought would maintain the status quo or the rights of the applicant, in accordance with s 46pp of the act whether granting of interim injunction appropriate migration human rights |
Jarrett FM dismissed the application. Subsequently, a Judge of this Court made an order under Order 80 rule 4(1) of the Federal Court Rules ('the Order 80') that the appellant be provided pro bono with legal advice as to her prospects of success in this appeal. The Order 80 stated that, if there were prospects of success, counsel could continue to act generally for the appellant; otherwise the assistance would end. 2 The matter was called on this morning and the appellant has made two applications. The first is an application that I disqualify myself from hearing the matter. The second is an application for adjournment. The appellant also claims that the Federal Court of Australia is part of that conspiracy in relation to her matter. She gave no details of the conspiracy or of its nature. 5 The appellant alleges that every Judge and every person employed by the Federal Court is part of that conspiracy and, on that basis, says that I cannot hear her matter. The appellant's claim would seem to extend to every person who participates in the business of the Federal Court. I note that no suggestion, basis or particulars have been given that I am in any different position to any other Judge of the Federal Court in this regard. 6 The appellant does, however, persist in her appeal and wishes to have it heard. She offers no suggestion as to how that would occur if no Judge is able to hear the matter. The doctrine of necessity would seem to have some application. She says that, because I made directions as to the further conduct of that case which was then heard by another Judge, I am precluded from sitting in this matter. No specific reference to the case was made, or details given of it. The appellant asserts that her case is very similar to that in Haneef , despite the fact that the matters are in relation to two different sections of the Migration Act 1958 (Cth) and two entirely different decisions under review. The appellant submits that because I am related to the Solicitor General of the Commonwealth, who argued the Haneef case for the Commonwealth, I am somehow precluded from sitting on her case. The fact that that barrister subsequently withdrew from the case, after giving the advice referred to in the Order 80, meant that the barrister was also part of a conspiracy by the Registrar to prevent the appellant from achieving justice. 10 It is not clear to me how, other than in respect of the general conspiracy asserted as the first basis, I am part of this latter conspiracy. Regardless, I have considered all of the matters put by the appellant in relation to her application that I disqualify myself, both individually and in combination. 12 No proper basis has been made out as to why I should disqualify myself from further hearing the matter. I decline to do so. I note that the Minister does not have any objection to my continuing the case. The application is therefore refused. 14 The appellant was directed to file and serve written submissions on or before 30 October 2007. On 31 October 2007 the barrister advising the appellant under the Order 80 informed her of his advice and of the fact that he would not act further in her case. The appellant says that she needs further time to prepare her submissions because of the late notification from the barrister. 15 I accept that, in the circumstances, it was reasonable for the appellant not to comply personally with the direction to file written submissions by 30 October 2007. However, the appellant has had several days in which to prepare written submissions for the hearing today. It is apparent that no action has been taken on her part to prepare written submissions. Certainly, none were presented. 16 The appellant also relies on a certificate signed by a clinical psychologist, dated 25 July 2007. She has demonstrated a tendency to be relatively easily distracted as her ability to focus and concentrate on detailed tasks is limited at this time. I asked the appellant what she wanted and she sought an adjournment of three weeks. When I asked her whether she would be able to make oral submissions on that future occasion, she said that she did not know. She said that it was just a ' matter of luck ' as to whether or not she would see herself as able to do so properly. 19 I note that the appellant appeared in person before Jarrett FM and that she prepared detailed written submissions in relation to that application. The appellant drafted the current notice of appeal herself and as she points out, the grounds of that notice reflect the grounds of the application made before his Honour. 20 I also note that there would be a great difficulty on the part of the Court to reconvene in Brisbane in some weeks time, in order to hear the appellant make her oral submissions in person. While video conferencing is possible on any adjourned date, in the circumstances of this particular appellant I believe that it would be of advantage to her and to the Court, to hear what she has to say in person. She has exhibited some difficulty in presenting her argument orally and there is no reason to believe that this would be different in three weeks time. However, from having seen her this morning I am of the view that if oral submissions can be given today, it would be to the appellant's benefit. 21 In the circumstances, the course that I propose to take is to proceed to hear what the appellant has to say today, bearing in mind that she is familiar with the detail of her appeal but to provide her with the additional opportunity to file written submissions upon which she wishes to rely. I will also hear from counsel for the Minister today. That will give the appellant the opportunity to hear the oral submissions for the Minister in addition to the detailed written submissions that were filed by the Minister and served on the appellant. The appellant can incorporate any further matters in her written submissions. 22 In response to my proposal, the appellant has stated categorically that she is not prepared and cannot make any oral submissions today. She has also said that she is not prepared to sit in the Court to hear oral submissions made on behalf of the Minister. 23 I have offered to the appellant a possibility that the case be stood down until later in the day or, in the alternative, until tomorrow or, in the alternative, until Friday to enable the appellant to prepare oral submissions and to prepare herself to be able to hear the oral submissions on behalf of the Minister. There would still be an adjournment for written submissions. The Minister has consented to having the matter stood over during the course of this week at any time that is convenient to the parties and to the Court. 24 The appellant has declined to take any of these alternative courses and has stated that, if the matter is to proceed today or at all this week, she does not wish to be present either to make her oral submissions or to hear any oral submissions on behalf of the Minister. She has said that in these circumstances it will be sufficient for her to have the transcript of the Minister's additional oral submissions. 25 In the circumstances there seems to be no good reason to adjourn the matter in so far as it requires oral submissions. I should proceed today. 26 Accordingly, I do not intend to adjourn the proceedings and the application is refused. 27 The appellant has asked that the costs of today follow the event and that no specific costs orders be made. The Minister consents to that course. The Court will order the transcript and arrange for a copy to be forwarded to the appellant. I certify that the preceding twenty seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | application for disqualification of judge no basis application refused application for adjournment recent refusal of counsel to act partial adjournment granted for written submissions oral argument to proceed practice and procedure |
His Honour also made an order that the applicant pay the first respondent's costs in the sum of $2,500. 2 The application before Federal Magistrate Smith was an application filed on 29 August 2006 which sought an order that the respondents show cause why a remedy should not be granted under s 476 of the Migration Act 1958 (Cth) in respect of a decision of the Refugee Review Tribunal dated 24 August 1998 and handed down on 25 August 1998. The Tribunal affirmed a decision of the Minister's delegate dated 26 September 1997 which refused the grant of a protection visa to the applicant. On 11 June 1997 I lodged an application for a protection visa with the Department of Immigration and Multicultural Affairs under the Migration Act 1958 ("the Act "). On 24 August 1998 the Tribunal affirms the decision not to grant a protection visa to me. I filed the application to the FMC for review that RRT decision and I applied for an order that the time for making the application be extended under section 477 of the Migration Act 1958 . However, the High Court of Australia has held that such a decision can be reviewed. The judgment of Judge Smith FM rely on the respondent filed the submission under section 477 of Act . The application is dismissed under rule 44.12 on the ground that it does not raise an arguable case for the relief claimed. In any event the important issue for the court is whether the Tribunal failed to take into account relevant material supplied by the applicant. If it did whether this would amount to an error or jurisdictional error on the part of the Tribunal'. The applicant must then further demonstrate whether substantial injustice would result if leave were refused supposing the decision to be wrong. Those principles derive from Decor Corp Pty Ltd v Dart Industries Inc. (1991) 33 FCR 397 and are consistent with the principles in Hall v Nominal Defendant [1966] HCA 36 ; (1966) 117 CLR 423. 6 In dealing with the application before Federal Magistrate Smith, his Honour turned to the requirements of rule 44.12(1) of the Federal Magistrates Court Rules. That rule provides, relevantly, that at a hearing of an application of the kind made by the applicant for an order to show cause, the court may - if it is not satisfied that the application has raised an arguable case for the relief claimed - dismiss the application. Federal Magistrate Smith concluded that the application did not raise an arguable case for the relief claimed and accordingly dismissed the application. 7 In doing so, his Honour considered a range of matters put by the applicant concerning the criticism of the decision of the Tribunal. At paragraphs 10, 11, 12, 13 and 14, his Honour considered the analysis by the Tribunal of the various claims of the applicant and particularly the foundation upon which the Tribunal reached the conclusion that it could not accept the claims of the applicant and was thus unable to be affirmatively satisfied that the applicant held a well-founded fear of persecution for a Convention reason. 8 Nothing in the material filed by the applicant in support of the present application, nor any matter identified in the notice of appeal, demonstrates an error or 'sufficient doubt' as to the decision to warrant the matter being reconsidered by a Full Court. Nor does the material demonstrate whether substantial injustice would result if leave were refused. However, fundamentally the difficulty with this application is that the applicant has simply failed to demonstrate any error on the part of the Federal Magistrate by reference to any material he has put before the court. 9 The applicant appeared today in person, unrepresented, but with the assistance of an interpreter. I invited the applicant to put to me any matter that may support the application. The applicant says that these matters occurred some time ago and he is not now able to remember the facts or the matter. It is clear from the affidavit I have read and the material filed by the applicant that some person has assisted the applicant in the formulation of this material. However, the material simply does not establish any question of 'sufficiency of doubt' about the Federal Magistrate's decision and even with the assistance of the interpreter, the applicant is not able to demonstrate to me why the Federal Magistrate's decision in determining that no arguable case had been raised, is wrong. 10 Accordingly, the application must necessarily be dismissed. 11 There is a procedural matter that needs to be addressed in terms of the application. The respondent has sought a direction that the title of the respondent be altered to 'Minister for Immigration and Citizenship' and I make that direction. I also direct that the Refugee Review Tribunal be joined as a second respondent for the purposes of the dismissal order. I also order that the applicant pay the respondents' costs of and incidental to the application. I certify that the preceding eleven (11) 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 the federal magistrates court migration |
The Commissioner says that the Tribunal erred in law in reaching those conclusions and, accordingly, appeals to the Federal Court pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). The object of Division 86 of the Assessment Act, which is within Part 2-42 and deals with the alienation of personal services income, is to ensure that individuals cannot reduce or defer their income tax by alienating their personal services income through companies, partnerships or trusts that are not conducting personal services businesses . It is designed to have the effect of attributing, to the individual who performed personal services, the income of a personal services entity from those personal services. A personal services entity is a company, partnership or trust whose income includes the personal services income of one or more individuals. 4 The provisions do not apply if the entity is a personal services entity conducting a personal services business . Under s 87-15(1)(c), a personal services entity conducts a personal services business if the entity meets at least one of the personal services business tests . One of the personal services business tests is the business premises test . It is also common ground that each of requirements (a) and (d) above were satisfied in relation to the Company in the relevant year of income, being the year ended 30 June 2002. 7 During the 2002 income year, Mr Dixon was a director and shareholder of the Company. Accordingly, he was an associate of the Company. During that year, the Company provided business analyst consulting services to its clients. For the purposes of carrying on its business, Mr Dixon provided personal services to the Company, from which it derived income. The personal services provided by Mr Dixon were used exclusively by the Company. The majority of the services provided by Mr Dixon to the Company were provided from the upper part of the Garage, although Mr Dixon spends some time at the office of IBM, a principal client of the Company. The Dural Property is rectangular and is approximately 4,000 square metres in area. Two main buildings are erected on it. One is a dwelling house occupied by Mr Dixon and his family for private purposes. The other is the Garage. The dwelling house and the Garage are 15 metres apart at the narrowest point between them. The dwelling house is close to the boundary on one side and the Garage is close to the boundary on the other side. 9 Vehicular access to the Dural Property is provided by a driveway from an entrance in Taylors Road, which provides access both to the dwelling house and the Garage. Parking space is provided adjacent to the driveway close to the Garage. The balance of the Dural Property consists of gardens and grassed open space. 10 The Garage is a two storey structure with three separate vehicular entrance doorways. There is accommodation for three motor vehicles on the ground level and office facilities and office space on the upper level. There is separate external access to the upper level. The location of the office part of the Garage is notified by a sign post and wording on the side of the Garage. It is common ground that the upper level was used exclusively by the Company in the 2002 income year. 11 There are no plumbing or toilet facilities in or attached to the Garage, although there are such facilities in the dwelling house. A mailbox at the entrance to the Dural Property is used for domestic mail as well as mail relating to the Company's business. 12 The space in the ground level of the Garage was used for only two vehicles in the 2002 income year. The remainder of that space was used for storage of material belonging to the Company and some few items belonging to Mr Dixon's family. Each of the two vehicles that used the space in the 2002 income year was registered in the name of the Company. One, a Holden sedan, was used by Mrs Dixon for private and family purposes as well as for the Company's purposes. Mrs Dixon is a director of the Company and is paid a salary by the Company. The Tribunal did not make a finding as to the respective proportions in which the Holden was used for private and family purposes, on one hand, and Company purposes, on the other. Well over 90 per cent of the use of the other vehicle, a Toyota Land Cruiser, was for the Company's purpose. All expenses relating to the motor vehicles were paid by the Company and the Company paid fringe benefits tax in respect of the private use of the vehicles. In the application form, the Company was named as the personal services entity and the Dural Property was stated as the address of the relevant business premises. 15 metres between edge of house to steps to office. No adjoining roof or walkway. No accommodation (bedroom) or kitchen. Separate phone line. However, the determination was refused on 4 August 2004, on the ground that the Company did not satisfy the requirement that the business premises be physically separate from premises that Mr Dixon and his family used for private purposes. 15 The Company lodged an objection to the Commissioner's decision on 27 September 2004 and, on 8 December 2004, the Commissioner disallowed the objection in full. An application for review of the objection decision was lodged on 3 January 2005. 16 In its decision of 3 March 2006, the Tribunal set aside the Commissioner's objection decision and determined that business premises comprising the Garage satisfied the test prescribed by s 87-30(1) of the Assessment Act. The matter was remitted to the Commissioner for further consideration. There are two buildings on the property. The two buildings are clearly separated from each other in the physical sense and are approximately 15 metres apart at the closest point. One building is a single storey residential premises... The other building is a two storey building... The ground floor of the two storey building is used as a garage. 18 The Commissioner's Statement of Facts and Contentions asserted that ' the Business Premises ' were not physically separate from the premises that Mr Dixon used for private purposes. In the Commissioner's written submissions to the Tribunal, filed prior to the hearing, the Commissioner accepted that the Company ' meets all the criteria for the business premises test except the requirement in s 87-30(1)(c) '. The submission stated that the question for the Tribunal was a factual one, namely, ' are the premises used and maintained by [the Company] physically separate from all parts of the property which comprise premises used by the Dixon family for residential purposes '. 19 It is clear, from that material, that the Company was, at that stage, contending that the relevant business premises consisted only of the upper part of the Garage. However, in the course of the hearing before the Tribunal, the Company's position changed. If the garage was used for domestic purposes then it would be very difficult to argue that the office upstairs was separate and apart from the garage. They are both of the same structure. Counsel pointed out that the Commissioner bears no onus and that it was entirely a matter for the Company whether evidence was to be called. In the light of those observations, counsel for the Company indicated that he would call Mr Dixon to give evidence. Mr Dixon was then sworn and gave brief oral evidence in chief and was cross-examined by counsel for the Commissioner. 22 After Mr Dixon's evidence was completed, counsel for the Commissioner raised a preliminary question concerning ' the definition of business premises that the Tribunal is considering '. The Tribunal's attention was directed to the form of application for a personal services business determination briefly described above, where the ' business premises ' were described as existing ' in loft over separate garage '. The Tribunal's attention was also directed to the Company's statement of the relevant facts cited above. 23 Counsel for the Commissioner observed that the Company had, thus far, only put its case on the basis of the business premises, being the upper level of the Garage, and that, because of that, the Commissioner had made a concession thus far that the Company otherwise met certain aspects of the business premises test. That concession was made on the basis of an understanding that the business premises consisted solely of the loft, being the upper level of the Garage. In that case, the Commissioner accepted that the Company would not fall foul of paragraph (b). Counsel said, however, that if the Company was to put its case on the basis that the business premises include the ground floor of the Garage, the Commissioner would no longer make that concession and would contend that the Company falls foul of paragraph (b), on the basis that the Company did not have exclusive use of the ground floor. That's what he's saying. So you're saying the Tribunal should look at then (b) and (c) and if the business doesn't have exclusive use of the garage then that means that it cannot be classified or described as business premises. That's what he's now saying. It hasn't been an issue. I can understand that you have been taken perhaps a little by surprise but on the other hand as I say it is a matter for you. That is not unreasonable [counsel for the Commissioner] ?. 27 Nevertheless, it is clear that, at that stage, there were now two issues before the Tribunal. The first was whether the dwelling house and the Garage were physically separate. On the Company's contentions to that stage, however, the business premises consisted of the upper level of the Garage. There had been no claim by the Company that the ground level formed part of the relevant business premises. Once the Company contended that the whole of the Gargage constituted the relevant business premises, that contention brought into play the second question, namely whether the Company had exclusive use of the ground level of the Garage. Counsel for the Company and the Commissioner addressed the Tribunal on both questions before the Tribunal reserved its decision. While they are both on the same parcel of land, they are detached from one another. The Tribunal found that the Garage is not ' incorporated functionally into the surrounding premises '. The Tribunal did not indicate whether the reference to ' the surrounding premises ' was to the dwelling house or to the open space adjacent to the two buildings. 29 The Tribunal found that the Company uses the driveway and part of the surrounding open space to enable clients to gain access to the upper level of the Garage. The Tribunal observed that there was no evidence that Mr and Mrs Dixon had granted, to the Company, title to any part of the Dural Property for the exclusive use of the Company. A fortiori , the Tribunal made no finding as to the arrangements, if any, that were in place between Mr and Mrs Dixon as owners of the Dural Property, on the one hand, and the Company, on the other hand, in relation to the use of the ground level of the Garage. 30 The Tribunal considered that the appropriate question was whether the Garage was physically separate from other parts of the Dural Property and the question was not ' as to whether they are separate from themselves '. The Tribunal found, as a matter of fact, that the Company's business premises consist of ' the garage and the office accommodation above it ' and that ' the garage accommodation is mainly used ' (emphasis added) by the Company for its business. After rejecting any proposition of ' joint occupancy ', the Tribunal said that there was ' if anything a limited joint use of the garage premises '. The Tribunal then said that ' the use is use of company property, namely the motor vehicles '. 31 The Tribunal was satisfied ' that there is a physical separation of the two premises ' and that they are ' distinct and separate from one another '. The Tribunal found that the premises ' are detached from one another, even be it they are on the same land '. The Tribunal went on to say that it was clear on the evidence ' that the buildings are separate one from the other ' and that ' the buildings are largely functionally independent of one another '. Thus, the Tribunal was clearly treating the dwelling house and the Garage as separate premises. 32 The Tribunal was satisfied that the Company has exclusive use of ' the premises ', by which it must be taken to have referred to the Garage, to the exclusion of relevant use by the Dixon family. The Tribunal observed that the vehicles are the property of the Company and that, if there is any use of the vehicles in a private sense by Mrs Dixon or Mr Dixon, it is use by them of the Company's property. The Commissioner also contends that the Tribunal took into account an irrelevant consideration and failed to taken into account relevant considerations in concluding that the Company had exclusive use of the Garage. The Commissioner says that the Tribunal wrongly considered that the payment of fringe benefits tax in respect of the personal use of the vehicles was relevant in concluding that the Company had exclusive use of the ground floor of the Garage. The Commissioner also contends that the Tribunal failed to take into account a relevant consideration, namely, that the ground floor of the Garage was used by Mr and Mrs Dixon and their family for private purposes. 34 The Commissioner also contends that the Tribunal misconstrued the term ' premises ', in so far as it considered only the physical separation between the dwelling house and the Garage, rather than considering the question of physical separation of the Garage from the garden, driveway and curtilage comprising the open space around the dwelling house and the Garage. It appears to involve some confusion between, or conflation of, the concepts involved in paragraphs (a) and (b) of s 87-30(1). What the legislation does provide is that for premises to be " mainly" used by [the Company] to conduct activities producing personal services income. The issue of exclusivity relates to the use of the premises being that of more than one individual or entity in the sense of shared accommodation. That requirement would be satisfied even if the Company conducted such activities, in part, from some other premises. It is common ground that the Company mainly conducts, at the Garage, the activities from which personal services income was gained or produced and, accordingly, the requirement was satisfied. 37 It was not in issue that the Company maintained and used the whole of the Garage. However, in order to satisfy paragraph (b), the Company must also show that it had exclusive use of the whole of the Garage. There are at least two possible meanings for that requirement. First, it may mean that, as a matter of fact, the Company was the only person that used the Garage. Alternatively, it may mean that the Company had a legal right to the exclusive use of the Garage, whether or not it in fact enforced that right. In the present case, there was no evidence whatsoever as to any legal right. As to the former meaning, a factual finding must be made by the Tribunal. Such a factual finding as to exclusive use, if made by the Tribunal, could only be the subject of an appeal under s 44 of the Administrative Appeals Tribunal Act if the Tribunal did not direct itself properly as to the meaning of exclusive use. 38 The Tribunal in fact found that the ground floor of the Garage was used both for business purposes and for private purposes, although the Tribunal found that it was used for private purposes only to ' a limited extent '. The Tribunal also found that the ground floor of the Garage was ' mainly ' used by the Company. When referring to the Commissioner's contention that the ground floor of the Garage was used for both business and private purposes, the Tribunal said that was true but ' only to a limited extent '. The Tribunal characterised the position as being the family using the ground floor ' to a limited extent '. The Tribunal considered that, while other parts of the Dural Property, such as the dwelling house and garden, are used solely for residential purposes, that did not disqualify the Garage, including the lower level, from ' having an apposite description applied to it '. 39 The Tribunal's findings, that the fact that the Garage was used to a limited extent for private purposes and was only mainly used by the Company, led to the Tribunal's conclusion that the Company has exclusive use of the Garage to the exclusion of relevant use by the Dixon family. It may well be that a private use that could be fairly characterised as de minimis would not detract from a finding that the Company had exclusive use. However, the Tribunal made no such finding. Use ' to a limited extent ' is far from a finding that the use is so slight that it should be ignored. 40 The Tribunal made observations concerning the use of the ground floor of the Garage for the garaging of the vehicles, which were used, to a greater or lesser extent, for private purposes, albeit that they were owned by the Company. The Tribunal's findings concerning the motor vehicles centred on the fact that they are owned by the Company, which paid fringe benefits tax in respect of their private use by members of the Dixon family. 41 However, the Tribunal did not direct attention to the basis upon which the vehicles were garaged in the ground floor of the Garage. That is to say, the Tribunal made no finding as to the arrangements between the Company and the Dixon family concerning the garaging of the vehicles. It may be that the vehicles were garaged in the Garage because the Company required that its vehicles be garaged there. On the other hand, if the vehicles were garaged there by Mr and Mrs Dixon by reason of their ownership of the Dural Property, of which the Garage formed part, and not under some arrangement with the Company, it could not be said that that gave rise to any exclusive use by the Company of that part of the Garage. 42 No doubt there are many instances where a motor vehicle owned by an employer is entrusted to the custody of an employee for private use and the employee garages the vehicle at premises totally unconnected with the employer. The fact that the vehicle is owned by the employer and the garage premises are used for no purpose other than garaging the vehicle, could not lead, in the absence of something further, to a suggestion that, in such a case, the employer had exclusive use of the premises where the vehicle is garaged. 43 That, in the absence of any finding to the contrary, is the position in the present case. The mere fact that the vehicles were owned by the Company cannot of itself lead to the conclusion that the Company had exclusive use of the place where the vehicles were normally garaged. There is no indication that the Company had any right to the use of the ground floor of the Garage. Indeed, there was some evidence that some of the ground floor was used for the storage of family property. Since the Tribunal found that the Holden vehicle was used for the most part by Mrs Dixon for private and family purposes, it is difficult to see how it can be said that the mere fact that the vehicle was garaged in the ground floor of the Garage leads to the conclusion that the ground floor was used exclusively by the Company. While Mrs Dixon was a director and was paid remuneration by the Company, there was no suggestion that the Company in any way directed the use of the Holden vehicle and the Tribunal made no such finding. 44 Having regard to the observations made by the Tribunal concerning the extent to which the ground floor of the Garage was used for private purposes, coupled with the Tribunal's observations that there is no requirement that there be exclusive use, in the sense of the relevant premises being used 100 per cent for business purposes, I do not consider that the Tribunal properly directed itself concerning the question of whether the Company had exclusive use of the whole of the Garage. The Tribunal, therefore, made an error of law. The difference between the Company and the Commissioner, in this regard, turns on the construction of the word ' premises '. 46 The Company contends, and the Tribunal accepted, that each of the two buildings constructed on the Dural Property constitute different premises. In that sense, it is clear that the dwelling house is physically separate from the Garage. In its reasons, the Tribunal expressed the view that the fact that the dwelling house and the Garage share a front gate and driveway and that there were no water or sewerage facilities in the Garage does not necessarily deprive the Garage of the capacity to be physically separate and apart from the dwelling house. In that respect, the Tribunal was identifying the two buildings as being the relevant premises, without having regard to the open space surrounding both buildings. 47 However, the Commissioner contends that the whole of the Dural Property constituted premises and that the dwelling house and the Garage were all part of those premises, which include the open space consisting of the garden, driveway and curtilage. 48 There is no reason why the word ' premises ' should not be understood according to its ordinary English usage. Premises means a house or building with the grounds, etc. belonging to it ( Macquarie Dictionary , 4 th ed, The Macquarie Library Pty Ltd, Macquarie, 2005); it also means a house or building, together with its land and outbuildings occupied by a business or considered in an official context ( Shorter Oxford English Dictionary , 5 th ed, Oxford University Press, Oxford, 2002). The Dural Property is owned by Mr and Mrs Dixon. There has been no suggestion of any separate title existing in respect of the Garage. Rather, the whole of the Dural Property is held under a single title. The Dural Property could be described as the premises known as 4 Taylors Road, Dural. There is one entrance to those premises, which is used by the Dixon family for private purposes. The Garage is part of the Dural Property. As I have said, the Tribunal found that the Garage was not incorporated functionally into the surrounding premises. However, the Tribunal found that the Company uses the driveway and part of the surrounding open space to enable clients to gain access to the upper level of the Garage. Thus, there was a sharing of the driveway by the Company and by the Dixon family. It may have been possible for the Tribunal to make a finding, on the evidence before it, that there are premises that are exclusively used by the Company that can be shown to be physically separate from the dwelling house, open space and driveway that constitute the premises of the Dixon family. It did not do so. Accordingly, the Tribunal failed to make clear the distinction that is required by paragraph (c). That was an error of law. The Tribunal misdirected itself as to the meaning of paragraphs (b) and (c) of s 87- 30 (1). It is conceivable that the Tribunal, properly directed, could still reach the conclusion that the business premises test is satisfied. Accordingly, the appropriate order is to set aside the decision of the Tribunal and remit the matter to the Tribunal for further consideration according to law. The parties have agreed that since the Company was provided with funding under the Australian Taxation Office Test Litigation Process Program, there should be no order as to the costs of the proceeding. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | personal services income declaration whether the respondent company met the business premises test whether the company had exclusive use of the premises whether the premises the company used were physically separate from any premises used by the family for private purposes judicial review whether tribunal misinterpreted the requirement for exclusive use whether tribunal took irrelevant considerations into account and failed to take relevant considerations into account- whether tribunal misconstrued the word " premises " income tax administrative law |
1 ('SF1') with the life insurance business of CMLA, in particular the superannuation non-participating term certain annuity sub-fund of CMLA's Statutory Fund No. 3 ('SF3'). There were only three CIHL policyholders for whom CIHL had no current address details and to whom the approved summary of the Scheme was not sent. (2) The evidence of the return mail procedures adopted by CIHL as detailed in [36] of Ex. 2. On 7 June 2007 in response to CMLA's claim for interlocutory relief, I made an order pursuant to subs 191(5) of the Act that the need for compliance with para (c) of subs 191(2) of the Act, in so far as it requires an approved summary of the Scheme to be given to owners of policies issued by CMLA referrable to CMLA's SF3, be dispensed with. (2) No changes are proposed under the Scheme to the current basis of managing the business of CMLA's SF3. (3) The interests of CMLA's SF3 policyholders have been considered by the actuaries, including the independent actuary. In short, the Scheme does not prejudice, or materially affect, CMLA's policyholders referrable to SF3. (4) The Australian Prudential Regulation Authority ('APRA') has indicated that it has no objection to the dispensation relief sought by the applicants, and has no objection to the Scheme itself. (5) The applicants have widely advertised the proposed Scheme and the intended confirmation application in newspapers throughout Australia. The notice advised policyholders where they may inspect or obtain copies of the Scheme. The advertising programme was approved by APRA. (6) Details of the Scheme have been placed on the Comminsure website. Copies of the Scheme have been sent to policyholders upon request, free of charge. CMLA is a subsidiary of CIHL and CIHL is ultimately owned by the Commonwealth Bank of Australia. CIHL operates through a single statutory fund, SF1, and its portfolio of non-participating term certain annuity policies is closed to new business. CMLA operates six statutory funds, including its annuity business conducted through SF3, which in turn has a number of sub-funds. CMLA's SF3 is open to new business. Once confirmed, the Scheme is intended to take effect from 11.59 p.m. on 30 June 2007 ('the Transfer Date'). Whilst the Court's discretion is broad, it is not unfettered, and must be exercised on the evidence and having regard to the objects of the Act, principally, the protection of the interests of policyholders and prospective policyholders (s 3(1) of the Act). See Colonial Portfolio Services Ltd v Australian Prudential Regulation Authority (2000) 11 ANZ Ins Cas 90-103; [1999] FCA 1779 at [4] and [29]. Second, there is a substantive aspect in which the Court is concerned to see that the Scheme will not be prejudicial to the interests of policyholders and that policyholders are properly safeguarded, i.e., there is not likely to be any material detriment to policyholders affected by the Scheme (see NuLife Insurance Ltd v Norwich Union Life Australia Ltd [2005] FCA 1635 at [24] per Emmett J; MLC Lifetime Company Ltd & Anor (No. (2) That notice of the intention to make this application, in the form approved by APRA, was published on 2 April 2007 in the Gazette and in newspapers, approved by APRA, circulating in each State and Territory in which there is a register of life policies for the applicants, in compliance with subs 191(2)(b) of the Act and Reg 9.02(1) of the Regulations. (3) A correction notice, in the form approved by APRA, was published in Tasmanian newspapers on 13 April 2007. (4) That for a period of 15 days after publication of the notice, the Scheme was open to inspection on each of these registries by any policyholder of the applicants. (5) No persons attended at the advertised locations to inspect a copy of the Scheme, and only one person requested a copy of the Scheme by letter. (6) Two telephone calls were received by the call centre established by the applicants to answer queries relating to the Scheme and one call was received by Freehills, the applicants' solicitors. (7) Two persons made an email request for a copy of the Scheme and were sent a copy as requested. (8) No person has advised Freehills that they intend to object to the Scheme. The effect of the Scheme is that the whole of the life insurance business of CIHL's SF1 will be amalgamated with the life insurance business of CMLA's SF3, in particular, the superannuation non-participating term certain annuity sub-fund of CMLA's SF3. To this end, on the Transfer Date, CMLA will acquire all assets and assume all liabilities of CIHL's SF1, other than current tax liabilities of SF1 to 30 June 2007 and an amount represented by the provisions set aside to meet such liabilities. Thus, on the Transfer Date CIHL's policies will be transferred from SF1 (with net assets of $94 million as at 31 December 2006) to a significantly larger and more diverse portfolio of business of CMLA's SF3 (net assets of $1,657 million as at 31 December 2006). The only change to CIHL's Scheme policies is that references to CIHL will be read as references to CMLA, and references to a statutory fund of CIHL are to be read as references to CMLA's SF3. The Scheme does not change the policy terms and conditions of existing CMLA policyholders referrable to SF3, and no changes are proposed under the Scheme to the current basis of managing the business of CMLA's SF3. The Scheme does not affect CMLA's other statutory funds. All costs of the Scheme will be met by CMLA's Shareholders Fund. The actuarial report sets out the commercial background to the proposed merger of the life insurance business of CIHL with CMLA. (2) Equity is maintained between the existing policyholders of CMLA and those being transferred from CIHL. (3) Adequate security of policyholder benefits should be maintained. (4) The amalgamation is in the interests of policyholders of both companies. (5) The amalgamation is in the interests of shareholders. That approval was sought on 30 May 2007. The Assistant Treasurer's 'go ahead' decision was given by letter dated 27 June 2007. (2) The objective of the Scheme is to integrate and consolidate the life insurance business of CIHL and CMLA, and it does so in a manner which does not change the benefits or future expectations of policyholders of either company. (3) Adequate security of policyholder benefits should be maintained. (4) The amalgamation is in the interests of policyholders of both CIHL and CMLA and is in the interests of shareholders. (5) APRA has independently considered the Scheme and has no objection to the present application being made to the Court for confirmation. I also made an order that the applicants pay the costs of the proceedings of APRA as agreed or assessed. Finally I directed that both orders be entered forthwith. | life insurance scheme for amalgamation of life insurance businesses application to court for confirmation of scheme compliance with life insurance act 1995 (cth) and life insurance regulations 1995 (cth) insurance |
I gave orders in respect of the hearing of that Notice of Motion on 9 February. The motion was filed in good faith motivated to assist the Thompson Family in their Native Title interests and in the public interest. The motion of the 8 th of February was filed under the instructions and insistence of the Thompson Family. However having failed to get any legal assistance and being advised that the motion is unlikely to succeed in its present form I can no longer pursue this matter. The amount they seek, they say, is less than half the cost which they have incurred. 3 The difficulty about the application for costs arises from s 85A of the Native Title Act 1993 (Cth) ('the Act'), this being a proceeding under that Act. 4 In ordinary Federal Court proceedings, where there is a notice of discontinuance filed, in three of the four circumstances referred to in O 22 r 3 Federal Court Rules , being those set down in r2(1)(a), (b) and (c), in the absence of any specific order, the party discontinuing is to pay the costs of the party against whom the discontinued proceedings had been brought. There is no provision expressed in relation to the circumstance where a matter is discontinued, the leave of the court having been obtained for that respect. In the case of the grant of leave the court would be conscious of the need to address and make appropriate orders as to costs to meet the justice of the case. Lee J's observations were picked up by the Full Court of the Federal Court in De Rose v State of South Australia (No 2) [2005] FCAFC 137. The Court consisted of Wilcox, Sackville and Merkel JJ. It follows that the exercise of the discretion is not conditional upon a finding of fact or the formation of an opinion as to the occurrence of unreasonable conduct or the existence of special circumstances (at [35]). However, the starting point is that each party will bear their own costs unless the Court determines that it is appropriate in the circumstances to make an order for costs (at [34]) . Failing to respond to the fax of 23 May 2006 from Michael Neal Lawyers in a timely manner. taken up the invitation of the Jagera People to attend a meeting, or 2. The offer contained in the fax is a little bit at odds with the application for costs now made, the basis of it being that the deadline imposed by the facsimile, namely Wednesday 24 May 2006, passed and there was no Notice of Discontinuance filed, or any communication by Mr Coghill with Mr Neal. 9 In the light of all the material, including the written submissions filed by Mr Coghill today, and observations put to the Court on behalf of Queensland South Land Council by Mr Colin Hardy concerning attempts to resolve matters of dispute involving claims, including the claim of the Jagera People, I am not satisfied that this Notice of Motion is a proceeding which has by any unreasonable act or omission caused another party to incur costs in connection with the institution or conduct of it. This is not a case where an unmeritorious claim has been progressed in circumstances where costs are caused to another party. 10 The fact that the application is discontinued is explained by the submissions made by Mr Coghill. I have to say that there seems to be a great deal of lack of co-operation, if not lack of goodwill in relation to the disputes between the Thompson family and the Jagera # 2 claim applicants. 11 This is another illustration of the fact that unless the matters are dealt with constructively and in good faith, then acrimony will prevent the progression of any persons legitimate expectations as to native title rights. I make those comments conscious that there are further opportunities available to attempt to resolve what seemed to be genuine disputes. 12 In my view, the failure to act by the close of business on 24 May 2006, being the imposed deadline by Mr Neal, was not an unreasonable act or omission which comes within subs 85A(2) of the Native Title Act (1993) (Cth). 13 The court has as general power to make orders for costs as Lee J's comments in Ward illustrate. There is a specific power where the court is satisfied of the matters referred to in subs 85A(2) of the Act. In my opinion those considerations do not apply. 14 Looking at the matter generally, in my judgment, this is not a case where it is appropriate to make any order as to costs. The consequence is that, pursuant to subs 85A(1) of the Act, each party to the Notice of Motion is to bear his or her own costs. 15 For the above reasons I give leave to Shane Coghill to discontinue the notice of motion filed on 8 February 2006, and note that, pursuant to s 85A of the Act, each party to that motion is to bear his or her own costs. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender J. | discontinuation of application application for costs against discontinuing party whether any unreasonable act or omission caused another party to incur costs practice and procedure |
The proceedings have a long history in this Court. It is not necessary for me to traverse that history for present purposes. On 10 December 2008, I heard the plaintiff's Application and, at the conclusion of the hearing, reserved my decision. That decision remains reserved. On 15 December 2008, Mr Watts, to whom I have granted leave to appear on behalf of the plaintiff, forwarded a facsimile communication to my chambers in which he sought to place before me certain additional material. That facsimile transmission will be marked MFI-2 and placed in the Court file. In response to Mr Watts' communication, Registry staff informed him that he would need to make the application which he was seeking to make in the correspondence to which I have referred by way of formal Notice of Motion supported by an affidavit or affidavits. The affidavit comprises some five pages of text and a number of annexures. The annexures, with one exception to which I shall come shortly, comprise documents which all pre-dated the hearing which took place before me on 10 December 2008. The majority of the documents bear dates between early 2005 and mid-2007. All of the documents appear to have been in the possession of the plaintiff or Mr Watts at all times since they were brought into existence. Further, most of the affidavit deals with events and contentions covering the period 2005 to 2007. The exception to these remarks is Annexure 2A to the affidavit which is commented upon in paragraphs 3 and 29 of the text of the affidavit. Annexure 2A comprises a notice disputing the validity of a Bankruptcy Notice served upon Mr Watts and his wife in respect of the same debt which is the subject of the Creditor's Statutory Demand which is sought to be set aside in the present proceedings. The notice disputing the Bankruptcy Notice is dated 8 April 2009 and has attached to it a calculation which Mr Watts submits constitutes the correct calculation showing the present state of the account between the plaintiff and the first defendant in respect of the two loans made by the first defendant to the plaintiff in 2004. With the exception of the two paragraphs to which I have already referred and Annexure 2A to the affidavit, the annexures to Mr Watts' affidavit of 14 April 2009 comprise documents all of which could have been tendered at the hearing before me on 10 December 2008. Indeed, many of them were in fact tendered at that hearing. The same observation may be made in respect of the text of the affidavit in the sense that much of what is said there has either already been said or could have been said at the hearing before me on 10 December 2008. In order to have the affidavit of Mr Watts sworn on 14 April 2009 (including the annexures to that affidavit) admitted into evidence, Mr Watts would need to show either that the evidentiary material set out in that affidavit comprised facts and matters which had arisen after the hearing or which were not known to him or could not have been ascertained by him by the exercise of reasonable diligence at the time the hearing took place on 10 December 2008 and that it is in the interests of justice that the material be admitted into evidence (see The Movie Network Channels Pty Ltd v Optus Vision Pty Ltd [2009] NSWSC 132 at [4] ---[8]; Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 at [24] ; and Australian Securities and Investments Commission v Rich [2006] NSWSC 826 ; (2006) 235 ALR 587 ; (2006) 58 ACSR 414 at [18] ). One of the important considerations to be weighed in the interests of justice in the present case is the public interest in the finality of litigation. Given that most of the documents attached to Mr Watts' affidavit are already in evidence and that most of the assertions and contentions sought to be advanced in the affidavit have already been put, in my judgment the plaintiff has failed to establish that it should be permitted to re-open in the manner sought by it. Further, no explanation has been offered as to why the material set out in Mr Watts' latest affidavit was not presented in the way in which it has now been presented when the hearing before me took place on 10 December 2008. When asked in argument whether Annexure 2A and the paragraphs in the affidavit to which I have referred could be treated as a submission only and not as evidence, Mr Watts accepted that that material could be treated in that fashion and that, if the material was considered by me on that basis, he would be satisfied. Mr Watts told me that his main concern was to ensure that I had, in the one place and in a manner which was clear and coherent, his contentions concerning the correct way of calculating the amounts due under the loan agreements (if any). Mr Skinner, who appears for the first defendant today, does not oppose my receiving that material on that restricted basis for that purpose. Accordingly, for the reasons which I have explained, I refuse the plaintiff leave to reopen. However, I will receive as a submission the material contained in paragraphs 3 and 29 of the affidavit sworn by Mr Watts on 14 April 2009 together with Annexure 2A to that affidavit. I propose to order that the costs of the Notice of Motion filed on 14 April 2009 be costs in the proceedings. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. | application by the plaintiff for leave to re-open after the hearing but before judgment no new evidentiary material of any substance existing evidence and arguments presented in a different way leave to re-open refused part of the material received as a submission only evidence |
The Tribunal affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs to refuse to grant a protection visa to the appellant. 2 The appellants are a husband and wife and are citizens of India. They claim a well-founded fear of persecution in that country of their origin by reason of the appellant husband's political association and activity with the Congress Party in Gujarat. The appellant husband claimed in his statement to the delegate that he strongly condemned the Godhra train tragedy in February 2002, and because of his activities in helping victims and arranging rallies to have the culprits of that incident arrested and punished, he became the target of extremists from the Bharatiya Janata Party (BJP) and the Rashtriya Swayamsewak Sangh (RSS), who burnt his office, destroyed his business and made threatening phone calls demanding that he leave the Congress Party. The appellant husband claimed that he reported those threats to the police, but that no action was taken. The appellant husband also claimed that as a result of his association with the leading candidate for the Congress Party, he was beaten by the same extremists so severely that his arm was broken and he was hospitalised. 3 The Tribunal found that the appellants claims lacked the necessary detail to establish relevant facts sufficient to establish refugee status, and in particular that it was not satisfied that the appellants had a well-founded fear of persecution. The Tribunal accepted that the appellants lived in the epicentre of the violence which occurred in Gujarat, but that the arson of the husband's business was more plausibly explicable as an aspect of the general violence and pattern of destruction. The Tribunal cited independent country information as a demonstration of the fact that perpetrators of the violence directed the same towards Muslim people, whereas the appellants are Hindu, and accordingly their claim that the police would not assist them was not credible, as well as was unsupportable to the extent of its alleged detail. The Tribunal also found that it was unlikely that the appellants were targeted because of criticism of Gujarat's Chief Minister, since the male appellant in particular was but one of many critics of the BJP and RSS. The appellants also failed to provide details explaining why they were targeted. Although the appellant's claimed that relocation was not possible the Tribunal notified the appellants in any event that it was not able to make a decision in their favour based on the information placed before the delegate, and invited the appellants to attend the hearing and address their claims orally to the Tribunal Member. However it was said that the appellants wrote to the Tribunal declining that offer and asked for a determination in their absence. 4 The appellants asserted in their further amended application filed on 20 January 2005 that the Tribunal failed to take into account a relevant consideration when it assessed whether the delegate of the Minister raised reasonable grounds for not granting a protection visa, and that the Tribunal failed in that regard to consider properly the chance of persecution if they were returned to India. The appellants advanced the following details in support of those assertions: first that the appellant husband was persecuted by Muslims because of his political popularity; secondly that the appellants were unable to collect documentary evidence; thirdly that the Tribunal did not provide the appellants with adequate particulars of the independent country information; fourthly that the Tribunal did not provide the appellants with adequate opportunity to respond to the substance of this information; fifthly that the information used by the Tribunal did not show that Congress politicians are safe; sixthly that the appellants did not get an opportunity to attend the Tribunal hearing because they were not informed of the consequences of non-attendance or the hearing procedure; seventhly that the appellants needed an opportunity to give oral evidence and the decision of the Tribunal was affected by a lack of procedural fairness; and eighthly, that since the appellants had been persecuted by the BJP, it would not be possible for them to relocate in India. 5 The Federal Magistrate found that the Tribunal's decision was unaffected by jurisdictional error and therefore dismissed the application with costs. The Federal Magistrate further found that the Tribunal had not been satisfied that the appellants had a well founded fear of persecution because of the absence of evidence to support their claims. The appellants admitted that they could not provide evidence by then not forthcoming, and did not attend the hearing as a consequence of bad advice. Moreover the independent country information was said by Barnes FM to fall within the exception under s 424A(3)(b) of the Migration Act 1958 (Cth) ('the Act'), and did not require notification of the Tribunal's citation thereof. The reasoning of the Tribunal concerning the lack of detail in the appellants application and their failure to attend the hearing, were said to be matters of evaluative reasoning, inclusive of their thought processes, which were not required to be brought to the attention of the appellants. Barnes FM further found that the ground for review challenging the independent country information used to demonstrate that members of the appellant husband's political party were safe was misconceived, since the Tribunal had found that the appellants had not provided enough evidence to establish that the appellant husband was in fact targeted, and had rejected the notion that relocation was not an alternative open to the appellants. Moreover Barnes FM explained that the Tribunal did consider the consequences of relocation in India, and found that so much would be possible having regard to the material placed before it to the effect that the appellant husband held business interests in four States of India and the BJP was not a dominant political party in other States. The Federal Magistrate further held that the Tribunal's decision did not lack rational and logical reasoning and did not contravene the Act because the appellants made the choice not to give further evidence, and consequently the Tribunal was entitled to proceed on that footing. 6 The notice of appeal raised the following grounds: first, that the Federal Magistrate erred in failing to find jurisdictional error in the Tribunal's decision; secondly that the Tribunal failed to 'assess the harm from the perspective of the persecutor' when considering the question of well-founded fear; thirdly that the Tribunal did not properly consider the basis of fear of persecution and ignored the appellant husband's evidence concerning his political activities; fourthly that the 'Tribunal adopted a harsh approach' and failed to give 'importance to the real issues' relevant to the case as to denial of procedural fairness in favour of the appellant. In relation to that final ground, the notice of appeal stated that the appellant husband informed the Federal Magistrate why the appellants did not attend the hearing, but the Federal Magistrate did not believe his testimony that he had relied for assistance and advice on his migration agent who did not however make him aware of the consequences of non-attendance at the Tribunal. 7 At the hearing of the appeal in this Court, the appellant was unable to demonstrate, nor did he seek to demonstrate, error in any of the Tribunal's reasoning, but instead sought an adjournment to enable he and his wife to obtain evidentiary material from India in refutation of the Tribunal's findings. He did not detail explicitly what that evidence might be, or its particular source, and in any event in the light of the Minister's understandable opposition to any adjournment for that purpose, I rejected that request at the instance of the Minister's solicitor. Plainly the appellants having first arrived in Australia on 21 February 2003, the Minister's opposition could not be described as unjustifiable, particularly since nothing specific of potential significance was indicated as likely to be forthcoming. 8 Accordingly I ordered that the appeal be dismissed. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. | no point in principle migration |
However, it is common ground between the parties that the application to set aside the statutory demand was served outside the 21 day time limit set under the Act. Notwithstanding this, Mr Johnson, who appears for the Nationwide, seeks to pursue an application by way of final relief for an order that the Deputy Commissioner be restrained from commencing winding up proceedings against Nationwide. 2 Mr Johnson accepts that in light of the decision of the High Court in David Grant & Co Pty Limited (Receiver Appointed) v Westpac Banking Corporation (1995) 184 CLR 265 , it is necessary for him to establish to my satisfaction that the pursuit of a winding up application in the present circumstances would amount to an abuse of process within the principles stated in Williams v Spautz [1992] HCA 34 ; (1992) 174 CLR 509. 3 This application has come on before me as corporations judge as a matter of some urgency this afternoon. I do not consider it is necessary to set out the facts in any detail; they are recorded sufficiently in the various affidavits that have been read by Mr Johnson in support of the application. 4 The statutory demand described the debt as consisting of three separate components. The first is a running account balance deficit as at 25 March 2008 in an amount of approximately $122,000; the second is an income tax liability for the year ended 30 June 2004 made pursuant to a tax return filed by Nationwide. The amount stated in the statutory demand in respect of this component of the debt is an amount of nearly $29,000 inclusive of interest. The third component of the debt is described as an amount of nearly $29,000 comprising income tax liability for the year ended 30 June 2005, together with interest. The total amount of the debt described in the statutory demand is $179,700. 5 The essence of the case put to me this afternoon by Mr Johnson is that the evidence establishes that the Deputy Commissioner was aware of Nationwide's difficulties in verifying the amount of the running account stated in the statutory demand. He points to the evidence which establishes that Nationwide is taking steps to rectify the position. He also points to the fact that a statutory demand served on Mr Peter Nemes, a director of Nationwide, was set aside by order of the Court. 6 The evidence before me shows that the difficulty in which Nationwide finds itself is that its former tax agent received large amounts of funds on behalf of its various clients, including Nationwide, but apparently failed to account to the ATO for the moneys which were to be remitted to the ATO by the agent. 7 The substance of the evidence is summed up in [7] of Mr Nemes affidavit of 16 May 2008, which suggests that the former tax agent or entities related to it may not have remitted the funds to the ATO. Reference is made to a report which indicates that there is in excess of $1.6 million of unpaid client funds missing from the former tax agent. 8 The evidence also suggests that Nationwide's new agent, Mr Santoro, has been taking steps to ascertain what moneys were remitted or alternatively, paid to the agent but not accounted for. However, Mr Santoro has not yet been able to ascertain the correct position. 9 Mr Johnson submits that Nationwide is therefore in a position where the ATO knows that it cannot verify the outstanding amount due on a running account. Indeed, he submits that the ATO's estimate has been made in circumstances where the Deputy Commissioner knows that Nationwide is not in a position to respond to it. 10 Nationwide finds itself in a particular difficulty because of its failure to take steps to set aside the statutory demand within the required 21 day period and there is, therefore, a presumption of insolvency under the Act. 11 Mr Johnson submits that but for the late service of the application to set aside the statutory demand, this would have been a case where Nationwide could have demonstrated a genuine dispute, or at the very least, that Nationwide would have succeeded in an application to extend time for compliance with the demand under s 459F of the Act. 12 Mr Johnson submits that the Deputy Commissioner has a duty to monitor the obligations of tax agents. There is evidence before me which demonstrates sufficiently that the Deputy Commissioner accepts he has a responsibility to administer tax agent registration requirements. This is in order to provide consumer protection to taxpayers using the services of registered tax agents. The registration system is intended to ensure that persons who charge a fee for providing tax-related services have appropriate knowledge and are otherwise fit and proper persons. Nationwide's former tax agent was a person or company who was a registered tax agent, in respect of whom the Deputy Commissioner had obligations and responsibilities in accordance with those that I have outlined. 13 Mr Johnson recognises that in order to obtain the relief that he seeks, it is necessary to offer certain undertakings to the Court. He has offered an undertaking as to damages as well as an undertaking on behalf of Mr Nemes to pay the sum of $35,000 into Court within seven days. 14 In my view, the submissions made by Mr Johnson and the evidence to which I have been taken does not establish that the notice was served for an improper purpose or that it would constitute an abuse of process for the Deputy Commissioner to proceed with an application to wind up Nationwide. There is nothing in the material before me to establish that the pursuit of the winding up processes is to be sought otherwise than for a conventional purpose. 15 It is important to note that the provisions of the Income Tax Assessment Act 1936 (Cth) deal with the question of an estimate of the liability of a taxpayer and for the service of the requisite notice. This liability is called a liability to pay an estimate . Here, the statutory notice was served on 6 March 2008, but no steps were taken by Nationwide to challenge the amount of the estimate. 17 The statutory demand under the Act was served more than seven days after the date on which the estimate of the taxpayer's liability was arrived at and the notices under s 222AHA and the related sections were served on Nationwide. Whilst it would appear from the evidence before me that the Deputy Commissioner accepts that he has a responsibility to monitor the affairs of registered tax agents, I do not see that this creates a duty to Nationwide or to Mr Nemes, which, in the circumstances of this case, would give rise to an abuse of process by reason of the estimate of the running account that was made. 18 It is also important to bear in mind that the statutory demand is not limited to the amount of the running balance account. As I have said earlier, it comprises two other components. Those components consist of income tax liability in amounts totalling approximately $58,000. Those liabilities arise from tax returns filed by Nationwide in respect of those financial years. I do not see how, in those circumstances, the pursuit of a winding up of Nationwide based upon the statutory demand could amount to an abuse of process. 19 It seems to me that this is a case which falls squarely within the principles stated by the New South Wales Court of Appeal in Braams Group Pty Limited v Miric [2002] NSWCA 417 ; (2002) 44 ACSR 124. It is sufficient to refer to what was said by Stein JA at [41]-[42], [51] and [61]. 20 For those reasons, the application will be dismissed. 21 I should point out that the originating process sought the injunctive relief as an interlocutory order, however, without objection by counsel for the Deputy Commissioner, Mr Johnson proceeded to seek the relief as final relief. However, as I have said, Nationwide has not made out a claim of abuse of process and I propose to dismiss the application. I order that the plaintiff pay the costs of the application. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | application for order restraining defendant from commencing winding up proceedings against plaintiff company plaintiff out of time to apply to set aside statutory demand plaintiff's tax agent, registered with defendant, had dealt improperly with the plaintiff's funds not an "abuse of process" for defendant to commence winding up proceedings against the plaintiff application dismissed insolvency |
In fact, the name ACMA has been adopted since 2005 by the solicitors for the applicant, but without a formal order of the Court being granted changing the name of the Authority. Mr Mansfield opposes the application on the basis that it should not be made retrospectively but that it should be granted only from the date at which the order of the Court is made. The history of the matter is evident from an affidavit filed by the solicitor for the applicant confirming that the original applicant, ACA, was a body corporate under the s 15 of the Australian Communications Authority Act 1997 (Cth) and able to sue in its corporate name. On 23 June 2005 it filed an application and statement of claim in this proceeding. In the statement of claim, it was pleaded that the applicant was established in the manner I have indicated and that from 1 July 2005 the Australian Communications Authority would be substituted by the Australian Communications and Media Authority as the applicant by operation of item 6(1) of Sch 4 of the ACMA Act. It would be a body corporate under s 18 of the Australian Communications and Media Authority Act 2005 (Cth) and able to sue in its own name. It was as a result of that legislative change that the applicant's solicitors chose to use the name ACMA in place of the name ACA from dates after 1 July 2005. Accordingly on 15 July 2005, ACMA filed an amended statement of claim purporting to substitute ACMA as an applicant in the place of ACA. No formal order of the Court was obtained permitting any amendment to the identity or name of the applicant. That is a matter which has been brought to the attention of the applicant's solicitors in recent proceedings by an officer of the Court. The solicitor for the applicant deposes to that fact, as well as Mr Mansfield who pointed it out in the course of submissions made orally today. Application is now made pursuant to O 6 r 10(2) of the Federal Court Rules to formally ensure that ACMA replaces ACA as the named applicant on the Court record. I have not considered closely the question of whether an order is absolutely necessary in the circumstances but what is clear is that the legislative effect of item 6 of Sch 4 to the ACMA Act provides in subs 1 that (subject to sub-item(2)), if any proceedings to which the Australian Broadcasting Authority (ABA) or the ACA was a party were pending in any court or tribunal immediately before the transition time, ACMA is to be substituted for ABA or ACA from the transition time as a party to the proceedings. There is an exception to that contained in sub-item (2) but it is not been suggested by any party that that provision has application in the present circumstances. As to the substitution from the transition time, it is clear from the legislation and from the assurances of counsel for the applicant to which no objection has been taken, that the transition date runs from 1 July 2005 when ACMA replaced the ACA. It seems to me that the legislative effect of the transitional provisions means that the intent of Parliament is perfectly clear and that ACMA must, from the transition time, be substituted for the ACA. I cannot discern any circumstances under which an order of the Court, providing that all the circumstances of sub-item (1) are satisfied, should not be made but certainly in the present situation the clear legislative intent should operate. Accordingly, it follows that orders will be made in terms of the minute sought by the applicant. There will be no order for costs of today. The orders will be: The time for service and the hearing of this Motion be abridged so as to permit a hearing at any time after service of this Motion. In accordance with item 6(1) of Schedule 4 to the Australian Communications and Media Authority (Consequential and Transitional Provisions) Act 2005 (Cth) the Australian Communications and Media Authority is substituted for the Australian Communications Authority as the applicant herein, that substitution is to take effect from 1 July 2005. The title of this proceeding be amended in terms of Order 2. There be no order as to costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | substitution of name of applicant by legislative effect orders to rectify the court record practice and procedure |
The Tribunal rejected an application for review of decisions made by the respondent, ASP Ship Management Pty Ltd, on 10 July 1995 and 13 June 2000. Those decisions rejected claims made by the appellant, Mr George Cook, for compensation under the Seafarers Rehabilitation and Compensation Act 1992 (Cth). Mr Cook had been successful in obtaining compensation for cellulitis contracted in July 1993 when he was employed as a ships engineer. The decisions in question related to further impairments, which Mr Cook said related to the cellulitis and to an ankle injury which he said was sustained at the same time. The appellant argued that the question of law was whether he had been denied procedural fairness by the refusal of the Tribunal to adjourn the hearing of the application. 4 On 6 May 2005, Mr Cook sent a fax to the Tribunal in which he indicated that a medical expert whom he wished to call, Mr Wearne, was only available to attend the Tribunal on a Friday. At that point the hearing of the application had been listed on a series of dates which did not include a Friday. Consequently, Mr Cook sought the cooperation of the Tribunal to accommodate Mr Wearne's availability. He also indicated that Mrs Rosemarie Cook, who was to attend the hearing, was not well and would only be able to attend if there was a substantial break between hearing days. 5 On 12 May 2005, Mr Cook sent a further fax to the Tribunal in which he indicated that he would be available for a telephone directions hearing in relation to Mr Wearne's availability, such directions hearing to be held on 16 May 2005. On the following day, 13 May 2005, the Tribunal sent a fax to Mr Cook confirming that the directions hearing would proceed on 16 May 2005. On 16 May 2005, Mr Constance, the senior member of the Tribunal, held the directions hearing by phone as programmed. Mr Cook did not in fact participate in that hearing and Mr Constance determined that the listed dates of 21, 23 and 26 June 2005 for the hearing of the case would remain. A fax on the same day from the Tribunal to Mr Cook confirmed this result. 6 On 23 May 2005, a week later, Mr Cook sent the Tribunal a fax in which he explained that Mr Wearne had become available to appear before the Tribunal on the second programmed day of hearing, namely, 23 June 2005 at 2pm. In the same fax Mr Cook indicated that it was difficult for Mrs Cook and he to attend the Tribunal and in order to avoid the exhaustion of travel they would need to stay in Melbourne for the purpose of the hearing and would be claiming their expenses in so doing. Mr Cook indicated that Mrs Cook was still unwell and that it was impractical for him to attend without her. Please refer to attached medical certificate. To explain, Rosemarie has recently had two operations in her head, (10 May '05 and 7 June '05), and a follow up cautery at the Royal Victorian Eye and Ear Hospital. A post operative infection followed the 7 June operation, it is being treated using antibiotics. Bronchitis has also developed. Her illness means that, 1) I do not have a companion driver at hand to help me attend the Tribunal 2) She cannot assist me on the appointed hearing dates 3) She cannot give evidence to facts in her personal knowledge ... The mattter [sic] will have to be rescheduled to dates to be fixed when Mrs Cook recovers. Senior Member Constance has requested an urgent telephone directions hearing be listed to deal with your application. Please let me know if you are available at 4.00pm this afternoon, 10.00am tomorrow morning, or some other time tomorrow. If I do not hear from you this afternoon, a telephone directions hearing will be listed for 10.00am tomorrow morning. The illnesses of Rosemarie Cook, (my Medical and General Power of Attorney) are beyond my control. I live at a considerable distance from Melbourne and cannot access public transport. When Rosemarie has recovered her health somewhat, then the case can proceed. I have appointments schedule which will keep me from home today, and Monday, 20 June '05. 11 On the same day the Tribunal sent a fax to Mr Cook, which noted his fax from the morning indicating to the Tribunal that he was unavailable for a directions hearing that day or the following Monday, and stated that nonetheless he would be called at 10am "just in case". Senior Member Constance has considered your application and is not satisfied on the basis of information provided by you in your fax of 16 June 2005 that the matter should be adjourned and the application for adjournment is refused. You should therefore appear at the Tribunal at 10:00am on Tuesday 21 May [sic] 2005 and be ready to proceed. The Tribunal has agreed to assist you to meet the reasonable costs of public transport to and from the hearing. You will be reimbursed upon presentation of your tickets, or other verification of your expenses, to the Registry. I will respond to them as quickly as possible. Telephone conferences are impractical due to my deafness. I was not aware of the Practice Notice referred to, it has never been drawn to my attention, or sent to me. Please refer to the recent report of Mr Wearne, which says I cannot use Public transport; that condition still, unfortunately exists. Rosemarie Cook is still sick. I will not therefore attend on 21, 23 and 28 of June '05; my notification of inability to attend was transmitted to you with the minimum of delay; Mr Wearne[']s (Orthopaedic Surgeon) booking for 2pm, 23 June has been cancelled. I only become [sic] aware of the requirement to notify the presiding member or listing coordinator last night. I request also that the hearing of this case be rescheduled as soon as is convenient. I attach to this notification 1) A fax sent to the affected parties on 16 June '05 2) A letter of Mr Wearne; see --- paragraph 1, page 2 regarding my mobility. NOTE: The nearest operating train station is at Pakenham some 30 kilometres distant. The next nearest is at Cranbourne, aproximately [sic] 36 kilometers [sic] away. The Tribunal has on file details of my deafness and difficulties experienced with telephone communications. Telephone directions are impractical. Mail communications in the area are often delayed. The best means of communication me [sic] is by fax, of which Deputy President Forgie and ASP's legal team are aware. Being in contact [with] Rosemarie Cook and her bronchitis has meant that I have myself now contracted bronchitis, for which I am taking antibiotics. 14 The report of Mr Wearne dated 8 February 2005, was attached to this fax. He drove a car fitted with automatic transmission and with a hand accelerator. He had little difficulty with short trips but on long trips he was very dependent on the cruise control. He would often become very tired when driving and would pull over into a parking area where he could rest and sleep for a short time. In that facsimile he notified the Tribunal that he would not be attending on the 21st, the 23rd or the 28th June, and in fact indicating that he has taken it upon himself to cancel the booking for Mr Wearne, Orthopaedic Surgeon, to attend the Tribunal on 2pm on 23 June. For the purpose of the transcript, so it is clear as to the basis upon which the Tribunal intends to take that step, I will take some time to simply record the steps that have been taken in this matter, to ensure that the matter could be heard and disposed of. I would at the outset note that this matter goes back to an application lodged in 1995. I certainly do not intend going into the whole history of the matter. It is not a matter in which I have been involved until the matter was set for hearing today. But I do note from the file that in the hearing certificate of 21 February 2005 lodged by Mr Cook, he indicated then that it may even be necessary that he attend by ambulance to enable him to appear at the hearing. He also indicated that he intended to call Mr Wearne to give evidence, Dr Taylor, the medical practitioner, he would give evidence himself, and Rosemary Cook also to give evidence. The matter was set down for today, 21 June, next Thursday the 23rd, and the Tuesday of the next week, 28 June. It was set down for those days following a request by Mr Cook that in fact the hearing be set down, I think, on one day per week. That request was given due consideration, and the present hearing dates were set. The Tribunal is satisfied that Mr Cook was notified of those hearing dates, and there is a notice of hearing of 17 March 2005 notifying the parties of that hearing. There is absolutely no doubt that Mr Cook is aware of today's hearing, in view of his various applications to adjourn the hearing today, and including his fax to which I have referred, which clearly indicates that he is aware of the dates and refers to the dates. By a fax received on 6 May 2005, Mr Cook indicated to the Tribunal that Mr Wearne was unavailable to give evidence other than on an agreed Friday, and he indicated that he wished to have the Tribunal allocate a Friday hearing date. My associate attempted to contact Mr Cook to arrange a telephone directions hearing to endeavour to sort out any problems relating to Mr Wearne giving evidence. I note that in particular she had a telephone conversation with Mr Cook on 11 May 2005 at 3.30pm, when he returned her call. On that occasion she had approximately a 15 minute telephone conversation with Mr Cook, at the end of which she indicated to me that she had had no difficulty in communicating with him by telephone. Notwithstanding that, Mr Cook indicated that he was not available for a telephone direction hearing in relation to Mr Wearne's evidence, and that travelling into Melbourne for AAT hearings was difficult, and he did not want a directions hearing. A telephone directions hearing was listed for 16 May 2005 at 2.30pm, and notice of that was sent to Mr Cook. Mr Cook was not available on 16 May 2005 at 2.30pm by telephone, despite efforts by my associate to contact him, and despite he having advised by a fax of 12 May 2005 that he would be available for that telephone directions hearing. My associate had also sent a fax to Mr Cook on 13 May 2005 advising him that the telephone directions hearing for 2.30pm on 16 May would go ahead for the purposes of determining how we would progress the matter. That telephone directions hearing was held with counsel for the respondent, and I decided on that occasion that the matter would remain listed for 21, 23 and 26 June, and that information was conveyed to Mr Cook by a facsimile of 16 May 2005. By fax received on 23 May 2005, Mr Cook advised that he had been able to arrange for Mr Wearne to give evidence at 2pm on Thursday 23 June 2005, which had indicated that that difficulty had been overcome. Mr Cook raised in that facsimile that it would be impracticable to hold the hearing without Mrs Cook, who was then ill, because he said that participants who whisper, mumble and continually hide their faces do not allow the hearing impaired to absorb what is said, seen, and is an affront to natural justice. I should indicate that having read the transcript of the proceedings in the Federal Court, that I note in those proceedings that Mr Cook was able to sit opposite counsel at the bar table, and that that appeared to resolve any difficulties with his hearing impairment. And certainly had he been present, I was proposing that if he wished, that that same procedure would be adopted. By a facsimile of 16 June 2005 received on that day, Mr Cook advised the Tribunal of the ill health of Mrs Cook, and indicated that her illness meant that he did not have a companion driver to help him attend the Tribunal, that she could not assist him on the appointed hearing dates, and she could not give evidence of facts in her personal knowledge. In light of that facsimile, a telephone directions hearing was listed for 10 am on 17 June 2005 to deal with the application of Mr Cook in relation to progress of the hearing. That followed efforts by my associate to speak to Mr Cook by telephone, and she was unable to achieve that. A notice of the telephone directions hearing in accordance with the practice direction as to applications for adjournment within 10 days of the hearing date was issued. Mr Cook was unavailable at 10am last Friday the 17th, and a brief telephone directions hearing was held again with counsel for the respondent. I adjourned that telephone directions hearing to 3pm on 17 June, again in an attempt to allow Mr Cook an opportunity to put any further information he wish[ed] to the Tribunal. At 3pm last Friday, my associate again attempted to contact Mr Cook. He was not available by telephone, and I note that a notice of that 3pm listing was sent by facsimile by the Tribunal to Mr Cook at 1303 on Friday. In view of the fact that Mr Cook did not attend either of the listed telephone directions hearings and did not put any further information to the Tribunal, the application for an adjournment of the hearing date was refused. And I should note for completeness that on that day the respondent applied for an adjournment of the hearing date based on the uncertainty as to what was likely to happen today, and the costs which would be incurred by the respondent in preparing for the matter if it did not proceed. In the circumstances, I was not prepared to grant that application. So the matter has come on for hearing today. I should also note that Mr Cook was advised of that by facsimile on last Friday, and an offer was made by the Tribunal to meet his costs of public transport to the hearing, if he wished to avail himself of that. In all the circumstances, the Tribunal considers it proper that this matter should proceed to hearing, and the Tribunal will discharge its duty to consider the matter, and endeavour to reach a proper conclusion on the basis of the material before it. On that basis then we proposed to continue with the hearing. They argued that by refusing to grant Mr Cook an adjournment the Tribunal committed an error of law, namely, it failed to give Mr Cook a reasonable opportunity to present his case in breach of s 39 of the Act. They contended that the Tribunal failed to take account of the fact that he was unrepresented. It should have taken positive steps, they argued, to make contact with Mr Cook rather than simply offer him a phone directions hearing on 16 June 2005. 17 Further, the Tribunal should have explained to Mr Cook that the purpose of such a directions hearing was to have him elaborate on the basis upon which he sought the adjournment. It was argued that the Tribunal failed to take account of the effect of the refusal of the adjournment, namely, that Mr Cook would not be able to lead his own evidence or cross-examine the respondent's witnesses on the days then fixed for hearing. 18 The Tribunal took into account that the matters went back as far as 1995, and that in February 2005 Mr Cook gave thought to the difficulty of attending the hearing and considered that he may have to use an ambulance for that purpose. In its reasons the Tribunal then noted that the hearing days were disjoined following a request made by Mr Cook. 19 As outlined at [15] the Tribunal in its oral reasons recounted the events from 6 to 23 May 2005 and observed that Mr Cook had no difficulty in communicating by phone with the Tribunal on a past occasion. It recorded that Mr Cook had indicated he would participate in a phone directions hearing in relation to the timing of Mr Wearne's evidence on 16 May 2005 and then failed to do so. It referred to the problem raised by Mr Cook in the fax of 23 May 2005 that Mr Cook may not be able to attend without the assistance of Mrs Cook, and indicated that arrangements could be made at the hearing to overcome the problems raised by her absence. 20 The Tribunal then recorded in its reasons the issues raised by Mr Cook in the fax of 16 June 2005, namely, that he did not have a companion driver, that Mrs Cook was not able to assist him on the appointed hearing days and that she could not give evidence of the facts within her personal knowledge. The Tribunal then recorded its efforts to convene a phone directions hearing on 17 June 2005. The Tribunal decided to refuse the application because Mr Cook did not put any further information to the Tribunal in support of his application to adjourn the hearing and did not attend the phone directions to do so. It indicated that it would cover the reasonable costs of Mr Cook's attendance by public transport. 21 I do not accept that the Tribunal breached s 39(1) of the Act. It was reasonable for the Tribunal to offer Mr Cook a phone directions hearing in view of the contact by phone which Mr Cook had previously had with the Tribunal. The Tribunal was not obliged to simply accept his assertions in favour of an adjournment without further elaboration. It explained in its reasons that the absence of Mrs Cook to assist him at the hearing could be addressed by arrangements made at the hearing. It had the report of Mr Wearne about Mr Cook's ability to drive and use the train which justified its conclusion that Mr Cook could attend. In any event, the Tribunal was not bound to accept that Mrs Cook could not attend as the medical certificate relating to her was fairly uninformative. Her unavailability was not necessarily, on its own, a reason for the Tribunal to grant the adjournment. 22 The Tribunal had no obligation to detail to Mr Cook the shortcomings of his material. It was reasonable for the Tribunal to give him the opportunity of explaining and advancing his application at a phone directions hearing. In this respect, the case differs from Opitz v Repatriation Commission (1991) 29 FCR 50 where at 58 to 59, it was held that the applicant was denied an opportunity of putting further evidence to the Tribunal due to the unusual circumstance of his evidence by phone being interrupted by the advent of an earthquake. 23 In Bourke v Companies Auditors & Liquidators Disciplinary Board (1998) ACLC 1380 the circumstances were also quite different. There the Tribunal refused an adjournment partly on the basis that the medical condition of the applicant had not been corroborated. This decision was procedurally unfair because the opposing lawyer had accepted the reality of the applicant's illness in conversations between them and had not indicated to the Tribunal that he had done so. 24 The Tribunal in this case attempted to mitigate any difficulty for Mr Cook attending the Tribunal by suggesting that a directions hearing would be held by phone. There is nothing to suggest that the Tribunal failed to take into account the fact that Mr Cook was unrepresented or, if it was bound to do so, that it failed to take into account the consequences of proceeding in the absence of Mr Cook. Indeed, it recorded that it acted under s 40(1)(b) which is directed to the conduct of a proceeding in the absence of a party. 25 For these reasons the application is dismissed. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North. | judicial review grounds of review procedural fairness refusal of application for adjournment whether breach of administrative appeals tribunal act 1975 (cth) s 39 whether reasonable opportunity to present case administrative law |
(ii) The decision, conduct or action of the Fourth Respondent on or about 21 March 2001 to set up a Committee comprising the First Respondents and to make an adjudicative referral to them under s 93 of the Act in respect of the conduct of the Applicant (hereinafter referred to as " the Adjudicative Referral" ) . (iii) The decision, conduct or action of the First Respondents in preparing and giving to the Second Respondent a Final Report dated 28 October regarding the conduct of the Applicant, which was communicated to the Applicant by letter dated 4 November 2004 and received on 5 November 2004 (hereinafter called "the Committee's Report" ) . The second challenged decision or course of conduct concerns Dr Holmes, the Director of Professional Services Review ("the Director"). The next decision challenged is that of the Professional Services Review Committee ("the Committee") in preparing and forwarding to the Determining Authority the final report regarding the conduct of Dr Phan. The first is the advice of Dr Christine Davidson dated 4 July 2000 and the second is that of Dr John Dawson dated 12 October 2000. As a consequence, it is contended that Dr Phan was unable to make submissions contrary to the adverse comments set out in those reports by Dr Davidson and Dr Dawson. It is submitted that the Applicant was not aware of these statements, and that he ought to have been informed of them so that he could make relevant submissions to contest them or seek to adduce additional material to the Director. 5 The Director's decision to make the referral is challenged on the second basis that the lists of medical services and patient files which were referred to the Committee were not a proper sample as they had been previously examined by the Director and found to have been deficient in relevant respects. It is contended that this conduct must have inevitably skewed the exploratory sample results and affected the deliberations of the Committee in a manner adverse to the Applicant. The Applicant submits that the Committee itself did not ensure that the sample was in fact an appropriate random sample as required under the Act . Therefore, it is contended, the sample results were invalid and the Committee did not have before it a random sample. Consequently, the Committee failed to follow the procedure required by s 106K(4) of the Act . 7 The Committee is further said to have erred in taking into account the patient records sent to it by the Director in the adjudicative referral because those records adversely affected the sampling process and gave rise to an apprehension that the Committee was biased in considering the sample. The Applicant also contends that as a matter of procedural fairness, the Committee fell into error by not notifying Dr Phan that it had obtained and taken into account advice relating to the sampling process from a consultant, Professor Des Nicholls, a Professor of Statistics at the Australian National University. It is submitted that the Applicant was deprived of procedural fairness because he was not able to make submissions or adduce evidence in respect of the advice from Professor Nicholls as to the sampling methodology. These paragraphs provide a sufficient description of the scheme for present purposes, and it is not necessary to repeat the details of the process here. The fourth tier or step involves the imposition of a sanction on a practitioner who has been found to have engaged in "inappropriate practice. In the case of a general practitioner, the test is whether the conduct of the general practitioner in connection with the rendering of services would be unacceptable to the general body of general practitioners: s 82(1)(a). 10 The first step involves the Commission's decision to make an investigative referral to the Director in relation to the conduct of an individual as to whether that person engaged in inappropriate practice in connection with the rendering or initiating of services: s 86(1). This stage contemplates that there has previously been a complaint or inquiry by the Commission into the conduct of the practitioner. The investigation must be sufficient to enable the Commission to form a view that the practitioner may have engaged in inappropriate practice. 11 The second step concerns the investigative referral to the Director, who is a medical practitioner appointed by the Minister with the consent of the Australian Medical Association: s 83. Section 86 provides that an investigative referral must contain particulars of all services rendered or initiated during the two years immediately preceding the referral. When an investigative referral is made by the Commission to the Director, the Commission must send a copy of the referral to the practitioner concerned inviting written submissions to the Director within 14 days stating why the Director should dismiss the referral without establishing a Committee: s 88. The Director has power to require the provision of information or the production of documents from the person under review or any other person the Director believes may have relevant documents: s 89B. In addition, in order to obtain assistance in making his or her decision on the investigative referral, the Director may consult with Panel members or any consultant or professional bodies that the Director considers appropriate: s 90(1). The Director may dismiss the investigative referral if he or she is satisfied there are insufficient grounds for a finding of inappropriate practice: s 91. Alternatively, the Director may dismiss the referral by entering into an agreement with the individual under review that includes an acknowledgement by the individual of past inappropriate practice and specified action to be undertaken in relation to this: s 92. 12 The third stage of the process involves a decision by the Director to establish a Committee and the making of an adjudicative referral to that Committee under s 93. The three Committee members appointed by the Director consist of a Deputy Director and two practitioners of the same speciality or the area of practice as the practitioner being investigated. The Committee sits in private as provided for in s 98. Where a Committee is established, the Director must prepare a written report to the Committee in respect of services to which the referral relates. This report must outline the reasons why the Director considers that there is inappropriate conduct: s 93(6). The Committee must hold a hearing if, after considering the matters that are the subject of the adjudicative referral, it appears to the Committee that the person may have engaged in inappropriate practice in connection with rendering or initiating the referred services: s 101(2). The practitioner concerned must be given notice and particulars of the matter to which the hearing relates 14 days before the date of the proposed hearing: s 102. This notice must require the person under review to appear at the hearing and give evidence to the Committee: 104(1). 13 Section 103 spells out the rights of persons under review in relation to hearings before the Committee. An individual under review is entitled to attend the hearing, to be accompanied by a lawyer or another advisor, and to call witnesses to give evidence. The individual can also produce written statements as to her or her character, question individuals giving evidence at the hearing, and address the Committee on questions of law arising during the hearing. Finally, following the conclusion of the taking of evidence, the individual concerned has the right to make a final address to the Committee in relation to questions of law, the conduct of the hearing and the merits of the matter to which the hearing relates. 14 Section 105A empowers the Committee to require that the person under review or any other individual produce further relevant documents if the Committee believes such documents to be in possession of the person given notice. The procedure for conducting the hearing is within the discretion of the presiding Committee member: 106(1). Further, the Committee is not bound by the rules of evidence but may inform itself in any matter in any way it sees appropriate: s 106(2). 15 Section 106K concerns the Committee's power to have regard to only a sample of services included in a particular class of referred services under an investigation. 17 The Committee is required to provide a draft report setting out its preliminary findings pursuant to s 106D. This draft report may, with the consent of the practitioner, include recommendations for the disqualification of the practitioner and the nature and duration of that disqualification. 18 A copy of the draft report must be given to the practitioner concerned accompanied by a notice inviting written submissions to the Committee within 21 days suggesting changes put forward by the practitioner. After taking into account any such submissions, the Committee must prepare a final report setting out its findings, including its recommendations. The copy of the final report must be given to the Director and the practitioner under review. The Committee must not give a copy of the final report to the Determining Authority until 28 days after the day on which a copy is given to the practitioner. This establishes a timeframe in which an application can be made by the practitioner for judicial review or relief: 106L. 19 The final step in the decision-making process relates to the determination of the Determining Authority. In the present case, the Court is not concerned with the decision made at that level. The decisions and conduct challenged relate only to the second and third steps as described above. However, it is important to note that ss 106T --- 106U prescribes the nature of the contents of the draft and final determinations, and covers considerations such as the reimbursement of Medicare benefits. Section 106T makes provision for the draft determination to be sent the practitioner and allows the individual to make written submissions within 14 days suggesting any changes to the draft determination. Within one month from the end of the 14-day submission period, the Determining Authority must take into account the submissions and make a final determination in accordance with s 106U: s 106TA. 20 In Pradhan v Holmes, Finn J usefully encapsulates at [49]-[61] by reference to the above provisions the detailed staged process provided to afford procedural fairness under the statute at each of the four levels of consideration. It is against these comprehensive statutory provisions that the application and submissions as to procedural fairness in the present case ought to be considered. 190 made by the Commission on 29 June 2000. The Investigative Referral related to all services rendered or initiated in the period 1 January 1999 to 31 December 1999 (the relevant referral period in this case). During this period, Dr Phan rendered a total of 18, 165 services, including 17, 970 level B surgery consultations. 22 Adjudicative Referral No. 190 was made by the Director to the Committee on 29 March 2001, and the hearing took place before the Committee on 16-17 May, 2-3 August and 4 October 2001. 23 On 4 March 2004, emails were sent by the Committee Secretary, Ms Vanessa Goodspeed, to Professor Nicholls, seeking guidance in relation to the sampling methodology adopted by the Committee. This advice was provided by Professor Nicholls on 5 March 2004. 24 On 26 June 2004, the Committee made its draft report, with Dr Phan furnishing submissions to the Committee in relation to that report on 20 July 2004. The Committee considered these and made its final report on 28 October 2004. 27 The Director's decision and conduct in relation to Adjudicative Referral No. 190 is challenged on the basis that the Director failed to inform Dr Phan of the advice and evidence from Dr Davidson dated 4 July 2000 and Dr Dawson dated 12 October 2000. It is apparent that this material was pertinent to Dr Phan's conduct and was unfavourable to him. In these circumstances, the Applicant submits that full disclosure should have been made in relation to these documents prior to the hearing at the time of their consideration by the Director. It is contended that the failure to do this resulted in an error of law by the Director which operated to invalidate the Adjudicative Referral. 28 The reports are not mentioned in the Adjudicative Referral as being material which was before the Director, although paragraph 5 in the Director's Report sets out the material considered by the Director. This includes the Commission's Investigative Referral No. 190 of 29 June 2000; a written submission of Dr Phan dated 12 July 2000; additional information provided by Dr Phan in response to a Section 89B Notice of 1 September 2000 and a selection of records of various patients to whom Dr Phan rendered a medical benefits service ('MBS') item 23 service during the referral period, together with calendar charts provided by the Commissioner in relation to these records. 29 The documents of Dr Davidson and Dr Dawson were prepared for the Director after the date of the Commission's Investigative Referral on 29 June 2000. They constituted part of the material before the Director. 30 The memorandum by Dr Davidson prepared in July is a summary of the data set out in the Investigative Referral and highlights concerns in relation to the number of services rendered and pharmaceutical benefits prescriptions authorized by Dr Phan at his surgery. Dr Davidson sets out an examination of the records of Dr Phan and describes the nature and extent of his practice in considerable detail. The report is concluded with a recommendation that the referral be further investigated. All these appropriate records if put to a committee might well be found to be inappropriate... Most of the records had repetitious entries unrelated to the presenting symptoms and it was difficult to determine how much of the record was factual and how much was computer generated. 34 The Adjudicative Referral by Dr Holmes to the Committee sets out the background of the matter and refers to the material sent to the Committee with the report. I am informed by counsel for the Respondents - and this was not contradicted by the Applicant - that the reports of Dr Davidson and Dr Dawson did not go before the Committee. They are not referred to as material attached to the Director's Report in the Adjudicative Referral. 35 In the present case, I am satisfied that the material from Dr Davidson and Dr Dawson contained some comments adverse to the interests of Dr Phan. I also note that he did not have these documents disclosed to him or any opportunity to contest them. However, for reasons given below, I do not consider that there was any consequential breach of procedural fairness when regard is had to the determination process as a whole and the specific statutory scheme established for providing an opportunity to the practitioner to make appropriate and relevant submissions. It is: what does the duty to act fairly require in the circumstances of the particular case? The statutory power must be exercised fairly, i.e., in accordance with procedures that are fair to the individual considered in the light of the statutory requirements, the interests of the individual and the interests and purposes, whether public or private, which the statute seeks to advance or protect or permits to be taken into account as legitimate considerations. A person should have matters adverse to that person or that person's application put to that person for comment or evidence before an adverse decision is made (Kioa v West) [1985] HCA 81 ; (1985) 159 CLR 550). A decision-maker should not make a decision having had regard to undisclosed material being adverse information that was credible, relevant and significant to the decision to be made without first putting that material to the relevant person ( Kioa, ibid, at 629.3 per Brennan J; Re Refugee Review Tribunal, Ex party Aala [2000] HCA 57 ; (2000) 204 CLR 82; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22 ; (2001) 206 CLR 57; and Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 76 ALJR 966). The report records relevant percentile figures and makes certain observations as to the records and material provided. It concludes that this material raised the possibility that Dr Phan's records were not accurate and also specifies anomalies in relation to rates of prescription. The report expresses concern that the Applicant may have failed to provide sufficient clinical input and doubts are also raised as to the appropriateness and sufficiency of clinical investigations giving rise to the prescriptions. 39 In examining a staged statutory procedure concerning the rights or interests of a practitioner, in addition to considering the availability of procedural fairness at each stage it is necessary to take into account the statutory scheme as a whole in so far as its establishes a framework directed to achieving procedural fairness. 40 The importance of looking at the decision-making process in its entirety was referred to in the decision of Cornall v A.B. [1995] 1 VR 372 which concerned the application of a scheme of review in relation to an alleged breach of professional standards by a solicitor. In that case, the statutory scheme provided for a staged process of investigation and referral before the making of a final determination. The Full Court of the Victorian Supreme Court observed, at 396, that it is not a requirement in every case that an investigative body must afford a person under investigation an opportunity to be heard before the body can recommend a further step which could result in a determination of a judicial or quasi-judicial nature. At 397, the Court noted that consideration of the relevant principle may properly begin with a statement of S.A. de Smith in his Judicial Review of Administrative Action (4 th ed. In the case of Cornall , the requirements of natural justice were considered to have been satisfied by the statutory scheme leading to the ultimate determination, having regard to the entire process from the complaint to the final determination. The requirements of procedural fairness were therefore considered to have been exclusively prescribed by the detailed statutory scheme, and there was no room for the implication of procedural fairness in addition to those provided by the Legal Profession Practice Act 1958 (Vic) . In order to exclude the rules of natural justice, the legislative intent must be clearly evident and cannot be discerned from indirect references, uncertain inferences or equivocal considerations: Commissioner of Police v Tanos [1958] HCA 6 ; (1958) 98 CLR 383 at 396. 43 In assessing the procedural fairness requirements in the present case, a relevant consideration is whether the respective decisions of the Director and the Committee may be said to part of the one decision-making process. In the matter of Ainsworth v Criminal Justice Commission [1992] HCA 10 ; (1992) 175 CLR 564, the High Court considered whether the operation of the Criminal Justice Commission of QLD and Parliamentary Criminal Justice Committee could be said to be part of a unitary decision-making process. This, in their Honours' view, was an essential requirement in excluding the duty. Looking at the process in the present case in its entirety, the contested decisions of the Director and Committee were clearly part of, and directed to, the ultimate determination by the Determining Authority. They may be characterised as part of a single, sequentially-stepped decision-making process leading to a final outcome. This consideration leads to the conclusion that the legislative scheme is sufficiently exhaustive to indicate a legislative intent to exclude the application of additional measures to achieve procedural fairness. 45 As counsel for the Respondents points out, and as appears from the material attached to the Adjudicative Referral, the reports prepared by Dr Davidson and Dr Dawson were not before the Committee, which proceeded to hear the matter on the material before it. Accordingly, it cannot be said that the Committee's decision was "infected" or "poisoned" in any way by the two reports. 46 In this case, I am satisfied that the statutory scheme, considered as a whole, exclusively provided for procedural fairness principles to the extent that the legislature intended those principles to apply. I am satisfied that in its entirety, the process in fact afforded procedural fairness to the Applicant in respect of the Director's decision. Accordingly, I do not consider that there is any substance in the procedural fairness argument based on the Director's examination of the reports of Dr Davidson and Dr Dawson. It is submitted that this sample of records was not "random" because it contained items that had been previously examined by the Director and found to be examples of inappropriate practice. Therefore, the Applicant contends, the samples were not in accordance with the statutory procedure and were biased or skewed in such a way that any decision in relation to them must be invalid. 48 It is common ground that the Commission drew a preliminary random sample and then asked Dr Phan to produce the patient records relating to the item 23 services in that sample. I accept the view of Professor Nicholls that from a statistical point of view, it is irrelevant that the Committee looked at the same random samples and services as the Director. It was the Committee, rather than the Director, which had the authority to decide whether the sample disclosed inappropriate practice. 49 To support his position, Dr Phan has referred to the decision of Edmonds J in Mathews v Health Insurance Commission (2006) 90 ALD 49. In that case, his Honour decided that the Committee had erred in its sampling by failing to examine samples randomly drawn from a preliminary random sample as required by Health Insurance (Professional Services Review - Sampling Methodology) Determination 2000 (No. 1) ("the Determination"). The breach considered by his Honour was clear. The case was decided on the basis that the Committee had examined the first 30 services on lists of the first 40 services taken from lists of random samples furnished by the Commission. They were not therefore 'randomly drawn from the preliminary random sample' as required by s 8(a) of the Determination. 50 In the present case, the Committee - as it was entitled to do under s 106K(4) - used a sampling methodology which was not the subject of a Ministerial determination under s 106K(3). Instead, it used the sampling methodology which had been advised to be statistically valid by Professor Nicholls pursuant to s 106K(4) of the Act. The case of Mathews is clearly distinguishable from the present case, both on its facts and having regard to the controlling principles. 51 It was submitted by the Applicant in Mathews that the Committee's examination of 30 services in each MBS item of service under review from a list of 40 services provided to the Committee by the Director --- which included services that had already been examined by the Director and found to be deficient and adverse to Dr Mathews --- had the effect that the sample could no longer be considered to have been 'randomly drawn from the preliminary random sample. ' His Honour did not find it necessary to determine this question and specifically left it open. However, he did indicate that there might be some suggestion that this allegation of error in the sampling process should be upheld. 52 It is important to note that, as discussed above, the Mathews case is distinguishable and that Edmonds J specifically refrained from deciding that particular question. The observation of his Honour is not binding on me. In my view, the sample used in the present case was in accordance with the requirements of the Act. The evidence is that the Commission drew a preliminary random sample and that the Director required the production of records which he examined. He concluded, for the reasons given by him in his Report, that it would be appropriate for him to refer the matter to a Committee. In examining the material and completing his Report, the Director did not decide that there was inappropriate conduct. That determination was left for the Committee to make following a hearing and having regard to the evidence adduced at that hearing. It is not correct to suggest that the Director had found that the samples had in fact given rise to inappropriate conduct. The fact that the Director examined and considered the records and forwarded them to the Committee does not affect their randomness when they were considered afresh by the Committee. The sample items retained their character as random samples and were not skewed or biased so that the Committee's decision should be considered invalid. 53 The next ground of invalidity raised relates to Professor Nicholls' memorandum addressed to Ms Goodspeed dated 5 March 2004. It is submitted that Professor Nicholls' memo demonstrates that the decision of the Committee was based on errors of law. 54 On 4 March 2004, Ms Goodspeed, who had been given the task of preparing a draft report for the Committee, sent an email to Professor Nicholls. She sought his advice as to whether it was unsafe to proceed with the proposed sampling methodology. The Committee found that of the remaining 80 services, 69 or 86% (rounded down) were considered inappropriate. This value (78%) is to be chosen as the level of inappropriate practice (rather than 86%). The methodology on which the Determination is based is designed so the sampling procedure will result in the size of samples being determined so that if a particular sample is drawn then one can be 95% confident that the estimate of the percentage of inappropriate practice determined from the sample will be within + 10% of the actual or true percentage of inappropriate practice. Once the estimated percentage of inappropriate practice has been determined by the Committee, this percentage is then reduced by 10% (the half width of the 95% confidence interval) to give the final percentage on which sanctions are to be based. This is to the benefit of the doctor. An alternative approach, for a fixed sample size of 30 or more services, is to determine an estimate of the percentage of inappropriate practice. For this estimate, and the associated fixed sample size, it is then possible to determine the 95% confidence interval associated with the estimated level of inappropriate practice for the fixed sample size, and choose the lower bound of this confidence interval as the basis for which sanctions are to be based. In the first approach the half width of the 95% confidence interval is fixed at 10%, and the size of the sample selected to guarantee that the difference between the estimated and true percentage of inappropriate practice is within this value, ie + 10%. The estimated percentage of inappropriate practice is then reduced by 10% for the imposition of sanctions. In the second approach the sample size is fixed and the percentage of inappropriate practice determined from this sample. Based on the estimated percentage of inappropriate practice, a 95% confidence interval is then determined for this fixed sample. The lower limit of this confidence interval will then be taken as the basis of sanctions to be imposed. [W]hat the Committee has done, in paragraph 30 of their final report, is to make their findings on a ' reduced final random sample of size 80 MBS item 23 services. ' The Committee then pointed out that the half width of the confidence interval increased from 10% to 12%. That is, rather than calculate a final random sample as defined by the Determination and which will give a half width confidence interval of 10%, the Committee fixed the random sample at 80 and calculated the half width of the confidence interval (as 12%). The Committee examined a random sample of size 80, and in its final deliberations, as reported in its final report, found 58% of these services to be inappropriate. This figure was then reduced by 12% , the lower limit of the 95% confidence interval, to give a figure of 46% which is to be used for the imposition of sanctions. The approach adopted by the Committee is statistically valid in accordance with subsection 106K(4) of the Health Insurance Act 1973 . In accordance with this subsection, the Committee adopted an approach approved by an accredited statistician as required by subsection 106K(4) of the Act. However, he says that he did not thereby mean to indicate that he considered that the outcome was statistically valid. In his affidavit dated 6 March 2006, Dr Stevenson says that he checked the calculations and agreed that the conclusions presented in the final report of the Committee were statistically valid. However, he did not agree with the statement in the final report that the conclusions were arrived at by the sampling plan and as detailed in the Determination. He refers to the fact that one course of sampling action had been taken and a second course was then adopted in the analysis of the results in order to salvage the incorrect implementation of the first. 57 The principal difficulty with this challenge to the sampling process is that s 106K(4) of the Act specifically contemplates that the Committee can make use of an alternative sampling methodology to that prescribed in s 106K(3) if it has been advised by a statistician accredited by the Statistical Society of Australia Inc that the alternative sampling method is statically valid. Professor Nicholls' response to Ms Goodspeed's email dated 5 March 2004 clearly certifies that it was statistically valid for the Committee to accept the conclusion, based on a sample using 80 item 23 services, that the level of inappropriate practice would be determined at 78%. 58 The decision of the Committee was further contested by the Applicant on the basis that Dr Phan was unable to make any submission regarding the advice given by Professor Nicholls as Dr Phan was not notified that any such advice had been given. In my opinion, the Committee was not required by s 106K(4) to disclose the advice from Professor Nicholls. Under s 106K(4), it is open to the Committee to use any particular sampling methodology provided that the sampling methodology is the subject of the requisite advice prepared by a statistician qualified according to the section. The Committee is entitled to obtain the required advice at any stage of the decision-making process up to the time of the decision. There is no restraint on the changing of method, provided that the Committee makes use of a methodology that satisfies the requirements of s 106K(4). 59 In the present case, Professor Nicholls' advice constituted a condition precedent to the Committee's usage of a statistical tool or method of sampling. Once such an advice was obtained, the Committee was entitled to proceed on the basis of that certified or advised methodology. This is not a provision in respect of which there existed a duty to alert Dr Phan. The only issue which arises is whether, as a matter of fact, advice which complied with s 106K(4) was obtained by the Committee. 60 Furthermore, for reasons given above, the statutory hearing framework provides adequate opportunity for the practitioner to meet the substantive case brought against him. In this case, it is common ground that the conclusions in the final report of the Committee are statistically valid. In relation to the Committee's choice of methodology, it is important to note that like Professor Nicholls, Dr Stevenson is also a member of the Statistical Society of Australia and his confirmation on this point can be accepted. I am not persuaded that there is any constraint on the Committee proceeding on the basis of a sampling procedure which has been changed, provided that it uses a properly advised procedure and that the conditions of s 106K(4) are met. In particular, I do not accept the submission that if a previous method is considered inappropriate or invalid, it is impossible for an alternative method to be used by the Committee. The principal objection taken by the Applicant was that to allow such evidence would be contrary to the principle of 'judicial immunity,' as discussed in the judgments of Gaudron J in Herijanto v Refugee Review Tribunal [2000] HCA 49 ; (2000) 170 ALR 379 and Herijanto v Refugee Review Tribunal (No 2)(2000)170 ALR 575. Those decisions were concerned with the operation of s 435(1) of the Migration Act 1958 (Cth), which confers on members of the Refugee Review Tribunal ("RRT") the same protection and immunity as a member of the Administrative Appeals Tribunal. In the present case, s 106F(1) of the Act gives to Committee members in the performance of their duties the same protection and immunity as that given to a Justice of the High Court. By way of illustration of the nature of several of the interrogatories, the member was asked to give details as to the time and date when a specific view was reached and over what period of time the plaintiff's application was considered before the member came to a conclusion. One question concerned the physical location of the member during the consideration of the plaintiff's application. 63 Her Honour held that the entire general protection and immunity of a Justice of the High Court is conferred on a member of the RRT by s 435(1), and that this immunity extends to the disclosure of any aspect of the decision-making process. In her Honour's view, the purpose of such a provision was to provide freedom of thought and independence of judgment. Her Honour found no difficulty with the proposition that, in appropriate cases, a judge may be required to disclose 'the record' on which the judge has acted. However, in her Honour's view, the production of additional material beyond the record could breach immunity: Herijanto v Refugee Review Tribunal [2000] HCA 49 ; (2000) 170 ALR 379 at 383. 64 In respect of several of the interrogatories at issue in Herijanto , her Honour found that answers would not disclose the decision-making process and therefore these were permitted. However, where Gaudron J considered that the nature of the interrogatories sought compulsory disclosure of aspects of the decision-making process, her Honour held that they constituted a contravention of s 435(1). The offending interrogatories were consequently set aside by her Honour. 65 In the later Herijanto decision, her Honour held that the protection conferred by s 435(1) extended not merely to disclosure by the individual member concerned, but the revelation, by whatever means, of any aspect of their decision-making process. It was also noted by her Honour that whether or not the privilege extended to the revelation, by whatever means, of the decision-making processes of individual members, it would not be right to order discovery to enable the plaintiffs to do indirectly what they could not do directly. Accordingly, her Honour refused the discovery application: Herijanto v Refugee Review Tribunal (No 2)(2000)170 ALR 575. 66 In Mathews v Health Insurance Commission (No. 1) [2005] FCA 1061 , Edmonds J refused an application for discovery of the file of the Committee. In that case, the Applicant submitted that the file should be disclosed on the basis that an affidavit of the Manager of the Committee Unit indicated that the Manager had reviewed the Committee file and certain statements in the affidavit were made in consequence of that review. Referring to the principles articulated by Gaudron J in the Herijanto cases , his Honour rejected the application for discovery of the Committee file . In my view, there are two considerations which lead me to reject the submissions of the Applicant as to the application of judicial immunity in this case. 68 The first is that the advice of Professor Nicholls and the circumstances surrounding the provision of his report have not been shown to be a part of or an aspect of the decision-making process of the Committee or any individual member. The certification by Professor Nicholls and matters relating to it were directed to the provision of advice as to whether a statistical method was valid and could be used by the Committee. In other words, the advice of Professor Nicholls provided a basis, factum or tool of analysis in respect of which the Committee was free to act if it so chose. The Committee was able to accept a methodology approved by him as being in accordance with the required procedures, but his certification of the relevant methodology could not be said to be part of the Committee's 'decision-making process' in the sense articulated by Gaudron J in the Herijanto decisions. 69 The second consideration is that Professor Nicholls cannot be considered to be a member or agent of the Committee. I do not agree with Applicant's contention that the principle of judicial immunity operates to prevent Professor Nicholls from providing copies of his report to the Court because he is effectively the Committee's agent. Professor Nicholls is an independent expert consultant of the Committee, and accordingly the evidence which is objected to is not within the immunity conferred by s 106F. 70 In addition, I do not consider that s 129 of the Evidence Act 1995 (Cth) takes the matter further or is of any assistance to the Applicant. I do not need to decide whether the immunity can be waived in a manner similar to the way in which, for example, legal professional privilege can be waived, having regard to the public interest element that is concerned with the grant of judicial immunity. I note that Division 3 of Part 3.10 of the Evidence Act in which s 129 appears is entitled "Evidence Excluded in the Public Interest. " Clearly, the evidence given by Professor Nicholls in this case is an expression of his own independent advice. 71 As a consequence of my ruling in the course of the hearing on the judicial immunity objection, counsel for the Applicant indicated that he might seek discovery of other documents in the Committee file on the basis that there had been a "waiver" of the privilege by the Commission, and that the Applicant was therefore entitled to see the whole of the file and not just simply the letter of advice from Professor Nicholls. However, this course was not pressed by the Applicant. 72 For these reasons, I am of the opinion that the challenges made to the decisions of the Director and the Professional Services Review Committee must fail. 73 Accordingly, the application is dismissed with costs. | health insurance act 1973 (cth) professional services review statutory scheme for examination of conduct to ascertain whether inappropriate practice involved challenge to decisions of director and committee whether director erred in referral to committee by failing to notify applicant he had taken evidence from two medical advisors into account whether director erred by attaching samples of medical reports to his referral whether committee erred by taking reports into account application of procedural fairness procedures in context of staged statutory procedure whether committee erred by adopting alternative sampling methodology in decision-making process whether committee should have notified the applicant that an alternative methodology had been adopted application of judicial immunity whether advice given by statistician as to statistical validity of methodology is part of decision-making process whether statistician is agent of the committee application dismissed. administrative law |
2 As a result of orders previously made for the trial of separate questions, the only issue before the Court to which these reasons relate is Dr Thoo's challenge on administrative law grounds to the Committee's decision. Accordingly, of the respondents, only the Committee has appeared on the hearing. 3 Dr Thoo relies on two grounds. First, he contends that the Committee inquired into, and made its finding in respect of, services lying outside those in respect of which it was by law authorised to make any inquiry or decision. The second ground relates to a hearing before the Committee on 3 February 2006. Dr Thoo contends that on that day the Committee denied him procedural fairness, in particular, by refusing his request for an adjournment of the hearing. Associated with that refusal, Dr Thoo complains that the Committee received submissions and/or advice from the Committee's legal or other advisors in the course of the hearing but in the absence of Dr Thoo; that the Committee continued the hearing after he had left; and that the Committee failed to provide him with a copy of any record of the deliberations that took place in his absence. Dr Thoo does not press a complaint that the Committee received evidence in his absence at that hearing. The relevant legislation is the Health Insurance Act 1973 ("the Act ") as amended, up to and including the amendments made by the Health Insurance Amendment (Professional Services Review and other matters) Act 2002 . 4. Section 10 of the Act provides for the payment of medical benefits to an eligible person who incurs medical expenses for a professional service rendered in Australia. [The expressions "eligible person" and "professional service" are defined in s 3. ] Section 20A permits a person to assign his or her medical benefit to the practitioner who rendered the service, on the basis that the medical benefit is accepted as full payment of the medical expenses; this is known as " bulk billing . Part VAA of the Act [Part VAA was inserted by the Health Legislation (Professional Services Review) Amendment Act 1994 . ] provides for review of the provision of services by a medical practitioner to determine whether he or she has engaged in " inappropriate practice ," as defined in s 82. Inappropriate practice means conduct that would be unacceptable to the general body of the medical practitioner's peers. 6. This entity initiates the review process by making a request to the Director of Professional Services Review (s 86). On receiving a request, the Director decides whether to undertake a review (s 88A) and determines, relevantly, whether to set up a Professional Services Review Committee to investigate whether a practitioner has engaged in inappropriate practice (s 93). The Director makes a referral to a Committee (s 93). 6.3 A Professional Services Review Committee, consisting of a Deputy Director of Professional Services Review and two other practitioners [see ss 84 and 85. The Deputy Directors and the other Committee members are drawn from a Panel appointed by the Minister after consultation with relevant organisations and associations. ] who practice in the same profession as the practitioner under review (ss 95(1) and 95(2)). The Committee conducts hearings (s 101), prepares a draft report on which the practitioner is invited to make submissions (s106KD) and makes a final report on whether the practitioner engaged in appropriate practice (s 106L). If the final report contains a finding of inappropriate practice, copies of it must be given to the practitioner, the Director and - after 1 month --- to the Determining Authority (s 106L). 6.4 The Determining Authority established under s 106Q. If the final report contains a finding of inappropriate practice, the Determining Authority must prepare a draft determination containing one or more of the directions in s 106U (s 106T). After the medical practitioner has been given the opportunity to make submissions on the draft determination, the Determining Authority makes a final determination (s 106TA). While the scheme involves discipline of practitioners, that is not its primary focus. That is to say, as "public protective" legislation, Parts VAA and VA should not be narrowly interpreted. The Act has always contained provisions for the review of professional services for which medical benefits were paid or payable. It originally provided that the Minister could refer to a Medical Services Committee of Inquiry " any matter ... relevant to the operation or administration of [the] Act . " The Committee would investigate the matter and report back to the Minister, with a recommendation as to the determination the Minister should make. 9. A new scheme --- the 1994 scheme --- was introduced on 1 July 1994. [ Health Legislation (Professional Services Review) Amendment Act 1994 ] It was reviewed and amended after the Court's decisions in Yung [ Yung v Adams (1997) 80 FCR 453 , Adams v Yung (1998) 83 FCR 248] , and an amended version --- the 1997 scheme --- commenced on 6 November 1997. [ Health Insurance Amendment Act (No 1) 1997 ] Further amendments were made in 1999 to give effect to recommendations made in the Report of the Review Committee of the Professional Services Review Scheme --- the 1999 scheme . Most of those amendments came into operation on 16 July 1999. [ Health Insurance Amendment (Professional Services Review) Act 1999 . After Finn J found in Pradhan [ Pradhan v Holmes [2001] FCA 1560 ; (2001) 125 FCR 280] that the 1999 amendments had not achieved their purpose, the Act was further amended in 2002. The amended version --- the 2003 scheme --- commenced on 1 January 2003. The proposed amendments address certain issues identified by the Federal Court and clarify the intended operation of the Scheme as envisaged by the recommendations of the Review Committee. The Court held in Yung and Pradhan that the Committee's role is to investigate conduct by the practitioner that has been specified by either the Commission (Yung) [ Yung at 299B] or by the Commission and the Director ( Pradhan ). [ Pradhan at [126]] The Yung and Pradhan judgments were subjected to careful analysis by a Full Court in Grey . [ Grey 120 FCR at [178] to [187]] The Court " [did] not accept that a referral is to be framed as a charge or indictment ". [ Grey 120 FCR at [179]] It concluded that at the stage when a matter is referred to a Committee " the whole matter rests in inquiry, rather than charge . The 2002 amendments included the removal of references to " conduct " which had previously appeared in provisions that had assumed particular significance in Yung and Pradhan . Section 106KA(1) [Section 106KA was inserted into the Act to give effect to certain recommendations made in the March 1999 Report of the Review Committee of the Professional Services Review Scheme ] of the Act deems inappropriate practice to have occurred in certain circumstances. It provides that a practitioner " is taken ... to have engaged in inappropriate practice " during a particular period if the circumstances in which some or all of the services were rendered or initiated [Initiation of a service, for the purposes of the Act, means referring a patient to another practitioner, for example for an xray or a specialist opinion] constituted " a prescribed pattern of services ". In the case of general practitioners, rendering 80 or more services on 20 or more days during a 12-month period constitutes a prescribed pattern of services. [See reg 10 of the Regulations, made pursuant to s 106KA(3) of the HI Act. ] The combined operation of s 106KA(1) and reg 10 has become known as " the 80/20 rule ". 14. The deeming effect of s 106KA(1) is displaced if the general practitioner satisfies the Committee that " exceptional circumstances " affected the rendering of the services on a particular day or days. Section 4 of the Act provides that regulations made under the Act may provide for a general medical services table that sets out medical services items, the fees payable for each item, and rules for the interpretation of the table. The regulations cease to be in force 12 months after they are made. 16. The expression " MBS item number " refers to an item in the medical benefits schedule that forms part of the regulations made annually under s 4. The Committee in the present case considered MBS item 23 and MBS item 36 services, which are --- summarising the provisions briefly - consultations at a doctor's surgery involving a specified level of medical complexity, lasting up to 20 minutes (MBS item 23) or up to 40 minutes (MBS item 36). The full descriptors for the two items are included in the Glossary at the commencement of the Committee's final report. 6 On 23 December 2004, the third respondent, then the Health Insurance Commission (HIC), made a request to the fourth respondent, Dr AJ Holmes (the Director), for review in respect of Dr Thoo in relation to all services rendered by him during the "review period", 1 January 2003 to 31 December 2003. 7 By letter dated 10 January 2005, the Director advised Dr Thoo that he had decided to undertake a review. If confirmed, this may constitute a prescribed pattern of services which is taken under the Act, subject to accepted evidence of exceptional circumstances, to constitute engaging in inappropriate practice. At this stage I have no evidence of exceptional circumstances before me. For that reason, a Committee established under the Act could, unless exceptional circumstances exist, reasonably conclude that you have engaged in inappropriate practice. The "80/20 rule" was discussed at [4](13) above. 9 By a letter dated 10 February 2005 the Director advised Dr Thoo that he had decided to establish a Professional Services Review Committee under s 93 of the Act and to refer to it the task of investigating whether Dr Thoo had engaged in inappropriate practice in providing the services specified in the referral. 10 The Director established the Committee and made a referral to it under an instrument executed by him on 4 February 2005 entitled "Establishment of Professional Services Review Committee No. 446 and Referral to that Committee" (the Instrument). 11 On 23 February 2005 the Committee met to consider the referral that had been made to it. The Committee decided not to investigate whether the referred services constituted a prescribed pattern of services pursuant to s 106KA of the Act (see [4](13) above), but rather to have regard only to a sample of MBS Item 23 and MBS Item 36 services among the referred services. 12 By letter dated 30 March 2005 the Committee advised Dr Thoo of this decision, and enclosed a "Notice to Produce Documents or Give Information" requiring him to produce records for certain patients to whom he had rendered MBS Item 23 and MBS Item 36 services during the review period. Dr Thoo produced records in response to the notice. 13 On 22 June 2005 the Committee met to examine the records that Dr Thoo had produced. The Committee decided that a hearing was warranted. 14 The Committee conducted a hearing, at which Dr Thoo appeared unrepresented, on 31 August 2005, 18 November 2005 and 3 February 2006. Dr Thoo was questioned by the Committee on the first two dates in relation to MBS Item 23 services and MBS Item 36 services he had provided. 15 On the third hearing date, after being refused an adjournment, Dr Thoo left the hearing. He did not give evidence or make any submissions on that date. I will discuss below the course of the hearing on 3 February 2006. 16 Subsequently, on 24 February 2006, a solicitor who had been engaged by Dr Thoo contacted the Committee and requested an opportunity to make submissions. The Committee agreed to consider such submissions before preparing its draft report. On 10 April 2006 the Committee received the solicitor's submissions. Those submissions urged the Committee to make a formal finding that there was no evidence to support a breach of the 80/20 rule, to make no further inquiry into the provision of MBS Item 23 services and MBS Item 36 services and to prepare a draft report which did not contain any finding that Dr Thoo had engaged in inappropriate practice. 17 On 17 August 2006 the Committee forwarded its draft report to Dr Thoo. By a letter dated 29 September 2006 his solicitors supplied written submissions on the draft report. 18 The Chair of the Committee, Dr Bernard Kelly, signed the Committee's final report on 29 June 2007, and a copy was sent to Dr Thoo's solicitors under cover of a letter dated 2 July 2007. 19 Dr Thoo filed his application for review in this Court on 6 August 2007. 20 The second respondent (the Determining Authority) has received a copy of the final report, and has undertaken to the Court to take no action in the matter pending the resolution of this proceeding. I hereby make a referral to a Professional Services Review Committee No. My report for the purposes of subsection 93(6) of the Act in respect of the specified services, which gives reasons why I think the person under review may have engaged in inappropriate practice in providing those services, is at Attachment B. 24 In his report (Attachment B to the Instrument) the Director stated, under the heading "Reasons for making referral", that he had concluded that the circumstances in which Dr Thoo provided services during the relevant period may have constituted a prescribed pattern of services, as defined in s 106KA of the Act and Pt 3 of the Regulations, because the HIC's request had presented credible evidence that Dr Thoo had provided 80 or more professional attendances on each of 20 or more days in a 12 month period and Dr Thoo had made a submission which had not persuaded the Director that a committee could not conclude that he had engaged in inappropriate practice. Accordingly, I decided to make a referral to a Committee in accordance with section 93 for the Committee to consider whether the provision of services by Dr Thoo during the review period constituted engaging in inappropriate practice. 26 Dr Thoo submits that the Committee's authority was limited to inquiring into, and making findings in respect of, possible breaches of the 80/20 rule --- the concern that had moved the Director to act. 27 In my view, subss (1) and (3) of s 106H of the Act provides a complete answer to this contention. "Referred services" was defined in s 81 of the Act to mean the services specified in the referral made to the Committee under s 93 of the Act. In the present case, the referred services specified in the Instrument (the referral) were all of the services provided by Dr Thoo during the review period, being 1 January 2003 to 31 December 2003. 29 The Director's report to the Committee under s 93(6)(a) of the Act (see [24] above) referred to the Director's concern that Dr Thoo may have breached the 80/20 rule, but the effect of s 106H(3) was clear: this fact was not to limit the Committee's investigation of all services provided by Dr Thoo at or from his practice locations in Australia during the calendar year 2003. 30 Furthermore, section 106K of the Act authorised the Committee to have regard to only a sample of the services that fell within the referred services and to make a finding that Dr Thoo had engaged in inappropriate practice in providing the services included in the sample. Section 106K(1) provides that in investigating the provision of services included in a particular class of the referred services, the committee might have regard only to a sample of the services included in the class. Section 106K(2) provides that if the Committee finds that a person engaged in inappropriate practice in providing the services included in the sample, then that person was taken to have engaged in inappropriate practice in the provision of the services included in the class from which the sample was chosen. 31 The Committee submitted that they relied on s 106KA(7) as providing the source of the Committee's power. Section 106KA deals with patterns of services and provides in subs (1) that if during a particular period, the circumstances in which some or all of the referred services were rendered or initiated constituted a "prescribed pattern of services", the person under review "is taken, for the purposes of [Pt VAA] to have engaged in inappropriate practice in providing those services. " Subsection (3) of s 106KA provides for the prescription by regulation of services that constitute a "prescribed pattern of services". 32 It will be recalled that the Committee decided, in investigating whether Dr Thoo had engaged in inappropriate conduct, not to inquire whether Dr Thoo had rendered a prescribed pattern of services. Subsection (7) of s 106KA provides that s 106KA does not preclude the committee from making a finding under Subdiv C (ss 106G-106N), other than s 106KB, in relation to the provision of services during a particular period without considering whether or not the circumstances in which the services were rendered or initiated constituted a prescribed pattern of services. 33 Section 106KA(7) is concerned only with the effect that s 106KA might be thought to have had by way of limiting the Committee's power to make findings. It did not give power. If the Committee's power was limited by reason of matters extraneous to s 106KA, subs (7) of that section would not have overcome that limitation. However, as my reasons indicate above, the Committee's power was not so limited. 34 There is no substance in the first ground of review relied on by Dr Thoo. 37 Dr Thoo said that he was consulting his lawyers and thought that the hearing had to be adjourned until they decided whether the hearing should continue or whether they should write to Medicare or whether they take the matter to court. By "they" Dr Thoo was referring to his lawyers. Dr Thoo added that he thought that until he had the legal advice from his solicitors, the hearing should be adjourned. The Chairperson asked Dr Thoo whether he was saying that he was unwilling to proceed at that time and he replied that he was unwilling. The Chairperson then said that the Committee would have a short adjournment while the Chairperson took advice. The Chairperson asked Dr Thoo to wait outside for a few minutes. Apparently Dr Thoo went outside at 9.11 am and the hearing resumed at 9.25 am. There is no evidence of what happened during the intervening 14 minutes but I infer that the members of the Committee discussed Dr Thoo's application for an adjournment among themselves and with the Committee's legal adviser. 38 On the resumption of the hearing, the Chairperson informed Dr Thoo that the Committee had considered his request for an adjournment. Until this legal matter is resolved it is not appropriate to attend for review on Nov 18, 2005. 39 The Chairperson next quoted from the Committee Secretary's reply to Dr Thoo of 15 November 2005 to the effect that as the Committee was not in a position to provide Dr Thoo with legal advice, it suggested that he seek his own legal advice on the issues he had raised. The Committee Secretary had also pointed out in her letter that Dr Thoo was entitled, subject to any reasonable limitations or restrictions imposed by the Committee, to be accompanied at the hearing by a lawyer or other adviser. 40 In substance, at this point the Chairperson was indicating that as far as could be seen, Dr Thoo was raising at the hearing on 3 February 2006 the matters that he had raised twelve weeks earlier in his letter of 10 November 2005. It will be noted that Dr Thoo had in fact appeared unrepresented at the second hearing date of 18 November 2005, notwithstanding the exchange of letters between him and the Committee Secretary a few days earlier to which I have referred above. The legal matter --- I sought an opinion so I think I have grounds, okay, for not continuing because I will get the solicitor to either write to Medicare or write to you or he will decide whether to challenge the thing in court or he decide to continue on and then challenge subsequently in court because in your letter the reason for referral is due to other reasons. In the Health Insurance Act if you have a reason you have to give me the reason and then for me to reply and go through. But in your reasons is I breached 80 20, which I didn't, and statistics are provided which are fraudulent statistics and no court of law will uphold any fraudulent statistics. So, such that I want it to be adjourned until my lawyer get in contact with you which is reasonable under the Health Insurance Act . THE CHAIRPERSON: Dr Thoo, you've had 11 weeks from the time you got the last letter to seek this legal advice and you've given us no communication whatever from that date. Now, what is your explanation for that? DR THOO: That is a holiday period and I thought that I am busy with other legal matters, okay? So I couldn't get into too many of these things because I am suing a body corp for damages. I've got a top solicitor, David Le Page, and so now I am getting this solicitor so he can get back to you. So, I don't think we should proceed. THE CHAIRPERSON: When did you discuss this matter with your solicitor? DR THOO: I contracted recently, okay? But I will have to get more details on it and so we get back to you. THE CHAIRPERSON: What does "recently" mean? DR THOO: The last couple of days. THE CHAIRPERSON: Right. So, you've had 11 weeks and two days before the hearing you decided that - - - DR THOO: Because this is a matter that in any of this thing I shouldn't prejudice my legal rights. So, what I suggest to you, that is a matter that you cannot rush into anything but I think that this should be adjourned to appropriate date when we get back to you. THE CHAIRPERSON: All right. Well, we will adjourn the hearing for ten minutes and we will consider your submission. DR THOO: Okay, yes. THE CHAIRPERSON: Thank you. 42 There followed a second adjournment, apparently from 9.30 am to 9.40 am. 43 The Chairperson said that the Committee intended to go ahead. After further resistance by Dr Thoo, the Chairperson said that Dr Thoo's options appeared to be to stay and go through the process or leave the hearing. The Chairperson said that if Dr Thoo chose to leave, the Committee would go through the process in his absence. Dr Thoo said he decided to leave because he did not think his legal rights should be disadvantaged. The Chairperson said that Dr Thoo had previously had plenty of time to get legal representation. Dr Thoo said that he would not proceed on that day. 44 There was a third adjournment, apparently from 9.51 am to 9.52 am after which the Chairperson said that the Committee had taken legal advice. The Chairperson read part of s 104 of the Act to the effect that a committee might proceed with the hearing even if the person under review failed to appear, or appeared but refused or failed to give evidence or to answer a question. Dr Thoo asserted that that provision applied only if he stubbornly refused to cooperate. He asserted that he was "happy to cooperate" but because it was a legal problem, the hearing should be postponed. Finally, the Chairperson repeated that Dr Thoo had had ample time to obtain legal advice by the time of the hearing on 3 February 2006. The Chairperson said "good morning" to Dr Thoo at 9.53 am which was apparently the time when Dr Thoo departed. 45 The transcript does not reveal what happened subsequently on 3 February 2006. I do not think anything turns on this. The same consequences would follow whether that course was followed or the Committee and the legal adviser departed the hearing room, leaving Dr Thoo in it. 47 Counsel for Dr Thoo points out, in addition to relying on the facts revealed by the transcript, that English was not his client's first language and that it must have been obvious to the Committee that Dr Thoo was at a disadvantage. Again, I do not think that in the circumstances anything turns on this. 48 At one point I thought that counsel's submission was that the Committee had no power to proceed with a hearing in the absence of Dr Thoo, that is to say, that there was no power, under any circumstances and for any reason, to refuse an application for an adjournment. I would reject any such submission. The Chairperson does have power to adjourn a hearing from time to time as he or she thinks fit (see s 106(4) of the Act), but this does not signify that the Chairperson is required to grant any adjournment that is requested. Indeed, the Chairperson has a discretion in respect of the procedure for conducting the hearing (see s 106(1) of the Act). 49 Section 103 of the Act sets out certain rights of persons under review at hearings. They include a right to attend the hearing. The Committee accorded Dr Thoo that right. 50 Section 103 also includes a right to be accompanied by a lawyer at the hearing. Although the Committee refused to adjourn the hearing of 3 February 2006 when requested by Dr Thoo to do so on that date, I do not think that this amounts to denying Dr Thoo his right to be accompanied at the hearing on that date. Dr Thoo had been given notice of the hearing date and of his right to legal representation at that hearing. Dr Thoo chose to appear unrepresented. 51 Section 104(3) makes it clear that a committee may, in any case, proceed with a hearing despite s 103 even though the person under review fails to appear or appears but fails to give evidence or to answer a question. Dr Thoo appeared but indicated that he would not give evidence or answer questions because his legal objection had not been resolved. The Committee was entitled to proceed with the hearing after Dr Thoo left. The question remains, however, whether the Committee failed to accord procedural fairness to Dr Thoo in exercising its statutory power to proceed with the hearing in the circumstances that prevailed. The procedure that will satisfy the demands of procedural fairness may differ in order "to meet the particular exigencies of the case" ( Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 at 615 per Brennan J). Whether an adjournment should be granted is a matter within the discretion of the trial Judge (or Tribunal), to be resolved according to the overall requirements of justice in the particular circumstances [citation omitted]. 54 The Committee gave its reasons for refusing the adjournment, namely, that the reason given by Dr Thoo for the adjournment reflected a concern that he had ventilated with the Committee over a long period of time. He did not give any reason why he had not sought legal advice on the matter until a couple of days prior to 3 February 2006. No lawyer accompanied him on that date. He did not have anything in writing from his solicitor supporting his objection to the appointment and procedure of the Committee. 55 Dr Thoo had known from the time he received the letter dated 30 March 2005 from the Committee Secretary that the Committee was investigating his conduct in connection with his provision of MBS Item 23 and MBS Item 36 services. The first date of hearing was 31 August 2005. It was not until 10 November 2005, just eight days before the second hearing date, that Dr Thoo, for the first time, asserted that he believed that the Committee was inappropriately set up and invalid. His complaint in his letter of that date appears to have been that the Committee's authority was limited by reference to the allegation that he had engaged in a prescribed pattern of services by breaching the 80/20 rule. That letter also stated that he would like the matter referred to a barrister, and that it was not appropriate for him to attend the review on 18 November 2005 (see [38] above). 56 Notwithstanding his letter, Dr Thoo did in fact attend and participate in the hearing on 18 November 2005. He conceded that he did not seek legal advice until two days prior to the hearing on 3 February 2006. 57 In the circumstances, I do not think that Dr Thoo was denied procedural fairness by the Committee's decision to refuse his adjournment and continue the hearing in his absence. I note, though do not rely on, the fact that Dr Thoo's solicitors were afforded the subsequent opportunity to make submissions in respect of Dr Thoo's complaints (see [16] above). 58 I also reject counsel for Dr Thoo's criticism of the Committee because it adjourned the hearing on several occasions to confer with a legal adviser in Dr Thoo's absence and did not inform Dr Thoo of what had transpired in the course of that conferral. In my view, such a situation is no different to judges taking a short adjournment to confer. The Chairperson had a discretion to adjourn the proceedings pursuant to s 106(4) of the Act. The Committee was apparently provided with legal advice, and it was not incumbent on the Committee to disclose the content of the discussion it had with its legal advisers to Dr Thoo. 59 In my view, there is no substance in the second ground of review relied on by Dr Thoo. Dr Thoo should pay the Committee's costs of that challenge. 61 It has not been necessary for me to consider the parties' submissions in relation to the appropriate person to whom the matter should be remitted. 62 The proceeding will be listed for the making of orders. I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | application for judicial review of decision of administrative body natural justice denial of procedural fairness administrative body's refusal of adjournment application for adjournment on ground that legal advice needed legal advice sought for first time only two days prior to date on which adjournment sought applicant had previously participated in hearing on two earlier occasions eleven week gap between second hearing date and third, on which adjournment sought. held : refusal of adjournment did not constitute failure to accord procedural fairness. health insurance act 1973 (cth) professional services review committee whether committee authorised to inquire otherwise than within terms of report of director of professional services review. held : on construction of act, yes. administrative law administrative law |
The Second Applicant is a wholly-owned subsidiary of the First Applicant. The present proceeding was commenced by an Application filed on 14 December 2007. The issues now to be resolved are set forth in a Statement of Claim filed on 8 August 2008. Each of these bases of liability is alleged as against each of the Respondents. Interest is also sought pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) (the " Federal Court Act "). Although the position has varied over time, it is sufficient for present purposes to note that there was a close relationship between each of the Respondents. The Third Respondent (Dr Beaini) and the Fourth Respondent (Mr Wade) became directors of the First Respondent in May 2006. At the time the proceeding was commenced, the Fourth Respondent was the sole director of the First Respondent, the Third Respondent having ceased to be a director of the First Respondent in the days immediately before the Application was filed. At that point of time, the Fifth Respondent (Ms Wade) was a director of the Second Respondent. The Fourth and Fifth Respondents have been married for many years and, although separated for a number of years, remain married. The Third Respondent is a medical practitioner. The First Respondent was deregistered on 10 March 2009. The Second Respondent was deregistered on 9 November 2008. Relief is now claimed only against the Third, Fourth and Fifth Respondents. The acts of the Respondents relied upon by the Applicants are said to have occurred from about May 2006 until January 2008. As early as December 2007, when the matter was first brought before the Court, all of the Respondents consented to injunctive relief. Notwithstanding their consent to injunctive relief in December 2007, each of the Respondents denies that there has been any contravention of the Trade Practices Act or the Trade Marks Act or that there has been any passing off. The hearing was initially set down for final hearing in December 2008. An application made prior to that date by the Fourth Respondent for the vacation of those dates was rejected: AMI Australia Holdings Pty Limited v Bade Medical Institute (Aust) Pty Limited [2008] FCA 1783. But the final hearing did not in any event proceed in December 2008 because of the absence of the Fifth Respondent. She was unfit to attend because she had recently undergone dental treatment. After the vacation of the December 2008 hearing dates, the final hearing of the proceeding was listed to take place on 8 and 9 April 2009. But on those dates the hearing again did not proceed due to what was said to be a " psychological disorder " of the Fifth Respondent which rendered her " unfit for court ". So much, at least, was the assertion in what could only be described as a cursory medical certificate of a medical practitioner. No further details were provided. Indeed, the Fifth Respondent was not present in Court when the matter was called for hearing. The hearing was adjourned for a short period and she ultimately appeared later in the morning. Notwithstanding reservation as to whether the hearing should nevertheless proceed on 8 and 9 April 2009, the hearing was adjourned until 1 and 2 June 2009. The Fifth Respondent was informed that no further adjournment would be entertained unless a medical certificate was provided which set forth sufficient detail such that an informed view could be formed as to her condition and the doctor providing any such further certificate was made available for such questioning as was considered appropriate. The final hearing ultimately did commence on 1 June 2009. The vacation of the December 2008 and April 2009 hearing dates proved to be only the start of further procedural difficulties. Those difficulties arose out of repeated attempts to ensure as far as possible that the physical ailments claimed by the Fourth and Fifth Respondents did not deny them an effective opportunity to be heard and to participate in the proceeding, whilst at the same time ensuring that the Applicants were not denied the opportunity to have their claims heard and determined. Further difficulties emerged from an application made by the Third Respondent, Dr Beaini, to amend his Defence . It was in this context that Counsel for the Applicants proposed for resolution whether the orders made in December 2007 were conclusive as to liability, such that the only question outstanding was the assessment of loss or damage or the quantification of any lost profit. The December 2007 orders were made with the consent of all Respondents and at a time when those Respondents were represented by legal practitioners. The only evidence the Applicants sought to rely upon in making their submissions in April 2009 was the form of the December 2007 orders themselves and a search disclosing the deregistration of the First Respondent in March 2009. Counsel for the Third Respondent, with respect, vacillated between an acceptance that the evidence relevant to the resolution of this issue was so confined and a submission that the relevant evidence was more wide-ranging. The more extensive evidential inquiry could extend, it was submitted on behalf of Dr Beaini, to a review of the intention of the Respondents when consenting to the December 2007 orders and the subsequent conduct of the parties. Given that this issue emerged for resolution at a far earlier time than may otherwise have been expected, no criticism can be directed at Counsel for such vacillation as initially emerged during the course of his submissions. On the morning of 9 April 2009, Counsel for the Third Respondent sought to tender an Affidavit containing such further evidence as was sought to be relied upon by that Respondent. The Applicants' submission that the conclusiveness of the 2007 orders could be resolved by reference to the form of those orders alone, and without any examination of the facts, is rejected: if the contention to be resolved is the " effect " of the 2007 orders and any submission is to be advanced that those orders exposed an " agree[ment] to permanent injunctions ", evidence relevant to any such " agreement " extends beyond simply the orders themselves. No attempt was made by the Applicants, however, to establish any such agreement. No submission was advanced by either party, however, that denied the importance of resolving the question as to whether the December 2007 orders confined the Respondents to a dispute as to loss or damage. This was so notwithstanding the fact that the question did not clearly emerge from a reading of the Statement of Claim as filed in August 2008 or the subsequent Defences . Submissions addressing this question were contained within written Outlines of Submissions as provided by the Applicants in April (and subsequently August) 2009. Indeed, Counsel for the Third Respondent placed some reliance upon both the filing of the Statement of Claim subsequent to the making of the December 2007 orders and the absence of reference either in the Statement of Claim (or perhaps in a Reply to the Defences , had one been filed at that point) to the asserted conclusiveness of those orders. If this submission was to be advanced on behalf of the Applicants, Counsel for the Third Respondent contended that it should have been raised on the pleadings. Notwithstanding what may be regarded by some as a commendable departure from the strictures previously imposed by rules of pleadings, it is considered that it would have been far more desirable for the conclusiveness of the December 2007 orders to have been addressed in the pleadings. Parties, it is considered, should not be left to identify the issues by reference to some combination of the pleadings together with written submissions or possibly even oral submissions made during the course of a hearing. Order 11 r 10 of the Federal Court Rules indeed imposes an obligation upon a party to specifically plead " any matter of fact or point of law ... that ... if not specifically pleaded might take the other party by surprise ...". The conclusiveness of the December 2007 orders as asserted by the Applicants, it is considered, is such a matter and should have been specifically pleaded. If necessary, an application could have been made by the Applicants to specifically plead the conclusiveness of the December 2007 orders. In the absence of this step, a submission potentially available to all Respondents was that the Applicants were estopped from asserting that the only live issue remaining to be resolved was an assessment as to loss or damage. It is unnecessary to resolve this question, however, because neither of the Applicants' submissions as to the conclusiveness of the December 2007 orders succeeds. Whatever may have been the preferable course, the question was addressed and submissions advanced. Liability, it was contended by the Applicants, had been accepted by all Respondents either by reason of: the grant of injunctive relief by consent; or the form in which the orders of the Court had been published and entered. The language is clear and unambiguous and there were no reservations in relation to the orders sought or included in the consent orders. The effect of those orders is that the respondents agreed to permanent injunctions, and thus foreclose any argument before the Court now that liability is denied. They were final orders. The difficulty confronting the Applicants, however, is that notwithstanding that all Respondents consented to the orders made in December 2007 granting injunctive relief, those orders were made " until further order ". The order as then made was not a " permanent injunction " as contended by the Applicants. There may well be reasons why a respondent may not wish to oppose interlocutory relief at the outset of a proceeding but may seek to preserve an entitlement to defend the proceeding at a final hearing. Consent to the grant of interlocutory relief cannot be construed as an admission of all facts necessary to establish liability at a final hearing. To contend otherwise would be a submission without substance. It was for that reason that no reliance was ultimately placed by the Applicants upon the grant of the injunctive relief. This way in which the Applicants sought to advance their submission is thus rejected. The 2007 orders do not have the conclusive effect they assert. " Reservation " is expressed on the face of those orders in that the orders are not " permanent injunctions ". The interlocutory nature of the relief, it is thus considered, does not preclude any of the Respondents from now denying liability. The alternative manner in which the Applicants contended that all questions of liability had been conceded presents greater difficulty. The primary difficulty emerged from the form in which the orders were entered in December 2007. The orders as made on 19 December 2007 and as then initialled and placed with the records of the Court were expressed at the outset to be " by way of interlocutory relief ". The form of order as published and entered, however, did not contain this phrase. The error occurred within the administrative processes of the Court. The parties, of course, were not responsible for this error. The Applicants nevertheless contended that liability had been conclusively resolved, not by the form of orders as made and as retained in the records of the Court, but by the form of those orders as they were ultimately published and entered. On this approach, all contraventions of the Trade Practices Act and the Trade Marks Act , together with the requisite elements of the tort of passing off, had been conceded. Short of an application to amend or vary the orders as published pursuant to O 35 r 7 of the Federal Court Rules , the orders as published --- so it was contended --- were conclusive. There is a self-evident need for the published orders of the Court to mirror precisely the terms of orders as made. Where, however, a mistake does occur within the Court process itself, it would be invidious to visit the consequences of that mistake upon the parties. In circumstances where it is readily apparent from the face of the order as initialled and placed with the records of the Court that orders are made " by way of interlocutory relief ", no conclusion should be drawn that the orders are anything other than interlocutory. Where a mistake does occur, it remains open to the parties --- or the Court itself --- to rectify that mistake. Even in the absence of an application being made to vary the orders as entered, it would occasion an injustice to the Respondents to give an effect to the December orders different to that intended by all parties at the time and, indeed, an effect different to that intended by the Court itself. The alternative manner in which the Applicants seek to contend that the December 2007 orders are conclusive as to all aspects of liability is also rejected. It may also be noted, perhaps, that a further potential difficulty confronted the Applicants. This further potential difficulty was that the order as to the transfer and deregistration of domain names, the deregistration of business names and the removal of online " blogs ", among other steps to be taken, was not an order made as against the Third Respondent. But it is unnecessary to further pursue the significance, if any, of the form in which this order was made. Final submissions were heard on 2 September 2009. At the outset of the hearing on 1 June 2009 the Fourth Respondent, Mr David Wade, was not present. The hearing of the case commenced in his absence. He had been advised by the Applicants by way of a letter dated 28 May 2009 that the case would proceed in the absence of any application being made for a further adjournment. During the Fourth Respondent's absence from Court that morning, an application made by the Third Respondent to amend his Defence was resolved. Mr Wade's absence whilst that took place occasioned him no prejudice. The issues as remained to be resolved were also clarified whilst Mr Wade was absent. This outline, of course, did not depart from the issues as identified in the Statement of Claim . The Fifth Respondent, Ms Georgina Wade, then informed the Court that Mr Wade wished to attend. A short adjournment was allowed to permit a phone call to Mr Wade to be made. Mr Wade then attended. He advised the Court that he had voluntarily left St Vincent's Hospital the previous weekend and sought a further adjournment. In support of that application, the name of a Registrar at the Hospital was provided but she was unable to be contacted by telephone. Mr Wade was advised as to what had happened in his absence and the case proceeded. The further adjournment sought was refused. The view formed during the course of the first morning of the hearing on 1 June 2009 was that Mr Wade was able to competently represent himself. He effectively asked two witnesses questions going to the issues in the proceeding as he perceived them. He was, however, obviously in considerable discomfort and there was no reason to question his assertions as to the pain he was experiencing. Steps were thus taken to accommodate his physical condition, such as adjourning for short periods as Mr Wade's health required. In order to reclaim some of the time lost during the first morning of the hearing, and whilst Mr Wade was able to effectively participate in the hearing, the Court sat until 1.30 pm. On 25 June 2009 the Fifth Respondent gave evidence. She was cross-examined by Counsel on behalf of the Third Respondent. But the Fourth Respondent was not then present. The hearing of the evidence concluded on 25 June 2009. An extended timetable was then set down so that the Respondents, especially the unrepresented Fourth and Fifth Respondents, would have an adequate opportunity to see the manner in which the case was ultimately to be put against them and an opportunity to respond. The matter was set down for the hearing of final submissions on 2 September 2009. But on 10 August 2009 a faxed copy of a statement from an Associate Professor at St Vincent's Hospital was received by the Registry. He was admitted on July 13 2009 and is still in hospital. He is being treated for malignant lymphoma and is having intensive chemotherapy. This therapy will extend over 6 months so he is unlikely to be able to attend court over this period. They opposed the vacation of the 2 September 2009 date. The qualified nature of the statement made by the Associate Professor is only to be expected. The opinion expressed was, not surprisingly, expressed in terms of likelihood. More importantly, the statement was dated 30 July 2009 and offered no specific comment in respect to the Fourth Respondent's expected medical condition as at 2 September 2009. On 17 August 2009 no order was made further adjourning the September 2009 date for submissions, but two options were explored. One was the prospect of a further medical certificate being provided closer to the date for the hearing of final submissions with a view to then resolving whether or not an adjournment should be granted. The second option was to proceed with the hearing of submissions on 2 September 2009 but with the need to accommodate the then medical condition of the Fourth Respondent firmly in mind. If short adjournments during the course of that day were required, or even if the Fourth Respondent wanted to present his oral submissions later in the week, those matters could then be addressed. The Applicants did not oppose that course. On 17 August 2009 the Fourth Respondent indicated that he in fact wished to proceed on 2 September 2009 but would be unable to file prior to that date the Outline of Written Submissions the subject of a previous direction. There was no opposition to the Fourth Respondent not providing a written outline of his submissions and for the entirety of those submissions to be presented orally on 2 September 2009. This was what finally transpired --- but not without a yet further application for an adjournment. On 2 September 2009 the Fourth Respondent sought an adjournment so as to allow further evidence to be obtained. A parliamentary inquiry into the affairs of the Applicants, it was said, was taking place. An opportunity was sought to adjourn the hearing so that either the results of that inquiry or evidence obtained in that inquiry could be made available to the Court. Whether or not such evidence would be admissible may be left to one side. Whatever may be the scope of the inquiry or the evidence obtained, it was considered, it would have at best marginal relevance to the issues to be resolved. The adjournment was refused. Oral submissions proceeded --- but not without a yet further complication. On 2 September 2009 oral submissions were heard first from the Fourth Respondent. That course was not opposed by Counsel for the Applicants and was pursued so as to accommodate the Fourth Respondent's physical condition. His oral submissions, it should be noted, were coherent and presented his case, it is considered, in as persuasive a manner as possible. His physical condition, it is further considered, did not impair his ability to present his case. Oral submissions on behalf of the Fifth Respondent were far more confined and repeated the case advanced during her evidence. The complication on 2 September 2009 emerged from an unexpected quarter --- the Third Respondent, Dr Beaini. Notwithstanding the fact that Dr Beaini had been represented throughout the hearing by Counsel, on 2 September 2009 Counsel did not appear. Nor did the solicitor on the record. An employed solicitor appeared merely to state that Dr Beaini sought to rely upon detailed written submissions which had been filed on his behalf on 25 August 2009. But that employed solicitor had not read those written submissions and did not wish to be heard orally. Indeed, if anything, he appeared anxious not to be heard orally. He maintained that he had been " waylaid " on his way to appear in a different jurisdiction and had been instructed to simply convey his short message to the Court. No explanation was forthcoming as to why the solicitor who had had the carriage of the matter throughout the hearing of evidence, who had been present throughout whilst instructing Counsel and who remained the solicitor on the record, did not attend. Such a course did little to assist the Court. The detailed written submissions as filed on behalf of Dr Beaini have, however, been considered and have provided considerable assistance. An ambitious application made on behalf of the Applicants, ostensibly pursuant to O 32 r 2 of the Federal Court Rules , for the written submissions filed on behalf of Dr Beaini to be disregarded, was rejected. An application was made at the outset of the hearing on 1 June 2009 by Counsel then appearing for the Third Respondent by way of a Notice of Motion filed on 29 April 2009. At all material times, the Third Respondent (Mr Wade) and Fourth Respondent (Dr Beaini) have been the sole directors of Bade. By reason of the matters pleaded in paragraph 3 above, at all material times Mr Wade and Dr Beaini have been the controlling minds of and in positions to control and/or have controlled, Bade. But nothing turns on that error. The amendment sought to be made to the Defence was to " not admit " paragraphs [3] and [4]. The reference to " Bade " is a reference to the First Respondent, the Bade Medical Institute. There was no dispute that Dr Beaini was a director of the Bade Medical Institute from 30 May 2006 to 10 December 2007. It is the departure from the admission that Dr Beaini was a " controlling mind " of the Bade Medical Institute that Dr Beaini sought to achieve. Affidavits relied upon in support of the Motion and filed on 29 April 2009 annex correspondence dating back to December 2008. It was at that stage that those appearing for Dr Beaini first flagged a desire to withdraw the admission. The Applicants' solicitors sought particulars in December 2008 of " the basis upon which your client wishes to now be released from his admissions ". The response to that request in April 2009 was to contend " that your request for particulars is not an appropriate request ... ". The Affidavit filed on 29 April 2009 by Dr Beaini exposes the case sought to be advanced. That Affidavit annexes a Joint Venture Agreement dated 21 July 2006 between Jacs Angels Pty Limited and Lust & Love (Aust. ) Pty Limited. Dr Beaini was a director of the former company and Mr Wade was a director of the latter company. The power to allow the amendment is not in issue. The central principle is to do justice between the parties and, broadly speaking, amendments should be allowed unless the embarrassment or prejudice caused to the opposing party (if any) cannot be cured by an adjournment and costs: Londish v Gulf Pacific Pty Ltd [1993] FCA 470 ; (1993) 45 FCR 128. The object of the Court is not to punish parties for mistakes in presenting their case, unless fraudulent or intended to overreach, but to ensure a decision can be made on the real matters of controversy. Leave was given to withdraw the admission to para [4] and in its place, the defence was amended such that the Third Respondent admits that: at all material times he was a director of the First Respondent; and at all materials time he owed the duties of a director; but at all material times the arrangement as between himself and the Fourth Respondent was that those duties were to be discharged in accordance with the Joint Venture Agreement dated 21 July 2006. The Notice of Motion was otherwise dismissed. On the day the Motion was heard, the Applicants sought costs of the Motion and the question of costs was reserved. It is now concluded that the Third Respondent is to pay the costs of the Motion . It was originally named Advanced Medical Institute Pty Limited. There was a corporate restructure in November 2005 and, as a result, Advanced Medical Institute Pty Limited was renamed AMI Australia Holdings Pty Limited and a new wholly-owned subsidiary of this entity was incorporated under the name Advanced Medical Institute Pty Limited. AMI offers treatment for people suffering from sexual dysfunction. It has done so since early 2001. Three treatments offered to male patients suffering from sexual dysfunction are: a self-administered nasal spray; a self-administered lozenge; and a self-administered auto-injection into the penis. AMI now spends between $200,000 and $400,000 annually on research and development. Until December 2003, AMI operated approximately 38 clinics in capital cities and various regional locations throughout Australia. As a result of an increased importance attached to the internet, videoconferencing and the use of telephone consultations, AMI now operates 20 clinics. AMI attracts customers through direct advertising and marketing and through its existing customer base, which exceeds 300,000 people. It advertises its services through radio, newspapers, television and billboards. It advertises on 80 to 100 radio stations and its television advertisements feature on both free to air and cable channels nationwide. AMI also employs internet advertising. It first established an internet presence in January 2005 but did not focus on internet advertising until late 2006. AMI has the following registered internet domain names: amiaustralia.com.au; advancedmedicalinstitute.com.au; healthservicesformen.com.au; impotencyanonymous.com.au; australianmomentumhealth.com.au; and avmd.com.au. From August 2007 to October 2007, AMI spent approximately $8,000 per month on internet-based advertising and from November 2007 onwards it has spent $15,000 per month. A key aspect of AMI's marketing strategy is the promotion of its registered trade mark. Since at least 2000 it has also extensively used the acronym "AMI" in its marketing. That acronym appears in almost all of AMI's advertising. It also appears in documentation sent to customers. For the year ended 30 June 2006, AMI had audited revenues of approximately US$30 million; for the year ended 30 June 2007, it had audited revenues of approximately US$39.4 million. Other entities also provide services in respect to sexual dysfunction, including the Boston Medical Group. Other products such as viagra (produced by Pfizer), cialis (produced by Eli Lilly) and levitra (produced by Bayer) are also available and are dispensed through retail pharmacies. These products are advertised to the same consumers. A limited number of private medical practitioners also run clinics directed to those suffering sexual dysfunction. The dispute between the parties focussed more upon the resolution of questions of fact than upon any real dispute as to the manner in which those provisions were to be interpreted or applied. Sections 52 and 53 are found within Part V of the Trade Practices Act . They are provisions designed to protect members of the public who are consumers of goods and services from unfair trading practices: Mark Foys Pty Ltd v TVSN (Pacific) Ltd [2000] FCA 1626 at [38] , [2000] FCA 1626 ; 104 FCR 61 at 72 per Beaumont, Tamberlin and Emmett JJ (citing Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] HCA 11 ; (1978) 140 CLR 216). They are not provisions specifically designed to protect traders, although the operation of those provisions may incidentally have that effect. (2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1). For present purposes it is sufficient to note that conduct will be " misleading or deceptive " if it induces or is capable of inducing error: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 198. Gibbs CJ there further observed that " [t]he words 'likely to mislead or deceive' ... add little to the section; at most they make it clear that it is unnecessary to prove that the conduct in question actually deceived or misled anyone ". Section 52 has been discussed and applied in innumerable authorities. The test is objective and the Court must determine the question for itself ... Registration of a domain name may constitute conduct falling within s 52: e.g. CSR Ltd v Resource Capital Australia Pty Ltd [2003] FCA 279 , 128 FCR 408 ; Macquarie Bank Ltd v Seagle [2008] FCA 1417 , 79 IPR 72. Indeed, as in the present proceeding, in intellectual property cases it is not uncommon for a plaintiff to contend that the conduct of a respondent in using a domain name or a business name constitutes not only a contravention of ss 52 and 53 of the Trade Practices Act and the tort of passing off, but also a contravention of the Trade Marks Act : Bing! Software Pty Ltd v Bing Technologies Pty Ltd (No 1) [2008] FCA 1760 , 79 IPR 454; SAP Australia Pty Ltd v Sapient Australia Pty Ltd [1999] FCA 1821 , 169 ALR 1. There remain, however, a number of differences of potential significance between each of the causes of action. Where consideration is being given to passing off, there may be a requirement of some exclusive reputation --- but there is no such requirement in relation to Part V: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] FCAFC 70 at [99] , [2007] FCAFC 70 ; 159 FCR 397 at 418 to 419 per Black CJ, Emmett and Middleton JJ. For the purposes 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 a respondent's use of the particular get-up or name is likely to mislead or deceive persons familiar with the applicant's product to believe that the two products are associated: Bing! Software Pty Ltd [2008] FCA 1760 at [71] , 79 IPR at 475 per Collier J. There is no reason to give these provisions anything other than their normal meaning. In McDonald's Systems of Australia Pty Ltd v McWilliams Wines Pty Ltd (1979) 28 ALR 236 at 247, Franki J considered the meaning of the terms " sponsorship " and " approval ". " I see no reason to change this view and I consider that the word "sponsorship" in s 53(c) should be construed in a way appropriate to the construction of such a word in a section creating a criminal offence. ... The Oxford Dictionary defines "approval" as "the action of approving; sanctioning, approbation". The most appropriate meanings of "approve" in the Oxford Dictionary are, in my opinion, "to confirm authoritatively; to sanction; to pronounce to be good; commend". Nor should any constrained meaning be placed upon the term " affiliation " as used in s 53(d). As with s 52 , it is unnecessary for the purposes of s 53(c) or (d) " for there to be evidence that any natural person intended to mislead and deceive ... or even that any natural person knew that the representations were misleading or deceptive or likely to be so ": Australian Competition and Consumer Commission v Francis [2004] FCA 487 at [82] , [2004] FCA 487 ; 142 FCR 1 at 26 to 27 per Gray J. In Mark Foys [2000] FCA 1626 , 104 FCR 61 , conduct was held to fall within s 53(c) and (d) in circumstances where a television sales company pursued a marketing strategy of associating itself with the defunct Mark Foys department store. See also: 10 th Cantanae (1987) 79 ALR 299. A breach of s 53(c) was made out in Australian Competition and Consumer Commission v Chen [2003] FCA 897 , 132 FCR 309 in circumstances where a person operating an internet web site falsely represented that the site had some affiliation with or association with the Sydney Opera House. See also Australian Competition and Consumer Commission v Wizard Mortgage Corporation Limited [2002] FCA 1317 , (2002) ATPR 41-903. Conduct does not fall within ss 52 or 53 merely because a member of the public is caused to wonder whether goods may come from the same source: Chase Manhattan Overseas Corporation v Chase Corporation Ltd (1986) 12 FCR 375. The purpose of Pt V of the Trade Practices Act 1974 is to protect consumers by eliminating unfair trade practices. The object of s 52 is to prevent misleading or deceptive conduct which will affect the identification of goods or services. Conduct which merely causes some uncertainty in the minds of the public does not infringe s 52. The initial question which must be determined is whether the misconceptions or deceptions, alleged to arise or to be likely to arise are properly to be attributed to the ordinary or reasonable members of the classes of prospective purchasers. As loss or damage is the gist of the statutory cause of action for which s. 82(1) provides [ Elna Australia Pty. Ltd. v. International Computers (Australia) Pty. Ltd. [No. 2] [1987] FCA 230 ; (1987), 16 F.C.R. 410 , at p. 418], the cause of action does not accrue until actual loss or damage is sustained. The statutory cause of action arises when the plaintiff suffers loss or damage "by" contravening conduct of another person. "By" is a curious word to use. One might have expected "by means of", "by reason of", "in consequence of" or "as a result of". But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s. 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v. Stramare (E. & M. H.) Pty. Ltd. [(1991) [1991] HCA 12 ; 171 CLR 506] , except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so. Use " as a trade mark " in s 120(1) is use of the mark as a " badge of origin " in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods: Coca-Cola Co v All-Fect Distributors Ltd [1999] FCA 1721 at [19] , 96 FCR 107 at 115 per Black CJ, Sundberg and Finkelstein JJ; Global Brand Marketing Inc v YD Pty Ltd [2008] FCA 605 at [45] , [2008] FCA 605 ; 76 IPR 161 at 171 per Sundberg J; E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2008] FCA 934 at [19] , [2008] FCA 934 ; 77 IPR 69 at 73 to 74. Noted: Andreazza A, "Barefoot Gets the Boot: Trade Mark Infringement and Removal for Non-Use" (2008) 21(5) IPLB 85. For subsequent proceedings, see E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2009] FCAFC 27 , 175 FCR 386 ; E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2009] HCATrans 180. The function of a trade mark is to identify the source of goods. By way of contrast, " the purpose of s 52 [of the Trade Practices Act ] is to prohibit misleading or deceptive conduct which will affect the recognition or identification of goods ": Parkdale Custom Built Furniture (1982) 149 CLR at 210 per Mason J. Whether marks are " substantially identical " requires a side by side comparison and depends on the Court's own judgment: Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 414. "The identification of an essential feature depends", it has been said, "partly on the Court's own judgment and partly on the burden of the evidence that is placed before it": de Cordova v Vick Chemical Co [(1951) 68 R.P.C. 103 , at p. 106]. See also: E & J Gallo Winery [2008] FCA 934 at [41] to [43], 77 IPR at 78. By way of contrast, whether a mark is " deceptively similar " is not to be determined by a side by side comparison, but rather by reference to whether there is a likelihood of deception or confusion from a recollection or impression of the registered mark: Anheuser-Busch Inc v Budejovicky Budvar [2002] FCA 390 at [143] [2002] FCA 390 ; , 56 IPR 182 at 216. Thus, a side by side comparison is inadequate, and too narrow a test. It is not appropriate when making this comparison to undertake a wider enquiry of the kind undertaken in a passing off action or in a proceeding in which a contravention of Part V of the Trade Practices Act is alleged: CA Henschke & Co v Rosemount Estates Pty Ltd [2000] FCA 1539 at [44] , [2000] FCA 1539 ; 52 IPR 42 at 62 per Ryan, Branson and Lehane JJ. And, again, it is unnecessary to do more than outline some of the more generally accepted principles. The essence of the action in passing off, it may thus be noted, is the protection of a plaintiff's goodwill attaching to a business or commercial venture. In Campomar [2000] HCA 12 at [108] , 202 CLR at 88, Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ thus observed that "... passing-off, at least so far as concerns equitable relief, protects against injury to the goodwill built up by the activities of the plaintiff ". It is not concerned with an invasion of privacy: 10 th Cantanae (1987) 79 ALR at 317 per Gummow J. Passing off is a remedy for the invasion of a right of property in the business or goodwill likely to be injured by misrepresentations made by the passing off of one person's goods as those of another: Star Industrial Company Ltd v Yap Kwee Kor [1976] FSR 256 at 269; Pacific Publications Pty Ltd v Next Publishing Pty Ltd [2005] FCA 625 at [25] , [2005] FCA 625 ; 222 ALR 127 at 135 per Tamberlin J. It is not a remedy for the invasion of a right of property in a mark, name or get-up which has been improperly used. Nor is it, unlike s 52 of the Trade Practices Act , designed to protect consumers. Notwithstanding these different objectives, it is not uncommon for a plaintiff to place reliance upon both s 52 of the Trade Practices Act and the tort of passing off: e.g. The Architects (Australia) Pty Ltd v Witty Consultants Pty Ltd [2002] QSC 139. There are " close similarities " between the two causes of action: Osgaig Pty Ltd v Ajisen (Melbourne) Pty Ltd [2004] FCA 1394 at [80] , [2004] FCA 1394 ; 213 ALR 153 at 167 per Weinberg J. Indeed, authorities which have considered the common law tort of passing off provide guidance by analogy as to the type of conduct which would be likely to mislead or deceive the public for the purposes of s 52: R & C Products Pty Ltd v SC Johnson & Sons Pty Ltd [1993] FCA 198 ; (1993) 42 FCR 188 at 192 per Davies J. The tort includes "... circumstances involving the deceptive or confusing use of names, descriptive terms or other indicia to persuade purchasers or customers to believe that goods or services have an association, quality or endorsement which belongs or would belong to goods or services of, or associated with, another or others ... ": Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73 ; (1984) 156 CLR 414 at 445 per Deane J. The tort is not confined to cases where loss consists in the diversion of trade: Turner v General Motors (Australia) Pty Ltd [1929] HCA 22 ; (1929) 42 CLR 352 at 368 per Dixon J. The tort extends to those cases where a plaintiff and defendant are not engaged in a " common field of activity " and where a defendant is not in direct competition with a plaintiff: Totalizator Agency Board v Turf News Pty Ltd [1967] VR 605 at 608 to 609 per Smith J; 10 th Cantanae (1987) 79 ALR at 324 per Gummow J. But precise definition of the elements of the tort of passing off remains elusive: ConAgra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302 at 355 per Gummow J; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259 ; (1993) 26 IPR 261 at 268 per Gummow, French and Hill JJ. G. Spalding & Bros. v. A. W. Gamage Ltd., 84 L.J.Ch. 449 and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so. It does not follow that because all passing off actions can be shown to present these characteristics, all factual situations which present these characteristics give rise to a cause of action for passing off. True it is that their presence indicates what a moral code would censure as dishonest trading, based as it is upon deception of customers and consumers of a trader's wares but in an economic system which has relied on competition to keep down prices and to improve products there may be practical reasons why it should have been the policy of the common law not to run the risk of hampering competition by providing civil remedies to every one competing in the market who has suffered damage to his business or goodwill in consequence of inaccurate statements of whatever kind that may be made by rival traders about their own wares. The market in which the action for passing off originated was no place for the mealy mouthed; advertisements are not on affidavit; exaggerated claims by a trader about the quality of his wares, assertions that they are better than those of his rivals even though he knows this to be untrue, have been permitted by the common law as venial "puffing" which gives no cause of action to a competitor even though he can show that he has suffered actual damage in his business as a result. Lord Diplock's statement as to the five " characteristics " of the cause of action for passing off has been adopted in Australia: Moorgate Tobacco (1984) 156 CLR at 443 to 444 per Deane J; ConAgra (1972) 33 FCR at 308 to 309 per Lockhart J; Osgaig [2004] FCA 1394 at [83] to [85], 213 ALR at 167 to 168 per Weinberg J; Ward Group Pty Ltd v Brodie & Stone plc [2005] FCA 471 at [29] to [30] [2005] FCA 471 ; , 143 FCR 479 at 487 per Merkel J. The " declarations of principle " of Diplock and Fraser LLJ were also accepted by the Privy Council on appeal from the Supreme Court of New South Wales in Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 at 856 as being of " general application ". In summary form, there is a need to establish goodwill or reputation attaching to the relevant goods in the mind of the purchasing public, misrepresentation and damage or a likelihood of damage: Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd (1998) 41 IPR 347 at 356 to 357 per Goldberg J. The misrepresentation relied upon need only be likely to lead the public to believe that the goods are those of the plaintiff --- proof of actual deception is not required: Osgaig [2004] FCA 1394 at [85] , 213 ALR at 168 per Weinberg J. The tort has been applied in more recent times to circumstances in which a defendant passes off his goods or services as those of the plaintiff by means of an impermissible use of a domain name: e.g. The Architects (Australia) [2002] QSC 139 at [34] per Chesterman J. There need not be any deliberate fraud or any intention on the part of a defendant to deceive: ConAgra (1992) 33 FCR at 344 per Lockhart J; Select Personnel Pty Ltd v Morgan & Banks Pty Ltd (1998) 12 IPR 167 at 170 to 171 per McLelland J. There is no requirement that a respondent has been fraudulent, malicious or negligent: R & C Products (1993) 42 FCR at 192 per Davies J. But the presence or lack of any conscious intent can be relevant as a matter of evidence in establishing whether there has been any unlawful passing off: Pacific Publications [2005] FCA 625 at [88] , [2005] FCA 625 ; 222 ALR 127 at 148 per Tamberlin J. The reality is that there is a continuum with at the extremes purely descriptive names at the one end, completely invented names at the other and in between, names that contain ordinary English words that are in some way or other at least partly descriptive. The further along the continuum towards the fancy name one goes, the easier it will be for a plaintiff to establish that the words used are descriptive of the plaintiff's business. The closer along the continuum one moves towards a merely descriptive name the more a plaintiff will need to show that the name has obtained a secondary meaning, equating it with the products of the plaintiff (if the name admits of this --- a purely descriptive name probably will not) and the easier it will be to see a small difference in names as adequate to avoid confusion. For the purposes of a passing off action, it should also be noted at the outset that the comparison involved is different to the comparison undertaken for the purposes of resolving whether the use of a mark is " deceptively similar " for the purposes of s 120 of the Trade Marks Act : Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89. The comparison differs from that in a passing off action where the plaintiff points to the goodwill built up around the mark by reason of prior use and then points to the conduct of the defendant as leading to deception (or perhaps merely confusion) and consequent damage to that goodwill of the plaintiff. Liability is, however, sought to be established as against the Third, Fourth and Fifth Respondents. That liability is said by the Applicants to arise by reason of either: s 75B of the Trade Practices Act , in the event that there is a contravention of ss 52 or 53 of that Act; or the liability ascribed to directors and others for corporate wrongdoing, in the case of an infringement of the trade mark or passing off. But it is not necessary to prove that the person knew that his participation was a breach of the Act: Quinlivan v Australian Competition and Consumer Commission [2004] FCA 175 , 160 FCR 1; Yorke v Lucas [1985] HCA 65 ; (1985) 158 CLR 661 at 666 to 669 per Mason ACJ, Wilson, Deane and Dawson JJ. The particular provision invoked by the Applicants in the present proceeding is s 75B(1)(c). ... In our view, the proper construction of par. (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention. He lacked knowledge of an essential element of the contravention. The authorities and the " controversy " as to the extent of knowledge necessary to bring a person within s 75B have been discussed in Pearce M, "Accessorial Liability for Misleading or Deceptive Conduct" (2006) 80 ALJ 104. A Full Court of this Court revisited the decision in Yorke [1985] HCA 65 ; (1985) 158 CLR 661 and reviewed the previous decision of this Court as to the extent of the knowledge required to make a person " knowingly concerned " in a contravention: Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 , 135 FCR 1. There in issue was s 12GD(1)(e) of the then Australian Securities and Investments Commission Act 1989 (Cth), a provision comparable to s 75B(1)(c) of the Trade Practices Act . The Court there heard two appeals, one in which the Medical Benefits Fund was the appellant; the other in which an advertising agency, Bevins, was the appellant. The primary judge accepted that Bevins did not subjectively appreciate that the advertisements involved were false, misleading or deceptive but found Bevins liable pursuant to s 12GD(1). This conclusion was reversed on appeal. It follows, on his Honour's findings, that Bevins (through its officers and employees) was not aware of the second of the matters, as I earlier described them, constituting the contravening conduct of MBF. That is, while Bevins was aware of what the advertisements contained (necessarily so given that it created them) it was not aware that the advertisements might lead members of the public to believe that certain benefits would be enjoyed or rights conferred by taking out insurance with MBF. Accordingly, in my opinion, his Honour erred in concluding that Bevins was liable as an accessory under s 12GD(1). All that would be necessary would be for the accessory to know of the matters that enabled the representations to be characterised in that way. It is sufficient (and necessary) that the conduct in question can be accurately described as "misleading or deceptive" or "likely to mislead or deceive". This misleading or deceptive character is a question of fact that must be decided in the context of all the surrounding circumstances; Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136 ; (1982) 42 ALR 177 at 202. That "fact" is an essential element of the contravention. It follows that to be liable as an accessory one must have knowledge of the misleading and deceptive character of the relevant conduct. But it is necessary to know the essential elements of the contravention, by which I understand that one must know that which makes the conduct a contravention; in this case, its misleading and deceptive character. Only then can one form the intention to participate in conduct of that character. Liability as joint tortfeasors arises where two or more persons act in concert in committing a tort: Thompson v Australian Capital Television Pty Limited [1996] HCA 38 ; (1996) 186 CLR 574. As was said in The Koursk, ([1924] P 140 at 159-160), for there to be joint tortfeasors, "there must be a concurrence in the act or acts causing damage, not merely a coincidence of separate acts which by their conjoined effect cause damage". Principal and agent may be joint tortfeasors where the agent commits a tort on behalf of the principal, as master and servant may be where the servant commits a tort in the course of employment. Persons who breach a joint duty may also be joint tortfeasors. Otherwise, to constitute joint tortfeasors two or more persons must act in concert in committing the tort. Applied: Louis Vuitton Malletier SA v Toea Pty Ltd [2006] FCA 1443 at [164] , [2006] FCA 1443 ; 156 FCR 158 at 196. See also: Baxter v Obacelo Pty Limited [2001] HCA 66 at [18] , [2001] HCA 66 ; 205 CLR 635 at 646 to 647 per Gleeson CJ and Callinan J. There must be a " joint purpose " in engaging in unlawful conduct if there is to be liability as joint tortfeasors: TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151 , 158 FCR 444. Although the term is commonly used, the concept is not well defined. To be joint tortfeasors it is not sufficient that the independent wrongful acts of two persons have caused the same damage. Those persons are several tortfeasors. In Sir John Heydon's Case (1612) 7 ER 1150 at 1151 joint tortfeasors were described as "all coming to do an unlawful act, and of one party, the act of one is the act of all of the same party being present". The rule goes back to when an action in trespass was principally criminal ( Sir Charles Stanley's Case [1708] EngR 26 ; (1663) 84 ER 1094) but has been extended. There are three classes of joint tort: where a party is vicariously responsible for the acts of another --- as in master and servant, principal and agent and partnership; when there is a breach of a joint duty, be it a statutory or common law duty; and concerted action. In Thompson v Australian Capital Television Pty Ltd [1996] HCA 38 ; (1996) 186 CLR 574 the High Court accepted as a correct description of joint tortfeasors that given by Sargeant LJ in the The Koursk [1924] P at 159-160, namely that "there must be a concurrence in the act or acts causing damage not merely a coincidence of separate acts which by their conjoined effect cause damage". So, employing the language of criminal lawyers, all persons who aid or counsel direct or join in the commission of a tort are joint tortfeasors : Pratt v British Medical Association [1919] 1 KB 244 at 254 citing Petrie v Lamont [1841] EngR 66 ; (1841) 174 ER 424 at 426. Intent, of course, is not an ingredient of the tort for we are dealing with the civil law, not criminal conduct. However, liability as a joint tortfeasor is not confined to the potential liability of a director or officer of a corporation for a corporate tort. The test to be applied before a director or other officer of a corporation is exposed to liability by reason of his involvement in the conduct of a corporation remains uncertain. Those questions are not immediately answered by principles dealing with "authorisation" or joint tortfeasance. There are two relevant lines of authority, each supportive of a different test. The other line supported "the Mentmore test": whether the director had engaged in "the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it". In Root Quality Pty Ltd v Root Control Technologies Pty Ltd [2000] FCA 980 ; (2000) 177 ALR 231 (" Root Quality "), Finkelstein J discussed both tests and concluded at [46] that "[t]he director's conduct must be such that it can be said of him that he was so personally involved in the commission of the unlawful act that it is just that he should be rendered liable. " I tend to agree with his Honour's approach: compare also Universal Music [2005] FCA 972 ; 150 FCR 1 at [134]. What seems to underlie this test is the notion that, necessarily, companies can engage in tortious conduct only through human beings, and, at least ordinarily, where a particular human being involved and responsible to an appropriate extent can be identified, he should, as a matter of policy, be liable. After all, even if the aggrieved party did not sue him, apparently he would be liable to indemnify the company in respect of its liability to the aggrieved party. The reference to the " Mentmore test " is a reference to Mentmore Manufacturing Co Ltd v National Merchandising Manufacturing Co Inc (1978) 89 DLR (3d) 195. Notwithstanding the acknowledgment that there are these two distinct lines of authority, the Full Court has suggested that the differences may be more apparent than real. We are not aware of any case in which it has been held that a director or officer of a company directed or procured the company's infringing act, yet that person escaped liability because he or she did not deliberately, wilfully or knowingly pursue a course of conduct that was likely to constitute infringement or that reflected indifference to the risk of infringement. This may be because, in practice, an act of direction or procurement will generally meet the Mentmore test. It is notable that, in Mentmore itself, the Canadian Federal Court of Appeal declined (at 204) to "go so far as to hold that the director or officer must know or have reason to know that the acts which he directs or procures constitute infringement". The court declined to do this because that "would be to impose a condition of liability that does not exist for patent infringement generally". The written Outline of Submissions as filed on behalf of the Applicants helpfully refers to the divergence in authorities. It would appear, however, that the Applicants were content to contend that the liability of the individual Respondents was made out by reason of their having " procured the actions of the corporate respondents ... ". It is not in dispute that, prior to its deregistration, the Bade Medical Institute carried on a business of providing prescription medication and medical advice to customers. That business was of much the same nature as that conducted by the Applicants. In carrying on that business, the Bade Medical Institute registered the following business names and used them in its trade and commerce: The Bade Medical Institute also registered the following business telephone listings and used them in its trade and commerce: The Bade Medical Institute also posted online advertising in a number of internet " blogs ", employing: None of this conduct of the Bade Medical Institute was carried on with the consent or permission of the Applicants. In engaging in this conduct, it is considered that the First Respondent contravened s 52 of the Trade Practices Act . The registration of the business names and the securing of the telephone listings and its online advertising was conduct which was unquestionably misleading or deceptive. The conduct was engaged in in trade and commerce and falsely represented that its own goods were either the goods of the Applicants or associated with the Applicants. It is also considered that such conduct contravenes s 53(d) of that Act, namely that the conduct constituted a representation that the Bade Medical Institute had an " affiliation " with the Applicants. This conclusion is only reinforced when consideration is given to the fact that both the Applicants and the Bade Medical Institute were operating in a common field of activity, namely the provision of goods to those suffering from sexual dysfunction. The First Applicant used this trade mark in a variety of forms of advertising. The trade mark was a " key aspect " of the " marketing strategy " whereby the Applicants promoted their business. Whatever other comment may be appropriate as to the form of advertising pursued by the Applicants, their use of the trade mark cannot be questioned. The Applicants contend that the First Respondent infringed this trade mark in a variety of ways. Some of these ways include the very registration by the Bade Medical Institute of the business names AMI Medical Institute and AMI Nasal Sprays and the use of these business names. Another of the ways in which it is contended the trade mark has been infringed is the manner in which the Bade Medical Institute promoted itself in its telephone listings and on the internet. The trade marks are neither " substantially identical ", nor " deceptively similar ". Undertaking a side by side comparison, it is concluded that the marks are not " substantially identical ". Attention is drawn to this image because of its position and it being set against a contrasting background. Another prominent feature of the mark is the acronym " AMI " displayed directly beneath the circular disc in bold white type. The words " Advanced Medical Institute of Australia ", positioned immediately below the acronym, attract less attention because of their smaller size and compressed typeset. The Bade logo of which the Applicants complain has different salient features. In contrast to the AMI mark, in which the circular disc is a particular feature, the prominent feature of the Bade logo is the stylised text " bademedicalinstitute ". The first two words of this phrase are emphasised in bold typeface. Unlike the AMI mark, the Bade logo includes neither a circular disc image nor an acronym. Perhaps the most similar feature of the two marks is the semi-circular device in the upper left portion of each mark. In the AMI mark, the device takes the form of a series of close-set lines that appear to radiate from the circular disc at the centre of the mark. In contrast, in the Bade logo it is an elongated crescent that frames the text at the centre of the mark. In this way, each of these distinct semi-circular devices operates to accentuate the main distinguishing feature of the respective marks, serving to better distinguish each mark from that of its competitor. It is thus concluded that the marks are sufficiently distinct from one another that they cannot be said to be " substantially identical ". It is further concluded that the marks are not " deceptively similar " as the First Respondent's mark is not " likely to deceive or cause confusion " with respect to the Applicants' mark. A potential customer encountering the two marks in the course of trade is unlikely to conclude on the basis of the marks themselves that they emanate from the same source. In assessing whether the marks are deceptively similar, it is relevant to consider the context in which customers are likely to form their impressions of the marks: Australian Woollen Mills Ltd v FS Walton & Co Ltd [1937] HCA 51 ; (1937) 58 CLR 641 at 658 per Dixon and McTiernan JJ; Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595 per Kitto J; Anheuser-Busch Inc [2002] FCA 390 at [153] , [2002] FCA 390 ; 56 IPR 182 at 218 per Allsop J. While the Applicants and the Respondents operate in the same field of business, this field is one in which producers offer medical treatment options for a physical condition. Consumers directing their minds to purchasing a medical treatment programme are likely to give the competing products more than fleeting consideration (cf Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 at [74] , [2002] FCAFC 157 ; 55 IPR 354 at 375). It is in this context of greater consideration and attention that potential consumers will form their impressions of the competing marks. Accordingly, it is concluded the Bade Medical Institute logo as used by the Respondents does not infringe the Applicants' registered mark because the First Respondent's mark is neither substantially identical with, nor deceptively similar to, the Applicants' mark. It is, however, concluded that the First Respondent has passed off its own goods as those of the Applicants. As submitted on behalf of the Applicants, it is concluded that the Applicants have established goodwill or reputation by reason of: By engaging in the conduct identified, it is considered that the First Respondent has misrepresented its own goods as those of the Applicants and that those misrepresentations were made by it in the course of trade. The misrepresentations were made to prospective customers and a reasonably foreseeable consequence was that the business or goodwill of the Applicants would be injured. Actual damage has been occasioned to the business activities of the Applicants. The manner in which the Bade Medical Institute promoted and sold its own products diverted sales away from the Applicants. The apparent similarity in the names being used was supported (in part) by some evidence of those who bought the Respondents' products. A private enquiry agent who had been retained by the Applicants thus gave evidence of a phone call made in December 2007 to the Bade Medical Institute and the following conversation: He said: Hello, Jack speaking I said: Who have I called? He said: Bade. I said: I've rung in relation to erectile problems, and am enquiring about your products. He said: $450, and you get about fifty doses for that. I said: Are you AMI? He said: Yes, Australian Medical Institute. I said: Are you the ones that advertise AMI everywhere? He said No, that is the Advanced Medical Institute. I said: You're not the same? He said: No, we're different. Can you give me your name and address to send the spray to? Notwithstanding the acknowledgment that " we're different ", the association with " AMI " remained. ) Pty Ltd, contraventions of ss 52 , 53 (a), 53 (aa), 53 (c) and 53 (d) of the Trade Practices Act were alleged. Again, it is not in dispute that the Second Respondent: was the holder, owner and operator of all domain names used by the First Respondent; and provided the website and hosting capacity for the websites used by the First Respondent in relation to its business. The conduct of the Second Respondent in registering these domain names was conduct that was misleading or deceptive or conduct that was likely to mislead or deceive. When these domain names were accessed by Australian consumers the consumer was transferred to the website of the First Respondent, the Bade Medical Institute. It is further concluded that the conduct of registering the domain names was conduct that passed off the goods being promoted by the Respondents as those of the Applicants. But it is not considered that the conduct of registering the domain names constituted an infringement by the Second Respondent of the trade mark registered to the First Applicant. It should be noted that the domain names in issue were transferred by the consent orders made in this proceeding in December 2007. No relevant distinction can be drawn between the conduct of the First and Second Respondents and the conduct of the Fourth Respondent: cf Readymix Holdings International Pty Ltd v Wieland Process Equipment Pty Ltd (No 2) [2008] FCA 1480 at [111] . Mr Wade accepted that it was in 2006 that he " met Dr Buddy Beaini and we created Bade Medical Institute. ... We employed a webmaster and that webmaster was Andre Nader who was experienced in HTML ". He further maintained that " [t]he company, Bade Medical Institute, had spent something like $70,000 or thereabouts registering all names and trade marking certain names that we made up and phrases to put into the keywords so we could use them on Google. These names, trade marks, business names, phrases, were all in the source code and could not be seen; they were totally invisible and could only be ascertained by the Google scrawler ". Further evidence as to the manner in which the Bade Medical Institute carried on business was contentious and some explanations provided by Mr Wade were less than convincing. Thus, for example, it was not contentious that there had been an exchange of emails in January 2007 addressed to " patriciawade " within the Bade Medical Institute. That which was disputed by Mr Wade was whether a particular page formed part of that exchange. The page assumed importance because it was the compilation of material intended for use in the advertising of the Respondents' products and because it contained information which was substantially a " cut and paste " from a document prepared by the Applicants. The document contained only minor changes from the Applicants' own document used by the Applicants in the promotion of their products. The emailed document was the same as that used by the Applicants with the exception that words referable to the Applicants were deleted and the phrase " sexual enhancement nasal spray " inserted in lieu . Mr Wade accepted that the document was " definitely ... a cut and paste " but maintained that he did not write the document. It perhaps matters little whether the document was or was not an email or who wrote the document. Its significance is the fact that it exposes what was correctly put in cross-examination as an " intention to imitate, as far as possible, the approach and the products of AMI ". And, whether he wrote the advertisement or not, it is considered that Mr Wade had an intimate involvement in its preparation. The explanation advanced by Mr Wade that the document was directed to a product other than one concerned with erectile dysfunction is rejected. It is implausible and inconsistent with the content of the document itself. Another contention pursued by the Applicants was that Mr Wade and the Bade Medical Institute intentionally set out to " intercept " people searching the internet for access to the Applicants' products and to divert them to their own products. One explanation provided by Mr Wade was that the initials " AMI " stood for " acute myocardial infarction ". At one stage during the cross-examination, Mr Wade was taken to a list of searches undertaken on the internet. It's one of the salient acronyms for acute myocardial infarction, which is one of the cause of [impotence]. I've even put the word viagra alternatives but I wasn't selling Viagra. You have an assumption of your term AMI that you own everything between here and Botswana for the word AMI. It is considered that it was used for the very purpose being suggested by the cross-examiner. Although too much reliance should not be placed upon inconsistencies in the evidence of different witnesses, such inconsistencies as do exist are not to be disregarded and serve as a source of concern as to the reliability of the balance of the evidence being given by the Respondents. One instance may be given. The name " Maxine May " appeared on innumerable emails. ---Nobody. ... So they were keeping records? ---No. Maxine May was like --- it was just another email address. I had numerous email addresses but actually there was no Maxine May as a person. Why don't you get her up? Who is Maxine May?---His girlfriend. His girlfriend was every --- his girlfriend ruled --- whatever his girlfriend said, he did. It matters not whether the name of the " girlfriend " was " Maxine May "; that which matters is Mr Wade's assertion that she was " nobody ". Another instance is that Mr Wade maintained that he had not " worked with " his daughters, Ms Vicky Wade and Ms Patricia Wade. Yet emails in January 2007 were sent to and from Ms Patricia Wade concerning the business of the Bade Medical Institute and Mr Wade accepted that she " did graphics " for the business. Dr Beaini, like Mr Wade, maintained that Ms Vicky Wade " had no role in Bade ". Yet there was evidence of a phone-call being made to the Bade Medical Institute and the telephone being answered by a woman who identified herself as " Vicky ". Taken on its own, and given the apparent ease with which people assumed a variety of names, little weight is to be given to such an isolated telephone call. Indeed, such evidence established little. More persuasive of an involvement on the part of at least Ms Patricia Wade, however, was an exchange of emails in March 2007 when attempts were being made to establish the business of the Bade Medical Centre overseas. I will liase re their logos. Please print and send to Mediserve for their records. In the present proceeding, the involvement or non-involvement in the business of the Respondents could readily have been addressed by each of the daughters. And any such involvement need not be confined to activities in Australia. No explanation was provided as to their not being called other than a statement that both were overseas. Suitable arrangements could well have been made for their cross-examination (if any) by way of videolink should each have in fact remained overseas: Federal Court Act s 47A. The failure to call evidence from the two daughters (or even one or other of them) lends some further limited support for concluding that the involvement of individual persons is better recorded in the documents than in the denials of Mr Wade and also for rejecting his assertions as to such matters as (for example) the manner in which the Respondents were seeking to promote their products and the involvement of others in that business. The more reliable source of evidence, it has been concluded, is the documents available to the Court and the inferences to be drawn from such documents. The oral evidence of Mr Wade is considered to be an unreliable basis upon which to make findings of fact. It should finally be noted that an impression formed during the cross-examination of Mr Wade was that he was astute and careful in the answers he provided. He accepted that his recollection of events was " impaired because of [his] use of morphine and [his] use of other drugs ". But a re-reading of the transcript has confirmed the impression formed during the hearing itself that he suffered no prejudice by reason of his medical condition or the medication that he said he was taking. Although in discomfort, he was considered to be competent to answer the questions being put to him and to ask questions of other witnesses. It is further considered that Mr Wade was attempting to shield Ms Wade from such liability as she may otherwise encounter by reason of the present litigation. He was also attempting to shield Dr Beaini in a like manner. The manner in which he gave his evidence, the explanations sought to be advanced from time to time and the inconsistencies in his evidence are such that little reliance can be placed on his account. It is considered that Mr Wade was " a person involved in " the contraventions of ss 52 and 53(d) by both the First and Second Respondent for the purposes of s 75B of the Trade Practices Act . In his capacity as the driving force behind both companies, it was Mr Wade who caused the telephone listings and business names to be obtained. He secured the services of his " webmaster " in order to ensure that the internet domain names were secured. He caused the products of the Respondents to be promoted in the manner in which they were promoted. In so doing, it is considered that he " aided, abetted, counselled or procured the contravention " within the meaning of s 75B(1)(a). It is also considered that he was " knowingly concerned " in the contraventions within the meaning of s 75B(1)(c). Insofar as the First and Second Respondents have been found to have passed off the goods of the Bade Medical Institute as those of the Applicants, it is further concluded that the Fourth Respondent is liable for the conduct of those Respondents by reason of his being a joint tortfeasor. He was not only a director for a period of time. He was also a person who acted " together in furtherance of a common design to commit " the tort of passing off. As in other cases, it is not necessary to resolve which line of authority should be followed to determine whether a corporation and a director may be regarded as joint tortfeasors. It is concluded that the Fourth Respondent either " directed or procured " the conduct of the First Respondent or was " deliberately, wilfully or knowingly " pursuing a course that was likely to constitute a contravention by the companies of the rights of the Applicants. Insofar as the Second Respondent is concerned, a company in respect to which he was neither a director nor apparently an " office holder ", his conduct was nevertheless such as to render him a joint tortfeasor. He was frequently referred to as " Buddy " Beaini. Over the years he has apparently had an interest in developing a range of cosmetic products. He has also had a long-held interest in treating impotence. This latter interest emerged in 2000. He trialled a number of compounds prepared by a compounding pharmacist and concluded that they were unsatisfactory. He started his own experiments, including one on himself, and changed the dosage of the active ingredients. In 2002 he opened two clinics, one in Wahroonga and the other in Double Bay in Sydney. His path ultimately crossed those of the Fourth and Fifth Respondents. He first met the Fifth Respondent, Ms Georgina Wade, at his Double Bay clinic in March/ April 2006. There then occurred a discussion as to the potential involvement of the Fourth Respondent, Mr David Wade. Ms Wade suggested that her husband could assist in helping Dr Beaini's business. A meeting thereafter occurred between Dr Beaini and Mr Wade which resulted in Dr Beaini and Ms Wade becoming joint directors of a company then known as AP & PH (Aust. ) Pty Ltd in May 2006. That company later changed its name to Bade Medical Institute (Aust. ) Pty Ltd. The fact of his being a director of Bade Medical Institute (Aust. ) Pty Limited was not in question. Some of Dr Beaini's evidence was not contentious. The fact that he wrote prescriptions, for example, for those seeking the products being offered by the Bade Medical Institute was not questioned. But the extent to which he involved himself more intimately in the activities of the Bade Medical Institute was contentious. An assessment of his evidence was not without difficulty. Both the form in which questions were put in his evidence in chief and his tendency to provide explanations rather than answers compounded that difficulty. Other than his role in writing prescriptions, the case Dr Beaini sought to advance was that his " involvement was basically getting the medical information out ...". In respect to the information placed on the internet, he maintained that his " role [was] to advise patients of what is available, so I did all the medical writing up for the internet ...". The case advanced against Dr Beaini on behalf of the Applicants, and which placed particular reliance upon s 75B of the Trade Practices Act , sought to establish a more intimate involvement with the conduct of the Fourth Respondent and the First Respondent, the Bade Medical Institute. Although it may be accepted that the primary role discharged by Dr Beaini was this involvement in consultations and the writing of prescriptions, together with his involvement in drafting the medical component of internet material, it is not accepted that his involvement in the other activities of the First and Second Respondents was as limited as he sought to contend. A convenient starting point for assessing the extent of Dr Beaini's involvement was the accepted fact that Dr Beaini at the outset saw a business opportunity. He saw an opportunity whereby he could use the skills of the Fourth Respondent to " promote my cosmetic clinics over the internet because I believe that's the best way to promote this sort of business ... ". That was at the outset. A year later thoughts of expansion had not faded. In March 2007 there was thus an email to Dr Beaini from the daughter of the Fourth and Fifth Respondents, Ms Patricia Wade. The text of that email disclosed steps being taken in Europe to develop the business. A more intimate involvement was also supported, to a limited extent, by the fact that during the period from March to June 2006 Dr Beaini attended the " offices " of the Bade Medical Institute on three or four occasions. To the knowledge of Dr Beaini there was also being carried on from those " offices " what was described as " an Internet escort agency ". There were also numerous telephone conversations during the March to June 2006 period between Dr Beaini and Mr Wade. A more intimate involvement was further supported by the payment of monies in respect to invoices issued by the cosmetic clinic run by Dr Beaini into the account of the Bade Medical Institute. It was also supported by the involvement of Dr Beaini in May 2007 with attempts to export " our products overseas ". These " products " were those being offered by the Bade Medical Institute. Emails to this end were exchanged directly between Dr Beaini and an officer in the Exports Unit of the Therapeutic Goods Administration. If attention is confined to the involvement of Dr Beaini in respect of " advertising material ", it is difficult to accept that his involvement was as limited as he maintained. This involvement in " advertising material " was evidenced in part by a series of emails in September 2006 focussed on proposed radio advertisements. Issues canvassed in those emails included the cost of the proposed advertisements, the timing of the advertisements, the need to " organise the script (which Georgina is organising )" and the target audience. He was at least included as a person to whom the emails were forwarded. But those emails do not themselves reveal Dr Beaini as having any knowledge, for example, of the content of the " script " that was envisaged. The Applicants nevertheless invited inferences to be drawn that these emails exposed a greater involvement of Dr Beaini than his simply being included as one of a number of recipients. Dr Beaini denied having knowledge of the " script " to which reference is made. Whether or not such inferences should be drawn may be left to one side. There was no necessity to draw any inference in respect to Dr Beaini's involvement in and knowledge of another advertisement. In May 2007, an advertisement had apparently appeared in the Sun Herald . The limited significance of the advertisement in a newspaper must be accepted in the context where over 90% of the advertising of the Bade Medical Institute was carried out over the internet. But the email exposes knowledge on the part of Dr Beaini as to both the fact that the products of the First Respondent were being advertised and also a concern to ensure that such advertising as did occur served to " make our products saleable ". ---Not Georgina Wade, no. Dr Beaini had also been included in the earlier exchange of emails in March 2007 between " patriciawade " and " david@bademedicalinstitute ". That was the exchange of emails in respect to proposals to establish the business of the Bade Medical Institute overseas. Does that mean that Mel ( Harleys Medical ) is out of the picture? He, for example, was involved in the promotion of those activities in Australia and attempts to promote the business overseas. Dr Beaini also had an involvement in drafting at least some of the content of information contained on the home page of the First Respondent, the Bade Medical Institute. Our medical institute specialises in delivering the latest medical and cosmetic treatments for conditions that have previously either been difficult to treat or have or have not been treated optimally. The popularity of these treatments has been unsurprisingly exceptional. Conditions such as erectile dysfunction, premature ejaculation and orgasmic dysfunction are now successfully treatable in most cases. Similarly these treatments assist with improving personal relationships by heightening sexual arousal and performance. He later commenced advanced training in various cosmetic procedures including Botox, Restylane, Isologen, Laser and Aesthetic Pulsed Light treatments, in Australia and Europe. Throughout this period, Dr Beaini continued to serve as the principal doctor and director of two medical centres --- Thornleigh Medclinic and Merrylands Medclinic, Sydney --- where he practiced [sic] procedural medicine for 12 years. All parties have the unified interest to further research, develop and provide advanced treatments for health and beauty. It now operates on an international level. Once our clients are eligible to consume our products, we can have them delivered to your door anywhere around the world. Our clients are treated as individuals and we do not need to enter into any contractual arrangements when products are ordered. With this advanced technology, our clients can have personalized consultations within the privacy of their own home with one of our medical consultants. On any view of it, this extract certainly attempted to portray the Bade Medical Institute in the most favourable manner. Although Dr Beaini was presented as the " principal doctor ", he accepted during cross-examination that " [i]t was essentially myself because it wasn't busy enough to have any other doctors associated ". The " international marketing team " was " David Wade and the Internet ". The extract also portrays a commercial assessment as to the need to distinguish the business being promoted from " our competitors ...". There can be no doubt that, by mid-October 2006, Dr Beaini was also well aware of at least some of the concerns being advanced by the Applicants as to the manner in which the products of the First Respondent were being promoted. On 18 October 2006 there was thus an exchange of emails between the lawyers then representing the Applicants and Dr Beaini directly. A partner forwarded a copy of the Applicants' " logo " and unequivocally stated that " [o]ur clients' [sic] consider that the logo used by Bade Medical Institute on its various websites is deceptively similar to the logo on the attached documents ". And, there is no doubt that his involvement changed over time. Dr Beaini maintained that, from about March or April 2007, he no longer wanted " to deal with Bade " and from " basically around that time I was tapering off ". He continued writing prescriptions until September 2007. Certainly by late November 2007 the relationship between Dr Beaini (on the one hand) and the Fourth and Fifth Respondents (on the other) had deteriorated. On 21 November 2007, for instance, he wrote to the National Australia Bank. The subject-matter addressed in the letter was the " Bade Medical Institute " and an account held with the bank, identifying both the BSB number and the account number. Dr Beaini wrote that his " partners ", identified in cross-examination as Mr and Ms Wade, were still selling products without his involvement and this made " their action illegal ". The bank was asked to " [p]lease freeze this account as a matter of urgency ". In addition to the manner in which Dr Beaini referred to the Fourth and Fifth Respondents as his " partners ", the letter also exposed that Dr Beaini had a sufficiently detailed knowledge of the business activities of the Bade Medical Institute to know the specific details of the bank account. Notwithstanding the terms in which the letter was expressed, it is also curious to note that when asked as to the response of the bank to the letter Dr Beaini stated that he " presume[d] they froze the account. I didn't really follow it up, to be honest ". Had his intent been to sever all ties, a more immediate interest in the state of the bank account might have been expected. Notwithstanding his repeated assertions that his involvement in the business activities of the Bade Medical Institute and the promotion of the business by the Fourth Respondent was primarily confined to carrying out consultations, writing prescriptions and participating in the medical content of the advertising material contained on the internet, it is not considered that his involvement was so confined. It is not considered that Dr Beaini was as forthcoming in his dealings with the Bade Medical Institute and the Fourth and Fifth Respondents as was desirable. His repeated attempts to explain what he thought was important, as opposed to answering the questions being put to him, may be understandable. As a medical practitioner, it is suspected that he may have felt as uncomfortable in the witness box as his cross-examiner would have felt on an operating table. It may also be readily understandable that Dr Beaini saw his involvement in the business activities of the Bade Medical Institute primarily through the eyes of a medical practitioner. But such an understanding does not deny him knowledge of the more general business activities of his " partners ". An apparent failure on his part to produce such documents and records as may have supported his case only serves to reinforce a lack of confidence in accepting his account unquestioningly. It is considered that his involvement was greater than he was prepared to disclose. Assessing the evidence in its entirety, it is considered that Dr Beaini may well have focussed his primary attention on the medical aspects of the business activities of the Bade Medical Institute. But he also had knowledge of and was involved in the promotion of the business activities of the Bade Medical Institute and its advertising. The Fourth Respondent may well have been the driving force, but the involvement of Dr Beaini cannot be as quarantined as he would wish. It is also concluded that Dr Beaini was aware of the manner in which the Fourth Respondent and the First Respondent, the Bade Medical Institute, sought to develop its business. He was aware of the advertising that was being carried out and was in fact the author of parts of that material. He may have been more intimately involved in some advertisements than others. But he knew the business was being advertised and it is concluded that he knew of the general content of the advertisements. He was commercially interested in securing the success of the business and endorsed the manner in which that business was being promoted. Without his services in the writing of prescriptions --- or some other medical practitioner with a like interest --- the business of the First Respondent may well not have continued. That conduct on the part of Dr Beaini, it is concluded, brings him within the ambit of ss 52 and 53 (d) and s 75B of the Trade Practices Act . That conduct fixes Dr Beaini with knowledge of the manner in which the Bade Medical Institute was seeking to promote its business by way of advertising on both the internet and, albeit to a limited extent, on radio and television. It is concluded that he had knowledge of the entirety of the advertisements --- even though his primary focus of attention was upon the medical content of those advertisements. Dr Beaini was " a person involved in " the contraventions and was a person who " aided, abetted, counselled or procured the contravention " for the purposes of s 75B(1)(a). It is also considered that he was " knowingly concerned " in the contraventions within the meaning of s 75B(1)(c). Insofar as liability is sought to be ascribed to Dr Beaini for the passing off by the First Respondent of its products as those of the Applicants, it is further considered that Dr Beaini assumes liability by reason of his position as a director. Although not as involved as Mr Wade, it is concluded that he was sufficiently involved such that it can be said that he " directed or procured " conduct on the part of the First Respondent. And it is further concluded that he deliberately or knowingly pursued a course of conduct that would occasion the First Respondent passing off its products as those of the Applicants. Like Mr Wade, but unlike Ms Wade, it is considered that irrespective of his position as a director he also acted " together in furtherance of a common design to commit " the tort of passing off. She was also the sole director of the Second Respondent, World Wide Internet Services (Aust. ) Pty Limited, at all relevant times. An assessment of the evidence of the Fifth Respondent also presented its own peculiar difficulties. These difficulties included: the fact that she was not present on 12 June 2009, when Mr Joshua Gambell gave evidence going to costs, or 19 June 2009 when Dr Beaini gave his evidence-in-chief and was exposed to cross-examination; the fact that medical certificates have been provided to the Court attesting to her various physical and psychological difficulties; the fact that when she did give evidence she stated that she was then on medication; and the personal circumstances as between herself and her long-estranged husband, the Fourth Respondent, which were certainly not to be envied. Unnecessary repetition of evidence personal to a witness should be avoided. I wasn't aware of anything. I've just got to tell you my husband --- well, my ex-husband, him and his girlfriend --- my problem at the time I was chasing a 22 year old girl who stole my husband and my business and my money. And that's what --- that's what I --- that's what worried me at the time. He didn't talk to me about any businesses, he didn't want to know me. All he wanted to know was his girlfriend, his money and his business. And I was just told to sign this, do that and I'll give you some money. There were three separate accounts provided as to her involvement, namely the accounts given by: Ms Wade herself; Mr Wade; and Dr Beaini. He also gave evidence on Ms Wade's non-attendance at Court on dates listed for hearing, his evidence going to the Applicants' application for costs. When giving such evidence, he too gave an account of the activities of the Fifth Respondent, Ms Wade. The Applicants sought to rely upon his evidence, not only for the purposes of an application in respect to costs, but also in support of establishing her liability. Although Ms Wade was unrepresented throughout the hearing, an Affidavit had been filed on her behalf at the outset of the proceeding at a time when she was represented by the then solicitors on the record. At the hearing, she was indifferent --- or at least uncertain --- as to whether she wished to rely upon this Affidavit . The Affidavit was, however, taken as having been read, the solicitor having been taken to have filed such an account as he at least considered was in her interest. In addition, there was her oral evidence during her cross-examination by Counsel on behalf of the Applicants. The case Ms Wade sought to advance in that evidence was that she had no knowledge of anything to do with the business of the Bade Medical Institute. If there were documents which bore her signature, she maintained that she had signed because she had been told to sign by Mr Wade. And evidence as to conversations with a person identified as " Georgina " involved conversations, on her account, with someone other than herself. It is accepted that there may well have been a practice whereby Mr Wade simply asked Ms Wade to sign documents and whereby she simply signed. Her account was that Mr Wade would tell her: " Just do it as I say and I'll look after you ". But the picture she sought to present of herself as someone with little (if any) knowledge of the business activities of Mr Wade and the Bade Medical Institute is open to considerably more doubt. The cross-examination commenced with Ms Wade visibly upset, but it thereafter proceeded in a more measured fashion. Notwithstanding her repeated protestations of lack of knowledge, it is considered she had far greater understanding than she was prepared to concede --- at least in respect to the manner in which the Fourth Respondent, Mr Wade, sought to structure his business activities. There's never been a company Rowe's Investments, it was just, I think, a $2 shelf company he was opening up. Is that correct?---That's right. The account of Ms Wade's involvement in the business as provided by Dr Beaini, it is considered, was less than fulsome. At one point he tried to present her as having a very limited involvement. ---Georgina Wade was probably there on two occasions that I went to see David, and she was basically just making a coffee and bringing in the lunch or whatever. She didn't have major involvement with too many discussions. Is that the answer you truthfully give?---I didn't say that's her only role, but I'm just saying when I was there she didn't have any major involvement. And, notwithstanding his expression of opinion as to the involvement of Ms Wade in the business in which he had some involvement, he did not express any like reservation as to her involvement in another activity being jointly pursued by Mr and Ms Wade. I don't --- I've never, basically my business was to deal with the Internet marketing, and that's what they were marketing as well, that was one of their businesses. On balance, it is considered that only limited weight can be given to the evidence of Dr Beaini as to his assessment of the involvement of Ms Wade in the business of the Bade Medical Institute or the assistance she gave the Fourth Respondent. Irrespective of the weight to be given to the evidence of Dr Beaini as to the involvement of Ms Wade, further reason for reservation in accepting the account sought to be advanced by Ms Wade is that that account is nevertheless in some respects inconsistent with the account being advanced by Dr Beaini. Although perhaps too much weight should not be given to such inconsistencies, they remain troubling. Dr Beaini, for example, gave his account of the " escort agency " being run by Mr and Ms Wade. But her account was different. She denied conducting an " on-line escort agency ". Mr Wade gave evidence that he " used her as a bunny ". Although there were, for example, letters dated 10 and 31 July 2007 from the Health Care Complaints Commission addressed to Ms Wade as the " CEO " of the Bade Medical Institute, Ms Wade denied any knowledge of the letters and Mr Wade denied that Ms Wade was known as the chief executive of the Bade Medical Institute. Each of these three sources of evidence as to Ms Wade's involvement in the business activities of Mr Wade and the Bade Medical Institute is thus subject to criticism. In such circumstances, it is again considered that a more certain understanding of her involvement is to be gleaned from the available documents --- subject, of course, to constantly bearing in mind her evidence that she simply signed documents because she was asked to do so and her evidence that a reference in documents to " Georgina " is not necessarily a reference to her. And those available documents expose a more intimate involvement on the part of Ms Wade with the business activities of the First and Fourth Respondents than the account given by either herself, Mr Wade or Dr Beaini. This more intimate involvement is, for example, supported by an email to Dr Beaini from a radio station employee dated 30 September 2006. My address is [...]. Notwithstanding the evidence of Mr Wade as to the role of Ms Wade as the chief executive officer of Bade, it is nevertheless considered that a more intimate involvement is indeed further supported by the letters from the Health Insurance Commission in July 2007. Those were the letters addressed to Ms Wade as the " CEO " of the Bade Medical Institute. Assessing the evidence in its entirety, the account provided by Ms Wade of her limited involvement in the business activities of Mr Wade and the Bade Medical Institute is rejected. It is concluded that she had a far greater involvement than she was prepared to acknowledge and that the true extent of her involvement is more accurately set forth in the documents than in any contrary account provided by her, Mr Wade or Dr Beaini. Assessing the evidence again in its entirety, it is considered that Ms Wade had knowledge of the manner in which the Bade Medical Institute was conducting and promoting its business. It is concluded that she knew that the business was being promoted by means of telephone entries and business names, advertising on the internet and, to a far lesser extent, radio and television. But her involvement was far less than that of Mr Wade and less than that of Dr Beaini. Her involvement in the business activities of the First and Second Respondents, it is considered, brings her within the ambit of ss 52 and 53 (d) and s 75B of the Trade Practices Act . It is considered that she was " a person involved in " the contraventions and a person " knowingly concerned in " the contraventions for the purposes of s 75B(1)(c). But her involvement, it is considered, falls short of being a person who " aided, abetted, counselled or procured the contravention ". Nor is it considered that she had such an involvement in the business of the First or Second Respondent that liability for passing off should be assigned to her simply by reason of her position as a director and such involvement as she did have in respect to the business of the First Respondent. It is not considered that she acted " in furtherance of a common design to commit " the tort of passing off. One contention sought to be advanced which would potentially avoid such liability should be separately addressed. This was a contention that any misapprehension which may have arisen in the minds of potential customers, in particular by the use of domain names, was of no consequence because any misapprehension was corrected prior to sale. Dr Beaini in his Affidavit thus stated that he recalled " insisting that a disclaimer appear on any advertising of Bade products explicitly stating that Bade is not AMI or associated with advanced medical institute [sic] ". Conduct may remain misleading or deceptive even though there may only be transient confusion. A subsequent correction may seek to address any confusion which may have been initially experienced --- but, by then, a consumer may have been entangled in the " marketing web " of those who engage in such conduct. A correction may, however, be relevant to the relief to be granted. So to propose would be to limit s 52 of the TP Act in a way not justified by its terms. In my view, to induce the introduction of such a dealing is conduct which contravenes s 52, even if, ultimately, the consumer becomes aware that the equipment he is purchasing is not that of the Hattori Seiko group, the deception having occurred at an earlier stage: what is relevantly induced is the dealing or the negotiations, as distinct from the subsequent purchase itself. As Taco's case held, there is no reason why s 52 cannot apply to the earlier inducement, even if, as Puxu's case held, the conduct in respect of the purchase itself does not offend s 52 because, by then, the consumer knows or ought to have known that he is purchasing a product other than that of the Hattori Seiko group. For the purposes of passing off, it may be that deception must continue to the " point of sale ". Whether or not there is such a requirement in respect to the tort, s 52 does not impose any such constraint: Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136 ; (1982) 42 ALR 177. As a matter of principle and of logic, it is difficult to see why it should be. For the purposes of the present appeal, it suffices to say that, even if such a limitation should be recognized in the law of passing-off, we see no ground for importing it into the provisions of s 52 of the Act. In our view, it is sufficient to enliven s 52 that the conduct, in the circumstances, answers the statutory description, that is to say, that it is misleading or deceptive or is likely to mislead or deceive. It is unnecessary to go further and establish that any actual or potential consumer has taken or is likely to take any positive step in consequence of the misleading or deception. That is not to say that evidence of actual misleading or deception at the point of sale and of steps taken in consequence thereof is not likely to be both relevant and important on the question whether the relevant conduct in fact answers the statutory description and as to the relief, if any, which should be granted. Even if, in limited instances, the " true position " may have emerged such that in a limited number of cases consumers may have realised that the Bade Medical Institute was " not associated with AMI Advanced Medical Institute ", its conduct remained misleading and deceptive and such as to occasion loss or damage to the Applicants. Although the evidence of Dr Beaini was that he was " insisting " upon a disclaimer being used, there is in any event considerable uncertainty as to when any disclaimer first appeared and how uniformly it was being used. Such further evidence as Dr Beaini did give in cross-examination only reinforced the conclusion that consumers were being misled. Never participated in the formulation of any business plan whatsoever?---No. You sure about that answer?---What do [sic] mean? Can you clarify what you mean by business plan? HIS HONOUR: Will you wait until the question is put first? MR AZZI: Well, it says prepared, participated or consulted. MR GREEN: Well, any of those possibilities, Dr Beaini, in relation to the development and marketing of the Bade Medical Institute?---My involvement was basically getting the medical information out. There was an occasional issue where they would ask me my opinion. For example, they were getting some calls, people asking them if they were AMI and I said we should have it on our website that we're not. Because a lot of people wanted refunds and they were dissatisfied with AMI products. That was a joint agreement to have, "We are not AMI" on our website, so we wouldn't have to deal with that. My - and basically my role was to work with other products and expanding our product range, because we wanted to do something called Bade Online Pharmacy, which was going to sell different vitamins and insomnia products and lasers and Botox treatments and things like that. So they were the sort of business dealings that we had. The Applicants have suffered " loss or damage by conduct " that has contravened those provisions. In relation to passing off, the Applicants seek either damages or an account of profits. While it is a matter for an applicant to elect between these remedies, in the present proceeding it matters not which remedy is sought as the quantum to which the Applicants are entitled is the same. It is concluded that the total remedy to which the Applicants are entitled, in respect to both the action under the Trade Practices Act and passing off, is $220,000. The calculation of this amount, however, proved to be a task not without its difficulties. Not the least of the difficulties confronted was the paucity and incompleteness of the records produced by the Respondents. The manifest deficiency in the records made available by the Respondents meant that any assessment must necessarily involve a considerable margin for error. The deficiency in the records was of particular importance when attempting to quantify the profits said to be derived by the Respondents by reason of their conduct. Notwithstanding these difficulties, the Chief Financial Officer of the Applicants, Mr Shrestha, undertook an analysis of such materials as were available. His conclusions were variously expressed, namely that: AMI's lost net income was $188,468.07; the total net income that AMI would have received if the patients that purchased products from the Bade Medical Institute had purchased those products from the Applicants was $202,727.99; and total income (not including fees and charges) lost to the Applicants was $284,081.86. One reason justifiably relied upon by the Applicants in so characterising the calculations was the fact that no financial records were available for the period after November 2007. A further amount addressed in the Applicants' Outline of Submissions quantified an account of profits as $237,680.93. $284,081.86) may be disregarded. The attacks made upon the Applicants' calculations by Counsel for the Third Respondent were various. One line of attack was to suggest that the calculations based upon the Applicants' figures made no allowance for the fact that some of the sales taken into account were not sales at all but products supplied by way of trial. Other lines of cross-examination pursued were to suggest that, in calculating lost net income or loss or damage, further errors included: It was further suggested on behalf of the Third Respondent that the calculation was unreliable because: whatever be the number of patients, the number represented the entirety of all patients seen by Dr Beaini, including patients prescribed medications such as " topical creams ". As these products were distinct from the nasal sprays for sexual dysfunction supplied by the Applicants, it was contended that they should be discounted; the rate of profit calculated at 11.74% was asserted to be unduly high; and the assumption in the calculation was that every patient that went to the Bade Medical Institute would have gone to the Applicants, whereas that was not necessarily to be assumed given that there were other competitors to the Applicants who offered their products at different prices to the Applicants' products. Confronted with the difficulties presented, it is concluded that it matters not whether the Applicants claim loss or damage or elect to seek an account of profits. The best quantification that can be as to either is the same. The provision, introduced by way of amendment in 1984, " is a facultative provision intended to confer power on the Court to do justice between parties in relation to pre-judgment interest; a matter of some importance in these days of high interest rates and extensive delays in finalising litigation ": State Bank of NSW Ltd v Commissioner of Taxation [1995] FCA 1652 ; (1995) 62 FCR 371 at 385 per Wilcox J. The primary purpose of an award of pre-judgment interest is to compensate a successful applicant for the loss or detriment which has been suffered by reason of being kept out of money: Whitaker v Commissioner of Taxation (1998) 82 FCR 261 at 269 per Lockhart J. For example, for the purposes of s 51A(1) the formula "good cause to the contrary" would appear on its proper construction to mean only good cause for not allowing interest at all ... The subsection itself otherwise provides discretions as to the rate and the period of an interest award. In contrast, the same formula as used in s 58 of the Supreme Court Act 1986 (Vic) has been interpreted to mean good cause for allowing interest otherwise than in accordance with the terms of that section ... But s 58 , notably, does not provide the same discretions as does s 51A(1). Nonetheless, insofar as concerns a successful applicant who has been guilty of unreasonable delay, the view I am prepared to follow in the absence of binding authority is that the period for which the interest award is made can properly be adjusted if to allow interest for the whole period for which it could otherwise be ordered would work an injustice to the respondent in the circumstances ... Of particular relevance to the present proceeding is the significance to be given to the delay that has been experienced. As noted by Finn J in HK Frost Holdings [1999] FCA 795 , delay may be relevant to both the rate at which interest is awarded and the period of time during which interest is to be paid. See also: ICT Pty Ltd v Sea Containers Ltd [2006] NSWSC 1280 at [15] . The Application was filed in December 2007 but the hearing as to evidence did not take place until June 2009. Final submissions were heard in September 2009. Such delay as has been occasioned may be variously attributed to either the Fourth or Fifth Respondent --- but not the Third Respondent, Dr Beaini. Considerable reservation has been previously expressed as to the medical evidence sought to be relied upon by the Fourth Respondent when seeking a vacation of the December 2008 hearing dates: AMI Australia Holdings [2008] FCA 1783 at [8] to [11]. And considerable reservation is expressed as to whether or not the Fifth Respondent was in fact " unfit for Court " in April 2009, as claimed. For whatever reason, there has been a substantial period of delay between December 2007, when the Applicants were ready to proceed, and June 2009. There was also a further, more limited delay between the conclusion of the hearing in June 2009 and the hearing of final submissions in August 2009. To a large extent that latter delay was occasioned by a desire to ensure that the case for the Applicants was outlined in a sufficiently detailed manner that the unrepresented Respondents would have an adequate opportunity to comprehend how the Applicants sought to marshal the law and the facts against them. The purpose of an award of interest, however, is compensatory and not punitive: Ardelle v Spastic Society of Victoria Ltd [2001] FCA 220 at [13] . Whatever be the reason for the delay in the resolution of the present proceeding, it is not a delay that can be attributed to the Applicants. Nor can it be said that the Applicants delayed in promptly commencing the present proceeding. Interest, it is considered, should be awarded to compensate the Applicants for being kept out of their money. The only question is as against which Respondent and for what period of time. Any assessment is necessarily imprecise and certainly involves no mathematical certainty. It is considered that both the Fourth and Fifth Respondents should pay interest pursuant to s 51A as from 30 August 2008. But for the delays occasioned by either the Fourth or Fifth Respondent the proceeding would in all likelihood have been heard and resolved by that date. Neither the Fourth nor Fifth Respondents has shown any " good cause " not to make such order. The usual practice of this Court, which should be followed in the present proceeding, is to award interest at the rate applied in the Supreme Court of the State or Territory in which this Court is dealing with the matter: Namol Pty Ltd v A W Baulderstone Pty Ltd (No 2) [1993] FCA 606 ; (1993) 47 FCR 388 at 389 per Davies J. That is the usual practice unless it is shown that those rates are penal or not commercial ( GEC Marconi Systems Pty Ltd (t/as Easams Australia) v BHP Information Technology Pty Ltd [2003] FCA 688 at [7] , [2003] FCA 688 ; 201 ALR 55 at 58 per Finn J) and there is no such suggestion in the present proceeding. The Third Respondent, Dr Beaini, however, has not occasioned any delay. In such circumstances it is not considered appropriate that he be ordered to pay interest pursuant to s 51A for any period of time. An unexplained failure by a party to call a witness may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted the case of the party who might have been expected to call the witness: Ghazal v Government Insurance Office of New South Wales (1992) 29 NSWLR 336 at 343 per Kirby P. A court must see that a person who has not given evidence not only could shed light on a matter, but also would ordinarily be expected to do so: RPS v The Queen [2000] HCA 3 at [25] , [2000] HCA 3 ; 199 CLR 620 at 632 per Gaudron ACJ, Gummow, Kirby and Hayne JJ. The Applicants maintain that a number of witnesses were available to be called on behalf of the Respondents, but were not called. These witnesses include the two daughters of the Fourth and Fifth Respondents and the accountant of the First and Second Respondents. For his part, the Third Respondent maintains that the founder of the Applicants, Dr Jacov Vaisman, should have been called. But reliance upon Jones v Dunkel , it is considered, is of limited assistance to either the Applicants or the Third Respondent. The Applicants are correct in their submission that one or both of the two daughters could have been called to give evidence as to their involvement in the business of the Bade Medical Institute and that the accountant for that business could also have been called. Indeed, the accountant may have been able to assist in the calculation of (for example) the profits earned by that business. But it is considered that little significance is to be attached to the failure to call such witnesses. All Respondents were represented at the outset of the proceeding --- but only the Third Respondent was represented at the hearing itself. The Fourth and Fifth Respondents were unrepresented and both experienced their own medical disabilities, especially the Fourth Respondent. The Fourth and Fifth Respondents conducted their cases with as much care and skill as they were able to muster. It is not considered an appropriate course to pursue --- in the present case --- to proceed to draw inferences based solely upon the fact that one or other possible witness was not called. Some limited significance has been attributed to the failure to call one or other of the daughters. But the preferable course, and the course in fact pursued, has been to assess what each witness said by reference to the available documentary evidence. A failure to call the " compounding pharmacist " attracts potentially different considerations. It may have been expected that the Third Respondent, being a party who was represented by both Counsel and instructing solicitors for a large part of the hearing, may have called this witness. He, again, may have been a witness who could have provided assistance as to the calculation of profits of the Bade Medical Institute. The failure of the Applicants to call Dr Vaisman also attracts different considerations. The Applicants were at all material times represented by both solicitors and Counsel. The Applicants accepted that Dr Vaisman was their founder and a person available to give evidence. Notwithstanding his availability, the course pursued by the Applicants was to rely upon the evidence of Mr Richard Doyle, the principal of a company that provides legal and other services to the Applicants. Some of Mr Doyle's evidence was given " on information and belief ". The evidence given in that manner was within a narrow compass and was admitted as the detail of the evidence was not considered to be truly in dispute. The prospect of the Third Respondent himself calling Dr Vaisman was raised during the course of a Directions hearing shortly prior to the commencement of the June 2009 hearing. The Applicants undertook to make Dr Vaisman available to give evidence upon the Third Respondent providing an outline of the facts sought to be established. Such an outline was sought so that agreement could be reached, if possible, as to those facts which were not in dispute. Even short of such an undertaking, a course available to the Third Respondent was to issue a subpoena seeking his attendance. It remained a matter for the Third Respondent to decide whether he wished to: rely upon Jones v Dunkel and seek to gain such assistance as was possible from whatever inferences may have been available; attempt to secure agreement with the Applicants as to uncontentious facts; or simply seek leave to serve a subpoena for the attendance of Dr Vaisman. But no outline of the facts sought to be established was provided. The Applicants were released from the undertaking and (as events transpired) no subpoena was sought by the Third Respondent to secure Dr Vaisman's attendance. Submissions were nevertheless invited at the outset of the hearing as to the " inferences favourable " to the Respondents which it was said were available and which should be drawn by reason of the failure to call Dr Vaisman. There may perhaps be no need for a party to foreshadow at the outset of a hearing what particular inferences the Court may ultimately be invited to draw at the conclusion of the hearing. There is no necessity for a party to in effect provide at the outset an " advice on evidence " to his opponent. There may be no necessity for a party to even foreshadow that a submission will be made founded upon Jones v Dunkel . In the case where both the Applicants and the Third Respondent were represented by Counsel, the manner in which each sought to run its own case may safely be left in their hands. But the skirmish over whether Dr Vaisman was to be called or by which party ultimately assumed little relevance. Although it remained unclear what inferences the Third Respondent wanted the Court to draw by reason of the Applicants' failure to call this witness, at the end of the day it is not considered that the state of the evidence was affected by the fact that he did not give any evidence. In short, the course pursued was to resolve the case by reference to the evidence in fact available. Questions of onus and standard of proof were applied to the available evidence. That available evidence, it has ultimately been concluded, provided a satisfactory basis upon which the conclusions and findings already expressed could be reached. Submissions advanced by the Applicants as to why these documents might not be available ranged from deliberate destruction of documents to a deliberate decision not to produce them. Those were submissions only to be made after a careful and professional assessment of the facts. The submissions alleged serious wrongdoing and interference with the processes of this Court. (It is difficult to find a use of spoliator as "wrongdoer" in any except the most recent authorities, many of which cite Mozley . A more precise translation of the Latin word might be "robber, pillager, plunderer or spoiler" which accords with the maxim's usage in the older authorities. He is in the position that he is without the corroboration which might have been expected in his case. The written submissions filed on behalf of the Third Respondent deny that the non-production of documents was as great or as flagrant as contended by the Applicants. The non-production of documents assumes perhaps most relevance when attention is focussed upon the manner in which the Applicants sought to quantify their loss or damage or lost profits. That evidence was self-evidently less than what may have been desirable. But the evidence was sufficient to make out the case and to support the findings sought by the Applicants. It was thus unnecessary to resolve any submission as to documents which may have been available but not produced. He had previously been in attendance in Court and provided personal assistance to the Fourth Respondent in particular. On that day an application was made by the Fifth Respondent for an adjournment. Indeed, on that day she did not even appear. A telephone call was made to a medical practitioner who had signed a medical certificate for the Fifth Respondent. The evidence of the medical practitioner was of considerable use in assessing the ability of Ms Wade to give evidence on a subsequent occasion and in identifying those steps which should be taken to ensure that any cross-examination exposed her to no unfairness. For present purposes, however, on that occasion Counsel on behalf of the Applicants called Mr Gambell " to give evidence in relation to the subject matter of the application for an adjournment ". Since the question of the adjournment had by that stage been resolved, the relevance of any further questioning seemed elusive. Counsel maintained, however, that the evidence of Mr Gambell would be of relevance to a later submission as to costs. Counsel agreed that he was " calling Mr Gambell as a witness in [his] case on the question of costs ". Mr Gambell was called to give such evidence --- but it was stated at the outset that " the evidence will be confined to that issue unless further application is made ". An application was later made to have his evidence received as evidence on the substantive matters to be resolved. Mr Gambell gave evidence that he was known by a number of names, being Joshua Gambell and Joshua Luders. Can you identify them, please?---I can't recall the names of them. Mr Gambell, can you please tell his Honour the nature of the business and remember you're on oath?---I clearly remember I'm on oath. Advertising. When her husband ran them --- ran the businesses it generated income for her and has not been able to do it. There is absolutely nothing more I can say. Is that correct?---Yes, it is. This evidence of Mr Gambell certainly presents Ms Wade as being a person who had at least some business acumen in advertising. The evidence also lends support to a conclusion that there would have been little difficulty in the daughters being available to give evidence. The time during which she was involved in the " businesses " to which reference was made remained, however, unspecified. But it is not considered that the evidence of Mr Gambell should be used for any purpose other than that for which it was originally called --- i.e. costs. That was the purpose initially identified by Counsel on behalf of the Applicants and it was difficult to see how the evidence being adduced (or at least some of it) went to that issue. A series of objections had been taken on that very basis by Counsel on behalf of the Third Respondent. On the occasion when the evidence was given, neither Mr Wade nor Ms Wade was present in Court and there was thus no opportunity for any further questions to be put to Mr Gambell that may have thrown a different light on what he had said. Although the relevance and forensic advantage in admitting the evidence on a basis not confined to costs is readily apparent, it is considered on balance that it would be fundamentally unfair to the Fourth and Fifth Respondents to allow Counsel for the Applicants to use the evidence for any purpose other than that for which it was initially adduced. Although considerable reservation is expressed as to the utility of the medical certificates provided on his behalf in support of various applications for adjournment, there is no doubt that he was in a poor physical condition. His physical condition noticeably deteriorated from his first appearance before the Court in September 2008 to that point of time when he attended in Court in June 2009. Even after that date, his condition had very noticeably deteriorated even further by the time he attended in August and September 2009. The attempt to accommodate his physical condition by the granting of short adjournments during the course of days set aside for hearing or submissions was one thing. None of the legal representatives obviously opposed the extension of such basic courtesies to him. There remained however the difficulty of attempting to make some assessment as to the extent to which his physical condition precluded or inhibited his ability to adduce evidence, to cross-examine witnesses and to advance submissions. Any failure on his part to adduce available evidence by reason of his medical condition cannot be supplemented by speculation as to evidence that he may or may not have given. But it is considered appropriate to attempt to construe such evidence as he has adduced in a manner which is not critical of potential deficiencies and which attempts to give full effect to that which he has said in his evidence. The difficulties are most clearly exposed by a potential inability to adduce evidence; submissions can only be advanced in respect to the available evidence. But a further manner in which it is considered appropriate to address the medical condition of the Fourth Respondent is to not draw any sharp and indivisible line between the evidence he has given and the submissions he has made. In the absence of real prejudice to the Applicants, it is not considered appropriate in the present case to conclude that such facts as may be discernible from the submissions --- but which are not otherwise contained in his evidence --- should be disregarded. It should further be recognised at the outset that the difficulties confronting the Fourth Respondent not only had the potential to impact upon his own case --- they had the potential to impact upon so much of his evidence as may have assisted the case advanced by the Third and Fifth Respondents. The position of the Fifth Respondent raised similar considerations, but to a lesser extent. Her physical condition was far less serious than that of her estranged husband. She, however, did not advance any oral submissions after the conclusion of evidence. A one page letter continued to deny liability. The same approach has nevertheless been taken to the assessment of her evidence as was taken in respect to that of the Fourth Respondent. Accordingly, such has been the approach taken in respect to both the evidence and submissions of the Fourth and Fifth Respondents. It is not considered that the physical or mental condition of these Respondents, or the medication they said they were taking, has prejudiced the ability to make such findings of fact as have been made. Indeed, such findings are largely based upon those facts which were not contentious and upon a reading of the available documents. The Applicants seek exemption from the requirement to pay four days' hearing fee (for dates set down in June), and to pay a sum equivalent to two days' hearing fee instead. Exemptions from hearing fees are governed by reg 11 of the Regulations . None of the grounds for exemption contained in reg 11 is available to the Applicants. The Applicants seek exemption on the basis that Court sittings were abridged on each of these four days to accommodate the Fourth and Fifth Respondents' medical conditions. Notwithstanding the fact that the Court did not sit a full day through no fault of the Applicants, it is not considered that there should be an exemption. Such fees as are paid will be recoverable as costs against the Respondents. Although the present proceeding may have had more than its fair share of adjournments, such is the fate of all litigation. He is also liable by reason of his position as a director of the First Respondent and the role he played in the business of the First and Second Respondents for their passing off their goods and services as those of the Applicants. The Fourth Respondent should also be required to pay interest pursuant to s 51A of the Federal Court Act as from 30 August 2008. The Third Respondent, Dr Beaini, is also liable for the contraventions by the First and Second Respondents of ss 52 and 53 (d) of the Trade Practices Act . He also is liable for passing off. Like the Fourth Respondent, Dr Beaini assumes liability by reason of the role he played in the affairs of the First and Second Respondents. But it is not considered that he should be required to pay interest pursuant to s 51A for any period of time. The Fifth Respondent, too, is liable for the contraventions by the First and Second Respondents of ss 52 and 53 (d) of the Trade Practices Act . She too is liable to pay interest pursuant to s 51A as from 30 August 2008. But she assumes no liability in respect to passing off. There is no reason why costs should not follow the event. The costs to be paid by the Third Respondent should, however, be confined to the costs associated with the hearing of the Application as took place on 1, 2, 3, 5, 12, 19 and 25 June and 2 September 2009. The Third Respondent was not the reason why earlier hearing dates were vacated. The parties are to provide the Associate to Justice Flick with draft short minutes of order giving effect to these reasons for judgment on or before 17 December 2009 at 4.00 pm. I certify that the preceding two hundred and sixty-two (262) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | misleading or deceptive conduct representation as to approval or affiliation relevance of intent loss or damage a person who has aided or abetted contravention knowledge differences to the tort of passing off function of a trade mark deceptively similar substantially identical protection of applicant's property elements of the cause of action relevance of intent effect of a disclaimer liability of directors as joint tortfeasors interlocutory orders as an admission of all facts construction of order made withdrawal of an admission trade practices trade marks passing off practice and procedure |
3 The Scheme was an unregistered managed investment scheme conducted by the Hobart legal firm Piggott, Wood & Baker. The Scheme involved the receipt of funds from Investors and the lending out of those funds on security of mortgages over real estate. Sundberg J ordered that the Scheme be wound up pursuant to s 601EE(2) of the Corporations Act 2001 (Cth) with the Liquidator having all the powers that a liquidator of a company would have under s 477 of the Corporations Act , including certain powers specified in the Order. Under par 2(e) of the Order the Liquidator is required no later than 21 days after the date of the Order to send to Investors in the Scheme notice of his appointment, the estimated timetable for winding up, the "proposed two-monthly report to each Investor referred to in subparagraph (g) [sic, presumably (f)] below and a contact address for the Liquidator". The District Registrar confirmed the bills. The Trust paid the Liquidator the amounts of the bills but after deducting the Liquidator's fees and expenses in responding to enquiries from ASIC amounting to $85,639.65. ASIC accepts that the work in question has in fact been done by the Liquidator and charged for at the appropriate rate and the expenses incurred. Either expressly or by necessary implication ASIC's case is that the work is not "services" within the meaning of par 2(b)(xi) of the Order. ASIC does not allege any improper conduct on the part of the Liquidator. Nor is there any criticism of the District Registrar. The letter expressed "concerns for the quantum of fees and the seemingly endless and questionable cost benefit of some of the steps being taken by the liquidator". Copies of some earlier correspondence between the Liquidator's solicitors and the Trust were enclosed. 15 On 2 May the Trust wrote again thanking ASIC for the opportunity to discuss several matters concerning the Scheme, commending the Liquidator for his actions in relation to another matter concerning the Scheme, which is not relevant for present purposes, but noting that there remained "matters of concern" which had been discussed. 16 On 27 May the Trust wrote to ASIC enquiring as to the reasonableness of the legal costs and expenses of investigating possible proceedings against a valuer. 17 On 9 August the Trust sent an email to ASIC noting total costs and expenses paid to the Liquidator and also those concerned with the possible action against the valuer, and enquiring whether ASIC was "intending to do anything about these matters". 18 On 19 October the Trust wrote to ASIC complaining about the payments to the Liquidator in respect of the Scheme liquidation and two other similar liquidations. In particular, ASIC would like to understand the benefits and cost of the work currently being undertaken. A list of all creditors. A summary of all litigation that is current or contemplated. A description of that litigation. An assessment of your prospects in that litigation. A description of any other tasks or matters that remain outstanding in this administration. Whether, and when, you obtained any approval from the Court to commence that litigation. If that litigation has been commenced, copies of all court documents in that litigation. If you do not believe you are able to do this within that time, I would be happy to discuss alternate arrangements. On 10 April ASIC wrote making a number of comments. ASIC noted the particular role of the Trust in the light of its "unusual" obligations under the Legal Profession Act . It should, in ASIC's view, be kept informed as a creditor and "consulted on important decisions". If the Trust does not have an interest in any steps then these steps "must be reasonable and your general duties as a liquidator observed". The letter stressed that these were "general observations only and no inference is intended that you have acted inappropriately". Given the importance of this relationship, ASIC expects you to make all necessary efforts to ensure the Trust is kept fully informed of developments and actively involved in the progress of the liquidation wherever possible. Please confirm that you will return any funds already obtained and not make such a claim in the future. After responding to some of the criticism by the Trust, and complaining of the Trust's own actions and decisions in some respects, the Liquidator provided information about existing litigation. He said that it was not cost-effective to provide monthly reports to creditors but he was "quite content" to provide a monthly report to the Trust and ASIC. He agreed to provide his bills to ASIC, but at the same time as submitting them to the District Registrar. He noted that some of the tasks undertaken by his solicitors and himself would have to have been completed in any event when reviewing the current status of the litigation and determining what steps should be taken. 24 ASIC replied on 2 June confirming that the Liquidator had agreed to send monthly creditor reports to ASIC and the Trust and to "generally keep the Trust informed as to the conduct of the litigation". However, ASIC did not agree that the Trust was "liable to remunerate (the Liquidator) for the time and other charges incurred in responding to ASIC inquiries in relation to (his) conduct in this matter". 25 On 7 August the Liquidator wrote to ASIC noting that he had adopted the practice of requesting the District Registrar not consider the bills until 14 days after they were provided to him. The letter reported on current litigation. It was only out of politeness that the present application had been made rather than suing for a debt. 27 Alternatively, Mr Tree submitted that review by the Court was constrained in the same way as courts are upon a review of a taxation of costs. In such a case it is said that the Court will only interfere on an error of principle or, on a matter of discretion, "where the taxing officer's discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case": Schweppes' Ltd v Archer (1934) 34 SR (NSW) 178 at 183. 28 Neither submission should be accepted. The power of the District Registrar to determine or review (or "confirm, increase or reduce") the Liquidator's remuneration and expenses comes from the Court's powers under s 473(3) and (5) of the Corporations Act . A power of the Court may be delegated to a Registrar by Rules of Court: Federal Court of Australia Act 1974 (Cth) s 35A(1)(h). The powers in question were delegated by r 16.1(1) of the Federal Court (Corporations) Rules 2000 (Cth), see sch 2, Pt 1 , item 54. The exercise of a power so delegated may be reviewed by the Court or a Judge: r 16(2). For constitutional reasons (see Harris v Caladine [1991] HCA 9 ; (1991) 172 CLR 84), the review of a Registrar's decision must be a hearing de novo : Mazukov v University of Tasmania [2004] FCAFC 159 at [21] - [24] (Kiefel, Weinberg and Stone JJ). For that reason, reviews of taxation of costs in this Court are not limited as in the Schweppes' rule: Cachia v Westpac Financial Services Limited [2003] FCA 817 at [18] - [24] (Hely J). Such further requests for information as ASIC made, whether ad hoc or by the agreed provision of more frequent and/or more detailed reports, were but extensions of that obligation. ASIC was the applicant for the Winding Up Order. Although not an Investor or otherwise a creditor of the Scheme, ASIC had standing to apply for the winding up of the Scheme by virtue of s 601EE(1)(a) of the Corporations Act . While the Investors themselves were to receive reports as well, ASIC was the body which had the responsibility of looking after their interests. To discharge its own responsibilities ASIC needed to know how the liquidation, a complex one involving litigation, was progressing. 30 In that setting, the provision of information by the Liquidator to ASIC about the progress of the winding up was part and parcel of the "services" which the Liquidator was authorised and required by the Winding Up Order to perform. The Liquidator would surely have been open to criticism if he had refused to supply any information to ASIC, or any information beyond the bare requirements of the Winding Up Order. 31 ASIC sought information about the progress of the winding up. ASIC was at pains, both in its enquiries and in the present application to the Court, to make it clear that it was not alleging or suspecting wrongdoing by the Liquidator. It may be doubted that ASIC was exercising its power of enquiry under s 536(1) of the Corporations Act . It never stated that it was. It has never claimed that the Liquidator, in terms of s 536(1)(a) , had not "faithfully performed his duties" or had not "observed a requirement of the Court or of the Corporations Act or of the regulations or the rules". It did not make the Liquidator aware that it was acting as a result of communications from the Trust until 21 March 2006. But in any event, there is no question that ASIC had power to act as it did. Rather the point is whether in responding to ASIC's queries the Liquidator was providing the services contemplated by the Winding Up Order. Put another way, was the provision of information to ASIC an incident of the Liquidator acting as such, charged with the responsibility of winding up the Scheme (cf Pantzer v Wenkart [2006] FCAFC 140 ; (2006) 153 FCR 466 at [44] ). In my opinion, both questions must be answered in the affirmative. 32 Mr Abbott, counsel for ASIC, relied on a number of authorities. In Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96 the Full Court of the Supreme Court of Western Australia set aside a Master's approval of a provisional liquidator's remuneration. However, this was on the ground that the provisional liquidator had not provided "adequate evidentiary material" to enable the Court to determine whether the amounts claimed were fair and reasonable: at 102-106. In the present case, as noted above, quantum is not in issue. 33 Re Korda; in the matter of Stockford Ltd [2004] FCA 1682 ; (2004) 140 FCR 424 (Finkelstein J) was concerned with the validity of resolutions fixing administrators' fees. His Honour also discussed the basis on which the quantum of administrators' and liquidators' remuneration should be assessed. Again, such questions do not arise in the present case. 34 Ide v Ide [2004] NSWSC 751 ; (2004) 50 ACSR 324 was concerned with (hopefully) very unusual circumstances, far removed from the present case. A receiver of a partnership attended at the partnership property. In the course of an argument the defendant fired a rifle and killed the daughter of the plaintiff. The receiver's time spent in assisting police with their enquiries was held by Young CJ to be part of his "greater civic duty" and not recoverable as remuneration. 35 Australian Securities and Investment Commission v Atlantic 3 Financial (Aust) Pty Ltd [2004] QSC 133 involved claims for remuneration by investigating accountants appointed by order of the Supreme Court of Queensland to investigate certain managed investment schemes and report to the Court. Mullins J heard detailed objections to the accountants' claims. One claim disallowed (at [26]) was for attending a meeting with ASIC to explain the report. This was on the basis that the obligation of the accountants was to report to the Court and the subsequent conference with ASIC was a matter for ASIC and "cannot be characterised as part of the supervision required to be undertaken by the accountants or as part of the work in preparing the report". Also disallowed (at [35]) were work undertaken on certain loan schemes when the accountants knew the schemes had already been wound up by the date of their appointment. These were purely questions of fact and provide no analogy to the present case where the Liquidator reported to ASIC, pursuant to his obligations under the Winding up Order, express or implied, as to the progress of the winding up. 36 Mirror Group Newspapers plc v Maxwell [1988] 1 BCLC 638 supports the conclusion I have reached. The Court appointed receivers of the estate of the notorious Robert Maxwell. Questions rose over the remuneration of the receivers, including their costs of time spent in responding to a report of a committee of the House of Commons, the Select Committee on Social Security. The committee had been investigating pension funds. When it became apparent, soon after Mr Maxwell's death, that pension funds of companies associated with Mr Maxwell had been "plundered to the extent of hundred of millions of pounds" (at 658) the committee turned to investigate the receivers and other sets of administrators of the affairs of Mr Maxwell and his companies. The receivers devoted substantial amounts of time and incurred substantial expenditure in dealing with the requirements of the committee (at 659). They also spent time dealing with enquiries from the Serious Fraud Office in connection with the prosecution of Mr Maxwell's son. But they would not have arisen but for the fact that the receivers held the office to which the court had appointed them. Moreover the participation of the receivers was not initiated by them, nor was attendance before the select committee and the provision of information to it voluntary in any true sense, because physical, as well as moral, sanctions might have been applied if the receivers had ignored the requests for assistance made by the select committee. My present view is, therefore, that at least the initial response of the receivers to the requirements of the select committee and probably the entirety of their dealings with the Serious Fraud Office were wholly proper, even if also extraordinary, acts done in the course of the receivership. So far as I have residual doubts, these are attributable to the absence of full information about what has been done. In particular I am concerned that a significant part of the time and effort which the receivers have devoted to satisfying the requirements of the select committee may have been attributable to the receivers defending their conduct from criticism rather than merely providing information. If this were the case I would wish to give further consideration to the question whether the cost (whether in the form of remuneration for time spent by the receivers themselves or in disbursements paid to third parties) is properly to be paid out of the estate. Further, given the tenor of ASIC's enquiries, and particularly its letter of 20 December 2005, the essence of the Liquidator's response was the provision of information, not justification or answers to accusations. 38 In Pantzer the Full Court of this Court upheld a claim for remuneration by a trustee in bankruptcy. In his capacity as a former trustee the appellant had been drawn into litigate to assert a claimed amount which the respondent had not challenged by seeking taxation. Nothing in the judgment of the Full Court would appear to be inconsistent with the conclusion I have reached. Mr Tree was correct in submitting that (i) Pantzer provides no support for an additional requirement that to qualify for remuneration a liquidator's work must also "add value" to the liquidation, and (ii) the present case is stronger in that the Liquidator's work was not just "unavoidable, in a practical sense" albeit for his own benefit (at [43]-[44]) --- he was lawfully compelled by the Winding Up Order to perform it. ASIC's application will be dismissed. 40 The parties should file and serve before 10 am on Wednesday 20 December 2006 written submissions as to how the costs of this application should be dealt with. The alternatives seem to be that the costs of all parties be paid out of the proceeds of the winding up, or from the Guarantee Fund, or that ASIC and the Trust pay the Liquidator's costs. | liquidator's costs and expenses of responding to requests for information by asic winding up order providing that costs of liquidator to be confirmed by district registrar winding up |
I will call the applicant in proceeding NSD 1231 of 2005 "Ceramics" and the applicant in proceeding NSD 1232 of 2005 "Fresta". I will call the respondent in each proceeding "the Commissioner". 2 Each proceeding concerns assessments to income tax for the years ended 30 June 2000 and 30 June 2001. In respect of each applicant and each tax year, the Commissioner issued a notice of amended assessment on 31 March 2004, except in the case of Fresta for the year ended 30 June 2000, for which the Commissioner issued a notice of assessment on 31 March 2004. Each applicant objected on 23 July 2004. The Commissioner gave notice of his decisions on the objections on 23 May 2005. 3 The proceedings concern Div 7A of Pt III of the Income Tax Assessment Act 1936 (Cth) (the Act). Div 7A expands the operation of s 44(1) of the Act. Section 44(1) provides that the assessable income of a shareholder in a company includes dividends paid to him by the company. The question that arises in the present case is whether Div 7A has the effect that payments made by Ceramics to Di Lorenzo Tile Investments Pty Limited (Tile) as trustee of a unit trust, the units in which were held as to three by Ceramics and as to the remaining one by Fresta, were to be treated as dividends paid to the respective unitholders (deemed dividends), Ceramics and Fresta respectively. In Australia, he is called "Jack" Di Lorenzo. His wife is Salvatora (Sally) Di Lorenzo. They have four daughters: Maria, Pietrina, Diana and Belinda. Maria is Maria Fresta, the wife of Rafael Fresta. Pietrina is married to Hristos (Chris) Rogaris, and Diana's partner is Davide Isola. Belinda is a university student. 5 Mr Di Lorenzo described his education in Italy as being "up to Australian Year 10 equivalent". It is clear that by dent of hard work and enterprise, he has built up a substantial business of supplying and fixing tiles, of which he is justly proud. 6 Until 1978 Mr Di Lorenzo had been in employment. At that time he suffered a heart attack and decided to commence business on his own account. In 1982 he established a company, Vispoka Pty Ltd (it was incorporated on 21 June 1982), which, in 1996, changed its name to "Di Lorenzo Ceramics Pty Ltd". There was a further change in the company's name in 2005 to "Di Lorenzo Pty Ltd", but it is still appropriate to refer to it as "Ceramics". At all times, Mr and Mrs Di Lorenzo have been the only directors and shareholders of Ceramics. 7 In 1984, Ceramics commenced its present business. Its clientele includes major developers and the public. Mr Di Lorenzo's four daughters have worked in the family business, in Belinda's case on a part-time basis on account of her university studies. Mr and Mrs Fresta have been heavily involved in the business. Mr Di Lorenzo describes Mrs Fresta as "the financial controller" and Mr Fresta as "the general manager". 8 From 1984 to October 2002, Ceramics conducted its business out of premises at Blacktown --- from 1984 to 1992 out of leased premises, and from 1992 out of premises it purchased. 9 The dispute with which the present proceedings are concerned arises out of the next expansion in the Di Lorenzo business. This took the form of the acquisition of a 9,500 square metre block of land at 13-15 Lexington Drive, Norwest Business Park, Baulkham Hills (the Norwest site), and the subsequent construction of a building on it. The purchase was completed on 30 June 2000. The construction of the building was completed in September 2002. In October 2002, the business was relocated to the new building. 10 Mrs Fresta is a qualified chartered accountant and a member of the Institute of Chartered Accountants in Australia. According to her affidavit, she left employment with Ernst & Young in 1993 and joined the family's business as the internal accountant for Ceramics. According to Mr Di Lorenzo's affidavit, from about 1996, when he underwent heart surgery, Mr and Mrs Fresta have worked in the family business. It may be that 1993 is the correct year for Mrs Fresta and 1996 the correct one for her husband. 11 The external accountants and tax agents of the business are LCI Partners Pty Ltd (LCI). The letters "L", "C" and "I" apparently stand for the surnames of Sergio P Laureti, Frank Cavasinni and Gerry Incollingo, who are three of the directors of the incorporated practice. Mr Incollingo is the person at the firm who was most heavily involved in the dealings to be discussed. 12 In 1999, Mr Di Lorenzo considered that there was an opportunity to expand the business of Ceramics into Baulkham Hills, where much residential property development was occurring. He negotiated a price of $1.9 million for the Norwest site. A quantity surveyor advised him that the cost of building suitable premises would be in the order of $3 million, although this proved to be an underestimate. According to these figures, some $4.9 million would be needed. The ANZ Bank (ANZ) agreed to provide finance. There are different versions of the lending arrangements proposed but there are various possible explanations for any discrepancies, which are, in any event, of no consequence. Mrs Fresta states that ANZ agreed to lend $4.4 million. Mr Di Lorenzo says that it agreed to lend $1.7 million towards the purchase and $2 million towards the construction (a total of $3.7 million). Mr Di Lorenzo states that ANZ insisted that he find an equity contribution of some $700,000 immediately, comprising approximately $200,000 for the deposit and expenses on the purchase of the land, and $500,000 towards construction. 13 ANZ also required security. In addition to guarantees and securities provided by Mr and Mrs Di Lorenzo, Mr and Mrs Fresta agreed to provide a guarantee secured by a first mortgage over their home. Mrs Fresta states that she and her husband were the only members of the family who were able to assist in this way at the time because her younger sisters were in circumstances that did not permit them to do so. 14 Mr Di Lorenzo and Mrs Fresta discussed with Mr Incollingo the most desirable way of structuring the acquisition and construction, and it was decided that a unit trust structure be used, the trustee company being a new company to be formed, the units in the trust being held as to three quarters by Ceramics and one quarter by a company to be formed for Mr and Mrs Fresta. The premises were to be leased by Ceramics from the trustee of the unit trust. 15 Accordingly, Mr Incollingo caused Tile and Fresta to be incorporated on 25 August 1999, and by Deed dated 27 September 1999, the Di Lorenzo Property Group Unit Trust (the Unit Trust) to be constituted with Tile as trustee and a capital of $4.00 divided into four units, held as to three by Ceramics and as to one by Fresta. 16 Mr and Mrs Di Lorenzo have always been the only directors and shareholders of Tile, and Mr and Mrs Fresta the only directors and shareholders of Fresta. 17 According to a letter from ANZ dated 17 May 2000, ANZ offered two facilities of $1.7 million and $2 million to Tile and five facilities totalling $1,115,000 to Ceramics, a grand total of $4,815,000. 18 The solicitors who acted for Tile on the purchase were MatthewsFolbigg and the persons of that firm who were involved were Paul Matthews and Danuta Harkin. 19 The MatthewsFolbigg "Purchaser Settlement Sheet" dated 30 June 2000 shows that on settlement ANZ advanced $1,694,456.17. The deposit that had been paid was $190,000, and the solicitors asked Tile to provide by way of bank cheque a remaining balance of $33,157.87. In substance then, ANZ advanced to Tile $1,694,456.17, and a further $223,157.87 came from within the Di Lorenzo family. In fact those monies and all others that were provided from the Di Lorenzo family group towards the purchase and construction, came from Ceramics and were paid out of its bank account. A bank account was never opened for Tile. 20 Tile entered into a building contract with State Developments Pty Ltd dated 11 September 2000 for the construction of the building for an estimated price of $3,300,000. 21 On 1 October 2001 Tile granted a lease of the building to Ceramics at a rental of $55,000 per month commencing on that date. 22 Other companies, trusts and superannuation funds have been involved in the Di Lorenzo family group. These, however, are not relevant to the issues before the Court. Generally speaking, s 108 also operated to capture amounts paid or credited to a shareholder or a person associated with a shareholder, deeming such amounts to be dividends, which would therefore be included in assessable income of the recipient under s 44(1) of the Act. The deemed dividend was not, however, subject to dividend withholding tax and was unfrankable (that is, could not carry imputation credits to allow a rebate to the recipients for tax paid by the company). 24 Importantly, however, s 108 operated only when the Commissioner formed the opinion that the amount lent or paid represented a distribution of profits. In order to be in a position to form that opinion, the Commissioner needed to consider many factors and to analyse much information, which usually would not be available unless the Commissioner conducted an audit. It was believed that many amounts paid or credited that should have been assessed as dividend income were escaping taxation. 25 Division 7A was introduced by the Taxation Laws Amendment Act (No 3) 1998 (Cth). In the Explanatory Memorandum for the Bill for the amending Act, it was explained that the new measures would operate automatically rather than depend on the formation of an opinion by the Commissioner. 27 The amounts were made assessable income of the shareholder or associate (under s 44(1) , noted earlier) and provided a basis for reducing the company's franking account credit (under s 160AQCNC). 28 Some payments, loans and forgivings of debts were not treated as dividends (Subdivs C and D). Two of the provisions in Subdiv D have featured in this case. I note that it has not been suggested before me that the rental paid by Ceramics to Tile pursuant to Ceramics' obligations as lessee is a deemed dividend under s 109C: no doubt the view has been taken that the amount of the rent is no more than that which Tile and Ceramics would have agreed upon if they had been dealing with each other at arm's length. Note: This does not apply to a payment or loan to a company in its capacity as trustee. 30 An amount was to be treated as a dividend even if it was paid or lent by the company to the shareholder or associate through one or more interposed entities (Subdiv E). If the total of the amounts of the deemed dividends exceeded the company's distributable surplus, only that part of the total equal to the distributable surplus was treated as dividend (s 109Y). 31 In the present case, "the company" is Ceramics and the shareholders in it are Mr and Mrs Di Lorenzo. Note 1: Some payments do not give rise to dividends. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company's distributable surplus. What is a payment to an entity? (The amount of a payment is nil if the consideration given by the transferee equals or exceeds the amount that would have been paid at arm's length for the transfer. Note 1: Some repayments cannot be counted for the purpose of this subsection. See section 109R. Note 2: A private company is treated as making a loan to a shareholder or shareholder's associate if an interposed entity makes a loan to the shareholder or associate. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company's distributable surplus. What is a loan? In which year of income is a loan made? It will be noted that by reason of s 109C(3A) , payments and loans are dealt with in a mutually exclusive manner in ss 109C and 109D respectively. 34 Section 109ZD provided that in Div 7A, "associate" had the meaning given by s 318 of the Act, "entity" had the meaning given by s 960-100 of the Income Tax Assessment Act 1997 (Cth) (the 1997 Act), and "loan" and "payment" had the respective meanings given by ss 109D(3) and 109C(3) of the Act. 35 Not only did s 109ZD, as noted above, provide that in Div 7A "entity" had the meaning given by s 960-100 of the 1997 Act: in addition, s 109ZE provided that the rules in s 960-100 of the 1997 Act about entities apply to Div 7A. Note: The term entity is used in a number of different but related senses. It covers all kinds of legal person. It also covers groups of legal persons, and other things, that in practice are treated as having a separate identity in the same way as a legal person does. Note: This is because a right or obligation cannot be conferred or imposed on an entity that is not a legal person. (3) A legal person can have a number of different capacities in which the person does things. In each of those capacities, the person is taken to be a different entity . In his or her personal capacity, he or she is one entity. As trustee of each trust, he or she is a different entity. The trustees of the further trust are a different entity again, of which the individual is a member. (4) If a provision refers to an entity of a particular kind, it refers to the entity in its capacity as that kind of entity, not to that entity in any other capacity. Example: A provision that refers to a company does not cover a company in a capacity as trustee, unless it also refers to a trustee. Note: Under section 87-35, certain parts of Australian governments and authorities are treated as separate entities for the purposes of ascertaining whether another entity is conducting a personal services business. It is to be noted that s 2-45 of the 1997 Act provided that notes and examples formed part of that Act, although they were distinguished from the operative provisions in their typeface. Mr and Mrs Di Lorenzo are the shareholders in Ceramics: see ss 109C(1) and 109D(1) above. If we treat Mr and Mrs Di Lorenzo as the "primary entity" referred to in subs (1) of s 318, Tile falls within para (d) of that subsection because it is a trustee of a trust where another entity that is an associate of Mr and Mrs Di Lorenzo, namely, Ceramics, benefits under the trust. Ceramics is an associate of Mr and Mrs Di Lorenzo because it is a company where a majority voting interest in it is held by Mr and Mrs Di Lorenzo within s 318(1)(e). 37 I will note further provisions of the Act, notably ss 45Z and 46, which have been referred to in submissions, in the discussion at [113] --- [117] below. A FACTUAL DISPUTE --- WAS THERE A LOAN BY CERAMICS TO TILE? The Commissioner contends that Ceramics did so and that in consequence s 109D of the Act (loans) applied. The applicants contend that Ceramics did not do so and that as between s 109C (payments) and s 109D (loans) it is s 109C that falls to be considered. They submit, however, that s 109C is not enlivened in any event. Moreover, they submit that the factual dispute (as to whether there was a loan from Ceramics to Tile) "is largely an irrelevant distraction because ... the threshold legal issue is the same whether a private company [Ceramics] pays money to a trustee [Tile] for itself [Ceramics] or lends money to the trust [Tile] for itself [Ceramics]". 39 It was only very late in the day that the applicants came to contend that the monies that Ceramics paid to Tile were not loans. In his evidence, Mr Di Lorenzo insisted that he left everything to Mr Incollingo to set up. He said that his only intention was that his four daughters should share in all that he had to leave them in four equal shares, but with Mrs Fresta receiving her one quarter immediately in view of the fact that she and her husband had provided their personal guarantees and the mortgage over their home. Mrs Fresta's evidence was generally to the same effect. So was that of Mr Incollingo. In her affidavit, Mrs Fresta said: "It was always understood that I was not to attain any extra benefits, but that I was just getting this benefit earlier. " The accountants, Mrs Fresta and Mr Incollingo, said that the numerous references to a "loan" revealed in the documentary and other evidence before the Court did not adequately reflect the parties' intention. 40 Andrew Farrugia, a Technical Officer in the Small Medium Enterprises business line at the Australian Taxation Office (ATO) at Parramatta, made an affidavit that recounted in chronological sequence the contacts between the ATO and the Di Lorenzo family or LCI on its behalf. 41 Mr Farrugia had the conduct of a comprehensive review on behalf of the Commissioner in relation to the tax affairs of Ceramics in respect of the years of income ended 30 June 2000, 2001 and 2002. As a result of issues that emerged during the course of the review, he subsequently conducted an audit of Ceramics. 42 On 14 April 2003, the ATO wrote to Mr Di Lorenzo advising that it was conducting a review of the tax affairs of Ceramics. The letter asked him to provide certain information for the three years mentioned, including a statement of financial performance and a statement of financial position. 43 On 6 May 2003, Mr Laureti of LCI forwarded to the ATO balance sheets and profit and loss accounts as at, and for the years ended, 30 June 2000, 2001 and 2002. A covering statement was to the effect that the directors of Ceramics had provided the financial information that formed the basis of the financial statements. 45 On 16 May 2003, Mr Farrugia attended the premises of LCI at Church Street Parramatta, where he met with Mr Di Lorenzo. Mr Fresta and Mr Incollingo were also present. Either Mr Di Lorenzo or Mr Fresta said that the books of account were prepared by Mr Di Lorenzo's daughters. Mr Farrugia asked questions concerning the "loans", and Mr Incollingo said that the loan recorded in the balance sheet related to the deposit cheque for the Norwest site that was paid for by the Unit Trust from funds provided by Ceramics. He said "there are no loan agreements in respect of both loans and no interest has been charged on either. The loans will be paid back. 47 According to his affidavit, Mr Farrugia said to those present that where a loan is made by a company to a trustee company there may be "Division 7A implications in relation to the loan to the Unit Trust", but Mr Incollingo replied that he thought there was no problem as there had been no distribution by the Unit Trust. He undertook to give Mr Farrugia details of the Unit Trust and of the trustee company. 48 It is significant that Mr Incollingo's response was not to say that the reference to "loan" had been a mistake, but that a loan presented no difficulty because there had been no distribution to the unitholders. 49 On 21 May 2003, there was a telephone conversation between Mr Farrugia and Mr Incollingo in which Mr Farrugia again referred to the loan to the Unit Trust as being "a major issue which [would] require further discussions". Mr Farrugia undertook to fax a letter to Mr Incollingo outlining the tax issues to be discussed at a meeting that was scheduled for 28 May 2003. 50 On 22 May 2003, Mr Farrugia wrote to Mr Di Lorenzo care of Mr Incollingo seeking further particulars of the loan and other information, and asking that the information and documentation requested be provided at the meeting scheduled for 27 May 2003 (apparently there had been a change from 28 May 2003 or the earlier reference to that date had been an error). 51 On 27 May 2003, at the offices of LCI, Mr Incollingo said that he thought the loan was to the Unit Trust and could be classed as an investment with the consequence that Division 7A did not apply. According to Mr Farrugia, during the interview he was handed a two page response to his letter of 22 May 2003 and a copy of the Unit Trust balance sheets as at 30 June 2000 and 2002. 52 The two page document stated under the heading "Loan to Di Lorenzo Property Group Trust", "[t]his loan originated in October 1999 with the purchase of the property at Lot 7071 Lexington Drive Norwest Business Park, Bella Vista". In cross-examination Mr Incollingo questioned whether he would have given such a two page document to Mr Farrugia because it was not on LCI's letterhead. He insisted that virtually all documents that go out of LCI's office go out on the firm's letterhead. He said, however, that he did not mean to suggest that Mr Farrugia's evidence was false. I note that Mr Farrugia's letter of 22 May 2003 had requested 13 classes of particulars, and that the two page document responded in 13 corresponding paragraphs. I find that the two page document was prepared by or under the direction of Mr Incollingo and that he or someone under his direction handed it to Mr Farrugia in the course of the meeting. 53 Indeed, I note more generally that I accept Mr Farrugia's evidence of his dealings with Mr Incollingo, to which there was, in any event, no serious challenge. He made contemporaneous handwritten notes of the conversations to which he was a party and annexed them to his affidavit. 54 The balance sheet that was handed to Mr Farrugia at the meeting on 27 May 2003 showed that as at 30 June 2000, the Unit Trust had a current liability in the form of a loan made by Ceramics of $384,218.28, and the balance sheet of the Unit Trust as at 30 June 2002 showed a comparable figure of $778,982.62. These figures were, of course, the amounts shown in the balance sheets as at 30 June 2000 and 30 June 2002 of Ceramics as assets of that company (see [44] above). 55 On 28 May 2003, Mr Farrugia told Mr Incollingo that he had meant to get a copy of "the Loan Account" at the meeting on the preceding day but had omitted to do so, and Mr Incollingo said that he would fax to Mr Farrugia "a copy of the Loan Account". On the same day, 28 May 2003, Mr Incollingo faxed to Mr Farrugia what his covering memo described as "Ledger printout for the loan to Di Lorenzo Property Group Unit Trust for the three years from 2000 to 2002". That document was headed "Di Lorenzo Ceramics Pty Ltd --- Annual General Ledger". The first item under the heading "Narration" was "Loan --- Di Lorenzo Property Group Unit Trust". Apart from an opening balance of Nil, the first entry was dated 31 October 1999 and was a debit of $190,000. I infer that this was the amount of the deposit that Ceramics had paid on account of Tile towards the purchase of the Norwest site. 56 The Annual General Ledger, to the extent that it was provided, covered the period from 31 October 1999 to 30 June 2002. It contained references to numerous payments connected with the purchase of the Norwest site and the construction of the building. For the year ended 30 June 2000, the debit entries totalled $384,218.28 (see [44] above). There were no credits to Tile's loan account with Ceramics for that year. For the year ended 30 June 2001 there were many debit and credit entries, leaving a debit balance at that date of $841,704.87 (see [44] above). (Since the Commissioner treated the payments by Ceramics as loans to Tile, he similarly treated the amounts credited to Tile's loan account as repayments, and only the debit balance of $841,704.87 at 30 June 2001 as the amount of the deemed dividend --- see s 109D(2) of the Act. 58 On 3 June 2003, Mr Farrugia telephoned LCI and spoke to Anna Forcella, an employee, stating that the main issue of concern to the ATO was "the loan to the Unit Trust". He arranged a further meeting for 12 June 2003 with Messrs Incollingo and Di Lorenzo. 59 That meeting took place and Mr Laureti joined the discussion towards the end of the meeting. Mr Farrugia said that the ATO view was that the loan represented a deemed dividend under Div 7A. Mr Laureti said that he disagreed because he could not see how the loan could be deemed to be a dividend. He said: "Who are the recipients of the deemed dividend given that the unitholders are the companies?". Mr Farrugia replied that under the legislation the shareholders and/or their associates were deemed to be the recipients and, in the present case, that would be the unitholders (in and since his decision on the applicants' objections, the Commissioner has treated Tile as the recipient of the deemed dividend). 60 On 30 June 2003, Mr Farrugia told Mr Incollingo that it had been decided to finalise the "review" and to commence an "audit". He indicated that a matter to be included in the audit was the loan to the Unit Trust. On the same day, he wrote to Ceramics care of LCI confirming the commencement of the audit of the company covering, inter alia, the issue concerning the loan to the Unit Trust. 61 On 5 August 2003, Mr Farrugia attended the office of LCI and spoke to Mr Incollingo in relation to "the loan account" that he had sent to Mr Farrugia, asking for the source of the credits that were allocated to the loan account. Mr Incollingo said "these figures relate to draw-downs from the ANZ loan and rent paid by Di Lorenzo Ceramics to the property trust". Mr Farrugia asked for "a copy of the loan account with full narrations". 62 On 7 August 2003, LCI forwarded to Mr Farrugia a copy of Ceramics' General Ledger Account 697 (Loans to Di Lorenzo Group Property Unit Trust) for the year ended 30 June 2001, with, according to the covering memo, "narrations of all credit amounts". 63 On 12 September 2003, Mr Farrugia attended the premises of LCI where he met with Messrs Incollingo and Laureti. He said that the ATO was still of the view that the loan gave rise to a deemed dividend to the unitholders, as the trustee company, Tile, was an associate of the company (Ceramics) that had provided the loan, and the legislation did not exclude a loan by a company to another company in its capacity as trustee. We are going to organise for amended balance sheets to be prepared to change the loan to an investment. He asked for a submission to support the contention that the monies "are now an investment". 64 On 17 September 2003, LCI wrote a lengthy letter to Mr Farrugia stating that there had been no intention for the monies advanced ever to be repaid, but that there was an intention to receive a return on an investment, whether it be in the form of capital or revenue. The letter asserted that the client did not "fit into the parameters of the legislation because the monies subscribed for shares were not a loan but an investment in which they will enjoy a rate of return". It was truly a running account and had all the appearances of a running loan account as its title said it was. 66 Mr Di Lorenzo gave evidence that there was never an intention that Ceramics make a loan to Tile. However, the gravamen of his evidence was that he intended only that his four daughters share equally and that he left all accounting and legal questions to the professionals. 67 Mrs Fresta, a qualified accountant, said that the choice of the language of "loan" had not accurately captured the relationship between Ceramics and Tile. This net amount from Ceramics to Tile Investments was recorded by LCI as loan in the monthly management accounts. From an accounting perspective, I considered that this was a reasonable treatment to reflect that there was some arrangement between Ceramics and Tile Investments, and I myself had marked the ANZ bank statement entries involving these payments as loans to Tile Investments. I never thought any further about this accounting description of the transactions because I did not consider that the precisely correct characterisation of it was necessary for taxation purposes, until the ATO auditors made their assertions. The note recognised a loan by Ceramics to Tile. 68 Mrs Fresta also said that the intended arrangement was that she was to receive her one quarter share upfront, and that there was no discussion when the Unit Trust was established in 1999 about her having to subscribe for additional units. 69 Mr Incollingo was the person who had prepared the Annual General Ledger in relation to the "Loan --- Di Lorenzo Property Group Unit Trust". He emphasised that there was no separate bank account for the Unit Trust. According to Mr Incollingo, the error had come about because his staff had used a wrong coding --- 697 or 698 ("loan") instead of 780 ("investment"). (Mr Incollingo's affidavit refers to code 697, but in cross-examination he referred to code 698. ) He agreed that the Annual General Ledger of Ceramics recorded debit entries for payments of legal liabilities of Tile in connection with the construction work, that is to say, payments out to persons and companies who were creditors of Tile for goods and services provided in connection with the construction of the building on its land. Mr Incollingo insisted that the loan was in reality an "investment". 70 In cross-examination, senior counsel for the Commissioner took Mr Incollingo to the running balance of the account as between Ceramics and Tile, showing that the opening balance at 1 July 2001 of $841,704.87 was reduced to $780,648.62 as at 30 June 2002. (I note that the figure of $780,648.62 for the year ended 30 June 2002, taken from an exhibit to Mr Incollingo's affidavit, differs from the figure of $778,982.62 quoted in [44] above for the same period. The $780,648.62 figure appears in an untitled "running balance" sheet. The $778,982.62 figure appears in an exhibit to Mr Farrugia's affidavit being the "Annual General Ledger" of Ceramics from 1 July 2001 to 30 June 2002. The amount of $780,648.62 appears in only the one place and I assume that $778,982.62 is the correct figure. ) Senior counsel put it to Mr Incollingo that one does not ordinarily find an investment, but one does ordinarily find a running loan account, in the form of this account with, at times, a reducing balance. 71 Mr Incollingo agreed that the credit entries for rent from Ceramics, BAS refunds and the payments on account of the borrowing from ANZ, were all monies of Tile. He would not agree, however, to the proposition that the making of those credit entries was "consistent with" repayment of a loan to Tile from Ceramics. He did agree, however, that the Ceramics account and the Unit Trust account mirrored each other. 72 Mr Incollingo agreed that he had never protested to Mr Farrugia that the transaction was in fact not a loan but an investment. Mr Incollingo accepted that the response that he and Mr Laureti made to Mr Farrugia was that they could not understand how there could be a deemed dividend because "that outcome was crazy". He agreed that that entry reflected an indebtedness of the Unit Trust to Ceramics, and that if the payments made by Ceramics had been treated as an investment by it in the Unit Trust, that entry in the tax return would not have appeared. Mr Incollingo's explanation was, again, that the payments made by Ceramics out of its bank account had been wrongly shown as a loan to Tile in the various internal financial records. 74 It appears that neither Mr Di Lorenzo nor Mrs Fresta nor any other director or member of Ceramics or Tile gave close attention to the legal character that the payments made by Ceramics on account of Tile's liabilities was to bear. At least there is no evidence of an express agreement that those amounts were to represent either a loan or a subscription for additional units (no one has suggested that they were intended to be a gift). There was no agreement that the amounts were to be repaid by a particular date. There was no agreement that any particular number of additional units was to be issued. The proper characterisation of the payments was, however, left to Mr Incollingo. Mr Di Lorenzo and Mrs Fresta were content to leave it to him to characterise them as he saw fit and to prepare Ceramics' and the Unit Trust's financial statements and tax returns accordingly. One piece of evidence of express instruction is the reference to a loan to Tile written against entries in Ceramics' bank statements that were provided by Mrs Fresta to Mr Incollingo, although that evidence could be regarded as her acquiescence in the course that Mr Incollingo was already taking. 75 In my view there was a loan, because within the scope of his authority Mr Incollingo characterised the payments as loans, that is to say, as an indebtedness of Tile to Ceramics repayable upon demand. It was within the scope of Mr Incollingo's authority to establish a running loan account in the name of Tile, to treat the payments made by Ceramics as debits to it, and to treat the ANZ, rental and BAS receipts as repayments by Tile, as he in fact did. 76 I also do not overlook the convenience of treating as loans payments such as those made by Ceramics to another company under the same ownership and control where, as here, no decision is taken that they are to bear a different complexion. Treating them as loans allows the greatest flexibility for the treatment of them in the future as occasion arises. The company providing the funds might not only require repayment in whole or in part, and at one time or from time to time; it might forego repayment in whole or part, and at one time or from time to time, as consideration for one kind of benefit or another being conferred by the other company. Acting within the scope of his authority, Mr Incollingo took the most convenient course. 77 There was no agreement that the amounts paid by Ceramics were subscriptions for units in the Unit Trust, and the making of such an agreement would have prompted consideration of several practical questions. When were the further units to be issued to Ceramics? How would the gross imbalance between the ever increasing number of units held by Ceramics as against the single unit held by Fresta be avoided? On what basis could one additional unit be issued to Fresta for every three additional units issued to Ceramics? Would there be successive further issues of units? No consideration was given to such questions at the time when the Unit Trust was established. I considered an appropriate way to record properly Ceramics' payments was a further investment by Ceramics and Fresta in the Unit Trust, and that this should be formalised by way of the subscription for additional units in the Unit Trust. Because I knew it was always the intention of Jack and Maria that there be an investment into the Unit Trust and that the respective proportions should always remain 75/25, I considered it appropriate to record formally those decisions that had been informally made and in a way that reflected the formalities of the Unit Trust deed. I considered that the gift that Jack was in effect making to Maria (by reason that Fresta was attaining 25% of Ceramics' equity contribution) should be formally recorded as the subscription by Fresta of additional units equating to 25% of the issued units. Fresta's subscription was funded by Jack making a gift to Maria, who lent those funds to Fresta. Now shown to me and marked GI7 is a bundle of directors resolutions of Tile Investments made on 9 February, 2005. Now shown to me and marked GI8 is the unit register for the Unit Trust, which was altered on 9 February, 2005 to record the additional units. The minutes of the meeting of directors of Tile on 28 September 1999 provided for the issue of 1,600,000 units at an issue price of $1.00 each --- 1,200,000 to Ceramics and 400,000 to Fresta. But Mr Incollingo did not have instructions back on 28 September 1999 (the Unit Trust Deed was dated 27 September 1999) that such additional units were to be issued or that Ceramics was to give Fresta $400,000 with which to subscribe for one quarter of them. 80 Mr Incollingo has attempted to rewrite history in an effort to achieve what he considers to be a more fair and just result for his clients, and one that perhaps he thinks they would have agreed to if he had recommended it. 81 The applicants suggest that a treatment of the payments made by Ceramics on account of Tile's liabilities as an investment in units was somehow supportive of the 75 percent/25 percent arrangement, whereas a treatment of them as a loan was not. I disagree. The 75 percent/25 percent arrangement was fixed by the original issue of three units to Ceramics and one to Fresta. A fluctuating loan account as between Tile and Ceramics does not detract from that arrangement, but dictates the fluctuating value, from time to time, of the four units. 82 The authority given by Mr Di Lorenzo and Mrs Fresta to Mr Incollingo and the fluctuating account, its title, the numerous references to "loan" in the contemporaneous documents and also in things said by Mr Incollingo to Mr Farrugia show that there was a running loan account recording advances by way of loan from time to time by Ceramics to Tile. The loan was repayable on demand. Section 190D of the Act therefore has potential application. 83 In the alternative, the relationship between Tile and Ceramics that arose from the making of the payments by Ceramics at Tile's request in discharge of Tile's legal liabilities was that of creditor/debtor. The relevant common money count was that of "money paid by the plaintiff to the use of the defendant" or simply "money paid" as it came to be called. Section 109C(3)(a) of the Act refers to a payment on behalf of, or for the benefit of, an entity --- a concept that captures this alternative legal complexion of the payments that Ceramics made in discharge of Tile's liabilities. 84 I will consider the operation of ss 109C (payments) as well as of s 109D (loans). The applicants seized on the presence of the words "if there is an express or implied obligation to repay the amount" in s 109D(3)(c), and submitted that this element was absent. For the reasons given above, I think there was an implied obligation to repay, but in any event, there would be a payment by Ceramics to Tile within s 109C, unless other submissions made by the applicants were to be accepted. 86 An important submission made by the applicants as to why neither section applied is that the payment or loan was not for the benefit of Tile, and that Div 7A does not apply to loans (or payments) made to a trustee. The submission is, in substance, that the dealings should be treated for present purposes as having been payments made by Ceramics to itself as to three quarters and to Fresta as to one quarter, because they were beneficially entitled under the terms of the Unit Trust Deed. This submission is fundamental to other submissions made by the applicants, and I will address it below. 87 Tile in its capacity as trustee of the Unit Trust was an "entity". This results from the definition of "entity" in s 960-100 of the 1997 Act which defines "entity" to mean, inter alia, "a trust" and provides that the trustee of a trust is taken to be an entity consisting of the person who is the trustee at any given time (see [35] above). Importantly, the same section provides that a legal person can have a number of different capacities in which the person does things, and that in each of those capacities the person is taken to be a different entity. It follows that Tile, in its capacity as trustee of the Unit Trust, was an entity. 88 Section 109ZD provides that "associate" has the meaning given by s 318. As noted at [36] above, under s 318 Tile is an associate of Ceramics. 89 It is not disputed that if there was a loan (or payment) by Ceramics to Tile that was otherwise within s 109D (or s 109C), a reasonable person would have concluded that it was made because Tile was an associate of Ceramics. 90 A further matter that was not in dispute was that if there was such a loan (or payment) and a deemed dividend as a result, Ceramics and Fresta were presently entitled to the deemed dividend for the purposes of s 97(1) of the Act, Ceramics as to three quarters of the deemed dividend and Fresta as to one quarter of it. 91 Further, no argument was presented that the amount that Ceramics would be taken to have paid as a dividend to Tile at the end of Ceramics' years of income ended 30 June 2000 ($384,218.28) and 30 June 2001 ($841,704.87) was more than the amount of Ceramics' distributable surplus for those respective years, worked out under s 109Y of the Act. 92 It is important to appreciate that the Commissioner's case is not that dividends are deemed to have been paid to Ceramics and Fresta: it is that they are deemed to have been paid to Tile. The Commissioner's case is that subs 44(1) and Div 7A, especially s 109Z, have the effect that the amounts of the deemed dividends are included in the assessable income of Tile as trustee of the Unit Trust, and that it is Div 6, "Trust Income" (ss 95-102) of Pt III of the Act that operates to make those amounts part of the "net income" of the trust estate of the Unit Trust (s 95), and as to three quarters part of the assessable income of Ceramics and as to the remaining one quarter part of the assessable income of Fresta (s 97). Section 97 is applicable because Ceramics and Fresta were beneficiaries of the trust estate of the Unit Trust, were not under any legal disability, and were presently entitled under the Unit Trust Deed to shares of the income of the trust estate. 93 The applicants submit that Div 7A is directed only to "beneficial interests" and not to a loan (or payment) to a trustee. However, s 109ZD provides that in Div 7A "entity" has the meaning it is given by s 960-100 of the 1997 Act and s 109ZE provides that the rules in s 960-100 of the 1997 Act about entities applied to Div 7A. The provisions to which I referred at [35] above make it clear that a legal person that has more than one capacity is taken to be a different entity in each such capacity. 94 The conclusion is inescapable that the loans (or payments) were made to Tile in its capacity as trustee of the Unit Trust. Even the minutes of the meeting of the directors of Tile on 28 September 1999 that Mr Incollingo wrote on 9 February 2005 treated at least $1,600,000 of the amounts that had been paid to Tile as having been paid to it in its capacity as trustee of the Unit Trust, albeit as the subscriptions for further units to be issued. The note does not form part of the Act. However, as already observed, s 109E to which the note refers makes the rules in s 960-100 of the 1997 Act about entities applicable to Div 7A. Section 960-100(4) has the effect that the expression "another company" in s 109K refers to another company as a company in its own right and not in any capacity as a trustee that it may bear, in the absence of a reference to the trustee capacity. The example given of the operation of s 960-100(4) set out at [35] above is just such a case. 96 To construe s 109K as not applying where a payment or loan is made to another company in its capacity as trustee is consistent with s 46(12) of the Act which denies the intercorporate dividend rebate to a trustee shareholder. 98 I do not accept the applicants' submission based on s 109K of the Act. The first difficulty I have with this construction is that, after all, the straightforward case of a payment of a dividend to an actual shareholder is not subject to any such limitation. Where shares are held by a trustee, a dividend paid to the trustee shareholder is income of the trust estate that includes the shares, and is governed by Div 6 of the Act. Nothing in Div 7A suggests that the position under that Division in respect of deemed dividends should be at all different. 100 The second difficulty is that other provisions within s 109C(3) and s 109D(3) point in the opposite direction. Section 109C(3)(a) begins with "a payment to the extent that it is to the entity, on behalf of the entity" before adding the third possibility "or for the benefit of the entity". Similarly, s 109D(3) begins by referring to "an advance of money" and ends with a reference to "a loan of money" --- expressions which do not involve any notion of beneficial entitlement. 101 The terms of ss 109C(3) and 109D(3) do not suggest any limitation by reference to "beneficial entitlement". The language is simply neutral in this respect. I regard the various formulations with ss 109C(3) and 109D(3) as intended to give an ample and expansive coverage, and to be antithetical to any reading down of the kind suggested by the applicants. 102 Moreover, it is not a strained use of language to regard payments made in discharge of the legal liabilities of Tile at its request as having been made "on behalf of [Tile] [and] for the benefit of [Tile]" within s 109C(3)(a), and "for, on account of, on behalf of [and] at the request of" Tile, within s 109D(3)(c). Tile's liabilities in respect of the purchase and construction were not limited by reference to assets of the Trust. Its liability was unlimited. It is not inevitable, therefore, that every dollar paid by Ceramics in reduction of Tile's liabilities would benefit only the unitholders and confer no independent benefit on Tile. The applicants seek to have the case considered as one of payments made by Ceramics as to three quarters to itself and as to one quarter to Fresta. They submit that it is unrealistic and unjust that it should be considered otherwise. 104 In the course of submissions, reference was made to the discussion of "unit trusts" in Chief Commissioner of Stamp Duties (NSW) v Buckle [1998] HCA 4 ; (1998) 192 CLR 226 and CPT Custodian Pty Ltd v Commissioner of State Revenue (Victoria) [2005] HCA 53 ; (2005) 224 CLR 98. There was discussion in the judgments in those cases of such matters as the nature of the interest of a unitholder under the terms of the particular trust deed, a trustee's right of reimbursement out of the trust fund, and the question of a trustee's in personam right of exoneration against the beneficiaries. 105 I do not find it necessary to discuss in detail the present Unit Trust Deed or the matters just mentioned in the light of its terms. 106 While the provisions mentioned indicate that it would be quite inconsistent with the terms of the Unit Trust to regard the case as one in which Ceramics and Fresta held the Trust Fund themselves, both the applicants and the Commissioner have proceeded on the basis that Ceramics and Fresta are presently entitled, as to three quarters and one quarter respectively, to the income of the Trust Fund. 107 For the year of income ended 30 June 2000, the Commissioner treated the income of the Unit Trust as increased by $384,218 representing the amount of the payments made by Ceramics to Tile in that year, and for the year of income ended 30 June 2001, the Commissioner treated the net income of the Unit Trust increased by $457,487 representing the net amount of the payments made by Ceramics to Tile during that year after allowing for credits. He treated Ceramics and Tile, as unitholders, as presently entitled, as to three quarters and one quarter respectively, to the income of the Trust Fund. 108 It is appropriate, therefore, to consider the position on assumptions most favourable to Ceramics and Fresta, namely, that Tile held the Trust Fund of the Unit Trust on a "bare trust" for them in the respective proportions mentioned, and that their respective present entitlements to the income arose from their present entitlement to capital under the bare trust. 109 In these circumstances, Ceramics and Fresta would still confront the difficulty that they now confront --- the interposition of the trust. Division 7A would still assimilate their position to that in which Tile held shares in Ceramics upon a bare trust for them. 110 If Tile held shares in Ceramics on a bare trust for Ceramics as to three quarters and Fresta as to one quarter, and Ceramics declared a dividend, the applicants would still face the difficulty that they now face. Tile would have received, as trustee, a dividend which would not attract the intercorporate dividend rebate under s 46 of the Act: see s 46(12) set out at [96] above. Tile would be required to disclose the income as income of the trust estate, although it would not be liable as trustee to pay income tax upon it (s 96 of the Act). However, Ceramics and Fresta would be liable to do so as beneficiaries of the trust estate who were not under any legal disability and were presently entitled to shares of the income of the trust estate (s 97 of the Act). 111 It would not be to the point for Ceramics and Fresta to complain that the substance of the matter was that they were shareholders receiving the dividend declared. By reason of the structure adopted, they would have made it impossible for themselves to be regarded as the shareholders. 112 In substance, the position in which Ceramics and Fresta find themselves under Div 7A is no different. Instead of having actually paid a dividend to Tile as trustee, Ceramics is deemed to have done so, and instead of a bare trust for them, Tile holds on the terms of a unit trust under which they are, it is accepted, presently entitled to income. Once it is accepted that the deemed dividend provisions of Div 7A are enlivened, so are the provisions of Div 6. They submit that, in the result, no additional tax is payable by Ceramics, and that its amended assessments are excessive. DLC [Ceramics] should be considered a group company. No rebate would be available to Fresta, because it is unlikely that s 46F could be read to cover it. 114 However, s 46F(2)(a)(i) has the effect that a shareholder is not entitled to a rebate under s 46 in respect of an unfranked dividend. The applicants are right to concede that the deemed dividends here are deemed to be unfranked because para (h) of the definition of "frankable dividends" in s 160APA excludes from the scope of this expression "an amount taken to be a dividend under Division 7A of Part III". 115 Subsection (3) of s 46F provides, however, that subs (2) of s 46F does not apply "if the shareholder is a group company in relation to the company paying the dividend". Apparently, the applicants' submission would require Ceramics to be treated as the "shareholder" as well as being "the company paying the dividend". 116 The expression "group company" in s 46F(3) has the same meaning that it has in s 160AFE: see s 46F(1) ("group company"). Section 160AFE(2) states that for the purposes of s 160AFE a group company is a group company in relation to another company if one of the two is a subsidiary of the other or both are subsidiaries of the same company. None of Ceramics, Fresta and Tile is a subsidiary of either of the other two and no two or more of them are subsidiaries of the same company. Accordingly, none of them is a "group company" in relation to either of the others. 117 For the above reasons, I do not accept the applicants' submission that Ceramics is entitled to a rebate under s 46. I certify that the preceding one hundred and eighteen (118) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | deemed dividends div 7a of pt iii of the income tax assessment act 1936 (cth) trustee (t) of unit trust purchases land and constructs business premises upon it, borrowing from bank (anz) for the purpose related trading company (c) pays some of the liabilities incurred by t on the purchase and the construction, debiting a "loan account" of t in c's general ledger advances by anz and other amounts payable to t are credited to the loan account t has no bank account of its own, all payments and receipts on account of t taking place in c's bank account and being reflected in t's running loan account with c factual dispute as to whether loans by c to t within s 109d of the act or payments by c to t within s 109c of the act whether ss 109c and 109d operated only to deem payments and loans made to persons beneficially to be dividends whether the loans or payments made by c should be seen to be deemed dividends paid to the unitholders, c and another family company (f). held : (1) the amounts paid by c were loans to t; (2) div 7a was not limited to amounts lent or paid to an entity in a non-trustee capacity; (3) div 7a operated to deem the loans or payments to be dividends paid to t as trustee; (4) div 6 of pt iii of the act made the deemed dividends assessable income of the unitholders, c and f, as persons presently entitled to income of the unit trust fund. 109ze ) esp ss 109c , 109d , 109j , 109k , 109z , 109zd , 109ze income tax assessment act 1997 (cth) ss 2 45 , 960-100 income tax income tax assessment act 1936 (cth) pt iii , div 7a (ss 109a |
The trademark comprises the letters GHD. The owner of that trademark is a company incorporated in the United Kingdom, Jemella Limited, (hereafter Jemella UK). Jemella UK is the parent company of Jemella Australia. It has authorised Jemella Australia to use the GHD mark relevantly in Australia. Jemella UK has necessarily been joined to the proceedings. Its stance, though, unsurprisingly, is to support their institution and the seeking of the relief claimed by Jemella Australia. The substantive Respondent is a lady who resides in Victoria, Ms Liane Cherie Boutcher. Ms Boutcher was served with the originating application and has appeared on occasion, although not on every occasion, that a directions hearing has been held in the case. She has been permitted to appear by telephone. There is a convenience associated with the adoption of that course so far as Ms Boutcher is concerned, although my experience of the use of telephone directions hearings in this case with Ms Boutcher is that it can have the disadvantage of not bringing home to a respondent litigant in person the responsibilities entailed in litigation in a court. Be this as it may, at the last directions hearing at which Ms Boutcher did attend by telephone, I fixed today as the date for the trial of this case. That seemed to me to be the more convenient course to take, rather than to continue to deal with a difficulty in relation to her compliance with an order for discovery. As events transpired today, when the case was called on for hearing, Ms Boutcher did not appear. The absence of an appearance on her part at the date fixed for trial was, strictly speaking, an event of default in terms of O 35A r 2(2)(h). Jemella Australia adopted the course of proceeding to lead evidence on the trial rather than seeking to have judgment entered in default. In the circumstances of this particular case, that seems to me to have been the prudent and just course to take. I make that observation because there is a defence on file and also what at least purports to be an affidavit from Ms Boutcher as to, inter alia, the merits of the case. Jemella Australia had given to Ms Boutcher a notice to attend for cross-examination. It was envisaged on behalf of Jemella Australia's legal representative that she would be cross-examined on the trial on her affidavit. The issue which falls for determination in respect of the case is, firstly, whether or not the applicant is indeed a person entitled to bring this proceeding in respect of a registered trademark. The evidence before me is quite clear in its establishing that the mark to which I have referred does appear on the Register of Trade Marks under the Trade Marks Act 1995 (Cth) (Trade Marks Act) and, further, that the holder of that trademark has granted to Jemella Australia a licence and has authorised it to bring the present proceedings. The question then becomes whether or not there has been an importation which infringes that particular mark? Part 13 of the Trade Marks Act is directed to the subject of the importation of goods infringing Australian trademarks. It makes provision for the seizure of goods, which an objector notifies to the Australian Customs Service by the Customs, upon their being landed in Australia. It then confers a cause of action which can lead to the forfeiture of goods at the behest of the objector. In addition, in that infringement proceeding an applicant may, in the ordinary way, additionally claim damages or an account for profits and injunctive relief. That is what has occurred in terms of the application brought by Jemella Australia. I was informed when the case was called on for trial in Jemella Australia's opening that it was not desired on its part to press for either an account for profits or for damages. Further, rather than seek an order that the goods be released to it, Jemella Australia's claim was that the goods should be forfeited to the Commonwealth as s 139 and s 137 envisage. On 12 December 2008, Ms Boutcher filed what purported to be a defence. The bulk of that document was, in a technical sense, frivolous in that it provided for what were not truly defences and, for that matter, was cast in terms which one might regard as either scandalous or irrelevant. I struck out those portions. What was left was a bare denial by her of the claims made by Jemella Australia. The evidence from Jemella Australia establishes that there were four hair stylers landed in Australia. I am quite satisfied, on the evidence, that the person who sought to import the stylers was Ms Boutcher. Indeed, she effectively admits as much in an affidavit which was filed on 9 October 2008. An affidavit of Kelly Maree Gardner filed on 26 September 2008 contains as exhibits photographs of the hair stylers as landed. One sees reproduced there, inter alia , an alphanumeric code. Jemella Australia's evidence is that the code as reproduced in evidence on the four stylers imported is not a genuine code. I am satisfied on the evidence that the four hair stylers in question are counterfeit. By that, I mean that they have not been manufactured by or on behalf of either the applicant, Jemella Australia, or, for that matter, its parent company, Jemella UK. A question then arises as to whether or not the importation, or strictly the attempted importation, constitutes an infringement? Ms Boutcher's affidavit filed on 9 October 2008 contains some material which I regarded as irrelevant and of a nature such that it ought not to be able to be searched on the court file without the leave of the court or a judge. Apart from that, it does, though, contain an account by her of her reasons for seeking to import the four stylers in question. Mr Fox, who appeared for Jemella Australia, quite properly drew my attention to those parts of that affidavit. I, Liane Cherie Boutcher, have bought four due to the fact I have my own home, my mother's home and my father's home that I have bought one for, and, as I am a model and a hairdresser and have school and other obligations to attend to on a regular basis, I have purchased an extra hair straightening iron to keep in my car in case of an "emergency". Also please observe that I have purchased four different colours and styles of the GHD hair straightening iron for "fun" [sic]. She reviews such sites regularly. Her experience with what she terms "retail websites" is that they do not have a minimum quantity which must be purchased. With what she has termed "trade websites", these usually also do not provide for a minimum order, but where they do, the minimum order is usually 10. She states that she has not viewed any advertisement on a trade website which specifies a minimum of four. Her experience is also that a supplier is often prepared to what she terms "drop ship" counterfeit products; in other words, send a single unit direct to a customer's address. There is also evidence before me that, in the ordinary course, one way in which genuine GHD hairstyling products are marketed is via hairdressers. I have not had the benefit of seeing Ms Boutcher so as to form an assessment, on that basis, of her credibility. It does seem to me somewhat unlikely that four products would be purchased for the reasons that she gives; unlikely, but not impossible. I note that she gives her occupation as both model as well as hairdresser. The latter, of course, does raise a concern in terms of an ability, at least inferentially, to offer counterfeit hairstyling irons to customers. Jemella Australia is not obliged to prove an infringement to demonstration; only on the balance of probabilities. At first blush, an importation of four does seem to be rather more than one might readily regard as a purchase for personal use. Further, at first blush, it does seem to be a little unlikely that one would have four items placed at the locations which Ms Boutcher mentions in her affidavit. The hairstyler in question, as the photographs make evident, is not a large item. It seems to be one which is, and is designed to be, readily portable. On the balance of probabilities, I am satisfied that the stylers which were seized by the Customs were not items intended for personal use. As I say, the question is one where, with the benefit of seeing Ms Boutcher, and perhaps hearing her enlarge upon her reasons in cross-examination, a different view may have been open. She has, though, for reasons which doubtless seemed good to her, chosen not to attend at the date fixed for trial. In so doing, she has necessarily deprived me, as trial judge, of the benefit of the elaboration that she might have been able to provide in cross-examination. Her absence from court does not, in any way, prove Jemella Australia's case. All it means is that inferences which arise on the face of the evidence adduced by Jemella Australia - first blush impressions, as I have termed them - are not challenged by any further evidence from her. That being so, it becomes unnecessary to consider a further submission which was made in the alternative on behalf of Jemella Australia, that an infringement might nonetheless arise for the purposes of Pt 13 of the Act, at least, even if the goods concerned were imported for personal use. As, on the facts I have found, that is an academic question. It is preferable that I do not express an opinion as to the merits of that particular question. It would seem, having regard to the factual findings that I have made, desirable also to grant to Jemella Australia the injunctive relief that it seeks in relation to any further dealings by Ms Boutcher in relation to products which would infringe the mark. Jemella Australia has, then, established a case entitling it to an order that the goods be forfeited to the Commonwealth, and, further, for injunctive relief. After I had delivered judgment, Mr Fox, on behalf of Jemella Australia, sought that I fix costs in an amount in the order of $13,000. Notice had not been given to Ms Boutcher of the intention on behalf of Jemella Australia to seek costs in that amount and, in so doing, to provide her in advance with an assessment of those costs, along with a short-form bill. I indicated to Mr Fox that I considered that the requirements of procedural fairness in relation to costs were such that I should not proceed to allow costs in that particular amount without extending an opportunity to Ms Boutcher to be heard about the adoption of that course. At an earlier stage in the proceedings, and at a time when Jemella Australia envisaged that it would seek a default judgment, an affidavit of Kelly Maree Gardner was filed on 12 March 2009. That affidavit, at some length, set out a rationale, and it must be said it is a compelling rationale, why costs in the amount of $8000, as at that stage of proceedings, ought to have been allowed to Jemella Australia. That particular affidavit was served upon Ms Boutcher. Since then, in the ordinary course of events, other costs, on a party and party basis, must necessarily have been incurred by Jemella Australia. Again, in the ordinary course of events, the way in which the cost discretion would fall for exercise in this case, having regard to its disposition, is that Ms Boutcher would have to pay the costs. I can see nothing in the conduct of proceedings on behalf of Jemella Australia that would deprive it of an entitlement to its costs on a party and party basis. So the only question, effectively, would become whether or not costs ought to be fixed or taxed. Having regard to the episodic engagement by Ms Boutcher with these proceedings, it seems to me that to order the taxation of costs would be to impose an unnecessary burden both on Jemella Australia as well as, it must be said, Ms Boutcher. I say "unnecessary" because it seems to me that, on any view, a taxing officer would necessarily allow at least the sum of $8000 on a party and party basis in respect of the costs incurred by Jemella Australia up to and including trial. The rationale set out in the affidavit of Ms Gardner filed on 12 March is eloquent in that regard. That being so, it seems to me that the just course to take in this instance is to fix costs in the amount of $8000, to grant liberty to apply within fourteen (14) days of today's date in respect the order for costs, to direct that the judgment not be entered for a period of fourteen (14) days insofar as it relates to costs, and that, in default of any submission within fourteen (14) days, the judgment in respect of costs fixed in the sum of $8000 to be entered. I further direct that a copy of the orders made today be served on Ms Boutcher by prepaid post at the address which she has given for service. As to substantive orders, the orders that I make are: Pursuant to s 126 of the Trade Marks Act , the First Respondent, whether by herself, her servants, agents, or otherwise howsoever, be restrained from importing, promoting, distributing, advertising, offering for sale, displaying or otherwise using counterfeit hairstyling products bearing the marking "GHD hairstyling iron," "GHD hairstyler," or "GHD," or otherwise infringing registered trademark numbered 951664, being the letters "GHD. " I further order that the goods, being four hairstyling irons described as "GHD branded hair straighteners" seized pursuant to s 133 of the Trade Marks Act on 18 August 2008, as described in the notice of seizure to objector of that date, be forfeited to the Commonwealth. I will direct that the applicant bring in short minutes to reflect the orders made today. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | trade marks counterfeit items importation held infringement default on appearance by respondent where respondent has filed defence and evidence in support whether appropriate to order judgment in default or proceed to trial applicant's election to lead evidence on the trial held to be preferable course intellectual property practice and procedure |
The ground upon which the winding-up of Victorian Families is sought is that set out in s 461(1)(k) of the Corporations Act 2001 (Cth) (the Act), namely that the court is of the opinion that it is just and equitable that the company be wound up. On 18 March 2009, for reasons which I then gave, I appointed Messrs Worrell and Khatri as provisional liquidators of Victorian Families. It is proposed that these same gentlemen become the liquidators of Victorian Families, empowered to act jointly and severally in that capacity. Victorian Families is a wholly owned subsidiary of Storm Financial. The effect of that is that Storm Financial is a contributory of Victorian Families. In turn, that means that Storm Financial has standing to apply for the winding-up of Victorian Families in its capacity as a contributory pursuant to s 462(2)(c) of the Act. I am satisfied, having regard to the affidavit evidence read today, that what one might term the procedural aspects of the winding-up application, either as set out in the Act or in the Federal Court (Corporations) Rules 2000 , have either been complied with or, if only out of an abundance of caution, should be deemed to have been complied with. I sound the latter cautionary note because as is frankly stated in submissions made on behalf of Storm Financial, Storm Financial has not served Victorian Families with any material. The reason for that is that the registered office of Victorian Families is the former principal place of business of Storm Financial. Further, Storm Financial has been under the control, at all material times, of Messrs Worrell and Khatri either as administrators or more latterly as liquidators. In the same fashion, Victorian Families has been under the control of those gentlemen as provisional liquidators. There is then an element of putting form over substance to require service of the material in those circumstances. I am quite satisfied that the proceedings and all material relied upon in those proceedings have been drawn to the attention of Victorian Families as defendant. Storm Financial has taken the course of serving the receivers and managers appointed to it with all material relied on in the winding-up application. That is a prudent course to have taken. The shareholding of Storm Financial in Victorian Families is one of the assets subject to the charge which led to the appointment of the receivers and managers to Storm Financial. Those receivers and managers have, I note, appeared today. Their stance is not to oppose the making of a winding-up order in respect of Victorian Families. In the matter of Storm Financial Limited (Receivers and Managers Appointed) (Administrators Appointed); Australian Securities and Investments Commission v Storm Financial Limited (Receivers and Managers Appointed) (Administrators Appointed) [2009] FCA 269 at [65] , I canvassed both learned academic authority as well as judicial decisions relating to the history and nature of the jurisdiction to wind up a company on the just and equitable ground. I shall not repeat what I there stated. It suffices to note that the just and equitable ground is one which provides for a very broad basis indeed upon which a company may be wound up. Further, it is neither necessary nor desirable to seek to place limits on language which Parliament has made deliberately broad in its purview. That said, Parliament has chosen, in a case where a winding up application is made by a contributory, to specify, in s 467(4), some relevant considerations. Further, there are no persons who are willing to act as directors. But for the appointment of the provisional liquidators, Victorian Families would, in all likelihood, remain what one might describe as "a rudderless ship. " Victorian Families is not trading. Indeed, having regard to the absence of any disposition prior to the appointment of the provisional liquidators to fill the vacancy in the office of director and, further, having regard to the placement of the parent company into administration and, more latterly, into liquidation, there is a compelling inference that those who ultimately controlled Victorian Families prior to the appointment of external administration made a conscious decision to abandon its business and the management of that company. Victorian Families is in the following present financial position. Additionally, Victorian Families is presently subject to the contingency of claims in respect of margin loan losses by former clients. In some instances that contingency has become manifest; in others, claims are anticipated. One client has made a claim for $69,053 in relation to up-front fees paid to Victorian Families. The provisional liquidator's assessment is that more such claims are likely. In addition, Victorian Families has received notice of impending professional disciplinary proceedings. I am satisfied that there is no other remedy available to Storm Financial principally, for example, by way of a members' voluntary winding up. I note that the provisional liquidators have consented to being appointed as the liquidators of the company. It will be necessary to make some further observations in relation to their appointment shortly. On the facts that I have related, I am of the opinion that it is just and equitable that Victorian Families be wound up. The factors which, in my opinion, tell in favour of the winding up of this company are already evident from the recitation of facts. In other words, the company is what I have described as rudderless, and there is no prospect of that situation being remedied; its business has been abandoned; there are creditors who have made claims; and there are many creditors, or at least those who will allege themselves to be creditors, in prospect. In all in that regard, the provisional liquidator's estimate is that claims against Victorian Families, at least on present materials, may exceed some $2 million. The receivers and managers have an interest in the shareholding of Storm Financial in Victorian Families. It is desirable that the worth, if any, of that shareholding, having regard to claims made against Victorian Families, be properly ascertained. It is further desirable that those who make claims against Victorian Families have persons with whom they can deal. In all of these circumstances, it seems to me that it is just and equitable that the company be wound up. In voicing that opinion, I do not act on the basis that the company is shown to be insolvent. That is not the case on present materials, although it must be said that there is a likelihood of that in the future. I also bear in mind that likelihood in reaching the opinion that it is just and equitable for the company to be wound up. It remains, then, to consider whether Messrs Worrell and Khatri ought to be appointed as liquidators? They have, frankly, by their legal representative, drawn attention to a potential source of conflict of interest. That is in respect of the status, and more particularly, the liability recorded in the loan account, as between Storm Financial and Victorian Families. I note that those particular facts are not in any way challenged by, or on behalf of, the receivers and managers. There are advantages in Messrs Worrell and Khatri taking up the appointment of liquidators. (b) they expect that largest recoveries are likely to be received by professional indemnity insurers, and Storm Financial and Victorian Families have the same professional indemnity insurers, and were likely covered by the same policies. (c) there are cost savings to be had in the same administrators being appointed both in respect of Storm Financial and Victorian Families. I note that in Re Narla Prospecting Proprietary Limited; Dallhold Investments Proprietary Limited v Narla Prospecting Proprietary Limited [1992] FCA 341 ; (1992) 10 ACLC 1310 , French J, when a member of this Court, in deciding at the behest of a holding company to wind up a subsidiary, appointed as liquidator of the subsidiary the person who was the liquidator of the holding company. That also was a case where his Honour concluded that the company should be wound up on the just and equitable ground. I also bear in mind that Messrs Worrell and Khatri are well-experienced liquidators. I confidently expect that in the event that such potential, and I consider it remote, as there is for conflict of interest does arise, that that will be the subject of application in short order to the Court by them. I am satisfied that it is appropriate that they be appointed as liquidators of Victorian Families. My attention has been drawn to an interesting and, perhaps, inconsistent position in the Act in respect of circumstances where more than one liquidator is appointed. In any event, and again if only out of an abundance of caution, particularly having regard to Parliament's use of the imperative word "must" in s 473(8), I declare that anything that is required or authorised by the Act to be done by the liquidator is to be done by all or any one or more of Messrs Worrell and Khatri. The orders then that I make, apart from that declaration and the formal appointment of them, are for the winding up of the company and on the just and equitable ground. I will make an order that the Applicant's costs be costs in the winding up, and I will direct that the applicant bring in short minutes to reflect the orders made today. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | application by contributory to wind-up corporation on just and equitable ground and appoint official liquidators where corporation is a subsidiary of ultimate holding company where holding company is in liquidation where directors of corporation have vacated office no replacement director where entity is no longer trading as a corporation whether a conflict of interest exists in the appointment of the liquidators of the holding company as liquidators of the corporation court satisfied that it was in the interests of creditors to wind-up the corporation potential for conflict of interest remote order that company be wound up on just and equitable ground order that liquidators of holding company be appointed liquidators of subsidiary law reform interpretation inconsistencies between ss 473(8) and 530 of the corporations act 2001 (cth) need for harmonisation corporations statutes |
The ATO made him an offer of employment, subject to, amongst other things, a condition that should he be found unfit for employment the offer would be withdrawn or his employment terminated. He commenced work but shortly afterwards the ATO withdrew the offer. His medical assessment on behalf of the ATO had revealed a blood pressure reading of 200/110. On reassessment some three weeks later the reading was 200/125. 2 Mr Gordon claims that he has been subject to discrimination in employment contrary to s 15(2)(c) of the Disability Discrimination Act 1992 (Cth), which makes it unlawful for an employer to discriminate against an employee on the ground of the employee's disability by dismissing the employee. 3 There was disputed evidence as to the true level of Mr Gordon's hypertension, particularly in light of the fact that he appears to have been subject to a well known medical condition known as "white coat syndrome". This refers to the anxiety people often have when undergoing medical tests which results in a higher blood pressure reading than would otherwise be the case. However, while hypertension is undoubtedly a "disability" as defined in s 4 of the Act ("(e) the malfunction... of a part of the person's body") the term includes a disability that "(k) is imputed to a person". The disability imputed to Mr Gordon was that of a person with a serious level of hypertension. The job had other physical demands, to which reference will be made, but driving was the critical requirement. 8 In the s 15(4) context the question arises whether it is the actual or imputed condition of Mr Gordon at the time of dismissal that is relevant. 10 He held the degrees of Bachelor of Economics (Hons) (University of Tasmania 1993) and Master of Business Administration (Bond University 1991). He had qualified as a Certified Practising Accountant in 1997. He had two outstanding units to complete towards the Graduate Diploma in Applied Finance and Investment (Securities Institute). 11 From 1985 to 1995 he worked for the Department of Veterans' Affairs in various clerical positions with the ranking of ASO 2 and later ASO 3. 12 From May 1995 to February 1996 he was with the Insurance and Superannuation Commission at ASO 5 level. His duties included financial and prudential analysis and auditing superannuation funds. 13 From February 1996 to December 2001 he was employed by the ATO, initially at ASO 2 and later ASO 4. Towards the end of this period he worked in the Interpretation and Compliance Section completing audit investigations, examining work related expenses and issuing Private Binding Rulings. 14 From July 2001 until April 2003 he conducted a business as a private tax agent from his home in Hobart. This was confirmed in a letter headed "Offer of Ongoing Employment" dated 10 April. 16 The Offer was stated to be subject to the conditions set out in the letter. You would have already attended a medical assessment prior to commencing duty. Should you be found unfit for employment, this employment offer may be withdrawn or your employment terminated. 17 Another condition stated there would be a probation period of four months. During this period the employee would receive training. If the employee did not make satisfactory progress during the probation period, employment would be terminated. 18 The Offer enclosed a "Medical Evaluation" issued by Health Services Australia. This document explained that with the introduction of the GST the new position of "GST Field Officer" had been created within the ATO. No. The doctor will complete the form providing to Australian Taxation Office all the medical information about you that is relevant to your ability to do the job. While the doctor will certainly provide medical recommendations regarding your fitness to do the work, the decision on your employment remains with Australian Taxation Office. ... Medical Adviser Guidance Notes ... In reality very few medical conditions are an absolute contra-indication to employment. However, there are certain GST Field Officer tasks such as driving in which conditions pre-disposing to sudden loss of consciousness, poor vision or hearing could pose a health risk; ... ATO have indicated they will provide the doctor with guidance as to criteria against which an applicant is to be assessed if they do not meet the recommendation ie whether reasonable adjustments can be made. The evidence does not disclose whether this happened. The case of the respondent is that the offer of employment was withdrawn. As will be discussed below, for the purposes of s 15(2)(c) it does not matter whether an offer of employment was withdrawn before acceptance or whether a contract of employment which had come into existence was terminated by the respondent. Immediately prior to the assessment Mr Gordon filled out a questionnaire. In answer to the question "Do you or have you ever had high blood pressure? " he ticked "yes" and added "Have had reading of 160/110 doctor left untreated". 23 Dr Payne took a blood pressure reading of 200/110. In his report he stated that he told Mr Gordon "that he would speak to the ATO about it". Mr Gordon's weight, taken by Dr Payne's nurse, was recorded as 138.8 kg. 24 Mr Gordon was aware of the reading. He understood the purpose of the examination was to assess his fitness for the job. --- He said I couldn't start yet and he also said he would talk to the Tax Office about my situation. 25 On the same day Mr Gordon saw his General Practitioner, Dr Michael Mee, who recorded a reading of 190/105. Dr Mee prescribed some medication for blood pressure treatment which Mr Gordon commenced on 25 April. (The evidence disclosed many blood pressure readings for Mr Gordon both before and after his examination by Dr Payne. These are set out in a schedule to these reasons. The medical practitioners referred to are Dr Mee and Dr Russell Cooper (General Practitioners), Dr Payne, Dr Tomas McArdle (General Practitioner) and Dr Warrick Bishop (Cardiologist). 27 Mr Ian Godden was the director of GST staff in Tasmania and as delegate of the Commissioner of Taxation had the authority to withdraw the offer to Mr Gordon (or, presumably, terminate his employment). He swore an affidavit on which he was not cross-examined. Mr Godden deposed that on 28 April the training program for newly appointed field officers commenced in Launceston. 28 On 28 April Mr Gordon commenced duties at the ATO office in Launceston. 29 Some time later (it is not clear exactly when, but it must have been no later than 8 May) the ATO received Dr Payne's report, which stated that Mr Gordon was not fit for his employment duties. 30 On 8 May Mr Gordon was called away from training to a meeting room where his site manager and team leader were present. He was handed a letter dated 8 May signed by Mr Godden. The letter stated that the offer of ongoing employment was subject to the condition, amongst others, that he undergo a medical examination to satisfy the ATO of his fitness for duty as an Australian Public Service employee. The ATO had now received a report on the examination performed by Dr Payne. The letter advised that the report was held by a named officer and was available for him to discuss with her. The offer of employment was withdrawn. 31 On the same day Mr Gordon returned to Hobart. On 9 May he visited Dr Mee who recorded his blood pressure at 170/105. Dr Mee refused to provide Mr Gordon with a medical certificate for Centrelink on the grounds that he considered Mr Gordon to be fit for normal sedentary office duties and for interviews. Dr Mee supplied a certificate to that effect. Mr Gordon spoke to a delegate of the ATO who advised him that an appointment had been made on 13 May for a review with Dr Payne. 32 On 13 May Mr Gordon attended for a second examination by Dr Payne. The blood pressure reading was 200/125. 33 On 15 and 19 May Mr Gordon had blood pressure readings taken as noted in the schedule. 34 Dr Payne reported to the ATO in a letter dated 2 June. He noted that he had seen Mr Gordon on 22 April with regard to his fitness for work as a GST Field Officer. Hypertension 2. Hashimoto's disease (recently ceased medication and had not been monitored since then. Thus although asymptomatic his thyroid status was unknown) 3. Inflammation of an ingrown toe nail 4. Dr Payne noted that since the previous consultation Mr Gordon reported he had attended his treating General Practitioner with regard to the medical conditions mentioned above. He had been on medication for hypertension with an increasing dosage. His blood pressure had not at that stage stabilised. His lipid studies were reasonable. As to thyroid function, blood tests indicated a raised TSH. He had been placed back on thyroxin tablets. He had started to exercise and modified his diet. He had arranged an appointment for removal of his toe nail the following day. However it is likely that it will take some further time to stabilise his blood pressure as he is still on increasing dosages. He has reduced some weight now falling into the obese range not the morbidly obese. This still remains a risk factor in control of his blood pressure, general health and well being and risk of physical injury. His toe was less inflamed. 37 Dr Payne thought Mr Gordon still had further to go with regard to stabilization of his blood pressure. This remained a risk particularly with regard to the duties of the position and the driving component. There was also the aspect that at that stage he could not say whether the potential side effects from the increased dosage of medication would adversely affect his driving and work ability. The thyroid disease however would not prevent work at that time. Mr Gordon's weight was an added risk but would not necessarily prevent him carrying out his duties. The treatment to his toe nail was likely to give him somewhat restricted mobility for about two weeks from the procedure. The likelihood is that he will become fit for work with stabilization of his hypertension on appropriate medication, providing that there are no adverse effects on the duties from the medication. Continued loss of weight should have a positive effect on general health, well being and mobility. His toe condition should respond to appropriate treatment. 38 On 4 June Dr Payne spoke by telephone to Mr Andrew Hunter of the ATO to "clarify the information and risks identified in the report". Mr Hunter noted Dr Payne as saying that due to the nature of the role as a GST Field Officer, the issues surrounding control of weight, blood pressure ("currently 'juggling'"), medication and their impact on driving, that if Dr Payne was employing him it would be for "office based but with modified duties due to health issues, medication etc". Medication had possible side effects and it would be a matter of trial to see which medication reacts best for him. It has to do with personal approach to maintain weight loss, medication (etc) would be at least 1 month and possibly up to 6 months. Dr Payne advised that he had spoken with Mr Gordon's doctor who "had no issues" with the assessment that there are risks regarding Mr Gordon's health. In Dr Payne's view it would only be worth reviewing again if Mr Gordon's doctor provided advice that health issues were stabilised, medication was not causing problems and weight loss was maintained. Dr Payne's advice was that Mr Gordon "is a risk" and was "not suited at this stage (due to health issues) for field work; even office based duties would need to be modified to minimise this risk". 39 Also on 4 June Mr Gordon telephoned Mr Hunter advising amongst other things his lower blood pressure reading of 150/88 taken by Dr Mee on 2 June. 40 On the same day the ATO wrote to Mr Gordon stating that on the basis of the advice of the reassessment conducted by Dr Payne it had been concluded that "you are not medically fit for the duties outlined as an APS4 GST Field Officer Compliance operative". It was confirmed that the offer of employment had been formally withdrawn. 41 On 6 June Mr Gordon wrote to the ATO advising of his consultations with Dr Mee. He also considered that I was fit to carry out all the normal duties required in an office. 42 In a report the following year dated 10 August 2004 Dr Mee confirmed his examination of Mr Gordon on 9 May 2003. He stated he had made it clear to Mr Gordon that in providing a certificate stating he was "fit for sedentary work" and could drive a motor vehicle he was not expressing an opinion on his suitability for any specific employment. There was an expectation that he would follow treatment and management advice for his medical problems. Amongst other things Dr Cooper recorded blood pressure readings by Dr Mee and himself (see schedule). He noted that in his opinion, and that of Dr Mee and Dr McArdle, Mr Gordon was fit to work and drive a car. 44 Dr Cooper noted that Dr Payne's readings were a lot higher than the readings of Drs Mee, McArdle and himself around the same time which would suggest that Mr Cooper was "experiencing acute anxiety (white coat syndrome)". He found Dr Payne's view that Mr Gordon's improvement would be conditional on his experiencing no adverse effects from the medication "a bit perplexing". In Dr Cooper's view if there were side effects from medication it was not Mr Gordon's fault, rather the doctor's choice of medication and that it was the treating doctor's duty to find an anti-hypertension medication that is side effect free. 45 Dr Bishop duly examined Mr Gordon on 26 November 2003 and sent Dr Cooper a report of the same date. He enclosed an extract from Assessing Fitness to Drive: For Commercial and Private Vehicle Drivers, Medical Standards for Licensing and Clinical Management Guidelines published in September 2003 by the National Road Transport Commission. They should be reviewed by their treating doctor periodically regarding progression of the illness. If constantly elevated blood pressure had not been documented then by the guidelines it would seem that the patient would not be unfit to drive. If there were side effects from medication then this could interfere with driving. 47 Dr Bishop thought that the blood pressure needed to be documented on several occasions to confirm the diagnosis. Mr Gordon needed to be treated appropriately and shown to be tolerating the medication. If he satisfied the criteria outlined in the fitness to drive guidelines, then there would be no reason for him not to drive and similarly he could see no reason why he would be unfit for work. The time required for Mr Gordon to be sufficiently controlled from a hypertensive point of view was individual, although "it should have been able to be sorted out at most, within a couple of weeks". This involved fitting a device which automatically records blood pressure readings over a 24 hour period. Dr Bishop sent a report to Dr Cooper dated 31 March 2004. He said that he was "pleased to see that this showed excellent blood pressure control over the 24 hour period". He had reassured Mr Gordon and did not need to see him again. The total average was 111/70. 49 Dr Bishop's evidence at the trial was that the normal range of blood pressure in an adult male is around 120/80 or 130/80. On a 24 hour blood pressure monitor 140/85 would be acceptable. 50 Dr Cooper replied to Dr Bishop in a letter dated 27 April. The letter contains an analysis of the readings. The initial reading was 147/89 but then fell quite substantially over the 24 hour period with the average results "well within the normal range". Apparently on Mr Gordon's first visit to Dr Bishop his systolic reading was 185 but that fell immediately to 150 on retesting. 51 Dr Bishop's view in a report dated 30 April 2004 was that Mr Gordon had a "significant 'white coat' affect". He said that it was fairly common for patients' blood pressure readings to be spuriously raised when they were being tested by a doctor and that ambulatory blood pressure monitoring was a more reliable means of testing blood pressure in a group of patients who have significant variability due to a white coat effect. Surprisingly for an expert witness relied on in Tasmanian litigation, Dr Robinson practices in Claremont --- not the Hobart suburb but Claremont, Western Australia. He did not examine Mr Gordon. He reviewed various reports including those of Dr Payne, Dr Cooper and Dr Bishop. He expressed the view that diastolic blood pressure of 110 mmHg was a medical emergency that required prompt investigation and treatment. He would have admitted that person to hospital. Once the patient settled down in hospital the white coat effect would become less obvious. Tests should be conducted to exclude phaeochromocytoma and Conn's Syndrome. In the absence of those conditions the blood pressure could have been brought under control within a few days of aggressive management. Mr Gordon would have been strongly advised to lose weight and provided with dietary advice. He noted that Mr Gordon had a past history of a nervous condition, most recently affecting him during a return flight to Australia after his father's death in Italy. Mr Gordon, Dr Robinson said, responded badly to emotional stress. Dr Robinson thought that there would be more stress in the GST job than "'the white coat effect' from well meaning medical staff". He thought Mr Gordon's hypertension put him at risk of a heart attack or stroke, and his obesity put him at risk of developing diabetes. 53 I am not persuaded that a Perth cardiologist can give any useful evidence about the stress or otherwise for somebody working as a GST Officer in the ATO office in Launceston. 54 As to Dr Robinson's opinion about immediate hospital admission, Dr Bishop in cross-examination agreed that a reading of 110 had to be treated seriously, but in his 15 years of experience in managing high blood pressure he had not admitted a patient. This was because of the availability of more powerful oral medications. 55 I did not find Dr Robinson's report of much assistance. Did the respondent discriminate against Mr Gordon on the ground of a disability (s 5(1))? The respondent, on the advice of Dr Payne, imputed this disability to Mr Gordon. The comparator for the purposes of s 5(1) is a hypothetical person who does not have hypertension but has Mr Gordon's qualifications and experience and is applying for the position of a GST Field Officer in the Launceston office of the ATO. There can be no doubt that such a person would have got the job and would not have had the employment offer withdrawn. By withdrawing the offer of employment the respondent has treated Mr Gordon less favourably than it would have treated such a hypothetical person. It did so because of the imputed condition of hypertension, which, it considered, made him unfit for the requirements of the particular position. The respondent thus discriminated against Mr Gordon, within the meaning of s 5(1): Purvis v New South Wales [2003] HCA 62 ; (2003) 217 CLR 92 at [213] . 57 I do not accept the respondent's argument that the offer was withdrawn, not because of Mr Gordon's hypertension, but because he failed to meet one of the pre-employment conditions, viz, that he be certified fit for the duties of the position. One cannot divorce the factual base from its legal characterisation. Even if regard is had to the three other medical conditions mentioned by Dr Payne, there would still be discrimination because they are equally "disabilities" which would not be suffered by the comparator. But viewed in a practical way, the inescapable conclusion from the evidence is that the real and operative reason for withdrawing the offer was Mr Gordon's imputed hypertension. Did the respondent discriminate against Mr Gordon by dismissing him (s 15(2)(c))? 59 Anti-discrimination legislation is to be given a "fair, large and liberal" interpretation rather than one which is "literal or technical": IW v City of Perth [1997] HCA 30 ; (1997) 191 CLR 1 at 12 per Brennan CJ and McHugh J. From 28 April 2003 Mr Gordon was an "employee" of the respondent, however conditional the terms under which he was employed. He attended at the ATO Launceston office, carried out such duties as were required of him (there is nothing to suggest the contrary) and received, or became entitled to receive, a wage or salary as long as he so attended. During the period he was at the office the respondent would have owed him the common law and statutory obligations which employers owe to their employees. The respondent would have been liable to any third parties for torts committed by Mr Gordon in the course of his employment. Withdrawing an employment offer, in circumstances where Mr Gordon had already started work, and would have continued to work but for Mr Godden telling him to leave the premises that day, was within the concept of "dismissing" in s 15(2)(c). 60 Since s 15(1) make it unlawful to discriminate against a person on the grounds of disability in "determining who should be offered employment" (par (b)) or "in the terms or conditions on which employment is offered" (par (c)), it would be strange if someone like Mr Gordon who had actually started work would be in a weaker position and would have no protection against discrimination. 61 I reject the respondent's submission that Mr Gordon "commenced his employment under false pretences". The medical evaluation form ([18]-[20] above) made it clear that the doctor was not to decide whether Mr Gordon got the job. The form was quite encouraging in holding out the prospect that, if any medical problems existed, their effect on employment could quite possibly be resolved to the satisfaction of the employee. Mr Gordon was aware that Dr Payne would talk to the ATO. Mr Gordon was not to know when this would happen. In the meantime, according to Mr Godden, Mr Gordon's commencing work was somewhat accelerated, apparently on the ATO's initiative, because the training program was about to commence. 62 I conclude therefore that Mr Gordon has made out a prima facie case of discrimination. Before passing to the s 15(4) defence I should note that the Act does not require an intention or motive to discriminate; cf Waters v Public Transport Corporation [1991] HCA 49 ; (1991) 173 CLR 349 at 359 per Mason CJ and Gaudron J, with whom Deane J at 382 agreed, a case under comparable Victorian legislation. There is nothing to suggest that Dr Payne, or Mr Godden and the other ATO officers, acted otherwise than in good faith. Is actual or imputed disability the criterion for s 15(4)? That question was not addressed by the learned Federal Magistrate. In my view the failure to address that question was an appealable error. If the question had been addressed then there are two possibilities. The first is that the 'imputed disorder' of depression is the relevant disability. Alternatively, his actual condition of an adjustment disorder (from which he seems to have recovered) is the relevant disability. 16 The appellant's submissions assumed that the relevant disability was the actual condition of the appellant at the time of his termination. On that basis the appellant submitted that he could perform the inherent requirements of the position - indeed, he was doing so for the four weeks before his employment was terminated. Consequently, he argued, s 15(4) of the DDA had no application. 17 On the other hand the respondent's submissions assumed that the relevant disability was the imputed disorder of depression, notwithstanding that the appellant was not suffering from that disability. On this basis the respondent argued that in light of the report of Dr Ducrou the appellant was unable to comply with the inherent duties of the position. 18 So far as my research reveals, there is no authority directly on point. The definition of 'disability' in s 4 of the DDA purports to be an exhaustive definition, 'unless the contrary intention appears'. There is no obvious contrary intention disclosed by s 15(4). Nor is there any obvious reason to imply one. The DDA is principally directed to the elimination as far as possible of 'discrimination against persons on the ground of disability' in relevant areas (s 3 DDA). It is not directed at achieving 'fair outcomes' as such. Consequently what is prohibited is discriminatory behaviour based upon disability. 'Imputed' disability is sufficient for this purpose. What the DDA prohibited in this case was not the dismissal of the appellant for a reason which was wrong, but the dismissal of the appellant who had a disability (albeit an imputed one) in circumstances where a person without a disability would not have been dismissed. When it is understood that the DDA is directed at the ground of discrimination (which includes imputed disability) and not 'fair outcomes' then there seems no reason to imply that 'disability' appearing in s 15(4) of the DDA does not include imputed disability. 64 Additionally to his Honour's observations, it can be said that it is likely that the word "disability" wherever it appears in s 15(4) is referring to the same thing. Where first appearing, "disability" is obviously referring to the discrimination alleged against the employer seeking to rely on the defence. If that discrimination was on the ground of imputed disability, then "disability" means imputed disability and the later expression "his or her disability" refers to the disability imputed to the employee alleging discrimination. 65 Since s 15 as a whole is setting up a norm of conduct, it is to be read as addressed to employers as at the time they are contemplating potentially discriminatory conduct. Subsections (1) and (2) tell employers what they must not do. Subsections (3) and (4) tell them in what circumstances they may lawfully do what would otherwise amount to unlawful discrimination. This suggests that what subs (4) is concerned with are circumstances known to the employer at the time. However, consistently with the philosophy of anti-discrimination legislation (see [58] above), the criterion is an objective one --- as is indicated by the reference to "all other factors that it is reasonable to take into account". The relevant circumstances include the nature of the imputed disability in the light of such medical investigation as may be reasonable and the availability of reasonable treatment. What were the inherent requirements of the particular employment (s 15(4)(a))? The inherent requirements include at least the ability to carry out the physical tasks encompassed by the particular employment but also matters such as having regard for the safety of other employees, the general public and the employee himself: X v The Commonwealth [1999] HCA 63 ; (1999) 200 CLR 177 at [31] - [35] per McHugh J. 67 The requirements of the particular employment in question in the present case were described by Mr Godden. In 2003 GST Field Staff were organised into six teams, three each in Hobart and Launceston. The Launceston teams were based at an ATO office in that city. The office was purely a GST Field Site. No other ATO functions were performed at that site and there were no facilities for public contact. When a taxpayer had to be seen, the officers would go out to the taxpayer's place of business. 68 Launceston teams were expected to deal with clients in the North of the State down to Ross, on the North West Coast and in the North East down to Bicheno. 69 All Launceston staff were involved in field work in 2003. The work was a mixture of audit and advisory visits. The latter would be in response to a taxpayer's request for a visit. The Commissioner had given a public undertaking that the Office would contact the taxpayer within 72 hours of the initial request and complete the visit within 14 days. 70 Management was trying to maximise field time with an aim of officers spending 80 per cent of their time in the field. As it turned out, in 2003 officers in Launceston spent about 40 to 50 per cent of their time in the field, the remainder being taken up with training, team meetings, leave etc. New APS 4 staff such as Mr Gordon would have to spend more time in the field than the average because their work would have required them to spend more time doing advisory visits than audits. 71 Field officers were issued with a laptop and printer totalling 6.5 kg together with miscellaneous information booklets. 72 Sometimes overnight stays were required in remote locations. 73 Because so much work was done in the field there was a desk sharing arrangement in the office, ie one desk between four officers. 74 The foregoing description is, however, subject to the particular requirements of the training or induction period for Mr Gordon and other officers starting with him. The period was, as already mentioned, to commence on 28 April 2003 and extend over a period of sixteen weeks. As Mr Godden deposed, the training period "was not all office based". But that rather suggests that, in contradistinction to the post-training regime, work outside the office would be the exception. This inference is strengthened by the detail Mr Godden provides. The following week they were then required to undertake training out in the field for one day. The following week they had two days of field training. And the following week three days in the field for training. The field work during their training period could have been anywhere in the North of the State. It depended entirely on where the cases were located. 75 Thus virtually the whole of the first month was to be spent in Launceston. This is confirmed by the timetable for the training program (exhibit AH). For the rest of the training period, field trips appear in the program as "Buddy Days". As might be expected, trainees would not be sent into the field alone. Mr Gordon would not necessarily have had to drive. 76 I find that the requirements of the particular employment in this case, apart from the training period, included the ability to drive a motor vehicle frequently and sometimes for substantial distances. The suggestion that somebody in Mr Gordon's position could travel to places like Smithton and Ringarooma by bus or taxi is quite fanciful. However, the position during the training period was significantly different, as discussed above. It seems likely that Mr Gordon could have managed for that period without driving at all. Would Mr Gordon be unable to carry out these inherent requirements (s 15(4)(a))? It is plain that, as revealed by the ambulatory testing, Mr Gordon has been dramatically affected by white coat syndrome. His average reading revealed by such testing in February 2004 was 111/70 although of course it does not necessarily follow that Mr Gordon's true blood pressure in May 2003 was the same. But Dr Payne accepted in cross-examination that as at 22 April 2003 he recognised that Mr Gordon might be suffering a white coat effect, and that his underlying blood pressure may have been well below what he recorded in the surgery. 78 As to fitness for driving, Dr Payne, at the time he examined Mr Gordon, was not aware of the induction program. He accepted in cross-examination that by 13 May 2003 if Mr Gordon was not doing extensive driving he would have considered him fit. When the facts of the induction program were put to him, Dr Payne agreed that it did not involve extensive driving, particularly if Mr Gordon was getting a lift. For the orally dosed medications that are routinely used, one would think that dosing over a period of five half-lives (roughly five days for most these medications) would provide substantial blood pressure effect. To that end, one would normally hope to get at least moderate control of the blood pressure within a matter of weeks and then finer control of blood pressure beyond that. 82 The respondent has not established that Mr Gordon, by reason of his imputed (or indeed actual) hypertension would be unable to carry out the inherent requirements of the particular employment. It is therefore not necessary to consider questions under s 15(4)(b) as to the "services or facilities" that would be required and any "unjustifiable hardship" on the respondent. It can be said, however, that during the training period organising a lift for Mr Gordon to Hobart and return on 22 May 2003 and ensuring that his "buddies" would drive on subsequent training trips would not have imposed any unjustifiable hardship. Costs. However, I see no need for an order directing the respondent not to repeat such unlawful discrimination. As explained below, there will be no order for reinstatement, so it is unlikely that there will be any opportunity for discrimination against Mr Gordon in the future. The discrimination which occurred was not motivated by any animus on the part of the ATO towards Mr Gordon. There is no reason to suspect that in general the ATO is unaware of its obligations under anti-discrimination legislation. 86 The rather complicated background to this issue is as follows. At the time of the trial Mr Gordon was employed by the Retirement Benefits Fund, a statutory body which manages the superannuation of Tasmanian State Government employees. He worked in a call centre answering queries. After the evidence was completed, but before the written final submissions had been concluded (there were no oral final submissions), Mr Gordon applied for a position at the RBF as a Para Planner. This is a kind of apprenticeship position which can lead on to appointment as a financial planner. Mr Gordon has two remaining subjects to complete in order to satisfy the requirements for the professional qualifications for financial planning. 87 On 29 February 2008 Mr Gordon's solicitors wrote to the Court and the respondent's solicitor advising that Mr Gordon had been successful in obtaining an appointment with the RBF as a Para Planner, commencing 10 March 2008, on a salary of $45,414 gross per annum. The maximum salary payable could increase to $50,865 gross per annum after another five increment points. The maximum level payable on the currently held position was $47,218 after another two increment points. The solicitors advised that Mr Gordon no longer sought reinstatement. 88 On 19 March Mr Gordon's solicitors wrote to the Court foreshadowing an application to make further submissions and possibly call further evidence on the issue. 89 On 20 March the respondent's solicitor wrote advising that the respondent also would possibly wish to call further evidence. 90 On 1 April Mr Gordon's solicitors wrote advising that Mr Gordon now asked for retrospective reinstatement to the ATO, as originally sought. They were no longer instructed to make further submissions or present further evidence. 91 At a directions hearing on 22 April the respondent sought leave to call further evidence from an actuary in the light of Mr Gordon's disclosure of his new employment position with RBF. I refused the application. I intimated that I would rely on what was said in the letter of 29 February as to Mr Gordon's current employment. Counsel accepted this. 92 I do not propose to make an order for reinstatement. Five years have passed since Mr Gordon left the ATO. He now has permanent employment of his own choice. According to Mr Godden, the position Mr Gordon had been offered at ATO in Launceston was not refilled. In 2003 GST "as a business line" began contracting in numbers. In the Victoria/Tasmania region only positions in metropolitan sites were filled, due to decreasing work demands. Staff working in the remote sites such as Launceston were not replaced if they left and work targets for those "losing sites" were reduced so that there were enough staff at the relevant levels to undertake the required work. 93 "Particular employment" means the actual employment the relevant employee was required to perform pursuant to his contract of employment, not the general status of an employee in the employer's organisation: Cosma v Qantas Airways Ltd [2002] FCA 640 ; (2002) 124 FCR 504. Today the particular employment from which Mr Gordon was dismissed no longer exists. He paid a deposit of $5,000. Settlement was due on 13 June 2003. The contract was subject to Westpac Bank making available a mortgage to secure a loan of $150,000. 95 After the ATO terminated his employment Mr Gordon advised Westpac accordingly. Because he then failed the bank's income test the loan application was refused. An alternative buyer was found for the property in June or July 2003. The property was valued by Brothers & Newton Pty Ltd of Launceston in May 2007, as at May 2003, at $250,000. Apparently there was a real estate boom in Launceston. 96 Mr Gordon said he bought the house because he "felt it was an essential part of making a full commitment to the job". He was also spending money to stay in a hotel without any support from the ATO and returned to Hobart (where he owned another house) at weekends. He was told by agents that the market was "red hot". At the time he signed the contract he was aware of his high blood pressure reading but saw the risk of losing the job as "just so remote". 97 There was a considerable amount of cross-examination about the financial viability of the purchase, given Mr Gordon's existing mortgage over his Hobart property, and whether it was feasible to let part of the Launceston property. 98 However, I do not think any amount in relation to the house purchase is properly allowable as damages by way of compensation for any loss or damage suffered because of the conduct of the respondent: s 46PO(4)(d) of the HREOC Act. There is no suggestion that the ATO was aware of, let alone encouraged, this purchase. Any loss, either by way of out of pocket expenses or loss of a chance to make a profitable investment, arose from Mr Gordon's rather precipitate decision to purchase and cannot, as a matter of commonsense, be attributed to the discriminatory conduct of the ATO: cf March v Stramare (E & MH) Pty Ltd [1991] HCA 12 ; (1991) 171 CLR 506. 102 Mr Gordon claims past economic loss being the difference between what he has earned and what he would have earned at the ATO. The current APS 4 salary, assuming a salary in the middle of the band, is approximately $44,000 net. His current salary net would be approximately $37,000. The difference is $7,000 per annum or $5,830 for the 10 months of the current financial year. Adding that figure to the figure for the period to 30 June 2007 gives a result of $63,267. Mr Gordon's damages will include that figure. Since all the calculations are on a net basis I believe it will not be necessary to gross up to allow for any tax payable by Mr Gordon. Should it be necessary, however, I would receive further submissions on this point. 103 In 2003 and 2004 Mr Gordon received $8030 from Centrelink which he will be obliged to repay. This amount will be included in his damages. 104 The future loss is problematical. At the outset, it must be noted that, unlike the typical common law claim, this is not a claim for loss of earning capacity. It is not alleged that what I have found to be the unlawful termination of employment had any effect on Mr Gordon's physical or mental capacity to earn income. Mr Gordon's case is based on the loss of a hypothetical career with the ATO leading to retirement at 55, 60 or 65. He postulates three possible levels, "Pessimistic", "Expected" and "Optimistic". On the most optimistic scenario, he ends up as an Assistant Commissioner of Taxation based in Canberra. 105 Both sides called actuarial witnesses, Mr Morley for Mr Gordon and Mr Byrne for the respondent. There was little, if any, dispute between those gentlemen as to the methodology of calculation including such matters as discount rates. The real problem is the validity of the assumptions underlying Mr Gordon's case. 106 Assessing what is likely to happen in the future, or would be likely to have happened had not something intervened, is not a matter of scientific demonstration or proof. Nor, unlike findings as to alleged past events, is it a case of all or nothing; 51 per cent probability win, 49 per cent probability lose: Malec v J C Hutton Pty Ltd [1990] HCA 20 ; (1990) 169 CLR 638 at 643. Nevertheless, the circumstances in the present case make it extremely unlikely that Mr Gordon, had it not been for the termination in May 2003, would have pursued a successful career with the ATO until retirement, let alone at the level he suggests. 107 First, without wishing to be hurtful to Mr Gordon, the inescapable fact is that, for whatever reason, he is not a high achiever. On paper his qualifications are considerable. He has an honours economics degree and an MBA from good universities. He is a qualified accountant. He has almost finished financial planning qualifications. Yet the positions he has occupied up until now could be characterised as occupying a rank and salary towards the lower end of mid-level clerical/professional jobs. Professional men or women in their mid-forties should be at or approaching their peak in terms of earnings and professional status. If they haven't got very far by this stage, things are unlikely to improve to any significant extent. 108 Secondly, in the past Mr Gordon has not displayed any particular enthusiasm for a career in taxation. He did not persist with the ATO in his earlier career (see [14] above). Perhaps more importantly, in his recent job applications, both in the public and private sectors ([100] above), only one was tax-related. The rest appear to have been for employment in the funds management industry. 109 Thirdly, and connected to the last point, it seems that if Mr Gordon was truly interested in a long term career in tax he would have been better off in the private sector. 110 Mr Byrne was Managing Principal of one of Tasmania's largest accounting firms from 2001 until 2005. He said that in Tasmania it was quite difficult to find good qualified staff at all levels and for some firms this was still the case during 2007, particularly for experienced taxation staff. His firm employed staff from South Australia to fill vacancies. 111 In Mr Byrne's opinion, which was not seriously challenged, as a CPA with an MBA and at least five years in taxation services, given the shortage of tax professionals in Tasmania, Mr Gordon should have been readily employable with a career and salary prospects which could have at least matched if not well exceeded his expected career with the ATO. He could have expected a long career with one of Tasmania's larger accounting firms, that is to say ones with 25 plus staff (which I take to mean professional staff). 112 Mr Byrne prepared a table which compares Mr Gordon's earnings if he had followed a career as a taxation consultant compared to his hypothetical "expected" (ie the middle one of his scenarios) career with the ATO. This has manifested as an enormous amount of grief and anxiety. Losing the house I bought in Launceston also broke me up enormously. Asking the lawyer to ask the seller to give me an extension of time to sort things out... (k) telling my family (especially my father who lives in Italy on the telephone) and many of my friends (some female friends still not told) what had happened was also extremely difficult. I had to do this over a few months (and am still doing it) as I was simply unable to deal with it any sooner, ... (m) waiting three weeks in a state of limbo before finally contacting the ATO to find out what the situation was. No response had been received from the doctor, (n) visiting three different doctors on multiple occasions during this time, desperately trying to determine the status of my health. Having multiple blood pressure readings being performed also exacerbated my anxiety, ... (q) calling the Delegate in a state of stress at 1 a.m. in the morning to leave a message on his answering machine asking him not to send the (termination) letter as I considered it would breach the Disability Discrimination Act , ... (v) being rung up by the ATO and told that they had lost the second medical report... (bb) stress of investigating the case myself and preparing a large number of documents has also been extremely difficult emotionally, (cc) I have also suffered emotionally from the financial pressures that the situation has continued to place on me... (dd) I have a fairly nervous disposition and suffered from an episode of anxiety and depression around eight years ago resulting in me requiring three months off work on sick leave. This whole affair has certainly placed unusual stress upon me causing me many sleepless nights. I have also spend numerous hours in the daytime obsessing over the circumstances of my life and wasted large amounts of time and nervous energy in this pursuit. Carrying out work for the dole obligations has also been required during this period. 118 Mr Gordon's oral evidence was that he "suffered extreme amounts of anxiety as a result of the decision and the determination to fix the matter which I saw as unjust" but that he did not seek medical treatment for that anxiety. 119 Since, for the reasons already explained, the cancellation of the purchase of the Launceston house is not a basis for compensation, I exclude so much of the foregoing as relates to that issue. Nevertheless, I accept that Mr Gordon has suffered substantial mental anguish. Perhaps he does not have a particularly stoic makeup, but, to apply the aphorism of the common law, the unlawful discriminator must take the plaintiff as it finds him. 120 A job, which one has sought and obtained on one's merits, gives meaning and purpose to life. It is an essential part of one's self worth. If it is lost as a result of someone's unlawful conduct then compensation ought to reflect the loss that is suffered, quite apart from economic considerations. 121 Under this heading I would award Mr Gordon $20,000. The claim under the HREOC Act is, inter alia, a claim for "the recovery of ... money (including ... damages)". The current rate prescribed under rule 5A of the Supreme Court Rules 2000 (Tas) is 10.5 per cent. 125 The award for lost salary is for money lost progressively over the last five years. I will allow the 10.5 per cent on roughly half that amount, say $30,000, for five years, ie $15,750. The remainder of the award, $28,030, represents compensation for loss incurred five years ago. Interest on that component will be $14,715. Total interest amounts to $30,465. There will be a direction that within seven days of delivery of judgment the applicant file and serve submissions as to costs, the respondent file and serve submissions seven days thereafter and the applicant file and serve any reply within seven days. Costs will be decided on the papers. 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 Heerey. | disability discrimination applicant offered employment by australian tax office as gst field officer based in launceston on condition that should he be found unfit for employment the offer would be withdrawn applicant commenced duties and embarked on training program respondent subsequently advised of applicant's high blood pressure reading (hypertension) at medical examination respondent withdrew offer of employment later testing showed applicant affected by "white coat syndrome" (elevated blood pressure reading caused by anxiety reaction to testing) respondent relied on defence under s 15(4) of disability discrimination act 1992 (cth) claim for reinstatement claim for damages included (i) difference between earnings from termination to date and hypothetical earnings at ato (ii) difference between anticipated future earnings and hypothetical earnings at ato (iii) expense incurred on house purchase and loss of capital appreciation discrimination |
The businesses consist of a restaurant business known as " Moda " carried on at the Westfield Shopping Mall at Bondi Junction, a café business known as " Momo " also carried on at Westfield at Bondi Junction and a bar and gaming lounge business known as " Equilibrium " carried on in the World Square Shopping Centre in George Street, Sydney. Toby is Miguel's father and Marco's father-in-law. It is convenient to refer to Toby, Miguel and Marco jointly as the Farinhas . I shall generally refer to corporate entities connected with the Farinhas as the San Marco Group . 2 While the relationship between Carl and the Farinhas began as one of trust and cooperation, the relationship has soured and they have lost trust in each other. As a consequence, they have engaged in expensive litigation to resolve issues that should sensibly have been resolved by mediation or other extra curial means. 3 The three businesses have been carried on by the fourth, fifth and sixth defendants, San Marco Bondi Junction Pty Limited ( Bondi Junction ), San Marco Piccolo Pty Limited ( Piccolo ) and San Marco World Square Pty Limited ( World Square ) respectively. That is to say, Bondi Junction carries on the Moda business, Piccolo carries on the Momo business and World Square operates the Equilibrium business. However, as will become apparent, the Moda and Momo businesses have tended to merge into one business carried on by Bondi Junction. 4 A significant issue in the proceeding is whether Bondi Junction, Piccolo and World Square carry on the businesses beneficially or in some nominee or trustee capacity. The Farinhas say that Bondi Junction, Piccolo and World Square carry on their respective businesses as nominee for various partnerships. They say that a partnership, consisting of Toby Bondi Junction Pty Limited ( Toby Bondi Junction ), Marco Bondi Junction Pty Limited ( Marco Bondi Junction ) and Miguel Bondi Junction Pty Limited ( Miguel Bondi Junction ), which are controlled by Toby, Marco and Miguel respectively and Carl Bondi Junction Pty Limited ( Carl Bondi Junction ), which is controlled by Carl, carries on the Moda and Momo businesses. They also say that Cine San Marco Pty Limited ( Cine ) which is controlled by the Farinhas, and Carl World Square Pty Limited ( Carl World Square ), which is controlled by Carl, carry on the Equilibrium business in partnership. 5 All of the relevant corporate entities have been joined as parties to the proceeding, either as plaintiffs or defendants. Cine and Toby Bondi Junction, Marco Bondi Junction and Miguel Bondi Junction seek orders, by way of cross-claim, that the alleged partnerships be wound up and that an account of profits and losses be taken. 6 It is common ground that Carl and the Farinhas were to be involved in corporate entities that were to engage in one way or another in the conduct of the three businesses. Further, it is not disputed that Carl made payments exceeding $1,800,000 in connection with the three businesses. However, there is a dispute between the parties as to how those payments should be characterised. Carl claims that all of the payments should be characterised as advances on loan account. The Farinhas say, on the other hand, that the payments should be treated as contributions to the equity of the alleged partnerships. 7 There is another dispute as to the identity of the entity or entities to which Carl's payments were made. Carl adduced evidence from Ms Fiona Marie Bateman, a chartered accountant who specialises in forensic accountancy. Ms Batemen reported that, following a detailed examination of the books and records of various entities involved with the businesses, she was unable to determine how some of the payments should be allocated among the three businesses. 8 There are also particular disputes between the parties concerning the share capital of World Square. The first dispute concerns a written agreement involving Carl, Toby and Marco dated 20 July 2005 ( the Letter Agreement ), whereby it was agreed that, if a binding written agreement relating to their interest in the World Square project was not entered into by 7 September 2005, then, at the option of any of the parties, Toby and Marco were to arrange for the repayment of all monies invested by Carl in the World Square project and Carl's interest in the project would be transferred to the other parties. Carl claims that the option was not properly exercised or, if it was, that there is no longer any agreement on foot. 9 The second dispute concerns the purported allotment of a substantial number of shares in the capital of World Square to the eighth defendant, Equal 54 Pty Limited ( Equal 54 ). The Farinhas now say that, by reason of failure to comply with the Constitution of World Square, the purported allotment was ineffective. Carl, on the other hand, says that, whether or not the allotment was effective, it was an instance of unfair and oppressive conduct in relation to the affairs of World Square. Equal 54 was joined as a defendant but, having regard to the contention by the Farinhas that the allotment was ineffective, it has not played a substantive part in the proceeding. 10 Carl owns 40% of the issued capital of Bondi Junction and 40% of the issued capital of Piccolo. Until the purported allotment to Equal 54, Carl held 30% of the issued capital of World Square. Carl claims that the affairs of World Square, Bondi Junction and Piccolo have been conducted in a manner that is oppressive or unfairly prejudicial to or unfairly discriminatory against Carl in his capacity as a shareholder and in a manner that was or would be contrary to the interests of the members of those companies as a whole. He therefore claims orders, under s 461 of the Corporations Act 2001 (Cth) ( the Corporations Act ), that the Farinhas or entities associated with them be required to buy his shares in those three companies for a value determined on the basis that the alleged unfair or oppressive conduct had not occurred. 11 The allegations of oppressive conduct involve an examination of allegations made by Carl of under reporting of revenue of the three businesses and overcharging of management, administration and other fees payable by the three businesses to the San Marco Group. The parties accept that the question of the value to be attributed to Carl's shares in the three companies, if the relief claimed by him were to be ordered, should be the subject of a further hearing at which further evidence could be adduced and further submissions would be made. 12 Carl and the second plaintiff, Carpe Diem Initiatives Pty Limited ( Carpe Diem ), also seek declarations that Carpe Diem lent $550,000 to Toby and Marco or alternatively to the seventh defendant, Cockle Bay San Marco Pty Ltd ( Cockle Bay ), in order to fund a payment to Sherbet Creative Enterprises Pty Ltd. Cockle Bay is controlled by the Farinhas. In the further alternative, Carl and Carpe Diem sought a declaration that the loan was guaranteed by Toby and Marco, without saying who was the borrower. They claim that the loan fell due to be repaid to Carpe Diem on 30 November 2005. 13 As I apprehend the contentions of the parties, it is now common ground that, in March 2005, loans totalling $550,000 were made to Cockle Bay. However, the Farinhas say that the loan was made by Carl personally and not by Carpe Diem. Carl and Carpe Diem seek judgment in favour of Carpe Diem against Cockle Bay and do not press for declarations that the repayment of the loans to Cockle Bay was guaranteed by Toby or Marco. 14 The stance adopted by the Farinhas in relation to the loans totalling $550,000 is an essentially tactical one. The tactical consideration appears to be that, if a partnership that involved Carl personally came into existence, the taking of accounts may require a further payment by Carl. If the loans of $550,000 are owing to Carl, there may be a right of set off. In the light of the conclusions that I have reached that no partnership was entered into involving Carl personally, the issue may not matter. It is fair to say that certain of the amendments were prompted by questions raised in the course of argument. The amendments relate to the recovery of the payments made by Carl. The amendments were proposed under two rubrics, namely, " Monies Lent " and " Monies Had and Received ". Prior to the amendment application, the originating process had claimed declarations that the payments made by Carl had been advances to World Square, Bondi Junction and Piccolo on loan account. The originating process also claimed orders that those companies repay the amounts. Thus, it was clear that Carl had claimed repayment of the monies that he had paid and the proceeding was conducted on the basis that he was seeking repayment. Insofar as the amendments sought recovery of monies advanced on loan account, the proposed amendments did not change or extend the nature of the claims made in the proceeding. Accordingly, there was no real opposition from the Farinhas in relation to that aspect of the proposed amendments. 16 However, the claims under the rubric " Monies Had and Received " gave rise to difficulties. The Farinhas said that, in so far as the proposed amendments sought to raise claims on common money counts, the pleading was defective because it failed to plead properly a case of unjust enrichment. The Farinhas contended that it would be necessary for Carl to establish that each of the three companies was in fact enriched unjustly to the extent that it had received the monies in question, either on the basis of a total failure of consideration, or on the basis of some mistake as to the legal relationship which existed between the parties. 17 The Farinhas contended that they would be prejudiced by an amendment to plead such a case at that stage because they had conducted their defence up to that time on the basis of the existing pleadings, which did not call for the adducing of evidence, so they say, as to the precise manner in which the payments by Carl should be allocated between the three businesses. They contended that any cause of action must depend upon some notion of unjust enrichment, which they said they had not had the opportunity to address. More importantly, however, the Farinhas indicated that, in answer to such claims, they would wish to raise the defence of change of position. While they accepted that the existence of a partnership had been an issue addressed by them in the conduct of the proceeding, the question of whether or not Bondi Junction, Piccolo and World Square had in fact received payments from Carl to the use of those companies had not been addressed. The Farinhas said that such matters would need to be addressed by further evidence. They claimed that they would require at least several weeks before such evidence could be adduced. 18 It was not suggested that the Farinhas might have adopted a different course in the conduct of the proceeding if the proposed amendments had been pleaded originally. Accordingly, any unfairness to the Farinhas and the entities associated with them resulting from the proposed amendments, was able to be accommodated by affording them the opportunity to adduce additional evidence. In the circumstances, I granted leave to Carl to make the amendments under both the rubric of " Money Lent " and the rubric of " Monies Had and Received ", on the basis that the first to seventh defendants would be entitled to file a defence to any further amended statement of claim and would be afforded the opportunity of adducing evidence and making further submissions in relation to the issues raised by that defence. However, after several weeks, the Farinhas indicated to the Court that they do not wish to adduce further evidence on the new questions. Carl is qualified as a mechanical and aeronautical engineer. In 1990 he became a management consultant and worked in that capacity from 1992 until 2000 when he retired. Toby has been involved in running restaurant, hotel and liquor store businesses for over 40 years. 20 Carl was introduced to the Farinhas through a solicitor, Mr Colin Steingold. Another connection between Carl and the Farinhas, prior to the events that are the subject of the proceeding, was Mr Alan Saidman, an accountant who acts for both Carl and the Farinhas. While each of Messrs Saidman and Steingold may have been able to throw light on factual matters that are in dispute between Carl on the one hand and the Farninhas on the other, neither of them was called to give evidence by either side. While mechanisms would have been available for either to be called as a witness by the Court, if necessary, neither side availed itself of such mechanisms. 21 Carl met Mr Saidman in 1997 when Mr Saidman became his accountant. In 2001, Mr Saidman introduced Carl to Mr Steingold who then became Carl's solicitor. In 2003, Mr Steingold introduced Carl to the Farinhas. 22 Carl gave evidence in chief both by affidavit and orally and was cross examined. Carl's oral evidence in chief was clear and unequivocal. Some of his evidence as to relevant conversations given by affidavit were not disputed by the Farinhas. Despite the fact that Carl's evidence may have been rehearsed, I consider that he should be accepted as a truthful witness. Accordingly, in so far as the conversations that occurred between Carl on the one hand and the Farinhas on the other are relevant to the issues, I accept the evidence given by Carl as a reliable version of those conversations. In several instances, Carl did not give evidence in chief in relation to important conversations. In those instances, I consider that the version given by Toby is a reliable version of the communications that occurred orally. 23 Carl, Toby, Marco and Miguel all gave oral evidence in the proceeding and each was cross-examined. Each swore affidavits, some of which were quite extensive. The affidavits dealt with numerous conversations between them concerning the projects at Bondi Junction and at the World Square development. The evidence in chief in relation to significant disputed conversations was given orally. On the other hand, several affidavits sworn by the Farinhas accepted that the conversations deposed to by Carl took place as he said and those parts of the Farinhas' affidavits were tendered as admissions. In all of the circumstances, I have some confidence in making findings concerning the substance of relevant conversations. The Farinhas did not quarrel with that formulation. Some of the issues are interrelated and overlap. The issues as I propose to address them may be summarised as follows. (2) Whether payments made by Carl in connection with the businesses should be characterised as contributions to equity (whether of partnerships or otherwise) or as advances on loan account and, if the latter, to whom. (3) Whether the option conferred by the Letter Agreement was effectively exercised and, if so, whether any agreement is still on foot. (4) Whether the purported allotment of shares in the capital of World Square to Equal 54 was effective. (5) Whether the accounts of the Moda and Momo businesses underestimate the revenues earned in relation to those businesses and whether management fees, consultancy fees, administration expenses and training costs that have been charged to the three businesses by the Farinhas, or entities associated with them, were properly charged to those businesses. (6) Whether the affairs of World Square, Bondi Junction and Piccolo have been conducted in a manner that would attract the exercise of jurisdiction under s 461 of the Corporations Act . (7) Whether the loans totalling $550,000 that were made to Cockle Bay in March 2005 were made by Carl or by Carpe Diem. That will involve factual findings and some legal conclusions from those findings. In that regard, it is necessary to describe in some detail the dealings between Carl and the Farinhas that led to the establishment of the businesses and their falling out. On 31 March 2004, Toby and Mr Steingold were appointed as directors of Bondi Junction. At that stage, Carl had no involvement with any of the proposed ventures. 27 In late April or early May 2004, Carl and Mr Steingold had discussions concerning the possibility of the two of them participating with the Farinhas in the three proposed ventures. Shortly thereafter, a discussion involving Carl, Mr Steingold and the Farinhas took place. Carl gave no evidence in chief about such a discussion. However, in cross-examination he did not deny that such a discussion took place and I accept that it did. 28 In the course of the discussion, Toby said that the Farinhas were happy to do the Bondi Junction deal with Carl and Mr Steingold on a 50/50 basis, with Carl and Mr Steingold being the financiers and the Farinhas managing the businesses. Mr Steingold said that he and Carl were happy with that. Toby said that, for the World Square business, the Farinhas would want a controlling interest so they would do that on a 60/40 basis, again with Carl and Mr Steingold as the financiers. Carl and Mr Steingold both said that was fine with them. Toby then asked Mr Steingold to draw up a partnership agreement for the ventures after he had spoken to Mr Saidman. Mr Steingold said that he would. 29 Another meeting took place at Mr Saidman's offices at some time in the first part of 2004. Toby says that the meeting was attended by Marco, Miguel, Carl, Mr Steingold and himself. Miguel also gave evidence about such a meeting but I do not regard Miguel's evidence of the meeting as reliable: he made no mention of it in a statement that was provided in connection with the proceeding and was unable to give a satisfactory explanation, when giving oral evidence, as to how he subsequently came to recall the meeting. Marco also gave evidence of a series of meetings that he attended at Mr Saidman's offices during April and May 2004, some of which were attended by Carl. He said that the way in which the businesses would be structured was discussed. Carl gave no evidence in chief about such a meeting. However, while he said in cross-examination that he did not recall such a meeting, he did not deny that a discussion such as deposed to by Toby may have occurred. In the circumstances, it is difficult to form any firm view as to the precise discussion that occurred at any such meeting. However, on the balance of probabilities, I consider that such a meeting occurred and proceeded substantially as deposed to by Toby. 30 At the meeting, Toby told Mr Saidman that Carl, Mr Steingold and the Farinhas had agreed that Carl and Mr Steingold would take 50% and the Farinhas would take the other 50% of the Bondi Junction businesses as a partnership, and that the Farinhas would take 60% and Carl and Mr Steingold would take 40% of the World Square business as a partnership. Toby asked Mr Saidman whether he had any suggestions as to how they should structure the arrangements so as to be most tax effective for everybody. Mr Saidman asked whether they planned to sell the businesses in the future. Toby said that they may want to sell the Bondi Junction operation when it was up and running and profitable. 31 Mr Saidman said that it would probably be best if they established ' hybrid trusts ' for each of their usual family trusts and made them the partners in the partnerships. He said that he would form new nominee companies to carry on the businesses on behalf of the partnerships. He said that the new companies would only be nominees of the partnerships, so that all income would flow through to the hybrid trusts and the companies would file nil returns for tax purposes. He said that each of the participants would hold shares in the nominee companies in proportion to their interests in the businesses. Mr Steingold said that he would draw up agreements on that basis. No one gave any evidence as to the meaning of the term " hybrid trust ". It could possibly refer to a trust that had characteristics of different kinds of trust, such as a discretionary trust and a unit trust. Nothing appears to turn on the meaning of the term. 32 World Square was incorporated on 4 June 2004 with an issued capital of 10 shares. Of those shares, 6 were issued to Cockle Bay and 2 were issued to each of Carl and Steingold. Toby, Miguel, Marco and Mr Steingold were appointed as directors of World Square. On 8 June 2004, Marco, Miguel and Carl were also appointed directors of Bondi Junction. 33 On 24 June 2004, Carl received a draft partnership deed from Mr Steingold. At about the same time, Toby and Marco also received a copy of the draft. The draft was expressed to relate to the conduct of a restaurant business at the Westfield Shopping Mall at Bondi Junction. It provided that Bondi Junction would act as nominee of the partnership in accordance with the directions of the partners. The partners were to be companies controlled by each of Toby, Miguel, Marco, Carl and Mr Steingold, which were referred to in the draft respectively as Toby Co, Miguel Co, Marco Co, Carl Co and Colin Co. Companies by that name have never existed. It also provided that the partnership was to be managed and controlled by a committee to consist of nominees appointed by each partner. 34 After he received the draft Carl considered it in some detail and made a number of handwritten notations on the draft. Where he did not make a note against a provision of the draft, he placed a tick. He said that the tick simply indicated that he had read, but had no comment on, the provision. He denied that it signified any approval of the provision. 35 Carl also showed the draft to Mr Jonathan Hendy, a lawyer friend of his from South Africa, who happened to be visiting Sydney at the time. Mr Hendy made some handwritten notes on the draft and handed it back to Carl shortly before he, Mr Hendy, returned to South Africa. Carl did not discuss the draft with Mr Hendy and he did not consider Mr Hendy's notes particularly carefully. Mr Hendy's notes recorded that, under the structure proposed by the draft, a partnership would own the restaurant business and that Bondi Junction would conduct the business. His notes indicated that the partners would participate in profits and losses. The notes also indicated that the partnership was " not limited " and said " liability not restricted ". 36 The Farinhas did not consider that the draft partnership deed was acceptable. They thought that it favoured Carl and Mr Steingold unfairly. In any event, nothing further was done in relation to the draft. 37 On 5 August 2004, Mr Steingold sent to Mr Saidman a draft Unit Trust Deed establishing " the Carl Bondi Junction Trust ". Mr Saidman responded on 6 August 2004, saying that he had reviewed portions of the draft trust deed and expressed a preference that " Carl's trust " should also be a party to the trust deed and that certain units should be issued directly to that trust rather than to Carl. 38 On 13 August 2004, Mr Saidman sent to Carl a copy of a communication received from the Australian Taxation Office ( ATO ) that assigned a tax file number and an Australian Business Number for the Carl Bondi Junction Trust and its trustee. At around the same time, Carl Bondi Junction and Carl World Square were incorporated. It is tolerably clear that those companies were intended to be trustees of trusts ultimately controlled by Carl and that they were intended to be members of the partnerships that were to be formed to carry on the three businesses. 39 On 10 September 2004, Mr Saidman sent two letters to Carl, one relating to the Carl World Square Trust and one relating to the Carl Bondi Junction Trust. The letters enclosed trust deeds establishing the Carl World Square Trust and the Carl Bondi Junction Trust respectively, together with draft minutes of meetings of the directors of Carl World Square and Carl Bondi Junction. The letters also attached invoices for fees due to Mr Steingold's firm in connection with the preparation of the trust deeds and ancillary documents. Carl paid those invoices. 40 The trust deeds for Carl World Square Trust and Carl Bondi Junction Trust were apparently executed in early October 2004 since, on 12 October 2004, Mr Saidman's personal assistant thanked Carl for dropping off the signed documents in the previous week. However, there is no evidence as to whether resolutions were passed or contemplated by the draft minutes that Mr Steingold sent to Carl. 41 On 8 February 2005, Mr Saidman sent to Mr Steingold a copy of the first two pages of the trust deed establishing the Carl World Square Trust. The copy of the first two pages shows that the deed bore the date 10 September 2005 and that it had been duly stamped. The balance of the deed was not in evidence. There was no evidence as to what the trust property was or who the beneficiaries are. Whether the trust deed established a hybrid trust is totally unclear. 42 Piccolo was incorporated on 30 June 2004, when Toby, Miguel, Marco, Mr Steingold and Carl were appointed directors. As at 30 June 2004, the issued capital of each of Piccolo and Bondi Junction was 100 shares. 50 shares in Piccolo were held by San Marco Group Pty Limited and 50 shares in Bondi Junction were held by Cockle Bay. 25 shares in each of Piccolo and Bondi Junction were held by each of Carl and Mr Steingold. 43 During August 2004 Carl told Mr Steingold that he was no longer prepared to lend him funds for the ventures on the terms that Mr Steingold wanted. As a consequence, there was a falling out between Carl and Mr Steingold. Carl told Toby and Mr Saidman, at a meeting in mid-August 2004, that he would be happy to walk away from the ventures if they did not want him to participate, having regard to his falling out with Mr Steingold. Toby said that they wanted Carl with them. In late August and in early to mid September, Carl had discussions with Toby concerning the basis upon which Carl would take over either part or all of Mr Steingold's interest in the ventures. 44 In early October 2004, the Momo business opened for trading. Work was continuing on the Moda premises at that stage. It appears that the landlord was required to carry out further works to strengthen a floor to support a mezzanine level. 45 On 11 October 2004 Mr Saidman wrote to Toby, saying that he was enclosing a " draft memorandum " that he had prepared to give effect to what he understood the arrangements to be with Mr Steingold. He said that he had not passed it on to either Carl or Mr Steingold at that stage, since he thought he would first get Toby's confirmation. Carl subsequently received a copy of the letter with the enclosed memorandum. There are at least three versions of the memorandum and the circumstances surrounding the preparation of the successive versions are somewhat obscure. 46 The terms of the memorandum are not particularly significant in themselves, in that they deal with the proposed arrangements with Mr Steingold. However, all of the various versions of the memorandum refer to a proposed partnership in relation to the World Square development. Thus, the memorandum again corroborates the evidence of the Farinhas to the effect that the parties contemplated that a partnership would be established. On the other hand, the terms of the memorandum also indicate that, at that stage, no finality had been reached as to the terms of any partnership. 47 On 23 December 2004, Mr Steingold ceased to be a director of World Square, Piccolo and Bondi Junction. On 7 February 2005, 15 shares in the capital of Bondi Junction were transferred from Mr Steingold to Carl and 10 shares were transferred from Mr Steingold to Cockle Bay. The consequence was that the shareholdings in Bondi Junction were then Farinhas 60% and Carl 40%. On 21 and 22 March 2005, 64 shares in the capital of World Square were issued to Cockle Bay, 23 shares were issued to Carl and three shares were issued to Shadean (World Square) Pty Ltd ( Shadean ), a company controlled by Mr Steingold. At the same time, the two shares in World Square held by Mr Steingold were transferred to Shadean. The consequence was that the shareholdings in World Square were then the Farinhas 70%, Carl 25% and Mr Steingold 5%. 48 By March 2005, the design for the World Square project had been finalised and timelines for construction had been prepared. A building contract was entered into for a sum of $6,500,000 with construction to start in March or April 2005. 49 On 30 March 2005, Carl wrote to Marco concerning a proposed guarantee for additional funding from the Bank of New Zealand. I have furthermore fully funded the obligation of Colin Steingold in the project. I have also partially funded a small portion of the San Marco Group obligations in the project. I have now been approached to provide further support in the form of a bank guarantee to the value of $AUS750,000. Marco responded on 31 March 2005, indicating that certain of Carl's conditions would not be agreed to, since they involved a dilution of the Farinhas' shares in the ventures. 50 In early April 2005 Moda opened for trading. 51 On 13 April 2005 Carl wrote to Toby concerning the World Square project. He began by referring to the proposed San Marco World Square Partnership and the status of participation. He said that the proposed participation in the partnership was 60/20/20 and the " managing company " was registered accordingly. Carl said, however, that that was always subject to finalising the individual contribution of each participant. To that end, he said, Mr Steingold approached him for a loan that would enable him to participate to the level of a 20% partnership. 52 Carl then went on, in his letter, to describe the breakdown of his relationship with Mr Steingold such that Carl could not provide funding to Mr Steingold. Carl referred to a proposal whereby Mr Steingold would participate to 5%. Carl said that he had not heard back from Mr Steingold since writing to him on 31 March 2005 and that he was therefore withdrawing from negotiating as to any more proposals for Mr Steingold to have 5% of the World Square project. 53 Carl also said that he was not going to consider or accept any " proposed partnership participation " until such time as an amicable funding structure was agreed. He said that he had been funding in excess of 45% of the project needs and therefore requested that no partnership structure or participation be deemed to be agreed until such time as a fair agreement could be concluded based on participation, contribution and risk exposure. He suggested that the four directors of World Square call a meeting as soon as practicable to resolve the matter. 54 The references to a partnership in Carl's letter support the Farinhas' contention that a partnership structure was contemplated. However, it is clear from the terms of the letter that no consensus as to the terms of any partnership had been reached at that stage. 55 On 21 April 2005, Mr Saidman sent to ANZ Private Banking, Carl's bankers, a letter of 21 April 2005 from Marco and Miguel. Mr Saidman's letter said that the interests held by Carl in the various ventures were held by entities owned and controlled by him rather than by him personally. The letter also said that the ventures were " operated as partnerships " and that Carl's entities had partnership shares equal to the percentages set out in the enclosed letter. Carl currently has 25% of San Marco World Square Pty Ltd and is negotiating a further 5%. We also confirm that Carl Frauenstein has invested $1,658,930 in the three ventures mentioned above. The Farinhas place some store on the contents of the letter. However, while it confirms the parties' intention of establishing partnerships, it does not itself constitute evidence of the establishment of any partnership at that stage. 57 On 17 May 2005, Carl met with Toby and Miguel at Moda. Carl said that he was particularly concerned about the lack of transparency and management of the finances for the ventures. He said that he had no accurate idea of how the businesses were trading and how the capital expenditure was going. Carl suggested that they should have formal operational budgets agreed for all ventures and in particular for Momo and Moda. He said that the budgets for Momo and Moda would need to be agreed before mid-June and the budget for World Square before mid-August, when the Equilibrium business was to open. Toby said that he agreed. Carl said that he could not be expected to put more money into the ventures without having agreed to budgets and the degree of expenditure. Toby said that he would see to it that those matters were " actioned ". 58 On 18 May 2005, Carl sent an email to Marco and Mr Saidman, in which he referred to the meeting with Toby and Miguel on 17 May 2005. I would like to get your input incorporated in the agreement (I have sent you Tim's draft in electronic format in the event it is of benefit). I would then like to send the draft off to Tim to finalise. 59 On 12 June 2005, Carl had a discussion with Toby, in which he told Toby that he was not happy with the status of things. He referred to the meeting on 17 May 2005 and said that he had minuted the points they had agreed on, which he had followed up with an email on 30 May 2005, to which he had not received a response. Toby agreed that they needed to attend to the matter and suggested a meeting with Mr Saidman as soon as possible. Carl said that he was not willing to put in any more money until such time as he had budgets agreed and a better insight into the trading of the restaurants and the expenditure for the restaurants. Toby said that he would speak to Marco and that he would get that information to Carl. 60 On 20 June 2005, Carl, Marco, Miguel and Mr Saidman attended a meeting at Mr Saidman's office. Mr Saidman sent an email to Carl and Marco on 21 June 2005, attaching a memorandum recording the points that were discussed on 20 June 2005. The email confirmed that the points did not reflect any agreement but reflected the issues that were tabled and discussed. Mr Saidman suggested that once they had all had a chance to think about the issues they should reconvene and try to reach an agreement. 61 The attached memorandum was headed " Partnership issues to be agreed re San Marco World Square Pty Limited, San Marco Bondi Junction Pty Limited ". Various issues were raised regarding proposed clauses to be inserted in a Partnership Agreement in the above two businesses and the following is a list of those issues. These issues are set out for consideration and do not constitute an agreement at this stage. 62 On 23 June 2005, Carl sent an email to Mr Saidman and a copy of the email was provided to the Farinhas at the same time. In his email, Carl said that he wanted to summarise his sentiments. 65 Carl's email was the subject of discussion at a meeting subsequently held on 28 June 2005. At the meeting, Toby said that the Farinhas would like to take up the partnership scenario but could not agree to change their shareholding in the ventures such that the shareholding of Momo and Moda was the same as the shareholding in World Square. Marco said that they would address all of Carl's issues about financial reporting and make sure that he got timely reports on the ventures as he wanted. Carl said that he was not prepared to make any further funds available to the ventures until they had budgets agreed and that was not an unreasonable requirement. Marco said that he would get the budgets done as soon as possible. 66 On 5 July 2005, Mr Steingold transferred 5 shares in World Square to Cockle Bay and transferred 5 shares to Carl. The result was that Cockle Bay held 70% of the capital of World Square and Carl held 30%. 67 On 14 July 2005, Carl had a further meeting with Toby and Marco at which Carl provided them with an Excel spreadsheet showing Carl's understanding of the total cash input for the ventures. The spreadsheet showed that Carl had already contributed $1,850,000.00, which represented an over contribution of $759,265.61 on one view, or an over contribution of $808,397.22 after adjustments for training and administration costs. Marco said that he could not say that the figures were correct but that " the logic is certainly right ". Carl suggested that the Farinhas should pay interest on Carl's over-contribution. Marco agreed to that proposal with effect from 1 July 2005. 68 On 18 July 2005, Carl departed Australia for Los Angeles on his way to Canada. Prior to his departure from Australia, Carl gave power of attorney to Mr Tim Somerville, a solicitor. On 20 July 2005, Mr Somerville, acting as Carl's attorney, signed the Letter Agreement. The parties shall use their endeavours to cause a binding written agreement to be entered into between the entities controlled by them respectively relating to the interest of the parties in the World Square Project by 7 September 2005. If no such written agreement is entered into (by reason only of the parties being unable to agree to the terms of such agreement, after negotiating in good faith) by 7 September 2005 then at the option of any of the parties, to be exercised before 14 September 2005, Tobias Farinha and Marco Zagato shall arrange for the repayment of all monies invested by Carl Frauenstein or any entity under his effective control relating to the World Square Project within 12 months of any party exercising such option, whereupon all interests of Carl Frauenstein in such project shall be transferred to the other parties equally, or their nominees. The clear assumption underlying the Letter Agreement was that no binding agreement was on foot at that stage. 69 On 1 August 2005, Carl received a document requiring him to act as a guarantor on a loan of $1,970,000 from Multiplex, which was the builder of the World Square premises where the Equilibrium venture was to be located. The guarantee was subsequently executed on Carl's behalf by Mr Somerville under the power of attorney granted by Carl. On 3 August 2005, Carl received a text message from Marco saying that there was no time for discussions or signing an agreement in relation to the loan. Carl telephoned Marco and told him that he could not give further signatures or guarantees until such time as Marco, Toby and Miguel had executed formalised agreements for loans totalling $550,000. Carl also said that he needed those loans to be secured by the people who are providing guarantees. Marco replied that he was not happy but conceded that Carl's request was not unreasonable. He said that Toby would not agree to give personal guarantees for the loans. 70 Over the weekend of 6 and 7 August 2005, Carl received a telephone call from Toby. Carl told Toby that he was very unhappy with everything that had taken place. Toby said that he understood Carl's position but that they needed him to get Mr Somerville to sign the Members Equity loan documents. Carl said that he was not prepared to sign anything until his position was secured in relation to the $550,000 loan to Cockle Bay. He said that he had sent documents to Mr Somerville and wanted him to draw up the documentation for Toby and Marco to sign. Toby said that Carl was making it very difficult for him and gave Carl an assurance that he would repay every cent that he owed. Carl said that the difficult position was not of his making and that, if the Farinhas paid back the loans of $550,000, he would have more than enough money to cover his side. Toby said that the document had to be signed on Monday, 8 August 2005 and told Carl that he should trust him and that he would repay every cent owed. Carl again said that he was not happy but that it appeared that again he had no choice. He told Toby that his resources were being seriously stretched by the way things were going. Carl gave instructions to Mr Somerville on 8 August 2005 to sign the Members Equity loan documents. 71 Early in the morning of 5 September 2005, Carl asked Mr Saidman by email for Mr Saidman's documented notes of the points about which agreement had been reached at their meeting held on or around 28 June 2005. He pointed out that there was a deadline on the partnership agreement of 7 September 2005 unless otherwise agreed to by all parties in writing. That was clearly a reference to the Letter Agreement. Carl also said that the current financial status still required a bit of work on his side, which could involve obtaining further information. He said that he doubted that they would be able " to put it to bed " before 7 September 2005 and that he would not be able to satisfy himself that the figures accurately reflected the current status. He went on to say that it was his understanding that most points concerning the partnership agreement were agreed but that, because he did not have Mr Saidman's notes of their last meeting, he was unable " to make a call " on what was still outstanding. 73 Later in the afternoon, Mr Saidman responded by email, attaching another copy of his memorandum of the 20 June 2005 meeting. He said that, as far as he could recall, that memorandum set out the discussions that they had, save for a few subsequent issues that were discussed on 28 June 2005. • Carl was going to make a proposal as to how the San Marco administration costs should be accounted for. • They needed to agree on remuneration for the Farinhas for managing the ventures. • Some of the detail in the memo of 20 June 2005 needed to be agreed to. 74 Also on 5 September 2005, Toby and Carl had a discussion at Carl's home in Mosman concerning a bank guarantee with BNZA. Carl said that he would telephone BNZA to arrange a meeting. Carl and Toby also discussed the proposed partnership agreement. Carl said that, unless he was shown otherwise, he understood that all aspects of the agreement had been agreed to and that the only step remaining was that it needed to be drafted into a legal document. Toby agreed to instruct Mr Saidman to forward all the documents relevant to the partnership agreement to a solicitor to be suggested by Mr Saidman, so that the Letter Agreement could be complied with. Carl prepared minutes of those discussions, which he subsequently gave to Toby. 75 On 6 September 2005, Carl met Toby in Mr Saidman's office. Before Mr Saidman joined them, Toby told Carl that he was worried about Carl's exposure. He said that there was a lot happening, that he was worried and that the Farinhas were over exposed with the restaurants, the World Square project and " the building ". Toby told Carl that he had been very good " to us ". After Mr Saidman joined them, Toby told Mr Saidman that he was very worried about Carl's exposure and suggested that Carl consider exiting the World Square venture. Carl said that he would have to think about things overnight and that they could not achieve anything without having Marco and Miguel present. Toby and Carl agreed to meet the following day, 7 September 2005. Carl pointed out that 7 September 2005 was the deadline under the Letter Agreement. 76 Carl met Toby at the Momo premises at about 12.30 pm on 7 September 2005, when Toby asked Carl whether he had received a letter that Toby said he had faxed the previous day. Carl said that he did not know what Toby was talking about and that he had not received a letter. 77 Shortly afterwards, Marco joined them. Carl said that they needed to finalise the shareholders agreement and that it was 7 September 2005 and they had not yet discussed the final terms. Toby gave evidence that he said that the deadline could be extended by mutual agreement although Carl gave evidence that Toby said they would extend the deadline by mutual agreement. Carl made a diary note upon his returning home from the meeting in which he said that Toby had agreed to extend the deadline at Carl's request and that he, Toby, would inform Mr Somerville the next morning. I accept Carl's version of the discussion. 78 In the middle of the afternoon of 7 September 2005, Carl received a facsimile from Toby dated 6 September 2005, in which Toby expressed disagreement with the contents of Carl's minutes of their discussion on 5 September 2005, which Carl had given to Toby. • Carl was going to advise how he thought the San Marco head office administration costs should be dealt with: they were unresolved as to what salaries would be paid to members of the Farinha family for working at the various ventures. • They still needed to agree as to which matters required unanimous consent. The matters mentioned by Toby correspond fairly closely to the matters mentioned in Mr Saidman's email to Carl late in the afternoon of 5 September 2005. 79 Toby's facsimile then went on to say that he thought that they were not in a position to forward documents to a solicitor regarding the partnership arrangements until the matters so raised were finalised. Toby also confirmed that Carl said he wanted to speak to Mr Saidman regarding the spreadsheet and that discrepancies should be provided to Mr Saidman so that Mr Saidman could finalise the schedule. 80 On 8 September 2005, Carl left a voice mail message when Toby did not answer his mobile phone. Carl asked Toby to ring Mr Somerville about the extension of the Letter Agreement. Later that day, Toby telephoned Carl and asked that Carl meet with Toby, Marco and Miguel at Carl's home at 3 pm the following day. Carl again asked Toby to speak to Mr Somerville straight away about the Letter Agreement. 81 On 9 September 2005, Toby arrived at Carl's home without Miguel and Marco and suggested that they have lunch together without Marco and Miguel. During the course of lunch, Toby told Carl that he, Carl, should consider not being part of the World Square project because it was a very high risk. Toby also said that he was worried that Carl and Marco did not seem to get on together. Carl said that the only problem he had with Marco was when Marco made commitments, such as to provide employment and revenue figures, and did not deliver. Carl said that, if there was a funding concern that meant that he had to exit the venture in order to allow another investor so that the venture succeeds, he would do that on the basis that his exit would be treated in a fair and equitable manner. 82 Later in the course of lunch, Carl said that he was concerned that Toby had not yet spoken to Mr Somerville regarding the extension of the Letter Agreement. Toby said that there was no need to be concerned because he always keeps his word. Toby suggested that they meet the following day with Marco and Miguel. On the following day, 10 September 2005, Carl was unable to speak to Toby because his mobile telephone was switched off. He then spoke to Marco who said that Toby had gone home because he had a sore throat. Carl said that he had been hoping to meet with Toby, Miguel and Marco to discuss their agreement. 83 At 9.06 am on 12 September 2005, Carl sent a facsimile in response to Toby's facsimile of 7 September 2005. After referring to the BNZA facility, Carl said that the meeting in Mr Saidman's office of 20 June 2005 was not the last meeting and therefore Mr Saidman's memorandum of that date was not the most recent status of the agreement. Carl suggested that they meet with Mr Saidman to discuss and determine what, if anything, was still outstanding. Carl also agreed that they should meet with Mr Saidman as soon as possible in relation to the current costs spreadsheet. He said that he had met with Marco on the afternoon of 10 September 2005, when they had agreed that they should meet with Mr Saidman to discuss all the items at hand prior to Marco's departure on 13 September 2005. 84 Toby replied at 4.51 pm on 12 September 2005, agreeing with Carl's comments in relation to the BNZA facility. Toby also confirmed that he had met with Carl on at least three occasions in an attempt to discuss matters outstanding under the proposed partnership arrangement. He pointed out that the memorandum of 20 June 2005 from Mr Saidman clearly highlighted unresolved issues, being issues that continued to be unresolved. He said that their understanding was that they had not reached any agreement on the partnership issues and that, despite repeated attempts, Carl did not wish to discuss the matter but rather preferred to resolve the amounts owing to him. Toby also confirmed that they should meet with Mr Saidman as soon as possible to discuss any issues arising under the costs spreadsheet. 85 The language of Toby's email makes clear that it was his understanding, at that stage, that no agreement had been reached as to the terms of any partnership agreement. That is not necessarily inconsistent with there being a partnership in existence. However, when coupled with the language of the Letter Agreement, it is clearly inconsistent with there being any express partnership agreement. That is confirmed by the events of the following days. 86 At 6.51 pm on 12 September 2005, Carl received an email from Toby to which was attached a letter signed by Marco and Toby. Even if the option you refer to is valid (which is not admitted here) it is not capable of exercise as the condition precedent to this exercise has not been fulfilled. That is to say you have not negotiated with me in good faith to achieve the written agreement referred to in clause 1 of the letter of 20 July 2005. In essence, Toby was seeking Carl's agreement to a proposed settlement of the dispute. Carl adopted the stance that he did not know enough about the affairs of World Square and in any event would not contribute any further funds. 88 In the meantime, on 15 September 2005, by facsimile letter, Toby responded to Carl's facsimile of 14 September 2005. Toby " categorically " rejected Carl's contention that the Farinhas had not negotiated in good faith to achieve a written partnership agreement. He again referred to " a number of critical issues relating to the partnership arrangement " in relation to which Carl was to revert back to Toby. The letter asserted that the Farinhas had never heard back from Carl in relation to those issues, which concerned training costs, head office administration costs and salaries for Miguel and Marco. Toby went on to refer to meetings that had taken place between Carl and Toby in early September 2005. 89 On 18 September 2005, Carl met with Toby again. Toby told Carl that he wanted Carl in the venture and suggested that Carl work through the financials that week and raise any issues so that they could " put them to bed ". They agreed to meet again on Thursday, 22 September 2005. On 19 September 2005, Carl wrote to Toby saying that, in the light of their meeting on 18 September 2005 and Toby's suggestion that the Farinhas and Carl meet on Thursday, 22 September, Carl would not respond to Toby's facsimile letter of 15 September 2005 pending the outcome of their meeting. Carl also said that he was working through the financials as Toby had suggested. 90 On 20 September 2005, Mr Saidman sent to Carl a note of the items that he said Toby had suggested should be discussed at the proposed meeting on Thursday, 22 September 2005. Toby began by saying that the meeting was called to see how they were going to move forward and how best to do that. Mr Saidman suggested that the Farinhas " go away and work out what the budget is " and how much the World Square venture still required. Mr Saidman said that he did not think it was fair to expect Carl to inject any funds into any venture until such time as he had been given budgets and an opportunity to approve them. Toby said that he accepted that. 92 On 26 September 2005, Carl wrote to Toby and said that, in the light of the meeting on 22 September 2005, Carl would continue to withhold his response to Toby's facsimile letter of 15 September 2005. 93 On 4 October 2005, Carl asked Mr Saidman to send him copies of the register of members of World Square because, he said, he wanted to confirm that it was up-to-date and that 30% of the shares were held by Carl World Square. Carl sent that request after he had consulted with a solicitor, Ms Linda Johnson of Mallesons Stephen Jaques. Carl apparently received a response to his request to Mr Saidman because, on 7 October 2005, he sent a further email to Mr Saidman saying that he, Carl, was puzzled that his shares in World Square were registered in his personal name. He asked why Carl World Square had been set up. In the case of World Square the entities are Cine San Marco Pty Ltd and Carl World Square Pty Ltd acting as trustee for the Carl World Square Trust (I think that is the name of your trust). It has been done that way because it is very cumbersome to reflect the full name of the partnership every time and we decided that it was preferable to using a registered business name. As a result the shares in that entity really can be held anywhere and my advice was that I preferred them to be held in an entity or person that did not have beneficial ownership of the business assets. However, while the contemporaneous material indicates that the parties had in mind putting in place such a structure, it does not support a conclusion that any such structure was actually in place at any given time. While the various entities were indeed formed, there is no evidence to suggest that any of them adopted the arrangements summarised by Mr Saidman in his response to Carl. 96 On 8 October 2005, Carl met with Toby. Although Carl expected Marco and Miguel to attend also, they did not. The principal discussion related to loans of $550,000, which were repayable in November 2005. Toby said that they needed Carl to roll the loans over. Carl said that he would consider doing so but first they would have to draw up new loan agreements. Toby asked Carl to make a proposal as to how Carl wanted to proceed. Carl said that he would do so. 97 On 13 October 2005, a further meeting was held at Mr Saidman's office attended by Carl, the Farinhas and Mr Saidman. Some discussion took place concerning the question of whether solicitors should be instructed to prepare an agreement. Mr Saidman suggested Mr Greg Peach of Musgrave Peach. 98 On 4 November 2005, Mr Saidman sent to Carl a draft agreement for Momo and Moda, which had been prepared by Musgrave Peach. Mr Saidman said that he was forwarding the draft at the request of Marco and had been requested to say that the agreement was sent to Carl in draft form and did not constitute an offer or commitment in any way. Mr Saidman's email went on to say that an agreement for the World Square project had not yet been prepared but that it would essentially mirror the agreement for the Bondi Junction ventures, subject to some qualifications that he set out. The draft provided that the partners acknowledged that Bondi Junction had been acting as the nominee and agent of the partners in conducting the Moda business and Piccolo had been acting as nominee and agent of the partners in conducting the Momo business. The draft provided that the relationship between the partners, on the one hand, and Bondi Junction, on the other, was that of " independent contractors " and that nothing in the relevant clause meant or implied that a relationship between them was one of partnership or joint venturers. There was a similar provision in relation to Piccolo. 100 On 8 November 2005, Mr Saidman sent an email to Carl saying that he had received a note from Ms Johnson at Mallesons telling him that she was acting for Carl, that she had received the documents and that she would be reviewing them. Mr Saidman also said that he had received a call from Musgrave Peach saying that they had received a call from Ms Johnson to the effect that she could not review the agreements without the figures. Ms Johnson also questioned whether the structure was a partnership and insisted that the loan issues with Miguel, Tony and Marco be dealt with independently. On 10 November 2005, Mr Saidman sent a further email to Carl saying that he had spoken to Toby, who suggested that it might be better, if Carl's solicitor had any issues, that they try to resolve them. 101 However, all discourse came to an end 10 November 2005, when the official opening of Equilibrium took place. On that occasion, there was a confrontation between Carl and Mr Steingold, after which Carl recounted the incident to Toby. There was another incident later in the evening when Mr Steingold pushed Carl to the ground and kicked him. Carl demanded of Toby and Marco that Mr Steingold be removed. However, apparently nothing was done. 102 On 14 November 2005, Toby and Carl had a conversation in which Carl said that, after what had happened at the opening of Equilibrium, he had decided that it was best for him not to be involved anymore. Toby and Carl then went to Mr Saidman's office where they met Marco and Miguel. Carl handed to Mr Saidman his resignation as a director of Piccolo, Bondi Junction and World Square. Toby asked Carl not to do that. Carl said that he did not want " this sort of stuff in [his] life ". 103 Toby then told Carl that they had an investor that they could bring into World Square. Carl said that they needed to work out how they were going to settle all the matters and that his first priority was to have the loans to Toby, Marco and Miguel either paid back or have formal loan documentation executed. Carl said that, until he could reconcile the financials, he was not going to put any money into any venture and presently was not able to do so. It was some time before the proceeding was commenced. However, as from 14 November 2005, the parties were in effect at issue. It is now necessary to deal with the various issues identified above. • Equilibrium: Carl 20%, Mr Steingold 20% and the Farinhas 60%. Indeed, that is substantially Carl's claim, in so far as he alleges that the individuals involved undertook a quasi partnership or joint venture. However, no legally binding agreement ever came into existence. It was clearly the intention of Carl and the Farinhas to enter into arrangements whereby the three businesses would be carried on by a partnership of some sort and the entities intended for those structures were incorporated during the period, the parties never reached consensus as to the arrangements. While draft partnership agreements were prepared both in June 2004 and November 2005, neither was satisfactory to the parties and neither was ever signed. 107 The preparation of the draft partnership agreements tends to corroborate the evidence given by Toby and Marco that, at a meeting with Mr Saidman in early 2004, the Farinhas and Carl received a proposal that the businesses be carried on through partnerships. The drafts are consistent with the notion that the businesses would be carried on by Bondi Junction, Piccolo and World Square as " nominees " of partnerships of corporate entities controlled by Carl, the Farinhas and Mr Steingold. 108 Nevertheless, it is clear that the drafts had no contractual effect and were never more than drafts. While the June 2004 draft mentioned Bondi Junction and the individuals, it did not identify any specific corporate entities that were to be the partners in the proposed partnership. While the existence of that draft suggests that the individuals in question were intending to cause a partnership to be formed, in order to be involved in the conduct of the businesses at some stage in the future, it certainly does not evidence the existence of any partnership at that time. While the November 2005 draft referred to the companies that had been formed in the second half of 2004, it contained blank spaces for the insertion of further particulars of, for example, the capital contributions of the partners and the service fee to be paid to Cockle Bay for the provision of administrative services. The agreement also referred to a proposed deed of agreement to be entered into by the parties. 109 Thus, while it may be possible to conclude that, in late April or early May, Carl, the Farinhas and Mr Steingold formed an intention or reached a common understanding that they would establish partnerships along the lines demonstrated by the draft agreements, I am not persuaded by the evidence that any such partnership was ever established. 110 The Farinhas contend that, whether or not a formal partnership agreement was entered into, Bondi Junction, Piccolo and World Square operated the businesses as nominees. They refer to several matters as supporting that conclusion. 111 First, they refer to the steps that were taken in August 2004 and thereafter, by Messrs Steingold and Saidman, to establish the structures that had been suggested earlier in the year. However, there was no evidence of any record of either of Carl World Square or Carl Bondi Junction engaging in any activity that might be considered to be the conduct of a business in partnership, albeit through a " nominee ". There was no evidence whatsoever that either of Carl World Square or Carl Bondi Junction made a decision to enter into a partnership agreement or to be engaged in any partnership business. There was no evidence of any accounting record to suggest that either of those companies was at any time engaged in any business activity whatsoever. On the other hand, accounting records were kept in the name of World Square, Bondi Junction and Piccolo in relation to the conduct of the Equilibrium, Moda and Momo businesses. 112 The second matter relied on by the Farinhas relates to diagrammatic representations of proposed structures for the ventures that were brought into existence in September and October 2004. On 6 September 2004, Mr Gaddin of Mr Saidman's firm sent to Ms Kyu diagrammatic representations of the proposed structures. The diagram for the World Square venture showed a partnership between Cine as to 60% and Carl World Square, as trustee for Carl World Square Trust, as to 40%. However, Toby Bondi Junction was not incorporated until 22 September 2004. 113 The third matter to which the Farinhas refer is Mr Saidman's memorandum of 11 October 2004. It is curious that the memorandum, which was brought into existence several weeks after the diagrams sent by Mr Gaddin showing Mr Steingold with no interest, indicated that Mr Steingold continued to have a 5% interest. 114 On 18 February 2005, Mr Saidman sent to Mr Steingold a further version of his memorandum, which bore the date 18 February 2005. There were no significant changes from the earlier versions of the memorandum. Mr Saidman said that, because of Carl's absence, he had been unable to finalise the memorandum but that he had now had an opportunity to meet with Carl and Toby to run through the memorandum with them. Mr Saidman said that he believed that the memorandum set out the understanding, but asked for any comments that Mr Steingold might have. 116 Carl said in evidence that he had no recollection of meeting to discuss the memorandum but may have received a copy of Mr Saidman's letter. Carl said, however, that he had never seen the diagram and there is no evidence to suggest that it was ever sent to him. 117 While the various reincarnations of Mr Saidman's memorandum of 11 October 2004 tend to corroborate that discussion took place in late April or early May 2004 as deposed to by Toby and Marco, they also indicate the state of fluidity that existed at all relevant times concerning the arrangements between the parties. As at October 2004, while Momo had just opened for trading, neither Moda nor Equilibrium was yet operating. The significance of the letter of 18 February 2005 is that it indicates that, even by that time, no finality had been reached concerning the proposed structure for the ventures. 118 The fourth matter is that, on 9 June 2005, Mr Saidman sent to Carl a completed tax file number application form for Carl World Square Trust. The form stated that the applicant, Carl World Square Trust, was to start business on 10 September 2004 and that the main activity from which the applicant was to derive the majority of its business income was as a partner in a partnership operating a hotel, bar and restaurant. The form named Carl World Square and Cine as organisations associated with the applicant. Carl signed the form and returned it to Mr Saidman, who sent it to the ATO. That action is consistent with a clear intention on the part of Carl to participate in the establishment of partnerships as alleged by the Farinhas. However, it does not evidence their establishment. 119 The fifth matter is that tax returns were filed on behalf of Bondi Junction, Piccolo and World Square that do not disclose any trading by those companies. On 9 March 2006 Mr Saidman wrote to Marco concerning Bondi Junction. In the letter, Mr Saidman confirmed that he had advised the ATO that Bondi Junction is not required to lodge an income tax return for the financial year ended 30 June 2005. Mr Saidman said that the basis of that advice was Marco's confirmation to him that Bondi Junction had not traded in its own right but had acted as nominee of an underlying partnership of four trusts. On 7 April 2006, Mr Saidman wrote to Marco confirming the advice that he said he gave to the participants in the Moda and Momo restaurants. He described the structures as involving partnerships of discretionary trusts with Bondi Junction and Piccolo acting as nominees or representatives of the trusts, along the lines contended for by the Farinhas. 120 However, there is no evidence that tax returns were filed on behalf of any entities disclosing trading in respect of any of the three businesses. I do not consider that any weight at all should be given to Mr Saidman's letters on the question of whether partnerships were actually established. As I have said, Mr Saidman was not called to give evidence. 121 Sixthly, the Farinhas point to correspondence with financiers in which it was said that the ventures were operated as partnerships in which Carl's entities had partnership shares. Most of the correspondence was sent by Mr Steingold, although correspondence with Carl's own bankers is in a different category. In any event, while the correspondence is consistent with an intention on the part of Carl and the Farinhas to establish partnerships, it does not advance the question of whether or not the partnership structures were actually put in place. 122 Seventhly, on 11 July 2005, Carl World Square granted general power of attorney to Mr Timothy Somerville. The power was limited to the affairs of the grantor " in relation to its investment in the World Square Sydney project including its interest in San Marco World Square Pty Limited ". Once again such a grant is consistent with an intention to establish the structures contended for by the Farinhas. It does not establish one way or the other whether the structures were actually established. 123 Finally, the Farinhas rely on the Letter Agreement, in so far as it records that the parties are to use their best endeavours " to cause a binding written agreement to be entered into between the entities controlled by them respectively relating to the interest of the parties in the World Square project ". They also point to the fact that the Letter Agreement refers to the repayment of all monies " invested " by Carl or any entity under his effective control. However, as I have indicated, the Letter Agreement rather confirms lack of agreement or consensus at that stage. It certainly does not support a finding that the businesses were in fact being carried on by partnerships as alleged by the Farinhas. 124 Under s 1 of the Partnership Act 1892 (NSW), it is sufficient, for a partnership to come into existence, that the parties reach an arrangement to carry on business in common with a view of profit. Thus, if I were able to conclude that some parties were carrying on business in common with a view to profit, the fact that they were still negotiating as to the terms of a more formal agreement would not preclude a finding that a partnership had come into existence. 125 However, a difficulty for the Farinhas' contentions is determining the time at which any partnership came into being. At the time when much of the expenditure was being incurred in relation to the establishment of the Moda and Momo businesses, the putative partners did not exist. Further, there is simply no evidence of any adoption by any of the relevant entities, once they were formed, of any business or assets such that it could be said that the entities were thereafter carrying on a business in common. For example, there are no accounts of any partnership. No tax returns appear to have been filed on behalf of any partnership. While Carl and the Farinhas may have intended that World Square, Bondi Junction and Piccolo would act in some way as nominees or agents or trustees, there is no evidence to support a conclusion that they were carrying on the businesses in which they were engaged otherwise than in their own right and for their own benefit. 126 No one has suggested that any partnership came into existence involving Carl and the Farinhas as individuals. The only conclusion that is available on the evidence is that, while Carl and the Farinhas certainly intended to establish structures along the lines of those contemplated by the draft partnership agreements to which I have referred, the three businesses were in fact carried on by the so-called nominees in their own right. None of World Square, Bondi Junction or Piccolo ever undertook any juridical act that could give rise to a trust or disposition of any interest in the businesses carried on by them. 127 Even if there were a partnership structure as alleged by the Farinhas, that structure involved the three operating companies acting as " nominee ". That must involve the nominee entering into arrangements with third parties in its own name. It must be the legal owner of assets of the partnership and would be the party to any contractual arrangements entered into by the partnership. There is no evidence to suggest that the three operating companies entered into contractual arrangements as agent for the partners such that they incurred no personal liability. 128 I am not persuaded that any of the businesses has been carried on by any entities other than Bondi Junction, Piccolo and World Square. It follows that the cross-claim by Toby Bondi Junction Pty Limited and Marco Bondi Junction Pty Limited and the cross-claim by Cine must be dismissed. No payments were made by any of the companies that are alleged by the Farinhas to have been members of partnerships. Nobody has suggested that Carl himself was a party to any partnership. There has been no suggestion that Carl made the payments by way of loan or advance to the alleged partnership companies so that they could make a contribution to capital. There is simply no evidence to support a conclusion that the payments made by Carl were contributions to the equity of a partnership by a member of a partnership. 130 As I have indicated, there was no concluded agreement that could constitute a partnership involving Carl and the Farinhas or involving corporate entities associated with them. More particularly, none of the discussions that occurred concerning the possible formation of a partnership was directed to the capitalisation of the proposed partnerships. There was no discussion concerning any contribution to the capital of any proposed partnership. Even if it could be concluded that, at some stage, the parties had reached agreement that they were carrying on a partnership, there is no evidence that the monies or funds provided by any of the parties was to be treated as a contribution to capital or equity of any partnership. There is certainly no suggestion that contributions made by the parties were to be regarded as contributions to the share capital of any corporate entity, such as Bondi Junction, Piccolo or World Square. 131 While there may have been agreement as to the proportions in which the parties would share in profits and losses, the parties did not ever reach consensus as to what they would contribute to the capital of any proposed partnership. Even if there had been a partnership arrangement, there is no reason to treat any of the payments made by Carl as a contribution to capital or equity. Even if there were partnerships, there is no evidence that the payments were intended as anything other than loans repayable on demand. 132 Carl and the Farinhas were parties to a joint venture in the sense that they were pooling resources with a view to sharing in the profits of the three businesses. The Farinhas and Carl were each to contribute funds in the agreed proportions. The Farinhas would contribute their skill and expertise in the management of the proposed businesses and were to be remunerated for that contribution. The mechanism or structure for their joint venture was to be a series of corporate entities that ultimately had an interest in the businesses to be conducted by Bondi Junction, Piccolo and World Square. 133 However, the draft partnership agreements that were brought into existence and the structure diagrams made no mention of funding of the ventures in general or contribution to capital in particular. On the other hand, it is clear that the substantial sums that were contributed both by Carl and by the Farinhas were not intended as gifts. Carl gave evidence of discussions concerning loan accounts. There was no discussion about any arrangement for repayment of any of the advances. It is inherently more likely than not, that, pending the formalisation of the structure that the parties intended to put in place, the payments that were made by Carl, and any payments that may have been made by or on behalf of the Farinhas, were to be treated as advances on loan account, repayable on demand or upon reasonable notice. 134 I consider that the payments made by Carl, and any contributions made by the Farinhas or entities associated with them, should be treated as advances on loan account to one or other of the entities carrying on one of the three businesses. Demand for repayment has been made by Carl, at latest, by the commencement of the proceeding. However, the information provided to him was less than satisfactory and he complained vociferously about its inadequacies. 136 On 16 August 2005, the day after he returned from Canada, Carl asked Marco to provide him with the latest financials and reconciliations as well as the budgets, as they had agreed in their meeting on 14 July 2005. Marco said that he was still working on the budgets but would get Ms Kyu to send the financials to Carl. On 18 August 2005, Carl received by email a balance sheet for World Square as at 17 August 2005, a balance sheet for World Square as at June 2005 and four pages of reconciliations of payables for World Square. 138 Following receipt of those documents, Carl spoke to Ms Kyu and asked when the loan accounts were going to be correctly allocated. He pointed out that the loan account as between Bondi Junction and World Square was still in the books, even though there was at that time a bank account for World Square. Ms Kyu responded that they were working on a spreadsheet outlining the contributions and costs to make sure that it was all in order before it was given to Carl to review. 139 On 29 August 2005, Carl received a spreadsheet that he was told had been prepared by Ms Kyu. The documents are not self-explanatory. One sheet was headed " Summary of Partners' Contribution and Payment ". That sheet showed total contribution by Carl of $1,590,411.60. The detail showed total credits of $103,073.60 for World Square and of $1,609,030 for Bondi Junction. The credits correspond, in a number of instances, with payments made by Carl to which I shall refer below in more detail. However, they are not identical with those payments. 141 Three payments shown in the ledger for World Square correspond with payments made by Carl. In relation to Bondi Junction, there were credits corresponding with eight payments made by Carl. However, there was no record of several other payments made by Carl. While the amounts of the payments recorded correspond with amounts actually paid by Carl, the dates do not correspond with the actual dates of payment. 142 On 31 August 2005, Carl had a discussion with Miguel and Marco, in the course of which he said that he would like to get together later in the week to discuss the financials. When asked by Marco whether there was a problem, Carl said that there was nothing that he would like to discuss at that time. When pressed by Marco, Carl said that one point was that the BNZA facility was not recorded as a joint facility, notwithstanding that Carl had provided guarantees. A very emotional argument then ensued, without any resolution of the dispute. 143 At the meeting that Toby had with Carl on 5 September 2005, Toby also asked Carl whether he had reviewed the spreadsheet that had been provided to him on 29 August 2005. Carl said that he had reviewed it to some degree and that his first review revealed a number of discrepancies, some of which Marco already knew about and which Marco said that he would correct. Carl said that he would continue to review the spreadsheet and would request additional and supporting information as and when, and if, required. 144 On 20 September 2005, Carl sent an email to Ms Kyu saying that Toby had asked him to review the spreadsheet provided to him on 29 August 2005. Full details of all employment costs for all three ventures. Details of inter-company loans recorded in the balance sheet from Bondi Junction to World Square and from Bondi Junction to Piccolo. 3. Detailed records of all loan accounts. Carl's email went on to say that he had continued reviewing the spreadsheet and had asked Ms Kyu to send him the latest version as well as supporting documentation that would allow him to reconcile the spreadsheet accurately. Carl said that Toby had made it clear that the objective that Toby wanted to achieve at the proposed meeting of 22 September 2005 was for Carl to say whether he wanted to be in or out of the World Square project and to set a plan for the way forward. 146 On 22 September 2005, Ms Kyu sent amended spreadsheets to Mr Saidman, who forwarded them to Carl later that day. The documents included balance sheets for Piccolo and Bondi Junction as at June and August 2005. The documents also included capital expenditure for Bondi Junction " T/as Moda " and Bondi Junction " T/as Momo ". Finally, there was a further copy of the detail from the general ledger of World Square as at 30 June 2005, showing the same figures as had been enclosed with the spreadsheets provided to Carl on 29 August 2005. 147 Ms Bateman was retained to conduct an examination of the books and records of Bondi Junction, Piccolo and World Square and the businesses carried on by them in order to determine how the payments made by Carl were applied. She endeavoured to identify from the financial records the manner in which the funds paid by Carl were actually dispersed. 149 The Farinhas have not advanced a positive case as to how the payments were applied for the purposes of the three businesses. That question loomed large as an issue in the proceeding from an early stage. Ms Bateman's report as to her difficulty in effecting an allocation was provided to the Farinhas in February 2007. While the Farinhas engaged Mr Glen Harris, a forensic accountant, Mr Harris was ultimately not called to give evidence. However, parts of his report were tendered on behalf of Carl. 150 Mr Harris confirmed that Carl's payments had not been recorded in full in the books of the various companies. Mr Harris expressed the view that the variance resulted from the payment by Carl to creditors directly that was not recorded in the accounts. Mr Harris said that his investigations of current management of the companies indicated that they did not dispute the total of $1,810,619.15 arrived at by Ms Bateman. 151 Mr Harris was unable to express any opinion as to what the correct allocation should be, since that was beyond the scope of the report that he had been instructed to give. However, he confirmed that the current allocation in the books of the companies is clearly incorrect. 152 As I have indicated above, Ms Bateman's opinion is that $666,045 of the total payments made by Carl was applied for the purposes of the Equilibrium business and $119,652 was applied for the purposes of either the Moda business or the Moma business. Ms Bateman was unable to identify, from the accounting records and other materials made available to her in relation to the three businesses, how the payments made by Carl were in fact applied except to the extent indicated. 153 The issue concerning Carl's payments is not so much how the funds were actually applied, but to whom the advances on loan account were made. Where payments were made by Carl to third parties, those payments can fairly be treated as advances made to the company carrying on the business in respect of which an obligation was owed or monies were payable to that third party. That is part of the exercise conducted by Ms Bateman in identifying the businesses in respect of which the payments have been applied. The relevant borrower or debtor is to be determined on the basis of the discussions that took place between Carl, on the one hand, and one or other of the Farinhas, on the other, in connection with the request to make the relevant advance. Miguel said that a joint account would be opened soon but in the meantime Carl should pay the amount into the account of Cockle Bay. Mr Steingold asked Carl to fund his, Mr Steingold's, share. On 3 May 2004, Carl paid $5,500 into the account of Cockle Bay . That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Momo business. 156 On 20 May 2004, Miguel sent to Carl a copy of an invoice from Thomas Bucich Design for $11,000 addressed to San Marco Group for design consultancy fees for an architectural presentation in respect of the project at the World Square site. After receipt of the invoice, Carl spoke to Miguel and asked Miguel what he wanted him to do. Miguel said that it was necessary to pay Thomas Bucich so that the design and artwork for the presentation would be done. He said that otherwise they might not win the site. Carl said that he would pay 40%, representing his and Mr Steingold's share. He asked whether a joint account had been set up and where the payment should be made. Miguel said that he would speak to Marco and have an email sent to Carl with the details. 157 On 24 May 2004, Carl spoke to Marco. Carl told Marco that Miguel had asked him to make a payment of $4,400 for the World Square project and asked Marco for details of the World Square bank account so that the funds could be paid into the correct account. Marco replied that he would let Carl know but that, in any event, it did not matter which account received the funds because he had instructed Ms Kyu to keep separate records for each payment so that they could track their respective loan accounts. Marco confirmed that the funds contributed would be on loan account. 158 On 24 May 2004, Carl received an email from Ms Kyu and Miguel saying that a bank account had not yet been opened for the World Square project and asking that, in the interim, Carl deposit his portion of the cost into an account of Cockle Bay. Carl caused a payment of $4,400 to be made into Cockle Bay's account on 25 May 2004 . That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. 159 Shortly after that, Carl had a conversation with Marco concerning the payment of contributions. Marco asked Carl to pay his contributions into the Cockle Bay account until the legal entities had been set up. He said that the creditors would be paid from the Cockle Bay account but that if they decided to pay a creditor direct, they would let Carl know to whom the payment should be made. Carl said that that was fine and asked for the bank account details. Carl also asked how they were going to keep track of the respective contributions made by the parties, particularly as they were all paying contributions into one account. Marco said that they would keep a spreadsheet detailing each person's contribution and what it was applied to, so that they could manage each person's respective loan accounts in the ventures until such time as separate bank accounts had been opened for each venture. He said that, when the projects were finished and the ventures were trading, they would adjust all the loan accounts in the ventures to reflect what Ms Kyu's reconciliations showed. Carl said that that was okay. Carl asked that Marco let him know from time to time when he needed Carl's proportion of funds. 160 In early June 2004, Steingold asked Carl to pay $40,000 to Clayton Utz in respect of a deposit needed to secure a lease of the premises in the World Square project. Clayton Utz were the solicitors for the landlord of the World Square premises. On 10 June 2004, Carl paid $40,000 to Clayton Utz . That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. 161 On 15 June 2004, Carl was asked by an employee of the San Marco Group to pay $34,652.20 into Cockle Bay's account. He was told that that represented 50% of invoices received for interior design and furniture for the Bondi Junction businesses. On 25 June 2004, Carl paid $34,652.20 into Cockle Bay's account. That payment should be treated as a joint advance to the entities that subsequently engaged in carrying on the Moda and Momo businesses. 162 On 23 June 2004, Carl received from the Farinhas a budget for the set up cost of the businesses. Following receipt of that document, Carl spoke to Marco and asked him when and how much external funding they were going to get. Carl said that he needed to know that so that he could do cash flow projections and planning. Marco said that they would probably get around $7,500,000 externally and would apply for that well ahead of time so that the cash burden would be limited to the balance, being the amount shown in the budget less $7,500,000. 163 On 30 June 2004, Carl received an email from Marco requesting that he transfer the sum of $479,377.80 into the bank account of Bondi Junction. Marco replied that that was right and that it would be in accordance with the fit out budget that had been provided to Carl. Carl asked for invoices to be sent to substantiate the payments before he made the requested payment. Marco said that the money was needed urgently and asked that Carl make the payment because it was not practical to send him all of the invoices from the numerous suppliers. On 2 July 2004, Carl transferred the sum of $479,377.80 to the bank account of Bondi Junction . On that day, invoices specific to the World Square project totalling $164,453 were paid. To that extent, the payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. There is no evidence as to how the balance was applied. In those circumstances, the balance should be treated as a joint advance to the entities that subsequently engaged in carrying on the Moda, Momo and Equilibrium businesses. 165 In early August 2004, Marco requested Carl to pay $85,000 towards the Bondi Junction project. He said that that was Carl's portion of the cost. On 9 August 2004, Carl paid $85,000 into the bank account of Bondi Junction . That payment should be treated as a joint advance to the entities that subsequently engaged in carrying on the Moda and Momo businesses. 166 Shortly after that payment, Carl asked Miguel for a payment reconciliation report confirming the various payments that had been made and where the funds had been applied. Miguel asked Carl to send an email confirming what he had contributed. Accordingly, on 20 August 2004, Carl sent an email to Miguel indicating that his records showed that six payments had been made totalling $643,430. Ms Kyu responded on 23 August 2004 saying that she would email a reconciliation the following day and that there were some figures missing for World Square. 167 On 6 October 2004, Carl received an email from Marco and Ms Kyu attaching a document said to be a payment reconciliation for the ventures. The email requested Carl to remit $600,000 to Bondi Junction's bank account as the " September 2004 contribution ". A spreadsheet attached to the email stated that Carl had contributed $648,930 to the ventures, of which $486,751.72 had been applied to Momo and Moda and $162,173.28 had been applied to the World Square project. 168 After receipt of the spreadsheet, Carl told Marco that it was inaccurate in so far as the apportionment was concerned. Marco said that he would recalculate the required contributions of each party based on their correct shareholdings. Marco then said that, in any event, they needed Carl to contribute a further $600,000 towards the costs of the ventures and that that should be paid into the bank account of Bondi Junction. Carl replied that, according to his calculations, he had a credit in terms of contribution. Marco said that he appreciated that the numbers were a bit off because of the incorrect ownership allocation. 169 Marco then asked if Carl could make a payment of $350,000 in the meantime. He asked Carl to pay $200,000 direct to Sherbet Creative Enterprises Pty Limited, which was the head contractor and architect for the fit out of the Moda and Momo premises, and asked Carl to pay the other $150,000 into the bank account of Bondi Junction. Marco said that was partly for electrical works for Moda and Momo and that the balance was for the World Square project. Carl asked whether World Square yet had a bank account. Marco replied that World Square was not yet registered for GST and that it would not be possible to claim the GST back. On 11 October 2004, Carl paid $200,000 to Sherbet Creative Enterprises and also transferred $150,000 to Bondi Junction's bank account . The payment of $200,000 should be treated as a joint advance to the entities that subsequently engaged in carrying on the Moda and Momo businesses. In the absence of other evidence, I consider that it is more likely than not, that the whole of the sum of $150,000 was applied for the purposes of the World Square project and, accordingly, that payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. 170 In late October 2004, Marco told Carl that further progress payments were needed for the ventures. Carl asked how much was needed and Marco asked for at least $250,000. There is a dispute as to the conversation that took place concerning the sum of $250,000. Carl says that Marco told him that the Farinhas were carrying training costs and would be making their own contributions. Marco says that he told Carl that they were applying the existing funds to cover the working capital requirements and further funds were required to cover the shortfall and to fund the fit out of Moda. Carl says that he asked for another set of financials, including payments made for the equipment lease, which, he said, impacted on the budget. On 1 November 2004, Carl transferred $250,000 into the bank account of Bondi Junction . There was no evidence as to the use to which those funds would be put or how they were in fact applied. In those circumstances, the payment should be treated as a joint advance to the entities that subsequently engaged in carrying on the Moda, Momo and Equilibrium businesses. 171 In early November 2004, Marco and Carl had a further conversation, in which Marco told Carl that they needed to pay $200,000 to Sherbet Creative Enterprises. Marco says that he told Carl that it was for the Moda fit out. Carl says that Marco told him that it was for both Bondi Junction and World Square. Carl also says that he still did not have reconciled financials and was reluctant to pay without being able to make a reconciliation. He said that Marco told him that the contribution was needed urgently and he would ask Ms Kyu to send him the financial information. Marco, on the other hand, says that Carl referred to escalating costs and asked when Moda was expected to open. Marco says that he replied that he hoped it would be in early December but to accelerate the fit out at that time of year might cost more and that it might be better to do it in the New Year. On 9 November 2004, Carl transferred $200,000 to Bondi Junction's bank account . On that day and the following day, payments totalling $95,503 were made in respect of costs concerning the World Square project. To that extent, the payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. It is more likely than not that the balance of the $200,000 was paid to Sherbet Creative Enterprises for the fit out of the Bondi Junction premises. To that extent, the payment should be treated as a joint advance to the entities that subsequently engaged in carrying on the Moda and Momo businesses. 172 In early January 2005, Carl told Marco that he, Carl, had contributed more than his required share of funding and that he expected some funds to come back once the Westfield landlord contribution had been received. Marco responded that there had been unexpected costs of Moda and Momo that had led to over expenditure. Carl asked him for details of the over expenditure. However, he received no details. 173 During January 2005, Toby and Carl had a discussion concerning legal representation. Carl expressed discomfort with Mr Steingold continuing to act, having regard to the bad blood that had developed. On 19 January 2005, following that discussion, Marco and Carl met Mr Bede Mooney of Somerville & Co solicitors and instructed him to review the proposed lease for the premises in the World Square development. Carl subsequently received an invoice for the sum of $2,365.55 for the advice provided by Mr Mooney. Carl paid the invoice for $2,365.55 on 16 February 2005 . That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. 174 In mid-April 2005, Carl had a meeting with Marco in which Marco told him that they needed to pay certain creditors in respect of the World Square project and that, unless the creditors were paid, there would be a delay in the project. Carl told Marco that he had already over-contributed and had also lent $550,000 to assist the Farinhas with their contributions. He told Marco that the Farinhas would have to bring in their share so that the contributions were equal to their respective ownerships. 175 Carl also pointed out that he still did not have the " financials " that he had been promised some time previously. He asked who the creditors were that needed to be paid urgently. Marco said that Carl should speak to Ms Kyu. He said that it was critical and that they were a bit short of cash. 176 On 18 April 2005, Carl spoke to Ms Kyu, who told him that there were certain creditors who were threatening to down tools unless parts of their invoices were paid. Carl subsequently met with Ms Kyu, when she gave him a document headed " San Marco World Square Pty Ltd Aged Payables [Summary] 18/04/2005 ". Ms Kyu told Carl which of the World Square creditors were the critical ones that needed to be paid and how much should be paid. The details that Ms Kyu gave him amounted to $106,390. Carl said that he would transfer $110,000 so that Ms Kyu could pay those creditors and could apply the balance of $3,610 at her discretion in paying other World Square creditors. On 19 April 2005, Carl transferred $110,000 to the bank account of Bondi Junction . Clearly enough, that payment was for the purposes of the World Square project. That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. 177 On 18 May 2005, Marco told Carl that it was necessary to pay an establishment fee in respect of a loan offer from Members Equity for the World Square venture. Marco asked if Carl could do that since the funding they were waiting for had not yet arrived. Carl said that he was not happy about it but supposed he would have to pay. On 19 May 2005, Carl and Marco signed required documents for a loan from Members Equity. On 19 May 2005 Carl paid $31,875 to Members Equity by way of establishment fee . That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. 178 At around that time, Carl attended a project meeting for the World Square venture. After the meeting, Marco asked Carl to pay money owing to De Martin and Gasperini for concrete work for the World Square venture. Carl said that he would pay the supplier direct but was not happy about the way things were being handled. On 20 May 2005, Carl paid $60,507 to De Martin and Gasperini . That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. 179 A bank account for World Square was opened on 6 June 2005. On 6 June 2005, Carl paid a fee of $6,250 for a $1,000,000 bank guarantee for World Square . That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. 180 On 29 June 2005, Carl had a discussion with Marco in which Marco asked Carl to pay outstanding invoices in respect of fees due to John Hollis Pty Ltd, the quantity surveyor for the World Square venture. Marco said that he would make sure that Carl would be reimbursed on the drawdown of the proposed loan from Members Equity. He said that the reports from the quantity surveyor were needed, before Members Equity would release any of the loan funds. On 29 June 2005, Carl paid $10,692 to John Hollis Pty Ltd for work completed in connection with the World Square venture . That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. 181 Shortly before Carl left Australia for Canada on 18 July 2005, Miguel asked him for further assistance in the sum of $140,000 as a security deposit for Members Equity. He said that, if the security deposit was not paid, Members Equity would not release the loan funds and it would not be possible to pay the builder for the World Square project. Marco subsequently joined in Miguel's request. After he arrived in Los Angeles, Carl had further discussions with Marco by telephone, concerning the proposed further payment of $140,000. Carl said that he was very unhappy about the matter and was always being put under pressure to make funds available. He then had a discussion with Marco concerning the need to have a partnership agreement signed by a particular date. 182 Carl arranged for the sum of $140,000 to be transferred into the bank account of World Square on 21 July 2005 . However, on 28 July 2005, Carl sent an email to the Farinhas saying that he had been informed that the drawdown had not taken place and that it was not anticipated to happen that week and that no date had been fixed. He therefore asked for return of the sum of $140,000 that he had transferred the previous week. He said that, since the sole purpose for the payment was for the bank guarantee for the drawdown, there was no purpose in the money lying in an account earning little, if any, interest while he was paying interest on his side. Marco responded on the following day, saying that the $140,000 had already gone " towards the $350,000 bank guarantee ". That payment should be treated as an advance to the entity that subsequently engaged in carrying on the Equilibrium business. The amounts shown as being advanced for the purposes of Momo or of Momo and Moda should be treated as advances to Bondi Junction and Piccolo jointly, since the parties seem to have treated the two businesses at Westfield Bondi Junction as being more or less a single enterprise. The amounts shown as being advanced for the purposes of Momo, Moda and Equilibrium should be treated as advances to Bondi Junction, Piccolo and World Square jointly. There should be judgment for Carl against the appropriate borrowers. Miguel told Mr Panagopoulos that a partner was leaving the Equilibrium venture and that they wanted someone new to get involved. There was discussion concerning Mr Panagopoulos taking a 30% interest. In late August, Mr Panagopoulos said that he was definitely interested. The negotiations continued during August and September. 186 At the same time, Toby and Carl were engaged in discussions about the outstanding issues in relation to their proposed partnership arrangements. The timing of the discussions with Mr Panagopoulos casts considerable doubt on the good faith of the Farinhas in endeavouring to reach agreement with Carl as to the terms of the proposed partnership arrangements. There were several matters that required consensus, as indicated in Toby's response, of 7 September 2005, to Carl's minutes of 5 September 2005. 187 The most significant of those matters involved how to deal with charges made by the Farinhas, and entities associated with them, for training costs, head office administration costs and salaries. Toby intimated to Carl that the time for resolution of the outstanding matters would be extended. Whether or not Toby clearly said that the time would be extended, I am satisfied that he intentionally led Carl to understand that it was not necessary to finalise the outstanding matters on that day. Having regard to the discussions that were taking place with Mr Panagopoulos at the time, without any intimation to Carl, I am not persuaded that the precondition for the exercise of the option was satisfied. I do not consider that the only reason why no agreement was entered into by 7 September 2005 was that the parties were unable to agree to the terms of such agreement, after negotiating in good faith. The Farinhas did not want to enter into an agreement at that time. They were not negotiating in good faith. 188 However, in the events that have subsequently occurred, the dispute concerning the exercise of the option under the Letter Agreement has become essentially irrelevant. Carl claims that any agreement concerning the purchase of his interest in World Square was repudiated by Toby and Marco, because there has been no offer or attempt by them to arrange for " the repayment of all monies invested " by Carl or any entity under his control relating to the World Square project within 12 months. In the proceeding, Carl claims to have terminated any agreement that was still on foot by reason of that repudiation. 189 While the Farinhas contended that an obligation arising out of the Letter Agreement remains on foot, they did not advance substantive submissions in support of the continued existence of any obligation or agreement. Whether or not the Farinhas negotiated in good faith, and whether or not the option was validly exercised, I consider that any agreement to acquire Carl's shares in World Square is no longer on foot. There has been no attempt by the Farinhas, either before the period of 12 months expired, or at all, to arrange for the repayment of all monies invested by Carl. 190 In the second half of September 2005, Mr Panagopoulos instructed his solicitor, Mr Dennis Galimberti, to communicate with Mr Steingold concerning documentation of the proposed arrangements for the taking of an interest in the World Square project. On 2 December 2005 Mr Panagopoulos caused a payment of $200,000 to be made to Cockle Bay. The payment was made on behalf of Equal 54, a company controlled by Mr Panagopoulos. On 20 December 2005 further payments totalling $1,200,000 were made on behalf of Equal 54 to Cockle Bay. 191 The evidence does not disclose the details of any arrangement between Mr Panagopoulos and Equal 54, on the one hand, and the Farinhas or entities associated with them, on the other hand, as to the consideration for those payments. Nevertheless, it is tolerably clear that Equal 54 paid $1,400,000 to acquire an interest in the Equilibrium venture, although the precise nature of the interest is quite unclear. 192 On 16 December 2005, Mr Galimberti wrote to Mr Steingold, who was then acting for the Farinhas. The letter asked for evidence that Mr Panagopoulos was a director of World Square and was a shareholder of World Square as to 30%. The letter enclosed an executed counterpart of a deed of partnership. At about the same time, World Square and Cine executed a counterpart of the deed of partnership. It is clear enough that the three parties to the deed of partnership intended that it become binding at about that time. The deed recited that Equal 54 and Cine, who were described as the partners, intended to become partners in the business known as the " Equilibrium Hotel " with retrospective effect from the commencement of the opening of the Equilibrium Hotel on 29 September 2005. The deed recited that that business was conducted for the partnership by World Square. Clauses 3.4 and 3.5 provided that World Square would at all times act " as nominee " of the partnership in accordance with the direction of the partners, but that World Square was not a member of the partnership. Clause 3.6 provided that the partners would share in the profits and losses of the partnership in the respective proportions referred to above, with effect from the commencement date. Clause 6.1 provided that the partners would be entitled to shares in World Square in those same proportions. 194 On 21 December 2005, Mr Panagopoulos became a director of World Square. On 3 March 2006, Cockle Bay applied for the allotment of 630 shares in the capital of World Square and Equal 54 applied for the allotment of 300 shares. Thereafter, entries were made in the register of members of World Square reflecting the issue and allotment to Cockle Bay and Equal 54 of 630 and 300 shares in the capital of World Square respectively. 195 One of the claims made in the proceeding by Carl is that that conduct was unfair and prejudicial to him as a shareholder of World Square. Mr Panagopoulos and Equal 54 were joined as defendants and were separately represented. However, as I have said, in the course of the hearing, counsel for the Farinhas announced that there had been a failure to comply with the Constitution of World Square in connection with the purported allotment of shares to Cockle Bay and Equal 54 and that the allotments were ineffective. 196 Clause 49.1 of the Constitution of World Square provides that rules regarding the offer of shares applied for or to be issued are as set out in Schedule 11 to the Constitution . Schedule 11 relevantly provides that, before issuing shares of a particular class, the directors must offer them to the existing holders of shares of that class. As far as practicable, the number of shares offered to each existing shareholder must be in proportion to the number of shares of that class that is properly recorded in the register of members as already held by that shareholder. Schedule 11 specifies the procedure for the making of such an offer. Schedule 11 then provides that the directors may issue any shares not taken up under the offer as they see fit but not at a price that is less than the price at which they were offered to the existing shareholders. 197 There is no evidence that the shares held by Carl were other than ordinary shares. The shares purportedly issued to Equal 54 and Cine were not expressed to be of any particular class and must be taken to be of the same class as those held by Carl. In the course of the hearing, the Farinhas indicated that, having regard to the circumstances just recounted, steps were being taken to rectify the register of World Square to remove reference to the allotments of 3 March 2006. However, Carl then moved for urgent interlocutory relief restraining any interference with the register of members of World Square. Carl contended that he may have an election as to the remedy that he would seek as a consequence of the conduct that he asserts constituted unfair and oppressive conduct in relation to the affairs of World Square. 198 An undertaking was then proffered on behalf of World Square and the Farinhas that no steps would be taken to rectify the register of members of World Square pending the final resolution of this proceeding. The proceeding continued on the basis that there had been a purported allotment of shares to Cockle Bay and Equal 54 and that Carl was seeking relief in the proceeding on the basis that such allotments had taken place. In the meantime, counsel then appearing for Mr Panagopoulos and Equal 54 withdrew and those defendants thereupon submitted to such order as the Court sees fit to make, other than an order as to costs. 199 It is not disputed that payments totalling $1,400,000 were made by or on behalf of Equal 54 to Cockle Bay in connection with a proposed acquisition by Equal 54 of some interest in the Equilibrium business, whether direct or indirect. Carl claims that that matter is relevant to the question of the value of Carl's interest in World Square or the Equilibrium business. However, it is by no means clear how the payments made by or on behalf of Equal 54 are to be characterised. 200 One of the allegations made by Carl in the proceeding is that the effect of the deed of partnership was to divest the Equilibrium business, then owned by World Square, and to vest it in the partnership consisting of Equal 54 and Cine. However, the partnership deed does not purport to do so. Further, there is no evidence of any other juridical act on the part of World Square that could have the effect of divesting an interest in the Equilibrium business. A director who fails to take all reasonable steps to ensure compliance with those requirements contravenes s 344 of the Corporations Act . Detailed invoices, cash dockets and the like are normally kept to support cash expenses. Group certificates, job specifications, employment contracts and details of duties are normally kept to support salaries of wages shown as expenses in the accounts. Ms Bateman found no such material available in the course of her examination. Section 288 of the Corporations Act contemplates that financial records may be kept electronically. However, if financial records are kept in electronic form, they must be convertible into hard copy, which must be made available within a reasonable time to a person who is entitled to inspect the records. It is clear enough that there has been a failure on the part of Bondi Junction, Piccolo and World Square to satisfy the requirements of s 286 of the Corporations Act . She was provided with no invoices or working papers detailing the work performed in respect of which such fees were charged. 205 Finally, Carl complains about the charging of training costs to Piccolo, Bondi Junction and World Square. A sum of $66,915 appears to be in issue. Ms Bateman reported that there was no documentary evidence to support the charging of such costs to Bondi Junction. 206 In addition, Carl complains about under-reporting of revenue in respect of the Momo and Moda businesses. In May or June 2005, Carl arranged with Ms Saga Hassinen, who was restaurant manager of Momo from March to December 2005 and restaurant manager of Moda from that time until February 2006, to provide him with revenue breakdown cover reports in respect of the businesses. Ms Hassinen provided Carl with such reports. 207 Ms Bateman endeavoured to reconcile the revenue breakdown cover reports provided by Ms Hassinen with profit and loss accounts prepared on behalf of Bondi Junction and Piccolo. Ms Bateman reported that the revenue disclosed by the reports for Momo for the period from 6 October 2004 to 31 August 2005 was under-reported in the profit and loss account for Piccolo by the sum of $76,028. The revenue disclosed by the reports for Moda for the period 1 March 2005 to 31 October 2005 was under reported in the profit and loss account for Bondi Junction by the sum of $135,734. 208 The Farinhas sought to adduce evidence towards the end of the hearing that was designed to explain those discrepancies. The evidence was not in admissible form and, in any event, I indicated that I would have severe reservations as to whether the material, even if admissible, would be admitted at that late stage. In the event, the Farinhas did not press the matter and no evidence was adduced to explain the discrepancies reported by Ms Bateman. 209 At various stages during the course of the hearing, counsel for the Farinhas foreshadowed an explanation for the discrepancies. However, in the result, as I have indicated, no evidence was adduced to explain the discrepancies. In the circumstances, I can only conclude that the accounts that have been provided for the Moda and Momo businesses are inaccurate, in under-reporting revenue. Further, in the absence of any evidence concerning the basis upon which charges were made to Piccolo, Bondi Junction or World Square for management fees, consultancy fees, administration fees and training costs, the expenses were not properly incurred by those companies. 210 On the other hand, of course, if Cine or Cockle Bay, or other entities within the San Marco group were able to show that they have provided services, they may be entitled to recover some fees on a quantum merit or other similar basis. There is, however, no evidence before me that would support a finding that the charges were made pursuant to any express agreement made by any of the parties. 211 General accounting practice allows for the rolling over of financial accounts from one year to another. Thus, closing balances for one period should agree with opening balances for the following period. While that occurred with the Bondi Junction and Piccolo accounts, it did not occur for the accounts of World Square. Rather than rolling one year into the next, the accountants who prepared the accounts for World Square created new financial accounts for subsequent years. 213 Carl contends that the arrangements proposed in relation to the three ventures were undertaken as part of a quasi partnership or joint venture. He contends that, while it may well be that the parties intended that the quasi partnership or joint venture would be conducted through the structure described by Mr Saidman, in the events that occurred, the only entities engaged in the businesses were World Square, Bondi Junction and Piccolo. The contributions that Carl made by way of the payments that I have described above form an essential part of the arrangements entered into in relation to the ventures to be carried on by the three companies. 214 While Carl was a director of the companies, it is clear that the administration of the companies was in the hands of the San Marco Group. To the extent that the administration was inadequate, that inadequacy must be laid at the feet of the Farinhas, who undertook, through the San Marco Group, to provide such services. 215 For present purposes, the only significance of the under-reporting of revenue and the overcharging of expenses, is that they are matters relied upon by Carl in support of his contention that the affairs of the three companies have been conducted in a manner that is unfairly prejudicial to him as a shareholder of the three companies. For the purposes of the present proceeding, I conclude that the charges that I have described above were made in circumstances where there is no material to support a conclusion that the companies in question were liable for the charges. I also conclude, for the purpose of the present proceeding that revenue of the two businesses carried on by Bondi Junction has been under-reported in the books of Bondi Junction. 216 It was not intended that administrative and other services would be provided by the San Marco Group without charge. However, the basis of the charges was never agreed. Charges have been made to Bondi Junction, Piccolo and World Square by the San Marco Group, or entities associated with the Farinhas, for head office administration costs, training costs and salaries. There has been no authorisation for such charges and no agreement as to their quantum. It is possible that services have in fact been provided and that the charges that have been made are fair and reasonable. However, there was no hint of any evidence from the Farinhas to demonstrate the detail and precise nature of the services provided or the justification for the charges, despite the report of Ms Bateman, putting those matters in issue. I can only conclude, on the basis of the evidence adduced to date, that the charges have been made without any entitlement to do so. 217 The wholly inadequate recording of the details of the payments made by Carl is indicative of a failing in the maintenance of proper records. In the absence of any evidence of an accounting nature from the Farinhas, I can only conclude that the accounting records maintained by the San Marco Group on behalf of the companies were inaccurate and inadequate. The Farinhas have accepted, at least for the purposes of the proceeding, that Ms Bateman's conclusions are correct. Those conclusions indicate that the spreadsheets provided to Carl were quite inaccurate in recording the payments made by him and the allocation of the payments to the particular businesses. 218 In addition, the controversy concerning the allotment of shares in World Square is a further indication that the affairs of that company have been conducted in a manner that is oppressive and unfair to Carl as a shareholder. Whether or not the allotment was effective or was a complete nullity, there is no doubt that the directors of World Square intended to make an allotment to Equal 54 that would have the effect of diminishing, to the point of extinction, any value that Carl's shares in the capital of World Square may have had. Indeed, the payment made by Equal 54 suggests, although not conclusively, that the Equilibrium business conducted by World Square had significant value. The evidence, while it is not conclusive, gives rise to an inference that Equal 54, through Mr Panagopoulos, was prepared to pay $1,400,000 to acquire a 30% interest of the Equilibrium business. 219 In the circumstances, I am satisfied that the affairs of each of the three companies have been conducted oppressively to, unfairly prejudicially to, and unfairly discriminatorily against Carl as a shareholder. The Farinhas control the majority of the share capital of the three companies. I consider that it would be appropriate, therefore, to require the Farinhas, or entities associated with them, to purchase Carl's shares in the three companies for a value that is determined after taking appropriate account of the underreporting of revenue and the overcharging of expenses and ignoring the purported allotment to Equal 54. 220 The evidence before me at present does not enable any attempt to be made to arrive at an appropriate value. However, I will afford the parties the opportunity of making further submissions as to the mechanism that should be adopted for determining an appropriate value. That mechanism would include the adducing of further evidence, if need be, on behalf of both parties as to the way in which the value should be determined. In so far as the Farinhas are able to establish a reasonable basis for determining the value of administrative services provided to the companies by the San Marco Group, that value would be taken into account in valuing the shares in the companies held by Carl. Carl replied that he had put in more than his required share and that he had set his budget and relied on his money for mezzanine finance income. He said that it was up to Marco and Toby to make funds available in proportion to their ownership of the companies. 222 Marco then said that, at the moment, they were stretched because their " the Market Street building project " was behind schedule and asked Carl whether he could help them by making a loan to Marco and Toby, so that they could meet their obligations. Marco said that they would pay interest along the lines of a previous loan that had been made to Toby. 223 Carl said that he could only consider helping them for two months. Marco asked whether Carl could make it three months and said that he was 100% sure he could repay the amount. Marco said that Sherbet Creative Enterprises was shouting for payment of invoices and needed $300,000. Marco said that it would also be good if Carl could lend them an extra $250,000 so that they could pay some other bills. 224 Carl said that it seemed that he had no choice and that he would lend the money to Marco and Toby so that they could make their contribution. Carl also said that they had to make a very firm commitment to repay the money by the end of May. Carl said that an interest rate of 12.5% plus an establishment fee would be charged. He asked about security but Marco said that second mortgage security over their homes might prejudice negotiations that were being conducted with banks for further facilities. Marco said that he and Toby would give personal guarantees. Carl said that if he was personal guarantees that he would get his money back by 1 July 2005, he would make the loan. 225 At some stage thereafter a document describing the loans was signed by Miguel and Marco. The document referred an annual interest rate of 14%, payable in advance, and establishment fees of $2,071.23 and $1,438.36, for the two loans. The document stated a repayment date of 1 July 2005. There appears to be no other written evidence of the loans. 226 In oral evidence, Miguel accepted that he signed the document but said that he did so on behalf of Toby, at the insistence of Carl. As I have said earlier, Carl and Carpe Diem do not assert any personal liability on the part of Miguel, but claimed, in the alternative, a declaration that Toby and Marco were personally liable for the loan. As I have also earlier indicated, I do not understand any claim now to be pressed in respect of personal liability on the part of Toby and Marco. The only question is the identity of the lender. 227 On 27 July 2004, a deed was entered into between Carpe Diem and Miguel and his wife in order to evidence a loan by Carpe Diem to Miguel and his wife. That loan was secured by a mortgage in favour of Carpe Diem. The relevance of that evidence is that it indicates that, where a loan had previously been made to one of the Farinhas, it was made by Carpe Diem. That has some relevance to the identity of the lender who made the loans totalling $550,000 to Cockle Bay. 228 I consider that the loans were made by Carpe Diem and not by Carl personally. The most telling evidence in support of that conclusion is the stance adopted by the Farinhas in a proceeding commenced in the District Court of New South Wales by Carpe Diem for recovery of the loan. The proceeding was commenced by Carpe Diem against Toby and Marco and Cockle Bay. In its amended statement of claim, verified on 10 May 2006, Carpe Diem asserted that, in early March 2005, Carpe Diem agreed to make a loan to Toby and Marco in the amount of $550,000. The terms of the loan were then pleaded, including a variation concerning the date for repayment of the loan. The statement of claim then asserted that Carpe Diem, at the request of Toby and Marco, advanced $300,000 of the loan to Sherbet Creative Enterprises on 11 March 2005 and on 15 March 2005, at the request of Toby and Marco, advanced $240,990.41 of the loan to Cockle Bay, being the balance of the loan after deducting the establishment fee and interest on the loan to 30 March 2005. The statement of claim alleged, in the alternative, that the loan was made to Cockle Bay. 229 In his amended defence filed in the District Court, which was sworn on 18 July 2006, Toby asserted that in or about the middle of February, Marco, on behalf of Cockle Bay, entered into an agreement with Carpe Diem whereby Carpe Diem agreed to lend $250,000 to Cockle Bay. Toby asserted that on 11 March 2005, Carpe Diem provided $300,000 to Sherbet Creative Enterprises as part of Carl hybrid trust's partnership contributions to the partnership operated through Bondi Junction. No suggestion was made in the defence that any loan was made by Carl personally. In his defence sworn on 18 July 2006, Marco made the same assertions as Toby did in his defence. That is to say, neither of them denied that loans were made by Carpe Diem. There was no suggestion that the loans were made by Carl personally. 230 The District Court proceeding was subsequently discontinued and it is common ground, in the present proceeding, that the loans totalling $550,000 were made to Cockle Bay. The payments were in fact made by Carpe Diem. There is no evidence to suggest that the payments were made by Carpe Diem on behalf of Carl or any other person. Further, interest was paid by Cockle Bay to Carpe Diem on thirteen occasions from 31 March 2005 to 3 May 2006 at the rate of 14% per annum. No suggestion was made that the interest was payable to Carl. It is common ground that 14% was the agreed rate of interest. 231 In the circumstances, there should be judgment for Carpe Diem against Cockle Bay in the sum of $550,000 together with any interest remaining unpaid at the date of judgment. Further, the Moda, Momo and Equilibrium ventures have been carried on by Bondi Junction, Piccolo and World Square respectively in their own rights. (4) The purported allotment of shares in the capital of World Square to Equal 54 was made in contravention of its Constitution and would be liable to be set aside. (5) The accounts of the Moda and Momo businesses underestimate the revenues earned by those businesses and management fees, consultancy fees, administration expenses and training costs charged to the three businesses by the San Marco Group, or entities associated with the Farinhas, have not been properly charged to those businesses. (6) The Farinhas, or entities associated with them, should be required to purchase Carl's shares in Bondi Junction, Piccolo and World Square for a consideration to be determined after further evidence and argument. (7) Carpe Diem is entitled to recover the sum of $550,000 from Cockle Bay and should have judgment accordingly. At this stage, it is not appropriate to make any order as to costs. I certify that the preceding two hundred and thirty-three (233) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | business ventures whether carried on by partnerships where plaintiff made payments in connections with businesses characterisation of payments allotment of shares whether accounts of businesses underestimate revenues earned and overstate expenses incurred whether unfair or oppressive conduct occurred whether majority shareholders should be required to buy shares in companies of minority shareholders. corporations |
Until 23 June 2003, PMIF was called the Premium Income Fund of Australia --- 2000 (PIFA-2000). I will refer to the scheme as PIFA-2000, PMIF, "the Fund" and "the Scheme". I will refer to the members of the Scheme both as members and investors. 2 Stacks applies for directions under s 601NF(2) of the Corporations Act 2001 (Cth) (the Act) about how the Scheme is to be wound up. 4 Stacks has been the responsible entity of the Fund since 16 September 2004 but the circumstances that have given rise to the questions before the Court occurred at times when a former responsible entity was in office. 5 The only remaining assets of the Scheme are the proceeds of sale of a shopping centre (the Boondall Property --- see [48] below) and the proceeds of sale of a block of home units (the Upper Roma Street Property --- see [140] below). Stacks desires to distribute these proceeds of sale to the members entitled and to wind up the Scheme. The problem is that Stacks is confronted by complex and unclear financial records relating to the past history of the Scheme and the management of its affairs. 6 Stacks is unable to determine with confidence, on the documentary evidence, how the Scheme is to be wound up and, in particular, how the remaining cash is to be distributed among the Scheme's members. Stacks has placed the somewhat bewildering documentary evidence before the Court. 7 Annexed to the further amended originating process that was filed in court on the hearing, are no less than five schedules (the Schedules) setting out five alternative sets of directions that Stacks suggests the Court may see fit to make. 8 I accept that it is necessary for the Court to give directions about how the Scheme is to be wound up. It is of importance, however, particularly in view of the state of the evidence and the fact that the present difficulties arise from times prior to Stacks' incumbency, that I outline the legal principles governing the Court's exercise of its power under s 601NF(2) , and the limited effect of any directions to be given. 10 Stacks followed the desirable practice of giving notice of its application and of the hearing date to the members of the Scheme by post addressed to them at the postal addresses it had for them. Stacks gave a similar notification to the immediately preceding responsible entity, Mercator Funds Management Limited (now named Lion Advantage Limited) (Mercator). 11 I received written submissions from Linda White (a member of the Scheme) and Kevin Davis, on behalf Bemak Pty Ltd as trustee for KJ Davis Superannuation Fund (also a member of the Scheme). I note that I received no written submissions from Mercator. 12 In Re GB Nathan and Co Pty Ltd (in liq) (1991) 24 NSWLR 674 ( Nathan ), McLelland J (as McLelland CJ in Eq then was) discussed the principles that govern an application by a liquidator for directions under the then s 479(3) of the Corporations Law (Cth). That provision is now found in s 479(3) of the Act, and was (and is): "The liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up". 13 In Editions Tom Thompson Pty Ltd v Pilley (1997) 77 FCR 141, I held that these observations applied to an application by an administrator of a company subject to a deed of company arrangement for directions under s 447D of the Corporations Law (Cth) (now s 447D of the Act). 14 In Australian Securities and Investments Commission v Tasman Investment Management Ltd [2006] NSWSC 943 ; (2006) 202 FLR 343 ( ASIC v Tasman Investment ), Austin J approached an application under s 601EE of the Act for directions concerning the distribution of assets of an unregistered management investment scheme along similar lines. His Honour considered (at [29]) that, on balance, on the authorities, it seemed that binding orders affecting third party rights were not authorised by s 479(3) of the Act. His Honour said that even if they were, the decided cases showed that directions under the section were usually made in the limited form described by McLelland J in Nathan (that the office holder is "justified" in acting in the manner specified in the order). Austin J added that one reason for making directions in that limited form is that even if authorised by the section, binding orders would not in fact be made unless all affected parties or their representatives were properly before the Court. 15 It would have been possible for the Court to decline to give directions unless, with Stacks' consent, the Court converted the present proceeding into an inter partes proceeding by appointing and joining as a party, a representative of the members entitled to the First Mortgage Interest Portfolio (see below) on the one hand, and a representative of the members entitled to the High Yield Income Portfolio (see below) on the other hand: see Nathan at 680 per McLelland J and authorities there cited by his Honour. This course would have had the advantage that the members having interests in the remaining assets of those respective Portfolios would have been bound by the result. (2) There would have been considerable resulting costs, causing further diminution in the amount available for distribution. (3) On the assumption that Stacks has put before the Court all relevant documents that exist relating to the period in question, it is not obvious that the Court could have been assisted further beyond the assistance rendered by the legal representatives for Stacks (for which I am grateful). (4) Although once Stacks effects a distribution in accordance with directions to be given, it will be protected against any claim of breach of trust, it will remain open to any aggrieved member of the Fund to assert and prove an entitlement inconsistent with the directions, and to exercise such remedy as the member may have to recover the amount of the alleged overpayment: see ASIC v Tasman Investment at [30]. No doubt this is less satisfactory from the aggrieved member's viewpoint than having questions of entitlement resolved finally before distribution, but at least such remedy as the member may have will not be defeated by the giving of the direction. I have done so rather than either insisting that the proceeding be reconstituted as an inter partes proceeding, or simply declining to give any directions at all, thereby leaving Stacks to take a decision in a difficult situation, not of its making, yet exposing Stacks to the possibility of proceedings against it for breach of trust. 19 The Fund was established under the PIFA-2000 name by a deed dated 24 July 2000. The deed was executed by Cromwell Property Securities Limited (Cromwell) which was called in the deed "the Manager". An Australian Securities and Investment Commission (ASIC) historical company extract for the Fund shows the "Name Start Date" as 26 July 2000. The Fund was registered with ASIC as a managed investment scheme on 9 August 2000. 20 As noted earlier, on 23 June 2003 the name of the Fund was changed from PIFA-2000 to PMIF. 21 Cromwell was the manager and responsible entity of the Fund from its registration on 9 August 2000 to 21 September 2001 when Mercator replaced it. 23 Clause 2.2 stated that the Scheme was established to invite persons to invest in mortgage lending arrangements in accordance with the Prospectus. 26 Consistently with the definition of the term "Interest" noted above, by cl 2.3 of the Constitution , the Manager (defined as Cromwell or any other person for the time being acting as Manager, provided that at all times the Manager was a responsible entity as defined in s 9 of the Corporations Law (Cth) (now s 9 of the Act)) declared that it held and would at all times hold the "Assets of the Scheme [sic]" on trust for the members of the Scheme, subject, relevantly, to the provisions of the Constitution . 27 By cl 2.5, the Manager was to lodge and hold $100 to establish and constitute the Scheme. The same clause provided that the Manager may, from time to time, cause or cause to be received additional cash by way of additional funding for the Scheme "to be held on trust in accordance with [the] Constitution ". 28 Importantly, cl 2.9 provided that the Assets of the Scheme were to be divided into Classes, and that the Prospectus would specify which Assets were to form a Class. The term "Class" was defined to mean one or more Assets which were nominated by the Manager to be a Class for the purposes of the Constitution . Clause 2.10 provided that the beneficial interest in the Assets in any Class should be divided into "Interests", and that the beneficial interest in each Class as originally constituted and as existing from time to time should be held by the members from time to time in proportion to the Interests in each Class registered in their respective names in the Register of members. Every Interest in a Class shall be of equal value and confer an equal interest in that Class but shall not confer on any Member any interest in any other particular part of the Scheme or any other Class and no Member shall be entitled to the transfer to him of any Assets unless provided for in the Prospectus. 30 Clauses 6.1 of the Constitution gave the Manager various powers and responsibilities, including a power and responsibility to invest the funds in "Authorised Investments" (cl 6.1(b)(i)). The expression "Authorised Investments" was defined in cl 1.1, but only as meaning mortgages over real estate, and deposits at call or for a term with any authorised deposit-taking institution under the Banking Act 1959 (Cth) . Unfortunately, the clear distinction on which these early provisions of the Constitution insisted was not to be carefully observed at all times by the Manager and responsible entity in office. 33 Clause 9.1 provided that subject to any provisions to the contrary in the Prospectus, Assets might, pending their application in accordance with the terms of the Constitution , be invested in Authorised Investments in the name of the Manager as manager of the Scheme. 34 Clause 11 dealt with dissolution of the Scheme. Clause 11.1 provided that the Manager must ensure that the Scheme was dissolved in accordance with the Constitution and any orders made by the Court under s 601NF(2) of the Act upon, relevantly, the members passing an extraordinary resolution directing the Manager to dissolve the Scheme. As noted at [21] above, the Members so resolved at the extraordinary general meeting held on 8 September 2004. The Fund offers a range of different types of investment opportunities. Each type of investment is represented by a separate class of assets in the Fund. The first portfolio was the "First Mortgage Portfolio" which comprised one or more loans secured by registered first mortgage over security property. The statement was made that loans which formed part of the First Mortgage Portfolio must be limited to 80% of the value of the security property as certified by a registered valuer to the Manager. 37 The second portfolio was the "Project Development Portfolio". The Original Prospectus stated that the Project Development Portfolio comprised loans secured by a second or subsequent registered mortgage over security property for the purposes of developing the security property or construction of improvements on the security property. It further informed readers that loans that formed part of the Project Development Portfolio were limited to 90% of the completed value of the security property certified by a registered valuer to the Manager. 38 As will be seen, the First Mortgage Portfolio was later called the "First Mortgage Income Portfolio" (FMIP), and the Project Development Portfolio was later called the "High Yield Income Portfolio" (HYIP). I will use both the old and new names to refer to the respective portfolios. 39 Clearly, the First Mortgage Portfolio was the more conservative investment vehicle, being limited to loans not exceeding 80% of the certified present value of the security property. The Project Development Portfolio, on the other hand, allowed loans of up to 90% of the certified completed value of the security property. 40 Clause 2.1 of the Original Prospectus assured readers that each Mortgage Investment Portfolio represented a separate Class of Assets of the Fund. Clause 2.1 also assured them that the Loans and Mortgages that constituted the Assets in a Portfolio were held by a "Custodian" as agent of the Manager, who, in turn, held them in trust for the members. The members owned the Loans and the Mortgages which constituted the Assets of the relevant Portfolio as tenants in common. I note that the Custodian was, at all relevant times, Perpetual Trustee Company Ltd (Perpetual). 41 In sum, the Original Prospectus gave flesh to the bare bones of the Constitution . There were two Classes of Assets and, concomitantly, of members: the First Mortgage Portfolio (later the FMIP) and the Project Development Portfolio (later the HYIP). The Replacement Prospectus renamed the First Mortgage Portfolio and the Project Development Portfolio the FMIP and the HYIP respectively. Applications for investment in each class of unit must be made on the appropriate application form attached to this prospectus. It was stated that the FMIP did not provide development finance or construction loans, nor did it hold such loans. The balance of the settlement proceeds of sale of the Boondall Property was $731,181.86. As mentioned previously, Stacks seeks directions about how these proceeds should be distributed. 49 As will become apparent, there were at least three loan facilities (the Rycorp Properties Loan Facilities) provided by the Fund in favour of Rycorp Properties or associated entities prior to the appointment of Stacks as responsible entity which are relevant to the question of how the proceeds should be distributed. The loan was to be used to allow the construction of nine residential units at 102 and 106 Pashen Street, Morningside, Queensland (the Pashen Street Property). Meritstock was an entity associated with Rycorp Properties and its directors and shareholders were Colin Gregory Ryan and Islay Wendy Ryan. Meritstock accepted the offer of the Pashen Street Facility (that is, the loan offer outlined above) on 30 May 2001. 51 By October 2002, the construction had stalled due to lack of available funds. By that time, Mercator had replaced Cromwell as the responsible entity of the Scheme (see [21] above). Mercator considered that an additional $138,000 would be required to complete the project. An advance of a further $138,000 would increase the amount of the facility from $550,000 to $688,000. The increase was approved and the second mortgage over the Pashen Street Property was varied accordingly. 52 In or about March 2003, the Pashen Street Property was sold. This resulted in various payments into the relevant PIFA-2000 account, being account PA10003007 (the Pashen Street Facility HYIP Account). The letter "P" stood for Project and was a reference to the earlier name of the HYIP, namely, the Project Development Portfolio. The the Pashen Street Facility HYIP Account statement showed that the balance outstanding after those various payments were credited was $404,220.40. This amount continued to accrue interest. 53 Accordingly, the Pashen Street Facility was funded by the HYIP and the outstanding indebtedness of $404,220.40 was an Asset within that Portfolio. The loan was to be used to fund the construction of six residential units at 45 Bonney Avenue, Clayfield, Queensland (the Bonney Avenue Property). The loan was to be used not only to fund the construction directly, but also to pay out an existing Suncorp Metway first mortgage, and an existing PIFA-2000 HYIP facility. 55 The security for the loan was a first registered mortgage over the Bonney Avenue Property and unlimited joint and several guarantees by Mr Ryan, Rycorp and Rycorp Properties. Meritstock accepted the offer of the Bonney Avenue Facility (that is, the loan offer outlined above) on 30 May 2001. 56 The relevant PIFA-2000 account for the Bonney Avenue Facility was account FA10004002 (the Bonney Avenue Facility FMIP Account). The letter "F" stood for First and was a reference to the First Mortgage Portfolio (later the FMIP). The Bonney Avenue Facility FMIP Account showed that the loan was drawn down on or about 5 June 2001. 57 The Bonney Avenue Property was sold and the sale settled on 11 October 2002. The sale price was $360,000. The main payment that was made out of the proceeds of sale was a payment of $328,016.65 to Perpetual as custodian for the PIFA-2000 FMIP. The FMIP Bonney Avenue Facility FMIP Account recorded that only $327,495.30 was received on 14 October 2002. At that time, the principal outstanding was $1,275,000.00 and accrued interest outstanding was $31,895.62. The payment of $327,495.30 was applied first in extinguishing the outstanding interest and then in reducing the outstanding principal. The result was that there was a shortfall in payment of principal of $979,400.32 which, of course, continued to accrue interest. The only prospect of recovery of this shortfall plus interest was from pursuing the guarantors, namely Mr Ryan, Rycorp and Rycorp Properties. 58 Accordingly, the Bonney Avenue Facility was funded by the FMIP and the outstanding indebtedness of $979,400.32 was an Asset within that Portfolio. Mercator's letter of offer stated that the lender was Perpetual as custodian for the PIFA-2000 Project Development Fund, that is to say, the HYIP. The amount of the facility offered was $2,500,000 or a maximum of 90% of valuation, whichever was the lesser. 60 Two years earlier, on 6 September 2000, Meritstock had accepted a loan of $900,000 (the loan having been offered in a letter addressed to Meritstock and dated 5 September 2000), secured by, inter alia, a second mortgage over the Boondall Shopping Centre at 2115-2121 Sandgate Road, Boondall, Queensland (the Boondall Property). Mr Stack, in his affidavit, states that this loan was unrelated to the Scheme, that is, PIFA-2000. Rather, the loan was made on behalf of the Premium Income Fund of Australia (PIFA), a different scheme from PIFA-2000. Mr Stack states in his affidavit that, according to his understanding, based on conversations he had with staff of Mercator, PIFA-2000 and PIFA had common investors. There were also to be guarantees by Mr and Mrs Ryan, Rycorp, Rycorp Properties and Closemarket Pty Ltd (Closemarket). The letter of offer of the Boondall Facility stated that the second registered mortgage over the Boondall Property was to be "Subject to First Mortgage to Premium Income Fund of Australia", that is, subject to a first mortgage to PIFA. 62 It will be recalled that the sales of the Bonney Avenue Property and the Pashen Street Property resulted in large shortfalls. Accordingly, the second mortgage over the Bonney Avenue Property and the third mortgage over the Pashen Street Property were of no value as security for the Boondall Facility. 63 An internal Mercator memorandum dated 7 March 2002, enclosing a loan recommendation for the Boondall Facility, stated that Meritstock was at that time a borrower both from the PIFA and PIFA-2000 Funds, and that the Boondall Facility that was being sought was to "assist in the payout of borrowings from Colonial Bank" and "to payout a current loan with PIFA". In his affidavit, Mr Stack states that although he has not seen confirmatory documentation, his understanding is that the latter is a reference to the original loan (in the year 2000) secured over the Boondall Property mentioned at [60] above. 64 The loan recommendation, enclosed in the memorandum, stated that of the $2,500,000 comprising the Boondall Facility, $950,000 was to come from the FMIP and $1,550,000 was to come from the HYIP. In his affidavit, Mr Stack observes that this apportionment does not appear to be consistent with the original offer which described the lender as Perpetual as custodian for the HYIP. However, I attach little significance to this discrepancy because, as will appear below, $950,000 was indeed drawn from the FMIP and $1,550,000 was indeed drawn from the HYIP. 65 On 8 March 2002 a Loan Agreement was entered into by Meritstock and Perpetual. 67 On 28 March 2002, $950,000 was drawn down from the FMIP's account FA10004007 (the Boondall Facility FMIP Account). Between 28 March 2002 and 9 April 2002, $1,550,000 was drawn from the HYIP's account PA10003017 (the Boondall Facility HYIP Account). Mr Stack observes in his affidavit that it appears from the Boondall Facility HYIP Account statement that a further sum of $267,002.66 was advanced by the HYIP on 14 October 2002, but Mr Stack has not been able to locate any documentation in relation to that advance. 68 Pursuant to the Loan Agreement dated 8 March 2002, interest was payable in advance on the drawn down amounts. The last recorded interest payment in respect of both the FMIP drawdown and the HYIP drawdown was on 7 August 2002. 69 As senior counsel for Stacks observes, there does not appear to be any doubt that the two Portfolios, the FMIP and the HYIP, advanced the respective amounts mentioned, and the question which arises is which of them had the benefit of which mortgages. It is noteworthy that the various mortgages that comprised the security for the Boondall Facility were to Perpetual, but did not disclose whether they were in favour of the FMIP or the HYIP. In order to determine which Portfolio owned each of the mortgages, it is therefore necessary that I resort to the internal business records of the Scheme. 70 The Mount Warren Park Property was sold for $900,000 and that sale was settled on 19 December 2002. The net balance available to the Scheme after payment of rates and land tax was $790,084.34. The whole of this amount was credited to the Boondall Facility FMIP Account on 19 December 2002. This left a balance outstanding to the FMIP on the Boondall Facility of $246,172.49. In other words, the first mortgage over the Mount Warren Park Property was treated as having been for the benefit of the FMIP alone. Both had been initiated by a previous manager [a reference to Cromwell] with security which, in our opinion, proved inadequate. We have arranged for the loans to be refinanced from March 11, 2003 with satisfactory additional security over a further income stream and the whole consolidated with a High Yield Portfolio loan. It will be recalled that the Mount Warren Park Property was vacant land, the first mortgage over which was security for the Boondall Facility. 73 Mr Stack states that he cannot reconcile the amount of the stated principal and interest with the loan statements for those two facilities. The Second Prospectus does not explain the nature of the "satisfactory additional security over a further income stream" or state its value or describe the nature of the consolidation with a "High Yield Portfolio loan". A letter [of] offer has been issued to an associated company that assumes full responsibility for the debt as at 31 January 2003. This offer has been accepted and is being documented by the Fund's solicitor. If so, the reference to a "Second mortgage" was likely to be a reference to the second mortgage over the Boondall Property given by Meritstock. The statement therefore suggests that the second mortgage over the Boondall Property was given by Meritstock in favour solely of the HYIP. 76 On 17 March 2003, Mercator issued a letter making an "amended offer of the provision of a facility" to Rycorp Properties. The loan amount specified in that letter was $2,564,232.83. The letter replaced one of 11 March 2003 that had referred to a loan amount of $1,675,000.00. 77 An internal memorandum of Mercator dated 9 April 2003 referred to a meeting with Mr Ryan and discussions with Mercator's solicitors, Hopgood Ganim Lawyers. The memorandum stated that those solicitors had "produced for execution by Mr Ryan and his companies a deed of affirmation of all securities and a new security deed". The Security Deed recited that Rycorp and Meritstock were both in liquidation, and that Rycorp Properties, Closemarket and Mr and Mrs Ryan had requested Perpetual to continue to provide financial accommodation and to refrain from taking immediate enforcement action under "the Securities" and various guarantees notwithstanding the liquidations. The expression "the Securities" was defined to mean Mortgage No 704347855 (over the Boondall Property), Mortgage No 705599063 (also over the Boondall Property), Mortgage No 705960792 (over 100 Oriel Road, Clayfield), fixed and floating charges over all assets and undertakings of Rycorp Properties and Closemarket dated on or about the date of the Security Deed, and any other security interest executed prior to or after the date of the Security Deed which secured all or any part of the "Secured Money". 79 By the Security Deed, the Pashen Street Facility, the Bonney Avenue Facility and the Boondall Facility were consolidated into loans owing to PIFA-2000. The Security Deed extended the security to include a third mortgage over Mr Ryan's residence and the giving of personal guarantees by Mr and Mrs Ryan. 80 In cl 3.2 of the Security Deed it was acknowledged and agreed that the expression "Secured Money" (generally speaking, all money owing under any of the existing Rycorp Property Facility arrangements) was comprised of accounts that were set out in a table to that clause. I have set out this table below. The column titled "Portfolio" and the two rows titled "Total" did not appear in cl 3.2. They contain uncontroversial information and I have taken them from the table as set out in the affidavit of Mr Stack. In the case of the third line, the Boondall Property (that is, the Boondall Shopping Centre) had not yet been sold. Relevantly, the words "Mt Warren Park" appear below the reference to the Boondall Facility FMIP Account (being account FA10004007) in the table, and the words "Boondall Shopping Centre" appear below the reference to the Boondall Facility HYIP Account (being account PA10003017) in the table. This suggests that the first mortgage over the Mount Warren Park Property had been held solely in favour of the FMIP, and that the second mortgage over the Boondall Shopping Centre was held in favour solely of the HYIP. 82 Senior counsel for Stacks suggests that a fundamental question for me to decide is whether the Security Deed is valid. He points out that, on one view, the Security Deed was entered into in breach of trust. I consider this question at [128] --- [138] below. 83 It is to be noted that the Security Deed envisaged that ultimate repayment of the amounts owing would be made by 11 March 2007. The statement continued: "The refinance and the consolidation will remove the borrower from this portfolio [the FMIP]". This final sentence was incorrect, because the Security Deed did not have the effect that the borrower, Meritstock, was removed from the FMIP, because the FMIP still had claims under the Security Deed. Senior counsel for Stacks submits that the author of these words appears to have wished to create the impression that the default leading to the debt of principal and interest totalling $1,269,714.76 was no longer of any concern to the investors in the FMIP, and was now a problem only for the investors in the HYIP. 85 The Supplementary Prospectus No 1 also qualified what was stated in the Second Prospectus dated 12 March 2003 with respect to the HYIP. The statement in the Supplementary Prospectus No 1 was that with respect to the HYIP's loan of $1,550,000 as part of the Boondall Facility, the borrower had, since the Second Prospectus was issued, signed consolidating securities and advised that the "external first mortgage ahead of this security [was] currently being refinanced on a longer term basis to ensure continuity of mortgage interest payments from the security property's rental income streams". According to the Financial Report, the payment of the debt by Meritstock was to be made from the cash flow from an income producing security (no doubt a reference to the Boondall Property) together with personal and company guarantees. The PMIF High Yield Portfolio has a second mortgage over the Boondall property for $1,550,000, in the name of Rycorp Ltd, at an interest rate of 18.50% pa. This mortgage was advanced to assist in the payout of the Colonial Bank mortgage secured over this property, which was refinanced by Perpetual Mortgage Fund at 6.30% pa to a 65% lending ratio. The loan to Mt Warren Park by the [F]irst Mortgage Portfolio was also collateralised to this property. This property has been sold. The third paragraph acknowledges that the loan of $950,000 that the FMIP contributed in respect of the Boondall Facility was secured by a first mortgage over the Mount Warren Park Property. Although it is confused, the third paragraph seems to say that the Mount Warren Park Property has been sold and that the shortfall on the FMIP's loan had been purportedly subjected by the Security Deed to the second mortgage over the Boondall Property. The High Yield Portfolio is to taker [sic] over the debts held by the First Mortgage [P]ortfolio through the cross collateralisation of all debts . The funds are to come from repayment of existing mortgages due for repayment. The second sentence, which I have emphasised, appears to be a further reference to HYIP's ownership of the second mortgage over the Boondall Property and the purported subjection of that mortgage to the additional burden of the indebtedness of Rycorp Properties and Meritstock to the FMIP. The final sentence in the passage quoted suggests that there were yet other mortgages over other properties not yet sold. 90 In a table contained in an internal memorandum from David Hickie, the Chief Executive Officer of Mercator, to the "Credit Committee", there is a plan for repayment. The figure shown in the table for "Total Accrued Interest" for "Year 1 03/04" is $1,098,046.23 --- the figure that was shown as outstanding in cl 3.2 of the Security Deed (see [80] above). No provision is made in this internal memorandum for additional interest accruing or for capital reductions. 91 On 29 July 2003, Mercator wrote to Rycorp Properties offering to extend the existing first mortgage over the Boondall Property to secure $2,564,232.83 plus accrued interest. The lender was stated to be Perpetual as custodian for PMIF. The loan was to be used to "refinance the existing mortgages consolidated under the executed security deed". Mr Stack, in his affidavit, states that the result of this refinancing would be that more would be owed to the first mortgagee, and therefore, in the event of a sale of the security, the Boondall Property, the Scheme would receive less. It was added that the remainder of that loan would "mature in September 2005". 93 In relation to the HYIP and the loan of $1,550,000, again it was stated that since 12 March 2003 (the date of the Second Prospectus) the borrower had obtained an approval to refinance the external first mortgage, allowing additional funds to be paid to the Fund in debt reduction, including interest arrears of $58,699.33. Again, this statement suggests that the second mortgage over the Boondall Property was owned exclusively by the HYIP, as security for HYIP's loan of $1,550,000. The statement was added that this loan would also "mature in September 2005". The references to the loans maturing in September 2005 in this and the preceding paragraph are something of a mystery. This deed varied certain provisions of the Security Deed, but is not of importance in relation to the issues I have to determine. In this way, the FMIP received the whole of the benefit of the Fund's first mortgage over that land, and the HYIP received none of that benefit. Between December 2002 and December 2003, interest and legal fees accrued against the Boondall Facility FMIP Account. On 11 March 2003, there was credited to the Boondall Facility FMIP Account a sum of $86,256.83 which was described in the Boondall Facility FMIP Account statement as "Transfer to F1". This was the amount of interest owing in respect of FMIP's contribution to the Boondall Facility as at 11 March 2003 and as set out in cl 3.2 of the Security Deed (see [80] above). 96 On 17 December 2003 the Boondall Facility FMIP Account was credited by book entry with a sum of $176,171.40, shown as "Transfer to PA3017". This reduced the balance outstanding on the Boondall Facility FMIP Account statement to zero. The letter "P" indicates that PA3017 refers to a HYIP account. Mr Stack states in his affidavit that the amount was transferred from the Boondall Facility FMIP Account to the Boondall Facility HYIP Account, leaving a nil balance in the former. The making of this book entry suggests an intention that the amount was to be treated thenceforth as owing to the HYIP and no longer as owing to the FMIP. 97 On 11 March 2003, the interest owing on the Bonney Avenue Facility of $266,294.63 was also credited to the Bonney Avenue Facility FMIP Account and debited to F1. That amount of interest was referred to in cl 3.2 of the Security Deed as the amount of interest arising on the Bonney Avenue Facility. 98 On 31 December 2003, a book entry of an amount of $827,885.64 was also credited to the Bonney Avenue Facility FMIP Account and debited to the Boondall Facility HYIP Account leaving a nil balance outstanding in the Bonney Avenue Facility FMIP Account. The making of this book entry similarly suggests an intention that this amount too was to be treated thenceforth as owing to the HYIP and no longer as owing to the FMIP. It shows the borrower as Rycorp Properties, and records that that on 17 December 2003 a sum of $352,551.46 was debited to "P1". That amount is the aggregate of the sums of $86,256.83 and $266,294.63 that were debited to F1 as recounted at [95] and [97] above. 101 Mercator also supplied to Stacks a copy of a statement of the P1 Account. Like the F1 Account, it shows the borrower as Rycorp Properties. The first two entries are both dated 11 March 2003, the first being a debit of $299,383.55 from the Pashen Street Facility HYIP Account, and the second being a debit of $446,111.21 from the Boondall Facility HYIP Account. Those two amounts total $745,494.76. The sum of $299,383.55 represented the unpaid interest on the Pashen Street Facility HYIP Account, and the sum of $446,111.21 represented unpaid interest on the Boondall Facility HYIP Account. Both amounts were referred to in cl 3.2 of the Security Deed (see [80] above). 102 Both of the sums of $299,383.55 and $446,111.21 came from HYIP loans, and therefore the transfer of them to P1, an HYIP account, was merely a different way of accounting for them. However, there was also debited to account P1 on 17 December 2003 a sum of $352,551.46 which is in a different category. As will be recalled, this sum was the total of $86,256.23, being interest owing on the Boondall Facility FMIP Account, and $266,294.36, being interest owing on the Bonney Park Facility FMIP Account. The sum was therefore unpaid interest from the FMIP. The transfer of these amounts to PI represented a transfer of those debts from the FMIP to the HYIP. 103 According to Mr Stack's affidavit, on 5 January 2004 Mercator arranged for the amount of $528,722.86 to be paid from the HYIP bank account to the FMIP bank account. Mr Stack states that this payment suggests that Mercator intended, over a period of time, to attempt to have the FMIP repaid and the HYIP maintain the second mortgage over the Boondall Property to secure the indebtedness of Rycorp Properties. Mr Stack states that the payment of $528,722.86 appears to have discharged the total amount of the "Mount Warren Park shortfall", being the sum of $86,256.83 transferred to F1, and the sum of $176,171.40 transferred to the Boondall Facility HYIP Account. If one deducts those two amounts from the sum of $528,722.86, one is left with a balance of $266,294.63, which is the exact amount of the unpaid interest on the Bonney Avenue Facility being the amount of interest referred to in cl 3.2 of the Security Deed. The total of the outstanding principal and interest was therefore $827,885.64 at that date. 106 Senior counsel for Stacks submits that on the above evidence, the payment of $528,722.86 on 5 January 2004 by the HYIP to the FMIP appears to be a gift and that there does not seem to be a basis for it. After payment of the First and Second Mortgages, the balance of the settlement proceeds was $731,181.86. After certain further payments, $614,655.42 remained as at the date of the hearing on 18 October 2007, although no evidence was presented to confirm this final amount. 108 It is in relation to the net proceeds of sale of the Boondall Property that directions are sought. 110 Schedule 1 would have it that 34.46% of the proceeds of sale are held on behalf of the FMIP and the remaining 65.54% is held for the HYIP (para 1(a)-(b) of Schedule 1). This is on the basis that the Security Deed is valid and that the proceeds should therefore be allocated in proportion to the amounts outstanding as at the date of the Security Deed, being 22 May 2003. 111 Schedule 3 would also have it that the Security Deed is valid so that the 34.46% and 65.54% proportions apply. However, there is the qualification that the FMIP must pay whatever it receives up to a ceiling of $528,722.86 to the HYIP on the basis that the payment of that amount by the HYIP to the FMIP on 5 January 2004 was insupportable and took place in breach of trust, and so must be repaid to the HYIP by the FMIP. 112 Schedule 4 is advanced by Stacks as the "ultimate Fallback position" or "last resort". If I should conclude that there is simply not enough evidence to decide which of the two Portfolios, the FMIP or the HYIP, was entitled to the benefit of the second mortgage over the Boondall Property, it would be possible simply to apportion the net proceeds on the basis of the amounts contributed to the Scheme as a whole. The amounts contributed were $968,995 by the FMIP and $7,884,896 by the HYIP (see [47] above). This translates to a 10.94% contribution by the FMIP and an 89.06% contribution by the HYIP. 113 Schedule 2 reflects an argument advanced by Mercator in relation to the Upper Roma Street Property (see below). In relation to the Boondall Property, it states that the whole of the proceeds of sale of the Boondall Property would be held on behalf of the HYIP. As will be seen, this will depend on the answers in relation to the two preceding questions. There does not appear to be any suggestion in the evidence that the first mortgage over the Mount Warren Park Property was an Asset solely of the HYIP or that the second mortgage over the Boondall Property was an Asset solely of the FMIP. 115 I have taken into account the written and oral submissions of senior counsel for Stacks. I have also taken into account the written submissions of Linda White and Kevin Davis, referred to at [11]. 116 Since I have outlined the evidence in detail above, I am able to state my conclusions shortly. It is to be noted that the FMIP would, on this view, receive the amount of $70,000 in addition to the $790,084.34 that it received from the proceeds of the first mortgage over the Mount Warren Park Property. 119 On an alternative view, both the FMIP and the HYIP had a beneficial interest in both the first mortgage over the Mount Warren Park Property and the second mortgage over the Boondall Property according to their respective contributions to the Boondall Facility. These respective contributions of the FMIP and the HYIP were either $950,000 and $1,550,000, which translates to 38% and 62%, or $950,000 and $1,817,002.66, which translates to 34.33% and 65.66%. 120 On this alternative view, FMIP must bring into account the sum of $790,084.34 it received as the net proceeds of sale of the Mount Warren Park Property. The amount notionally available for distribution then becomes $1,404,739.76, being the total of $790,084.34 (the proceeds of the first mortgage over the Mount Warren Park Property) and $614,655.42 (the proceeds of the second mortgage over the Boondall Property as at the date of hearing). 121 On the basis of a 38 %/62 % apportionment, the FMIP would be entitled to $533,801.11 and the HYIP would be entitled to $870,938.65. 122 On a third view, being the view which I consider to be correct, the first mortgage over the Mount Warren Park Property was an Asset solely of the FMIP, and the second mortgage over the Boondall Property was an Asset solely of the HYIP. On this third view, the FMIP and the HYIP would be entitled to retain the proceeds of those respective mortgages (being $790,084.34 and $614,655.42). 123 The Mount Warren Park Property was sold on 19 December 2002 and the proceeds of sale applied only to the FMIP. It seems that a separate ledger (the Boondall Facility FMIP Account) was maintained for the FMIP in relation to its contribution to the Boondall Facility, and in particular, in relation to the Mount Warren Park Property. The Boondall Facility FMIP Account showed a shortfall, after receipt of the proceeds of sale of $790,084.34 on 19 December 2002, of $246,172.49. That figure is recorded in the table in cl 3.2 of the Security Deed as relating to the Boondall Facility FMIP Account. The table includes the words "Mount Warren" in its description of the Boondall Facility FMIP Account. 124 The above facts are consistent with the first mortgage over the Mount Warren Park Property being an Asset of the FMIP alone and securing the FMIP's contribution of $950,000 to the Boondall Facility. 125 The second mortgage over the Boondall Property, on the other hand, appears to have been treated as being an Asset of the HYIP alone (see, for example, [74], [81], [87] and [89]). I do not think that the evidence establishes that the advance of $950,000 by the FMIP was on the terms that it alone would have the benefit of the first mortgage over the Mount Warren Park Property and would in addition share with the HYIP in the benefit of all the other securities, including the second mortgage over the Boondall Property. Subject to the Security Deed, Stacks would therefore be justified in distributing the proceeds of sale of the Boondall Property to the HYIP investors alone. 127 I note, in passing, that it was permitted to the HYIP, as well as to the FMIP, to lend on first mortgage security. However, it was not permitted to the FMIP, although it was to the HYIP, to lend on second or subsequent mortgage security, but if such a lending by the FMIP on such a security took place, albeit in breach of trust, the FMIP would be entitled to the benefit of that security. If, on the other hand, I were to hold that the Security Deed is valid in the respect mentioned, there would have to be an apportionment of those proceeds as between the two Portfolios, and one method of apportionment would be to rely on the relative exposures which exist under the Security Deed as set out in cl 3.2 of the Security Deed. 129 I cannot see any alternative to the conclusion that the Security Deed was entered into in breach of trust. 130 Prior to the Security Deed of 22 May 2003, the Scheme held under the Boondall Facility a first mortgage over the Mount Warren Park Property and a second mortgage over the Boondall Property as security for an advance of at least $2,500,000 (and possibly an additional $267,002.66). The advances were made by the FMIP in the sum of $950,000, and by the HYIP in the sum of at least $1,550,000 (and possibly a further sum of $267,002.66). 131 It is clear that under the Constitution of the Scheme the beneficial interests in the Assets within the respective FMIP and HYIP Classes were owned by the members of those Classes as tenants in common. The proceeds of sale attributed to one Class were to be shared equally on a pro rata basis by the members of that Class: see Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008 ; (2003) 59 NSWLR 361 at [186] - [190] . 132 It is clear that Mercator was required to keep the loans and the associated mortgages in each Portfolio separate. Pooling of assets was not permissible. 133 The Security Deed purported to increase the debt secured by the second mortgage over the Boondall Property to include the shortfall owed to the FMIP in relation to the Bonney Avenue Facility and the debt owed to the HYIP in relation to the Pashen Street Facility. 134 Whether the Security Deed purported to increase the debt secured by the second mortgage over the Boondall Property to include the shortfall from the first mortgage over the Mount Warren Park Property depended on whether that shortfall was secured by the second mortgage over the Boondall Property prior to the Security Deed. This depended on whether the FMIP had a beneficial interest in the second mortgage over the Boondall Facility prior to the Security Deed. For example, if the Mount Warren Park Property was an Asset solely of the FMIP, and the second mortgage over the Boondall Property was an Asset solely of the HYIP, as I concluded above, the inclusion of the shortfall from the first mortgage over the Mount Warren Park Property would indeed increase the debt secured by the second mortgage over the Boondall Property. If, however, the FMIP was entitled to the first mortgage over the Mount Warren Park Property, but also had a beneficial interest in the second mortgage over the Boondall Property, the shortfall owed to the FMIP was already secured by the second mortgage over the Boondall Property, and the debt that the second mortgage over the Boondall Property secured would not have been increased by the Security Deed. 135 I concluded above that the second mortgage over the Boondall Property was an Asset of the HYIP alone. The trustee was therefore in breach of trust to diminish the value of the HYIP's security by entering into the Security Deed, thereby subjecting the HYIP's security to the shortfalls in the FMIP. 136 However, even if the second mortgage over the Boondall Property was also partly an Asset of the FMIP, there was a diminution of the value of that security by the purported burdening of it with the addition of the Pashen Street Facility debt, a debt owed to the HYIP. That is to say, in this respect there was a breach of trust as against the FMIP. Concomitantly, the diminution of the HYIP's interest by the inclusion of the debt owed to the FMIP in relation to the Bonney Avenue Facility was also a breach of trust. 137 Irrespective of Mercator's understanding or intention, there was no legal basis for the transfer of the debts owing to the FMIP to the HYIP on 11 March 2003 and 31 December 2003. On the evidence there was no benefit to the HYIP in those transactions. That being so, the book entries should be reversed. 138 On the evidence before the Court the Security Deed was entered into in breach of trust and Stacks is justified in disregarding it when distributing the proceeds of sale of the Boondall Property. The Court is not asked to resolve every issue that may be seen to arise in the confused state of the records. On the documentary evidence placed before the Court, the second mortgage over the Boondall Facility was an Asset solely of the HYIP, and the Security Deed was entered into in breach of trust and should be disregarded. Therefore, in my opinion, Stacks is justified in distributing the whole of the proceeds of the second mortgage over the Boondall Property to the interest holders in the HYIP. The Upper Roma Street Property was security for the provision of a facility to Libbian. The circumstances surrounding the Libbian Facility and the sale of the Upper Roma Street Property are more straightforward than those touching the sale of the Boondall Property. The documentary evidence concerning the derivation of the funds presents a clear picture as to which Portfolio's members are entitled to the proceeds of sale of the Upper Roma Street Property. The only reason why any question arises is that Mercator caused statements to be made that were inconsistent with that evidence. The purpose of the loan was to assist with the construction of 34 residential units at the Upper Roma Street Property. The lender was to be Perpetual as Custodian for the PIFA-2000 HYIP. There is no suggestion in the letter that the FMIP was to contribute any part of the loan. Of the total amount of $1,660,000, $300,000 was to be applied to construction purposes, and the remainder was to be applied to interest, working capital, creditors and other expenses, such as Mercator's own establishment fee of $166,000 and the repayment of $250,000 to PIFA (not PIFA-2000). Since lending on second mortgage was not an authorised investment of the FMIP, the proposed second mortgage security is consistent with the provision of the facility by the HYIP, not the FMIP. 143 The Libbian Facility was drawn down with funds from the HYIP on or around 19 October 2001 pursuant to a Loan Agreement of that date between Libbian as borrower and Perpetual as lender. The loan account in respect of the Libbian Facility was numbered PA10003014 (it will be recalled that the letter "P" indicates a Project Development Fund account, that is to say, a HYIP account). The whole of the advance of $1,660,000 was debited to that account. The project was delayed by a number of factors which are now largely resolved with the borrower and the fund has extended the term of the loan for a further ten months to enable the completion and sale of the development. The letter of offer has been issued and accepted by the borrower and is currently being re documented by the funds [sic] solicitors. By about June 2003, Libbian had defaulted under the first mortgage, and Equititrust had entered into possession and called for tenders for the purchase of the Upper Roma Street Property, with a closing date of 8 July 2003. 146 As will be seen below, it appears that Mercator proposed to take, and ultimately did take, a transfer of the first mortgage over the Upper Roma Street Property from Equititrust. 147 On 16 June 2003, Mr Hickie, of Mercator, sent an internal memorandum to the Credit Committee of PIFA-2000, headed "Loan Recommendation Variation and Extension - Libbian Pty Ltd High Yield Portfolio and Purchase or Refinance of the First Mortgage". Mr Hickie proposed an increase of the existing limit of $1,660,000 to $2,650,000, and referred to the further advance of $990,000, with an interest rate of 18% pa, as coming from the HYIP. In addition to this further sum of $990,000, Mr Hickie's memorandum referred to two further facilities --- one of $922,663 from the FMIP, and the other of $227,737 from the HYIP. These further advances totalled $1,150,000, and were both shown as having an interest rate of 10% pa and being for a term of four months. The total of $1,150,000 was shown in Mr Hickie's memorandum against the words "Total Loan Purchased from Equititrust", and was said to include interest . Under the column headed "Security Particulars", the first and second mortgages over the Upper Roma Street Property were listed, the first mortgage to be limited to $1,150,000. This suggested that the two loans totalling $1,150,000 were intended to enable purchase of the existing first mortgage over the Upper Roma Street Property held by Equititrust. 148 The proposal for a 4 month loan of $922,663 from the FMIP was inconsistent with a paragraph on p 6 of Mr Hickie's memorandum of 16 June 2003, which asserted that since the value of the land was only $854,000, the maximum amount that could be lent on first mortgage from the FMIP, applying its 80% lending ratio (see [36] above), was $683,200 including 4 months' of pre-paid interest. Time is now of the essence. The current valuation from Finch Freeman of the land is $854,000. The advance of [sic - on] a first mortgage basis at 80% lending ratio is $683,200 including 4 months prepaid interest with the further advance of $420,860 by the increase of the second mortgage to repay the first mortgagee. However, the paragraph set out above was omitted from p 6 of this version. Moreover, the memorandum's heading had been changed. The words "High Yield Portfolio and Purchase or Refinance of the First Mortgage" had been replaced by the words "High Yield Portfolio Loan and Purchase or Refinance of the First Mortgage held by Equity Trust by the First and High Yield Portfolios". This heading suggests that both the FMIP and the HYIP were to contribute to the purchase or refinancing of the existing first mortgage to Equititrust. 150 On 16 June 2003, being the same date as that of Mr Hickie's proposal referred to at [147]-[149] above, Mercator issued the first of two letters of offer of that date to Libbian. The lender is shown as Perpetual as custodian for the PIFA-2000 HYIP. The purpose is stated as being to assist with a refinancing of the first mortgage over the Upper Roma Street Property. The "commitment amount" is described as $683,200 (including $25,000 of prepaid interest) or an amount "not exceeding 80% of Land Value with Development approval". It will be recalled that the sum of $683,200 was calculated as being 80% of the Finch Freeman valuation of the land of $854,000 (see [48] above). The term of the loan was stated to be four months from the date of drawdown. 152 Mercator's second letter of offer to Libbian, dated 16 June 2003, again showed the lender as being Perpetual as custodian for the PIFA-2000 HYIP. The "commitment amount" was described as $3,078,500 being "90% of Gross Realisation Value". This 90% limit was that applicable to loans by the HYIP (see [37]). The purpose of the facility of $3,078,500 was said to be to refinance the existing facility of $1,660,000 plus interest owed, and to provide a contribution towards completion of the construction. 153 On 18 June 2003, Equititrust sent a fax to Mr Hickie of Mercator confirming that the proposal was for Mercator to take a transfer of Equititrust's first mortgage. The letter advised that the total amount of the then current indebtedness of Libbian to Equititrust was $1,104,060.71. This will enable completion of the construction contract and the provision of a First Mortgage for the construction finance by an external lender. In addition, the High Yield Income Portfolio purchased the First Mortgage on July 2003 to protect investor's [sic] interests pending refinance of the debt. 156 On 7 July 2003, Hopwood Ganim Lawyers, the solicitors for Mercator, wrote to Mercator advising that they had prepared documents to effect the transfer of existing mortgage No 705135344 (being the first mortgage over the Upper Roma Street Property) from Equititrust to Perpetual. The solicitors advised that settlement was due to take place the following day, 8 July 2003, and that the amount payable to discharge the first mortgage to Equititrust was $1,117,282.61. Thus, the request was that the two amounts come from the HYIP. 159 On 9 July 2003, Mr Hickie wrote to Mr Cullen of Hopwood Ganim Lawyers enclosing copies of two letters of offer for the provision of a facility from Mercator to Libbian, both dated 9 July 2003. In each of the enclosed letters of offer the lender was said to be Perpetual as custodian for the PIFA-2000 HYIP. Thus, in each case, the loan was to come from the HYIP. In one case, the "commitment amount" was said to be $1,150,000, including $25,000 of prepaid interest, and the purpose was said to be to "assist with refinancing of the first mortgage secured over the Upper Roma Street Property". The commitment amount was stated as "not exceeding 80% of Land Value with Development approval". Notwithstanding this reference to the FMIP limit, it was consistent with what had happened earlier in July that the loan was to come from the HYIP, as opposed to the FMIP. 160 In the case of the second letter, the commitment amount was stated to be $2,650,000, being the "Maximum of 90% of Gross Realisation Value". The purpose was said to be to assist with the construction of 32 residential units at the Upper Roma Street Property. The amount of $2,650,000 is the aggregate of the amounts of $1,660,000 and $990,000 previously mentioned at [147]. 161 Mr Hickie stated in the covering letter that the attached letters of offer had been executed and he instructed Hopwood Ganim Lawyers to prepare "a deed of variation for the mortgage purchased [from Equititrust] and a deed of variation for [Mercator's] existing second mortgage [for $1,660,000]" to reflect the two letters of offer dated 9 July 2003. Thus it appears that the purpose of Mr Hickie in writing this letter to Mr Cullen was to "regularise" the transaction that had in fact taken place earlier in July when the HYIP purchased the first mortgage over the Upper Roma Street Property from Equititrust. 162 On 15 July 2003, a Deed of Variation and Affirmation (the Deed) prepared by Hopwood Ganim Lawyers was entered into by Perpetual, Libbian, Mr Ellis, Bledisloe Developers Pty Ltd and Libbian Holdings Pty Ltd. In the Deed, Perpetual is described as acting in its capacity simply as agent for Mercator, the responsible entity for the PMIF. The Deed does not add to the evidentiary picture as to the sources of funds as between the FMIP and the HYIP or as to the entitlement to the proceeds of sale of the Upper Roma Street Property. This loan is no longer in default and will mature in July 2004. Although the passage simply states that the first mortgage was purchased by the Fund, without specifying a portfolio, the fact that the purchase of the first mortgage is mentioned under this heading "High Yield Portfolio" indicates that it was the HYIP that had purchased the first mortgage from Equititrust. Support for this view is found in the fact that the Supplementary Prospectus dated 18 September 2003 makes no reference to the purchase of the first mortgage under the equivalent heading for the FMIP. 164 On 20 November 2003, Mercator wrote to Libbian enclosing a "loan statement" for "the first mortgage loan". The loan statement is in respect of Account No PA10003021, a HYIP account in respect of an approved loan to Libbian of $1,150,000. The borrower was making arrangements to pay the interest owed; he has failed to do [sic - so] and has been served with default notices for both the second mortgage held in the portfolio of $2,160,000 and the first mortgage of $1,150,000 both due to mature in July 2004. 166 The Financial Report states at p 20 that the Scheme had three loans remaining in the HYIP. It indicates that both the first and second mortgages over the Upper Roma Street Property were owned by the HYIP. While the words "held in the portfolio" in that passage are attached only to the second mortgage, the statement that the "two loans represent 42% of [the High Yield Income] Portfolio" make it clear that both "the second mortgage...of $2,160,000" and "the first mortgage of $1,150,000" belonged to the HYIP. 168 On 23 June 2004, Mercator instructed Perpetual to pay $6,829.05 for advertising for the sale of the Upper Roma Street Property. Perpetual was instructed to draw this amount from "bank account PTCL acf [that is, Perpetual as custodian for] PMIF High Yield Main Account 0414-002 8372 11846". The ANZ Bank Statement of Account in respect of that account shows that the name of the account was the "PMIF High Yield Income Fund" Main Account, and that the above amount was indeed paid out of it. I have already noted some of them at [147] --- [149] above. There is one mortgage in the First Mortgage Portfolio and two mortgages in the High Yield Income Portfolio. This seems to be a reference back to Mr Hickie's proposal of 16 June 2003 (see [147] --- [149] above) that was not implemented. The memorandum explained that, at the time of "consolidation" pursuant to the Security Deed, the HYIP could not pay the FMIP for the transfer. It also referred to "High Yield share $201,469". These also appear to be references to Mr Hickie's internal memorandum dated 16 June 2003 that had proposed an advance of $922,663 to Libbian from the FMIP and an advance of $227,337 to Libbian from the HYIP, totalling $1,150,000, to purchase Equititrust's first mortgage over the Upper Roma Street Property. The loan was shared 82.07% being $922,663 owned by the first mortgage portfolio of the fund and 17.92% $201,469 with the High Yield Portfolio of the fund. It will be recalled that the amounts of $1,117,282.61 and $6,850 that were paid out of the PIFA-2000 HYIP account on 8 July 2003 totalled $1,124,132.61 (see [157] --- [158] above). The High Yield Portfolio has paid for the First mortgage portion of the Libbian loan in exchange for the transfer under the signed deed of consolidation of all Meritstock / Rycorp [Properties] loans to the High Yield Portfolio of the fund. In relation to the second sentence, there is no documentary evidence that shows that there was indeed an "exchange" of the kind described. It is difficult to understand Mr Hickie's meaning. 176 Similarly, the unsigned internal memorandum dated 27 August 2004 from Mr Hickie, stated that the first mortgage that was purchased from Equititrust for $1,124,132.61 was to be shared as to $922,663.00 by the FMIP and as to $201,469.61 by the HYIP. In that memorandum, Mr Hickie stated that the loan statement should have been split in these proportions and interest accrued in proportion to the ownership of the loan, being 82.07% to the FMIP and 17.92% to the HYIP. He stated that the interest accrued to 30 June 2004 was $135,706.51. This was all shown as owing to the HYIP, but in fact, 82.07% of that interest ($111,374.38) was owed to the FMIP and should have been recorded accordingly, and only $24,332.19 was owed to the HYIP, and should also have been recorded accordingly. Mr Hickie asserted that it was "incorrect" that the whole of the interest should be accrued to the HYIP, as it had been. 177 On 13 September 2004, the Scheme's auditors, Hanrick Curran wrote to Mercator advising that they had completed their audit on the Financial Report of the PMIF for the year ended 30 June 2004. There may also be a question as to whether the determination or level of the First Mortgage loan is correct in that the quantum of the previous loan replaced may have been less than the calculated amount of the new First Mortgage loan. Although we suspect that the accounts reflect the overall position of loans adequately, some further consideration may be necessary of this matter. At the same time another First Mortgage was restructured as a High Yield mortgage loan as part of an overall consolidation and repackaging of existing loans. It is my opinion that the internal documentation (loan statements and accounting records) reflecting the intention of the Responsible Entity in this set of transactions was not clear in allocating the loans as being either First Mortgage or High Yield Income portfolio loans. The Responsible Entity has indicated it will take action to rectify that situation. 179 On 8 December 2004, Mr Hickie wrote to Mr Stack asserting that the Libbian first mortgage was shared between the FMIP and the HYIP. If you have read the Supplementary Prospectus, you will note that all the Meritstock/Rycorp [Properties] mortgages were consolidated into the one facility held by the High Yield portfolio and this includes those mortgages held by the First Mortgage portfolio. The High Yield portfolio paid for the First Mortgage portfolio's interest in the Libbian mortgage in exchange for its liability to assume the Meritstock mortgages under the deed. The auditors journalised the entry to demonstrate this. I can assure you the First Mortgage portfolio does own a share of the first mortgage, equivalent to $922,663.00. There can be no doubts about this. Furthermore, the Libbian first mortgage was called by EquitiTrust. Had the property been sold by them the High Yield investors would have got nothing at all. This is important to note. The High Yield paid for the mortgage on behalf of the First Mortgage portfolio but only to the extent of what was owed to the First mortgage portfolio by the High Yield portfolio. This is the reason for our position. He advised them that he expected the contract to be executed by 6 September 2004 and that settlement was expected to take place approximately 30 days after that. He advised that the FMIP investors would be paid out since they were secured creditors, and that the balance of the proceeds of sale would be paid to the HYIP investors. 182 Nonetheless, it will be recalled that on 8 September 2004, at an extraordinary general meeting of the members of the Scheme, it was resolved that Mercator be removed and replaced by Stacks as manager and responsible entity of the Scheme. 183 In his affidavit, Mr Stack "submits" that, notwithstanding the contradictions presented by the documentary evidence, it appears that Mercator intended, on the sale of the Upper Roma Street Property, to repay the FMIP a principal amount of $922,663 plus interest in priority to the HYIP. 184 The Upper Roma Street Property was sold by private treaty for $1,600,000 plus interest in respect of a delay by the purchaser in completing. Settlement occurred on 18 April 2005. In his affidavit, Mr Stack states that a net sum of $1,664,474.84 was received by the Scheme pursuant to the sale of the Upper Roma Street Property. 186 Schedules 1, 3, 4 and 5 all proceed on the same basis. They suggest that the proceeds of sale of the Upper Roma Street Property are held by Stacks on behalf of the High Yield Portfolio. 187 Schedule 2, however, represents the argument advanced by Mr Hickie of Mercator in relation to the ownership of the first mortgage over the Upper Roma Street Property. That is, that 82.07% of the funds with respect to the first mortgage over the Upper Roma Street Property are held by Stacks on behalf of the PMIF, and that 17.93% of those funds are held on behalf of the HYIP. There does not appear to be any suggestion that the FMIP had an interest in the second mortgage over the Upper Roma Street Property. 189 In his affidavit, Mr Stack identifies numerous questions in relation to the ownership of the first mortgage over the Upper Roma Street Property on which he has been unable to satisfy himself on the evidence before him. The reason is that the voluminous documentary evidence is conflicting. 190 Contrary to Mr Hickie's assertion, there are doubts about whether the FMIP was secured by the first mortgage over the Upper Roma Street Property to the extent of $922,663. Mr Hickie may have had various intentions from time to time, and may have no doubt as to what those intentions were, but the documentary evidence strongly favours the view that the FMIP had no interest in the first mortgage over the Upper Roma Street Property. 191 I accept the submission made by senior counsel for Stacks that in respect of the Upper Roma Street Property there appears to be no evidentiary basis on which the Court should ascribe a beneficial interest in either the first or second mortgage over that property to the members of the FMIP. If any such interest was granted by Mercator, it is not documented in the books and records provided by Mercator to Stacks. 192 If Mercator did grant the FMIP an interest in the first mortgage over the Upper Roma Street Property, it did so in breach of trust because the HYIP advanced all the funds to purchase that mortgage. There was no benefit to be gained by the HYIP in the granting of such an interest to the HYIP. It follows that if an interest in the first mortgage over the Upper Roma Street Property was granted to the FMIP, it would have to be reversed. 193 Furthermore, in light of my conclusion that the Security Deed was entered into in breach of trust and is therefore to be ignored, the explanation that FMIP's interest in the first mortgage over the Upper Roma Street Property arose from an "exchange" or transfer of "Rycorp [Properties]" loans to the HYIP, is not an adequate explanation for FMIP's interest in the first mortgage over the Upper Roma Street Property. 194 Confining myself to the evidence, and doing the best that I can on that contradictory evidence, I conclude that Stacks is justified in distributing the proceeds of sale of the Upper Roma Street Property on the basis that the HYIP is entitled to the whole of the beneficial interest in the proceeds of sale of the Upper Roma Street Property. 197 As some of the other directions contained in Schedule 5 call for further discussion, the proceeding will be stood over to 23 January 2008 at 9.30 am for the making of orders. I certify that the preceding one hundred and ninety-seven (197) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | application under s 601nf(2) of corporations act 2001 (cth) (the act) by responsible entity of managed investment scheme registered under s 601eb of the act for directions constitution of scheme in form of deed declaring trusts executed by the original responsible entity constitution established two unit trust schemes eventually called "first mortgage income portfolio" (fmip) and "high yield income portfolio" (hyip) assets of the two portfolios to be kept separate permitted investments of fmip more conservative than those of hyip earlier responsible entity had not strictly observed requirement of separateness and had used funds of one portfolio for the benefit of the other portfolio only assets remaining in scheme were proceeds of sale of two properties evidentiary difficulty of being satisfied as to ownership of funds based on documentary evidence before the court limited role of court in giving directions directions do not bind members of scheme held : (1) in view of limited role of directions in protecting present responsible entity, appropriate to give directions without requiring appointment and joinder of representatives of the members of the scheme entitled to the assets within the respective portfolios; (2) documents suggesting that funds of hyip had been employed in acquiring properties shown as being within fmip, so direction made that responsible entity justified in distributing on basis that members of hyip alone entitled to proceeds of sale. corporations |
One is whether the proceeding meets the requirements for a representative proceeding contained in s 33C of the Federal Court of Australia Act 1976 (Cth). The other is whether there should nonetheless be an order that the case no longer proceed as a representative proceeding for one of the reasons mentioned in s 33N. 2 Section 33C(1) provides that a representative proceeding may be commenced where: "(a) 7 or more persons have claims against the same person; and (b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and (c) the claims of all of those persons give rise to a substantial common issue of law or fact. " In Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487, 514 Sackville J (with whom Spender J agreed at 489 and Hill J agreed at 492) said that s 33C(1)(a) requires every applicant and represented party to have a claim against the respondent and if there is more than one respondent then every applicant and represented party must have a claim against each respondent. The judgment records that this point had been conceded by counsel for the applicants so was not in issue before the Full Court. Nonetheless, Sackville J provided short reasons which justified the construction that counsel had conceded. 3 A different conclusion was reached in Bray v F Hoffman-La Roche Ltd [2003] FCAFC 153 ; (2003) 130 FCR 317. In that case the respondents applied on several grounds to stop the class action which had been brought against them. The grounds included non-compliance with s 33C(1)(a). Reference was made to Philip Morris . The Full Court found against the respondents on all grounds. As regards s 33C , two judges, Carr J (at 344-346) and I (at 373-374), said that to comply with s 33C(1)(a) it was necessary for the applicant to have a claim against all respondents but on its proper construction the section did not require every represented party to have a claim against every respondent. 4 Now, according to the law of precedent, Philip Morris has been overruled by Bray : Young v Bristol Aeroplane Co Ltd [1944] KB 718, 727-729; Campbell v Crawford (1985) 12 FCR 317, 332-333; BC v Minister for Immigration and Multicultural Affairs (2001) 67 ALD 60, 78; Sutherland Re; French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008 ; (2003) 59 NSWLR 361, 379. The overruling was not implied (as to the need to adopt a cautious approach to implied overruling see Jacob v Utah Construction and Engineering Pty Ltd [1966] HCA 67 ; (1966) 116 CLR 200, 207; Ratcliffe v Watters [1969] 2 NSWR 146, 152-153). In this instance the majority in Bray referred expressly to what had been said in Philip Morris in relation to the operation of s 33C(1)(a) and disapproved of it. It may be accepted that in Bray the Full Court ruled against the defendants on several grounds. Hence it was not strictly necessary for the Full Court to deal with the correctness of Philip Morris . Still the majority did deal directly with that issue. Carr J said (at 344): "I shall briefly express my views. The question is whether the decision in Phillip Morris was wrong on this point. With respect, I think that it is clear (to the extent required) that it was wrongly decided on this point and should not be followed. I agree with Finkelstein J's reasons for not following it, but would add a few comments. " He went on to give reasons. After referring to Philip Morris and what I saw to be the adverse consequences that would flow from its adoption, I said (at 373) that: "I am of the very firm view that there is nothing in the language of s 33C(1) , when considered in isolation or in its setting, which requires [the] result [mandated by Philip Morris ]. The cases are Johnstone v HIH Ltd [2004] FCA 190 at [38] and Guglielmin v Trescowthick (No 2) (2005) 220 ALR 515, 522. In neither case did the judge explain why he thought that the reasons of the majority in Bray were obiter. With great respect, it is, in my view, clear that the ruling on s 33C(1)(a) in Bray forms part of the ratio. 6 The ratio of a case is the ruling on a point of law upon which the judge acts to reach his (or her) conclusion: Cross & Harris, Precedent in English Law (4 th ed, 1990) at 72. If a judge gives two or more alternative reasons for reaching his (or her) decision each reason is part of the ratio: Crowther v Thorley (1884) 50 LT 43, 46; Commissioners of Taxation for New South Wales v Palmer [1907] AC 179, 184; Cheater v Cater [1918] 1 KB 247, 252; London Jewellers Ltd v Attenborough [1934] 2 KB 206, 222; Jacobs v London City Council [1950] AC 361, 369; Bristol-Meyers Squibb Co v F H Faulding & Co Ltd [2000] FCA 316 ; (2000) 97 FCR 524, 570-571. There may be some cases where the judge gives additional reasons but indicates that he does not wish them to be part of the ratio and is merely wanting to have his views recorded for the benefit of those who may later be required to consider the point. In that event, what the judge says is not part of the ratio: Behrens v Bertram Mills Circus Ltd [1957] 2 QB 1, 25. Bray , however, is not such a case. The majority tackled Philip Morris head on. 7 The irony in all of this is that what was said about s 33C(1)(a) in Philip Morris is itself obiter. Mr Watson who appeared for the applicant put that argument because the construction of s 33C(1)(a) was not in issue in Philip Morris . What was said, he submitted, could not be part of the ratio. He referred to a passage in the judgment of McHugh J in Coleman v Power [2004] HCA 39 ; (2004) 220 CLR 1, 44-45 where he dealt with the legal effect of a judgment that discussed a point not in issue. McHugh J said: "This Court has no business in determining issues upon which the parties agree. If a point is not in dispute in a case, the decision lays down no legal rule concerning that issue. If the conceded issue is a necessary element of the decision, it creates an issue estoppel that forever binds the parties. But that is all. The case can have no wider ratio decidendi than what was in issue in the case. Its precedent effect is limited to the issues. " See also: Coleman per Heydon J at 120 ("The concession may be assumed to be correct for the purposes of the next question, but that assumption implies no decision as to its actual correctness. "); Curtis v Corbin 107 A 506, 508 (Connecticut 1919) ("This was assigned for error and was held erroneous. The matter was discussed by counsel, and the court, at the end of the opinion, ruled, though without discussion, and apparently by agreement of the parties, that the taxation should be ... this may not be absolutely binding because conceded by counsel ..."); Local 144 Nursing Home Pension Fund v Demisay 508 US 581, 592 n5 (1993) (characterising statements in an earlier case that were "uninvited, unargued, and unnecessary to the Court's holdings" as non-binding obiter); Brecht v Abrahamson 507 US 619, 631 (1993) (reaffirming the longstanding rule that if a decision does not "squarely addres[s] [an] issue," a court remains "free to address the issue on the merits" in a subsequent case); National Cable Television Association Inc v American Cinema Editors Inc 937 F2d 1572, 1581 (Fed Cir 1991) ("When an issue is not argued or is ignored in a decision, such decision is not precedent to be followed in a subsequent case in which the issue arises. "); 1B Moore's Federal Practice |P0.402[2], (2 nd ed, 1995) ("When an issue is not argued ... the decision does not constitute a precedent to be followed in subsequent cases in which such an issue arises."). It follows that what the Full Court said in Philip Morris about s 33C(1)(a) was not part of the ratio. That leaves the field to Bray . 8 In light of the foregoing, the only issue that requires resolution on the s 33C(1)(a) point is whether the applicant has a claim against each respondent. That is to be assessed by reference to the application and statement of the applicant's claim. In Philip Morris Sackville J said (170 ALR at 514-515): "Since s 33C(1) is concerned with the commencement of proceedings, compliance with its terms can be assessed only by reference to the case pleaded by the applicants (or set out in affidavit form if pleadings are not used). The facts alleged are in a short compass. They are said to give rise to a range of causes of action including: contraventions of s 52 of the Trade Practices Act 1974 (Cth) and s 11 of the Fair Trading Act 1999 (Vic); negligence; deceit; breach of express and implied terms of contract; and breaches of collateral contract. There is even a claim based on estoppel of the Waltons Stores variety. Sooner or later it will be necessary for the applicant to drop this scattergun approach and focus on the key issues. Still, she does make claims against all the respondents. In a formal sense, therefore, she has satisfied the requirements of s 33C(1)(a). 10 On the other hand, the statement of the applicant's claim will likely not remain in its current form. The applicant has filed witness statements which disclose her case and, based on those statements, it is clear that she makes no claim at all against at least one respondent. 11 To explain why this is so it is necessary briefly to outline the case put by the applicant both on her own behalf and on behalf of the group. The claims arise out of what is alleged to be a scheme to defraud the State Revenue Office (Victoria). The applicant and group members claim to be victims of the fraud. Each of the first and second respondents owned and developed land in new housing estates in the outer south-eastern suburbs of Melbourne. They engaged estate agents, including the fifth and tenth respondents, to sell the land. The land was advertised for sale on the basis that a purchaser could obtain significant savings on stamp duty. In Victoria ad valorem duty is payable on the transfer of land. Accordingly the duty that is payable on land on which a house is constructed is more than the duty that would be payable on the transfer of the land if it had no house. The applicant attended at the office of one of the agents (the fifth respondent) and expressed an interest in purchasing a house which, as it turned out, was being sold by the first respondent. The agent said that the full stamp duty would not be payable on a transfer of the property. The catch was that the contract had to be backdated to a time before the construction of the house. The applicant was referred to the seventh respondent, a conveyancer. She was told by the conveyancer (so it is alleged) that it was not wrong to backdate the contract. A contract was signed and backdated and on settlement the stamp duty was paid at a rate applicable to a vacant allotment. In due course the fraud was discovered and the applicant was required to pay the balance of the duty. The pleaded case is that all group members purchased a house from either the first or second respondent, and in the process suffered a similar fate, most of them having dealt with the seventh respondent (I am told 95 per cent). 12 The problem with the applicant's claim is that she sues two estate agents. According to the statement of the applicant's claim each agent was involved in the scheme; the tenth respondent allegedly operated the agency between September 1999 and February 2004 when the fifth respondent took over the operation of that agency (though there may have been some overlap late in February). But according to the witness statement the applicant started looking to buy a property in August 2004 when the office was run by the fifth respondent. Thus, even if she were to succeed on all of her causes of action, she must fail at least against the other agent, the tenth respondent. The tenth respondent was joined because it was the agent with whom some group members dealt. 13 In substance, therefore, the proceeding does not comply with s 33C(1)(a), although, in a technical sense, that may not become apparent unless (as is likely) the statement of the applicant's claim is amended. The problem, however, can easily be resolved as Carr J pointed out in Bray (130 FCR at 345). He observed that s 33C(1)(a) would be satisfied in a case such as the present by joining as an applicant a person who has a claim against the other respondent to represent other group members who have claims against that respondent. 14 The second issue is whether, as is required by s 33C(1)(c), the claims give rise to substantial common issues of law or fact. The argument here is that this element is lacking because: in a misrepresentation case issues such as when the representations were made and acted upon must be decided individually; in the negligence case the claims relating to the backdating of the contract must be resolved individually; and any false statements made to the State Revenue Office must be assessed on an individual basis. 15 It cannot be denied that aspects of the claims made by the applicant and group members are personal to each. But that does not lead to the conclusion that the requirements of s 33C(1)(c) have not been satisfied. Speaking very generally, the case which the applicant seeks to make out is that several of the respondents got together to entice purchasers to buy land by engaging in a fraudulent scheme. Of course there are differences in the way the fraud was implemented in respect of each individual purchaser. But, in large measure, each case is very similar. Not only are the cases similar, the material facts that are in dispute, including the fact of backdating, are remarkably few. Moreover, there are two critical issues that are common to the claims of the applicant and each group member. The first is whether their involvement in the illegal scheme can be a bar to their claims. The second concerns the question of damages. The applicant and group members wish to recover the stamp duty they are now obliged to pay to the State Revenue Office. The respondents contend that this is not the true measure of their loss. Indeed, the argument is that the claimants have suffered no compensable loss. This is sufficient to satisfy s 33C(1)(c). 16 Some respondents also contended that s 33C(1)(b) had not been satisfied. What I have said about s 33C(1)(c) is enough to indicate that this contention cannot be sustained. 17 The final point is whether, pursuant to s 33N, there should be an order that this proceeding no longer continue as a representative proceeding. Section 33N provides for the discontinuance of a representative proceeding if it is in the interests of justice to make an order to that affect. The grounds upon which it may be in the interests of justice to make an order are set out in subsections 33N(1)(a) to (d). In Bright v Femcare Limited (2002) 195 ALR 574, 588 Lindgren J said: "Those grounds raise practical questions which require that the Part IVA proceeding be compared with other proceedings that are available to the applicant and group members as a means of resolving their claims. The first is that the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members: s 33N(1)(c). The second is that it is otherwise inappropriate for the claims to be pursued by means of a representative proceeding: s 33N(1)(d). 19 The grounds are said to be enlivened by reason of the following propositions. First, the claims of group members must be assessed on an individual basis. That is, the issues are likely to be so diverse that it would be best if there were separate proceedings instituted by all group members. Secondly, leading evidence of identical representations made to group members may be prejudicial as such evidence might not be admissible in separate proceedings brought by each applicant. Thirdly, it is suggested, but without any evidence, that some group members might not want to participate in separate proceedings necessary to establish their individual claims. Fourthly, it is said that many of the claims appear to have no factual foundation. And fifthly, particulars of all group members' claims have not been provided. 20 I reject each of these arguments. The fourth and fifth are simply irrelevant to a case which is still in its formative stages at least so far as the group members are concerned. The third is simply guesswork and unlikely to be accurate. The first and second, which may in some cases be important considerations, are not important here. I have already pointed out that the basic foundations of the applicant and group members' claims are not in dispute. That disposes of the first argument. There might be something in the second argument if it were proposed that the claim of every group member be heard and determined at once. But that is not the proposal. In addition to the applicant two group members' claims will be prosecuted at the trial. I do know the evidence that those claimants will lead for there has been an order that it be filed in the form of affidavits or witness statements. It is unlikely in the extreme that a judge will be prejudiced in hearing a claim against any respondent because he or she has heard the evidence of three witnesses rather than one. 21 Finally, on this aspect I want to repeat what I said in Bright v Femcare 195 ALR at 606 because it is as apposite here as it was in that case. I said in that case that if the applicants and the group members were not permitted to bring a group claim it was likely that many of them would not pursue an individual claim because the potential gain would not justify incurring the risk of costs. I said that in that sense it would be contrary to the interests of justice to make an order under s 33N. This is an even stronger case, due to the quantum of the individual damages claims, where stopping the group proceeding would work a serious injustice. 22 Last but not least I should refer to the undertakings given by the parties that they will not seek leave to appeal any order arising out of this judgment until the final disposition of the case. The parties are to be commended for adopting that course. It has ensured that this action, which may otherwise have been significantly delayed by drawn-out arguments and multiple appeals on interlocutory decisions --- with the associated escalation in costs --- will be disposed of efficiently. If ultimately there is an appeal in this case there will only be one full court hearing instead of several. 23 The various applications made by the respondents will be dismissed with costs. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | representative proceeding whether proceeding properly constituted under s 33c whether proceeding should be discontinued under s 33n whether later decision of full federal court on the interpretation of s 33c overruled earlier decision practice and procedure precedent |
The Statutory Demand was in the prescribed form (Form 509H in Sch 2 to the Corporations Regulations 2001 (Cth)). The causes of action which were merged in the judgment were causes of action based upon two loan agreements entered into between BMG and Adelaide Bank in 2004. Under the loan agreements, funds were advanced to BMG in order to assist it to acquire a residential house property known as 68 Lyons Road Drummoyne NSW , (being the land comprised in Folio Identifier 3/5980 and the buildings and appurtenances constructed thereon) ( the property ). The loans made by Adelaide Bank to BMG were guaranteed by Gambhir Watts ( Mr Watts ) and Bhoji Watts ( Mrs Watts ) who were the principals and controllers of BMG at all relevant times. In addition, those loans were secured by a Registered Mortgage over the property in favour of Adelaide Bank. In 2005, BMG fell into default under the loan agreements. Subsequently, the judgment was obtained, Adelaide Bank entered into possession of the property, the property was sold by Adelaide Bank as mortgagee in possession and the net sale proceeds were brought to account against the judgment debt. The amount claimed in the Statutory Demand was asserted by Adelaide Bank to be the balance due under the judgment after bringing to account all moneys received either by or on behalf of BMG after 3 April 2006. On 11 September 2007, BMG commenced the present proceedings against Adelaide Bank and against two other defendants, Southern Cross Home Loans Pty Limited and Austral Mortgage Corporation Pty Limited. The proceedings are brought pursuant to s 459G of the Corporations Act 2001 (Cth) ( the Act ). In its Application, BMG claims an order that the Statutory Demand be set aside. In support of that claim, BMG relies upon s 459H and s 459J of the Act. The causes of action relied upon to support them are not articulated in the Application. By Notice of Motion filed on 22 October 2007, Southern Cross Home Loans Pty Limited and Austral Mortgage Corporation Pty Limited sought orders striking out the claims made by BMG against them. That Notice of Motion has not been heard by the Court and the companies which are the applicants in that Notice of Motion remain parties to the present proceedings. However, they have taken no active role in the proceedings for some considerable time. Neither of those companies appeared at the hearing before me on 10 December 2008. The property was purchased as an investment. Apparently, BMG intended to develop the property and resell it at a profit. Settlement of the purchase occurred in mid 2004. In addition to the funds borrowed from Adelaide Bank, BMG borrowed an amount of $150,000 from a gentleman called Zabiullah Khorram in order to assist with the purchase of the property. BMG entered into two Home Loan Contracts with Adelaide Bank ( the loan agreements ). The first was dated 11 February 2004 and signed by BMG on 19 February 2004. The second was dated 30 June 2004 and signed by BMG on 2 July 2004. Each Home Loan Contract was in substantially the same terms. Under the first Home Loan Contract, Adelaide Bank advanced $848,000 to BMG. Under the second Home Loan Contract, Adelaide Bank advanced $152,000 to BMG. The term of each loan was 25 years. Each Home Loan Contract provided for the payment of late charge fees, break costs fees, enforcement expenses and default interest in the circumstances set out therein. The purpose of the loans is described in each Home Loan Contract as " Investment Purchase ". Each Contract provided that the loan would be secured by a mortgage of the property and supported by the guarantee and indemnity of each of Mr Watts and Mrs Watts. It is apparent from the evidence that the total borrowings made by BMG for the purpose of acquiring the property exceeded $1,150,000, although the purchase price itself was $1,060,000. Thus, the total funds borrowed for the purpose of the acquisition exceeded by a substantial amount the purchase price of the property. BMG defaulted under the first Home Loan Contract by failing to make the payments due on 25 February, 29 March and 26 April 2005. It also defaulted under the second Home Loan Contract by failing to make the payment due on 12 April 2005. On 11 May 2005, Gadens Lawyers ( Gadens ), acting on behalf of Adelaide Bank, served on BMG a Notice Pursuant to Section 57(2)(b) of the Real Property Act 1900 (NSW) in which it claimed the amount of $6,174.20, being the total amount of the overdue payments as at that date. BMG did not remedy the defaults referred to in that s 57(2)(b) Notice by 11 June 2005, the time limited by the Notice for the remedying of those defaults. In those circumstances, it was open to Adelaide Bank to call up the full amount owing under the loan agreements. In a letter dated 11 May 2005 from Gadens to BMG under cover of which the s 57(2)(b) Notice was sent, Gadens informed BMG that, if it failed to comply with the s 57(2)(b) Notice within the time stipulated for compliance, Adelaide Bank automatically demanded the immediate repayment of all sums due and owing under the loan agreements. In a letter from Gadens to BMG dated 19 July 2005, Gadens informed BMG and Mr and Mrs Watts that Adelaide Bank proposed to commence proceedings against BMG and Mr and Mrs Watts in respect of the then extant defaults under the loan agreements. In the same letter, Adelaide Bank indicated that it may be prepared to consider deferring legal action provided that a number of conditions were met. One of those conditions was that BMG and Mr and Mrs Watts make themselves available for service of the Statement of Claim, filing of which had been foreshadowed in the same letter. On 22 July 2005, Adelaide Bank commenced proceedings in the Possession List of the Common Law Division of the Supreme Court of New South Wales (No SC13204 of 2005) ( the Supreme Court proceedings ) against BMG, as principal debtor, and against Mr and Mrs Watts, as guarantors of BMG's debt. The Statement of Claim filed in the Supreme Court proceedings is not in evidence before me. However, I think I can safely infer from other evidence and from the amount of the judgment that, in that pleading, Adelaide Bank claimed possession of the property and judgment for all amounts then due under the loan agreements (being the principal sums, interest, late charge fees, enforcement expenses and costs). The Statement of Claim was served on BMG and on Mrs Watts on 26 July 2005 and on Mr Watts on 3 August 2005. No Notices of Appearance were filed by any of the defendants in the Supreme Court proceedings until late 2007 and no steps were taken in those proceedings by any of those defendants until late 2007. On 24 March 2006, Adelaide Bank made application to the Supreme Court that judgment be entered against BMG, Mr Watts and Mrs Watts by default. On 16 May 2006, Adelaide Bank made application to the Supreme Court for the issue of a Writ of Possession in respect of the property. On or about 22 May 2006, a Writ of Possession in respect of the property was issued by the Supreme Court. On 1 June 2006, the Sheriff issued a Notice to Vacate in respect of the property and scheduled an eviction for 15 June 2006. By this time, BMG, Mr Watts and Mrs Watts were aware of the existence of the judgment. At the request of Mr Watts, Adelaide Bank refrained from taking further steps to execute the Writ of Possession in order to enable BMG to attempt to sell the property at auction on 1 July 2006. An auction was held on 1 July 2006. No bids were made at the auction and the property was passed in. On 1 November 2006, Adelaide Bank took possession of the property. By early November 2006, BMG was asserting that it had procured a sale of the property to Mr Glenn Campbell for a price of $1,075,000. Various communications took place between BMG and Adelaide Bank in the period from mid 2006 to late 2006. Some of these communications were without prejudice . It is clear from the correspondence which is in evidence that, had BMG been able to exchange an unconditional contract for sale in respect of the property by 15 October 2006 for a purchase price of $1,075,000, Adelaide Bank would very likely have been content to forbear taking further action pending settlement of such a sale. However, no such sale was effected. These payments are now over due and payable within 7 days. Failure to comply with any of the above conditions will result in the immediate re-instatement of recovery/possession action. Please sign below acknowledging the above conditions and return by fax within 7 days together with evidence September 2006 payments have been made. Do not hesitate to contact me should any matter require further clarification. Adelaide Bank subsequently extended the time within which the executed copy of a purchase contract was to be provided to it to 15 October 2006. Several of the conditions in the email dated 11 September 2006 from Adelaide Bank to Mr Watts were not met. The most conspicuous of these was the requirement that an executed copy of a purchase contract be provided by 15 October 2006. One final opportunity to get its affairs in order was afforded by Adelaide Bank to BMG in a letter sent by email to BMG on 17 January 2007. Adelaide Bank Limited has subsequently sought and received further information from you to assist in an extensive review of this file. Any allegations that Adelaide Bank Limited has acted otherwise than appropriately in relation to this matter are rejected. We note you have undertaken numerous strategies over an extended period without maintaining consistent payment, nor have you delivered an acceptable, unconditional, clearance arrangement. The total arrears position is currently $93,839.71. The Bank will not agree to refund any interest or charges on the basis that these amounts have been applied consistent with the terms of the loan agreement and mortgage. Please be informed that Adelaide Bank Limited intends to proceed with exercising its power of sale over the property at 68 Lyons Road, Drummoyne NSW 2047. Adelaide Bank Limited will be instructing its Lawyer to prepare a contract for the sale of the property for $1,075,000.00, which we anticipate will be finalised by 1 February 2007. However, as a gesture of goodwill, the Bank will allow you one final opportunity to refinance the total debt as requested in your email dated 11 January 2007. By 15 February 2007 settlement of the refinance must take place and $1,075,000.00 applied to loan accounts 37198256 YXOI and YX02. The total debt is currently $1,092,224.88 plus legal costs. As a gesture of goodwill, should the refinance option or sale for $1,075,000.00 proceed, Adelaide Bank Limited will not pursue reimbursement of the shortfall from BMG Poseidon Corp Pty Limited. Adelaide Bank Limited reserves its rights generally, including under the judgement [sic], the mortgage and the loan agreement. On 14 March 2007, a further exchange of emails took place. In the first of these, Adelaide Bank informed BMG that it proposed to market and sell the property in light of the fact that the purchaser apparently located by BMG, Mr Campbell, had not yet signed an unconditional contract for the sum of $1,075,000. In response to that email, Mr Watts informed Adelaide Bank that he had procured refinancing up to an amount of $970,000. The last email sent on that day was from Adelaide Bank to Mr Watts. The marketing of the property will continue as stated. However, if you can provide me by close of business Monday 19 March 2007 (1) with a letter from a recognised financial institution stating you have unconditional financial approval of $970,000 and (2) a commitment that institution will refinance the debt of $970,000 by close of business Monday 26 March 2007 and (3) definitive evidence on how the shortfall will be repaid in full by Monday 26 March 2007 then I will withdraw the auction. These terms are not negotiable. The offer stands in my email dated 17 January 2007 below should this institution (only) require access to the property. (Original emphasis. In those circumstances, on 2 April 2007 Adelaide Bank entered into a Contract for the Sale of Land in respect of the property with Mr Campbell for the sale price of $1,000,000, that being the maximum amount Mr Campbell was then prepared to pay for the property. Prior to entering into that contract for sale, Adelaide Bank had obtained three valuations of the property. Each of those valuations was tendered in evidence before me. BMG did not call expert evidence as to the valuation of the property as at late 2006 and early 2007. However, Mr Watts had informed Adelaide Bank in July 2006 that, on or about 1 July 2006, BMG had received a " casual offer " for the purchase of the property at a figure of $850,000. There was also evidence to the effect that, by 17 May 2005, the property was in poor condition. It seems that it was vacant at that time and remained vacant thereafter. The Contract for Sale between Adelaide Bank and Mr Campbell was completed on 24 May 2007. The net proceeds received by Adelaide Bank after the deduction of all appropriate fees and expenses were either $990,950.54 or $993,480.86. Adelaide Bank has used $993,480.86 in its reconciliation calculations. For the purposes of these proceedings, I will accept the larger figure, viz $993,480.86. On 27 August 2007 the Statutory Demand was served on BMG. On 11 September 2007, BMG commenced the current proceedings. On 4 October 2007, BMG, Mr Watts and Mrs Watts filed in the Supreme Court an application to set aside the judgment. This application was filed approximately 18 months after judgment was entered and a long time after BMG, Mr Watts and Mrs Watts first became aware of the judgment. That application was heard on 7 February 2008 by McCallum J. On 12 February 2008, her Honour dismissed the application. In support of their application to set aside the judgment, BMG, Mr Watts and Mrs Watts filed and served an affidavit sworn by Gambhir Watts on 4 October 2007. The contents of that affidavit are identical to the contents of Mr Watts' affidavit sworn on 11 September 2007 and filed in these proceedings. McCallum J rejected all of the arguments advanced on behalf of the defendants in the Supreme Court proceedings. Her Honour concluded that the defendants had failed to establish any arguable defence to the claims made by Adelaide Bank in the Supreme Court proceedings. On 13 May 2008, a Summons was filed in the NSW Court of Appeal by BMG, Mr Watts and Mrs Watts in which they sought leave to appeal from the decision of McCallum J refusing to set aside the judgment. That Summons was heard on 6 August 2008. On 6 August 2008, the Court of Appeal dismissed that Summons with costs. On that occasion, the Court of Appeal gave brief reasons for its decision. Her Honour indicated her reasons for coming to the view that there was no apparent arguable defence in a manner which I do not find in any way undermined by the reassertions in the submissions of the kinds of considerations dealt with by her Honour. I do not see from her Honour's reasons that that matter was raised before her Honour in those terms. However, even if it had been, it lacks any detail. It does not on its face disclose a defence to the claim and at most may, if properly articulated as it is not at the moment, form the basis of some claim against the bank. His Honour went on to hold that this last point had not been raised before McCallum J or dealt with by her. His Honour also held that, in any event, it would not be a matter amounting to an arguable defence. On 11 September 2008, BMG, Mr Watts and Mrs Watts sought to apply for Special Leave to Appeal from the whole of the judgment of the NSW Court of Appeal in which that Court upheld the decision of McCallum J. That application was made out of time. The High Court treated that application as an application for an order dispensing with the requirement to comply with the time limits set out in r 41.02.1 of the High Court Rules , which rule requires that an Application for Special Leave to Appeal to the High Court must be filed within 28 days after the judgment below was pronounced. On 11 February 2009, the High Court dismissed that application and also dismissed the Application for Special Leave to Appeal to the High Court filed on 11 September 2008. The High Court published brief reasons in support of the orders which it made on that occasion. This matter concerns the application of settled principle on an issue of practice and procedure, and there is no reason to doubt the correctness of the decisions below. These submissions essentially gave rise to competing contentions as to the correct amount due (if any) from BMG to Adelaide Bank as at 21 August 2007. BMG also relied upon some of the matters advanced by it in respect of grounds (b) and (c) referred to in [53] above. Mr Watts submitted that these claims all sounded in damages or compensation the amount of which was much greater than the amount claimed by Adelaide Bank in the Statutory Demand. Accordingly, it was submitted by Mr Watts that BMG had offsetting claims within the meaning of s 459H of the Act which exceeded the amount of the debt claimed by Adelaide Bank. (see s 459E(3) of the Act). In support of these contentions, Mr Watts relied upon the decision of Tamberlin J in IFA Homeware Imports Pty Ltd v Shanghai Jerrys Candle Company Ltd [2003] FCA 533. (b) The Statutory Demand was issued for an improper purpose. At the hearing on 10 December 2008, Mr Watts conceded that there was in existence as at 21 August 2007 a debt due from BMG to Adelaide Bank but submitted that the correct amount of the debt due from BMG to Adelaide Bank at that time was $16,281.29. Subsequently, in a submission which I allowed Mr Watts to advance as a result of my decision made on 21 April 2009 (see BMG Poseidon Corp Pty Ltd v Adelaide Bank Limited; In the Matter of BMG Poseidon Corp Pty Ltd [2009] FCA 389), Mr Watts submitted that no moneys were due from BMG to Adelaide Bank and that Adelaide Bank had an obligation to account to BMG for surplus funds of approximately $86,286.32. That application has now run its course and been finally determined. The fact that BMG, Mr Watts and Mrs Watts sought to set aside the judgment in the Supreme Court and has failed to do so are relevant matters in the present proceedings. Further, in my consideration of the case which BMG seeks to make in the present proceedings, I am entitled to and should have regard to the grounds and contentions relied upon by BMG in support of the application to set aside the judgment made by the defendants in the Supreme Court proceedings. (3) If the substantiated amount is less than the statutory minimum, the Court must, by order, set aside the demand. offsetting claim means a genuine claim that the company has against the respondent by way of counterclaim, set off or cross demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates). respondent means the person who served the demand on the company. In order for a dispute of that kind to be raised, there must be more than the mere assertion of a dispute or the mere making of a claim (per Lindgren J in Rohalo Pharmaceutical Pty Ltd v RP Scherer SpA & Pharmagel SpA (1994) 15 ACSR 347 , (1994) 13 ACLC 94 at 352/30---354/15, esp at 353/20---25). The dispute must have an objective existence the genuineness of which is capable of being assessed ( Rohalo 15 ACSR 347 , 13 ACLC 94 at 353/17---25). The test has been equated with the test as to whether the creditor would be entitled to summary judgment on the claim ( Rohalo 15 ACSR 347 , 13 ACLC 94 at 353/42---354/8). In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the "serious question to be tried" criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit "however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be" not having "sufficient prima facie plausibility to merit further investigation as to [its] truth" (cf Eng Mee Yong v Letchumanan [1980] AC 331 at 341), or "a patently feeble legal argument or an assertion of facts unsupported by evidence": cf South Australia v Wall (1980) 24 SASR 189 at 194. But it does mean that, except in such an extreme case, a court required to determine whether there is a genuine dispute should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute. All that the legislation requires is that the court conclude that there is a dispute and that it is a genuine dispute. That is not to say that the court will examine the merits or settle the dispute. The specified limits of the court's examination are the ascertainment of whether there is a "genuine dispute" and whether there is a "genuine claim". It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it), the court has no function. It is not helpful to perceive that one party is more likely than the other to succeed, or that the eventual state of the account between the parties is more likely to be one result than another. The essential task is relatively simple --- to identify the genuine level of a claim (not the likely result of it) and to identify the genuine level of an offsetting claim (not the likely result of it). In particular, he made no submission to the effect that the various components making up the judgment debt of $1,028,725.29 had not been charged in accordance with the terms of the loan agreements. His attack on the judgment was more fundamental. It was Mr Watts' submission that the penalty charges and fees levied against BMG by Adelaide Bank ought to be disregarded entirely, that the costs incurred by Adelaide Bank in selling the property ought to be disregarded entirely and that BMG should get the benefit of the higher purchase price (viz $1,075,000) apparently negotiated by Mr Watts with Mr Campbell. These views or submissions are reflected in the calculation which I allowed Mr Watts to advance by way of submission earlier this week. It seems to me that these contentions made by Mr Watts on behalf of BMG are really nothing more than repetitions of contentions advanced by him in support of the other grounds relied upon by him. In essence, Mr Watts contended that Adelaide Bank had wrongly calculated the amount due, had sold the property at an undervalue and had otherwise dealt with BMG in such a fashion as to give rise to a claim for damages which could be offset against the amount of any debt properly due from BMG to Adelaide Bank. For reasons which will become apparent when I come to deal with the other grounds and contentions advanced by BMG, I am not satisfied that there is a genuine dispute between BMG and Adelaide Bank about the existence or the amount of the judgment debt or the part thereof which was claimed in the Statutory Demand. The points made on behalf of BMG do not rise above the mere assertion of a dispute. It was submitted on behalf of Adelaide Bank in support of a contention that no genuine dispute existed that, by reason of the application of the principles articulated by the High Court in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45 ; (1981) 147 CLR 589 , BMG was estopped from arguing that there was any dispute in respect of the judgment and, further, was estopped from arguing in the present proceedings any matter which was in fact raised by it, or could have been raised by it, in support of the application made by it, Mr Watts and Mrs Watts in the Supreme Court to set aside the judgment. I do not think that these propositions are correct. There has been no adjudication on the merits and no occasion calling for such an adjudication. The exercise of considering and determining an application to set aside a default judgment involves the application of very different principles from those which would ordinarily be in play on a final hearing on the merits. In my opinion, this Court has the power to go behind a judgment in appropriate circumstances, even if the judgment was obtained by default and even if the debtors have unsuccessfully made application to set the judgment aside. This much is made clear in the Reasons for Judgment of Gibbs J in Re Johnson & Mann; Ex parte Greendale Engineering & Cables Ltd [1968] ALR 408 , (1967) 11 FLR 335 at 341. It may be thought that certain observations made by Beaumont J in Olivieri v Stafford (1989) 24 FCR 413 are authority for the contrary proposition. Here the "reality" of the matter is that the merits of the respondents' claim have been demonstrated to the satisfaction of one judge of the District Court and another judge of that Court has declined to disturb the judgment. As a matter of substance, it is appropriate, in all the circumstances, for a court of bankruptcy to treat what happened in the two hearings in the District Court as a trial of the merits of the respondents' claim. That is to say, a court of bankruptcy should, I think, accept that a process of adjudication in the District Court has established that the underlying transactions created a true debt which could, in turn, provide a proper foundation for the entry of a judgment in respect of which a bankruptcy notice could properly issue. There is no principle which denies the existence of that discretion. In Olivieri 24 FCR 413 , a judgment had been obtained in the District Court by default and two attempts to have it set aside had failed. The approach of Beaumont J was to look at the reality of the matter. In his Honour's view, by the time that the case before him had reached this Court, there was no reason for this Court to examine yet again the underlying basis for the judgment. . In the same case, Gummow J reached the same result through a different process of reasoning with which, with respect, I agree. The natural justice arguments advanced by BMG in support of its application to set aside the judgment made in the Supreme Court cannot constitute a defence to the claim of Adelaide Bank for repayment of its loans and other moneys due under the loan agreements. The remaining two broad grounds relied upon by BMG in the Supreme Court (as to which see [42](b) and (c) above) are reminiscent of contentions advanced on behalf of BMG in the present proceedings. In the Supreme Court, McCallum J held that neither of these broad contentions constituted an arguable defence. In my view, in the case before me, BMG was also unable to support either of these contentions with any evidence or any persuasive argument. The fact that BMG was unable to satisfy the Supreme Court that it had an arguable case based upon the two broad contentions now under consideration is a matter relevant to my consideration of whether or not there is a genuine dispute in respect of the balance of the judgment debt now claimed by Adelaide Bank. With the exception perhaps of its contentions concerning the events of July 2005, BMG's case in the present proceedings is essentially directed to events which occurred after 3 April 2006 (the date when the judgment was entered) and, in particular, to the conduct of Adelaide Bank in administering the loans---especially during the time when BMG was in default of its obligations under the loan agreements and under the mortgage. In reality, my consideration of the question of whether I should be satisfied that there is a genuine dispute of the relevant kind between BMG and Adelaide Bank in the present case begins with the fact that Adelaide Bank is the judgment creditor under the judgment and the fact that the judgment has not been set aside despite the judgment debtor's best efforts to have it set aside. The reality of the matter is that the Supreme Court at two levels has decided that BMG had no arguable defence to the claims of Adelaide Bank made in that Court and that some of the unsuccessful contentions and arguments made by BMG in the Supreme Court have been reasserted here in precisely the same way as they were asserted in that Court. Although the expression may well include an unliquidated claim, that claim must be capable of being quantified as an amount of money ( Chase Manhattan Bank Australia Ltd v Oscty Pty Ltd [1995] FCA 1208 ; (1995) 17 ACSR 128 at 135). The claim must exist at the time at which the statutory demand is made ie in this case as at 21 August or perhaps 27 August 2007. By reason of the terms of the definition of offsetting claim , the claim must be genuine . The concept of genuineness gives rise to the same considerations as those with which I have dealt in respect of the s 459H(1)(a) ground. The first contention relied upon by BMG in support of this ground is that Adelaide Bank sold the property at an undervalue. This allegation amounts to an allegation that the bank breached the duty owed by it to BMG as mortgagee in possession when exercising its power of sale. In Upton v Tasmanian Perpetual Trustees Ltd [2007] FCAFC 57 ; (2007) 158 FCR 118 at [86] ---[90] (pp 138---143) a Full Court of this Court summarised various propositions that may be drawn from the relevant decisions of the High Court as to the content of the duty of good faith owed by a mortgagee to a mortgagor in the context of the exercise of a mortgagee's power of sale. In the passages referred to, the Full Court held that a mortgagee is entitled to exercise the power of sale for its own benefit but must take reasonable steps to obtain a fair price which in turn will involve taking reasonable steps to ascertain the value before selling. Further, the position in Australia remains that there is no common law duty in negligence by which a mortgagee can be found liable for damages if it fails to obtain a good price or the best price upon the sale of a mortgaged property (as to which see Fisher and Lightwood's Law of Mortgage , (2 nd Australian edition, 2005) at 496---497 [20.21]). The duty of the mortgagee is one of good faith. That duty requires the mortgagee not to act fraudulently or wilfully or recklessly or to recklessly sacrifice the interests of the mortgagor ( Pendlebury v Colonial Mutual Life Assurance Society Ltd [1912] HCA 9 ; (1912) 13 CLR 676 at 680). BMG tendered no evidence to support its contention that the property was sold at an undervalue. Adelaide Bank, on the other hand, tendered the three valuations which it had obtained. The valuers were not cross-examined. Their opinions were not challenged at all. In addition, Mr Watts' anecdotal recounting of the casual offer made to BMG in mid 1996 of $850,000 tended to support the valuations which Adelaide Bank had obtained. Furthermore, the obvious difficulties which BMG had encountered in selling the property in 2006 and early 2007 and in procuring sufficient funds to refinance its debts to Adelaide Bank in the same period provide additional support for the conclusion that the property was not likely to have commanded a price much above $850,000---$900,000 viewed from the perspective of a seller looking forward in late 2006 and early 2007. In my view, there is nothing to support the contention of BMG that the property was sold at an undervalue. The second contention made by BMG in support of this ground was that Adelaide Bank had breached arrangements to forbear or refrain from taking enforcement action under the loan agreements and the mortgage and had thereby thus caused loss to BMG. In particular, it was submitted that certain realistic opportunities for BMG to refinance were torpedoed by Adelaide Bank. The events of July 2005 were only faintly relied upon by Mr Watts. They were comprehensively dealt with in the judgment of McCallum J at [10]---[14] of her Honour's Reasons in support of her Honour's rejection of the proposition that those events gave rise to any defence to the Supreme Court proceedings. My own consideration of the relevant facts leads me to conclude that nothing that occurred in July 2005 gave rise to any arrangement or commitment to forbear of the kind alleged. Even if such an arrangement could be teased out of the communications passing between the parties at that time, it was one which was, at best, temporary and was able to be departed from upon reasonable notice being given. The other relevant circumstances occurred in the period from September to December 2006. In my view, Adelaide Bank did agree to defer taking possession of the property when it sent its email to Mr Watts of 11 September 2006. However, its agreement was subject to the conditions set out in that email. A number of those conditions were not complied with. In particular, no contract for sale was exchanged within the time limited in that email or within the further time allowed by Adelaide Bank. The non-fulfilment of the conditions upon which the agreement was made meant that Adelaide Bank was free to pursue its full remedies should it so desire. I have extracted at [29] and [31] above the communications passing between BMG and Adelaide Bank in January and March 2007. In my opinion, nothing in those communications could conceivably give rise to a conclusion that some arrangement of the kind alleged by BMG was made. Those communications contained proposals which never came into effect. The conditions set out therein were never met. There was no other evidence before me that could conceivably support the second contention relied upon by BMG in support of this ground. The more general and vague claim floated by Mr Watts on behalf of BMG and referred to at [42(c)] above was not articulated with any precision and was unsupported by any evidence or argument. It is fair to say that Adelaide Bank has exercised its rights to the full but the mere fact that it has done so does not give rise to any cause of action. No case was sought to be advanced either in evidence or argument that the loan agreements themselves or the mortgage should somehow or another be attacked or set aside. For the above reasons, I am of the opinion that BMG has failed to make out that it has an offsetting claim against Adelaide Bank within the meaning of s 459H of the Act. In my opinion, however, the circumstances of the present case are quite different from those in play in IFA Homeware Imports Pty Ltd [2003] FCA 533. In my view, Adelaide Bank was not required to verify the Statutory Demand at all and was not required to include a statement in the form urged by Mr Watts. In the present case, the amount asserted to be due from BMG to Adelaide Bank in the Statutory Demand is the balance of a judgment debt. Thus, the foundation for the claimed debt in the present case is the judgment, not the loan agreements or the mortgage security. That being so, in my view, the Statutory Demand was not required to be accompanied by an affidavit that complied with s 459E(3) of the Act. It is only if such an affidavit were required that consideration needs to be given to the requirements of the Rules. It is only when those requirements are brought into play that the reasoning of Tamberlin J in IFA Homeware Imports Pty Ltd [2003] FCA 533 is apt. I reject the first contention made by BMG in support of this ground. The second contention advanced by BMG in support of this ground has not been supported by any evidence or argument. It too is rejected. The third contention involves an assertion that the amount of the debt stated in the Statutory Demand was overstated. It will be remembered that the amount of the debt stated in the Statutory Demand was $122,570.17. At the hearing before me, Adelaide Bank asserted that the correct amount owed by BMG at the time of the service of the Statutory Demand was $178,640.30. However, Adelaide Bank did not seek to vary the amount of the Statutory Demand and informed me that it intended to proceed upon the basis of the amount set out in the Statutory Demand. Thus, for BMG to succeed with this contention, it must demonstrate that the amount actually due from BMG to Adelaide Bank as at 27 August 2007 was less than $122,570.17 and that substantial injustice will be caused unless the Statutory Demand is set aside. Mr Watts' arguments in support of this contention involved assertions made by him to the effect of those summarised at [59(c)] above. For these assertions to be made good, substantive reasons for disregarding the late charges and penalty charges levied against BMG would need to have been advanced and BMG would need to have satisfied me that it had an arguable case that the property had been sold at an undervalue. None of these matters have been established. However, it is apparent from the calculations propounded by Adelaide Bank in support of its primary contention that the amount due from BMG to it as at 27 August 2007 was $178,640.30, that it is Adelaide Bank's case that it can continue to levy late payment charges and other expenses against BMG based upon the covenants in the loan agreements after the date when it obtained judgment ie after 3 April 2006. Mr Watts did not argue that the entitlements to such charges had become merged in the judgment. However, I consider that it is open to me to take into account an argument that merger has occurred given that the amount said to be due was clearly in dispute. The rate is the applicable annual percentage rate applying under this contract. The interest is payable from the date we first you for the amount until that amount is paid. This obligation is not affected by the court order. (Original emphasis. Whatever rights Adelaide Bank had to levy such fees and charges under the covenants in the loan agreements were merged in the judgment which it obtained on 3 April 2006. After 3 April 2006 its rights were confined to recovering the amount of the judgment plus interest, albeit levied at the contractual rate if it so desired and its rights under its securities (see Economic Life Assurance Society v Usborne [1902] AC 147 ; and Elders Trustee & Executor Co Ltd v Eagle Star Nominees Ltd (1986) 4 BPR 9205 , [1987] ANZ ConvR 14, (1987) NSW ConvR 55 ---333). A complete copy of the relevant mortgage was not tendered in evidence before me. I will therefore assume that, prior to 3 April 2006, Adelaide Bank's rights in respect of interest and other charges were confined to the personal covenants in the loan agreements. In that event, those rights were merged in the judgment and ceased to exist after 3 April 2006. In fact, Adelaide Bank has levied interest after 3 April 2006 at the Court rate allowed in the Supreme Court. This basis of charging interest was open to Adelaide Bank. It is necessary for me to decide what is the correct amount that was actually due as between BMG and Adelaide Bank as at 27 August 2007. According to the evidence, the total amount of interest on the amount of the judgment debt at the rates applicable from time to time in the period from 3 April 2006 up to and including 24 May 2007 was $109,286.62. In that period BMG made two payments, each of $6,222. The total of those payments (viz $12,444) should be deducted from the total amount of interest levied in that period. If that deduction is made, as at 24 May 2007, the amount due from BMG to Adelaide Bank was $1,028,725.29 (the amount of the judgment debt) plus $96,842.62 (being the total amount of interest due in respect of the relevant period less the total sums paid in that period). Thus, the amount due from BMG to Adelaide Bank immediately before completion of the sale of the property on 24 May 2007 was $1,125,567.91. On 24 May 2007, Adelaide Bank received $993,480.86 from the sale proceeds. Thus, the balance due from BMG to Adelaide Bank as at 24 May 2007 was $132,087.05. Interest became payable in respect of the period from 24 May 2007 to 27 August 2007. Thus, in my view, the amount properly due from BMG to Adelaide Bank as at 21 August 2007 was an amount of $135,000 (approximately). This amount is more than the amount claimed in the Statutory Demand (viz $122,570.17). For these reasons, whilst I find that the amount stated in the Statutory Demand was misstated, I do not think that it can sensibly be said that substantial injustice will be caused if the Statutory Demand is not set aside. The amount claimed in the Statutory Demand is less than the amount that was properly due to the creditor as at the date the demand was made. Further, at least for present purposes, the creditor relies upon the lesser amount. I do not think that BMG has advanced or made out any other reason justifying the setting aside of the Statutory Demand. For these reasons, I am of the opinion that the s 459J grounds have not been made out. Indeed, it seemed to me that BMG did not seriously attempt to make a case that damages should be paid but rather sought to establish that, one way or another, no moneys were due to it from Adelaide Bank. Nonetheless, in form at least, BMG sought an order that the defendants pay damages or compensation in the amount set out in para 2 of its Application. It has failed to establish any entitlement to that relief against any defendant. Accordingly, I propose to dismiss BMG's Application in its entirety with costs. I certify that the preceding one hundred and twenty-two (122) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. | application by judgment debtor pursuant to s 459g of the corporations act 2001 (cth) to set aside creditor's statutory demand served for the balance of a judgment debt judgment obtained by default application to set aside the judgment refused by supreme court of nsw whether court satisfied that there is "genuine dispute" within s 459h(1)(a) of the act whether court satisfied that there is an "offsetting claim" within s 459h(1)(b) of the act whether court satisfied that there is a defect in the relevant statutory demand justifying an order setting aside that demand whether there is some other reason for setting aside the relevant statutory demand application to set aside statutory demand refused corporations law |
An amended notice of motion being an application pursuant to O 52 r 10(2) of the Rules for leave to appeal an interlocutory judgment of the primary Judge delivered on 26 October 2007. 2 As these applications have been heard together, the Court has determined each application in this judgment. The oppression was said to have resulted from conduct of Frederick Thomas Gulson and his company, the Triad Health Products Group of Companies Pty Ltd ('Triad'). 4 The shareholding in BGR was held by Triad (70.4%), TFI (22.2%) and John Reese through his company Karcor Holdings Pty Limited ('Karcor') (7.4%). In July 1999 Mr Gulson caused Triad to transfer 7.4% of its share in BGR to Cordato Partners (Services) Pty Limited ('Cordato'), a company controlled by Tony Cordato, Mr Gulson's solicitor. 5 Messrs Bax, Gulson and Reece conducted the functions of senior management of BGR's business. The business was involved in the production of tea tree oil. The main asset of the group was real estate known as Main Camp Station. 6 In July 2000, Triad, TFI and Karcor entered into consultancy agreements with BGR which made provision for the payment of consultancy fees to each shareholder. 7 At a meeting in March 2001 Messrs Bax, Gulson and Reece decided that it would be pointless to issue monthly tax invoices for consultancy fees since the BGR did not have the monies to pay them. However, each of them continued to work full time in the management of the group. As will be seen, whether the obligation of BGR to pay consultancy fees after March 2001 was suspended or was extinguished became an issue of pivotal contention. 8 In 2002 Mr Reece relinquished his shareholding. The remaining three shareholders in BGR were then Triad (68%), TFI (24%) and Cordato (8%). In 2005 disputes arose between Mr Bax and Mr Gulson and numerous other incidents occurred which led to the institution of the proceedings. 9 One dispute arose over a claim by TFI for consultancy fees. TFI claimed it was entitled to such fees exceeding $1,000,000 allegedly incurred in the period between March 2001 and 2005. Triad however asserted that no consultancy fees were owing either to TFI or Triad because the entitlement to consultancy fees in this period had been extinguished and not merely suspended. 10 The parties attempted to resolve their differences in two options for negotiated settlement. The first was known as Option A, pursuant to which Triad and TFI would each be paid consultancy fees totalling $1,040,849 plus interest. The second was known as Option B, which provided for a compromise payment for consultancy fees of $500,000 plus interest to TFI with the balance of the sale proceeds of the BGR's assets being distributed by way of fully franked dividends to each of the shareholders in accordance with each shareholding proportion. 11 On 12 February 2007 the primary Judge delivered reasons for judgment in proceedings NSD1140/2005: see The Food Improvers Pty Limited and Anor v BGR Corporation Pty Limited and Ors (No 3) [2007] FCA 97 ('the first reasons'). In the first reasons the primary Judge rejected such contention and found that it would have been unfair to the shareholders to work for BGR with no prospect of remuneration even if BGR's fortunes improved. Meetings had been held between the partners at which the two scenarios, Option A and Option B, were suggested for the distribution of the proceeds of sale of Main Camp Station among the shareholders. It is common ground that payment to the shareholders by way of fully franked dividends was beneficial to them for tax reasons. His Honour found that no agreement was reached between the parties despite the extensive negotiations to resolve their differences concerning TFI's claim for consultancy fees. 14 Before the primary Judge Mr Gulson claimed that he had not concerned himself with the details of the draft settlement deeds involving Options A and B and had never read their provisions relating to the payment of consultancy fees to TFI. The primary Judge did not accept such assertion. 15 Main Camp Station was sold on 12 December 2005 for $9,000,000. His Honour concluded at [195] that the negotiations to settle the partners' disputes culminated in Cordato's letter dated 11 January 2006 that proceeded upon the basis that the method of distribution 'would be in accordance with Option B' . However BGR, at the direction of Mr Gulson and without consultation, wrote to TFI on 23 February 2006 advising that an interim dividend of $3,500,000 had been declared. Such funds were derived from the proceeds of the sale. Instead, they were confronted with a fait accompli when a different form of distribution was made without any further consultation in February 2006. 16 Having found that TFI had suffered oppression, the primary Judge considered the relief to be granted. But it is not the end of the matter. Both Triad and Food Improvers are entitled to render invoices so as to be paid over $1 million each in consultancy fees which had not been invoiced. Food Improvers has established that it is entitled to receive interest from BGR on its loan of $111,000. The plaintiffs' position is that they wish Food Improvers to receive only $500,000 by way of a payment for the consultancy fees forgone. Likewise, Mr Gulson has indicated that he and Triad do not wish to receive any consultancy fees. As the difference between options A and B showed, Triad was fiscally better off by receiving only dividends which would be fully franked together with the corresponding imputation credits. And, Mr Lombardo gave advice that that was best for both Triad's and Food Improvers' positions. Having regard to the oppression which I have found in respect of the way Food Improvers has been treated, I am of opinion that it would be appropriate to make an order requiring BGR, Triad and Cordato Partners Services to cause the payment of a tax invoice for $500,000 plus GST, when issued by Food Improvers, in respect of the compromise of its entitlement to consultancy fees payable by BGR. That is, the $500,000 consultancy fee plus GST should be paid to Food Improvers by BGR and then a dividend paid to its shareholders which would be used to repay their loan accounts. The amounts so received by BGR would then fund a second dividend to its shareholders. It may be possible for the parties to agree some payments between them of net amounts instead of this, in light of the fact that the earlier payments have been made. Food Improvers will also be entitled to have the dividends paid to it by BGR treated as fully franked. The effect of the order necessarily subsumed the claim by Triad against BGR for consultancy fees by the payment of fully franked dividends. The combined effect of the orders was to remedy the proved oppression by resolving the claims of TFI and Triad upon BGR for consultancy fees and to achieve an equitable winding up of BGR for its shareholders. 20 The alternative proposal, namely Option A, was one in which both TFI and Triad would be paid the whole of their entitlement to consultancy fees. His Honour found that such payment, followed by the residue distribution from the sale of Main Camp Station, would be less advantageous to all parties. 21 Pursuant to the first reasons, his Honour also found that Triad was to refund consultancy fees paid to it in the period between 20 July 2005 to 28 February 2006 and after 28 February 2006, later calculated in the amount of $311,550.86. 22 On 12 February 2007 the primary Judge made orders in relation to certain aspects of the relief and stood the proceedings over to 14 February 2007 for the making of further orders. 23 On 14 February 2007 the primary Judge made orders that are not relevant to the present applications. His Honour stood over the proceedings to 19 February 2007 for the making of additional orders. 24 On 19 February 2007 after a further hearing before the primary Judge, his Honour made additional orders. Those orders, inter alia, effectively adopted the provisions of Option B. Triad and Cordato were ordered to repay those monies, being $340,000 and $40,000 respectively. 26 On 28 February 2007 the primary Judge delivered reasons ('the second reasons') which related to the hearing on 19 February 2007, particularly in relation to Order 6: see The Food Improvers Pty Ltd and Anor v BGR Corporation Pty Ltd and Ors (No 4) [2007] FCA 220. I was of opinion that it would be too cumbersome to order meetings of BGR or its directors to take the procedural steps necessary to implement and vote for the resolution. For the reasons that I gave in my principal judgment ([2007] FCA 97 at [269] - [271] ) Triad should receive only a distribution of the proceeds of sale of Main Camp Plantation by way of a fully franked dividend, and should not be able to claim consultancy fees in the liquidation. Likewise, because Mr Bax said that, for its own reasons, Food Improvers wished to have its distribution made by payment of the consultancy fee (limited to $500,000 plus GST) together with the balance as a fully franked dividend, Food Improvers should not be able to make any claim further for consultancy fees in liquidation. For those reasons I made declarations that neither Food Improvers nor Triad had any subsisting entitlement to consultancy fees having regard to the adoption of option B in the resolution. Such letter informed Triad that Gadens were acting for the liquidator, David John Kerr of BGR. The letter demanded payment of $651,550.86 said to be owing to BGR by Triad pursuant to the Court's orders. Triad then engaged new lawyers, namely Shaw Reynolds Bowen & Gerathy Lawyers, and Andrew Peter Quigley of that firm had carriage of the matter. 30 By letter dated 5 April 2007 Mr Quigley responded to Gadens. At page 89 the Court says that "Mr Gulson has indicated that he and Triad do not wish to receive any consultancy fees. As the difference between options A and B showed, Triad was fiscally better off by receiving only dividends which would be fully franked together with the corresponding imputation credits. Mr Quigley rejected the liquidator's claim but did not refer to Order 6 or to its effect, nor did the letter refer to consultancy fees. On 8 August 2007 Gadens responded and foreshadowed an application to the Court by the liquidator. 33 Mr Gulson claims that only after this exchange did he become aware that Mr Kerr was disputing Triad's claim to consultancy fees from BGR on the basis of Order 6. Pursuant to orders made on that day Triad filed an application on 12 October 2007 to vary Order 6 under O 35 r 7(2)(e) and (3) of the Rules ('the slip rule'). 35 On 26 October 2007 the primary Judge dismissed the application, and gave ex tempore reasons. 36 On 30 October 2007 Triad was served with a statutory demand issued by Mr Kerr claiming payment of debts pursuant to orders made in the proceedings. On 19 November 2007 Triad filed originating process in the Supreme Court of New South Wales to set aside the statutory demand. Since Mr Gulson was positively asserting there was no such entitlement, I found that he had indicated that he and Triad did not wish to receive those consultancy fees ( Food Improvers (No 3) [2007] FCA 97 at [269] ). That finding was inevitable given the joint rejection of distributing in accordance with Option A. And, they were accepting how the net assets were to be calculated. On 12 December 2007 Triad filed an amended application for leave to appeal from such dismissal. On 14 December 2007 Triad filed an amended application for the extension of time to appeal from the primary Judge's decision delivered on 19 February 2007. These are the two applications now before the Court. Mr Quigley was cross examined, and testified that in approximately March 2007 he was instructed to prepare a letter for Triad in response to the claim of the liquidator. Mr Quigley said he believed he had been provided with the first reasons at the time but was not aware of the further reasons or orders. He said he only later became aware of such orders and of Order 6. 41 Mr Gulson has provided an affidavit which sets out the grounds upon which the application for leave to appeal, out of time, is made. As to the explanation for Mr Gulson's delay in filing an appeal, Mr Gulson claims that he thought Triad's right to consultancy fees had been recognised, rather than extinguished, by the first reasons. He claims that he promptly took steps to make an application under the slip rule and to file the application for extension of time to appeal when he became aware of the effect of the primary Judge's orders. 42 During cross examination Mr Gulson acknowledged his understanding of Option B, and agreed that if Option B had been the basis of settlement, TFI would receive an amount of $500,000 in respect of its claim for consultancy fees, and that no other consultancy fees would be payable to any shareholder. Instead they would receive fully franked dividends from BGR. However, Mr Gulson claimed that he did not realise that the effect of the primary Judge's orders was to extinguish Triad's claim to consultancy fees. Triad submits that Triad would suffer substantial injustice if leave were refused because 'it will then have no avenue to challenge Order 6, which has extinguished a chose in action worth in excess of $1 million without compensation' . Triad also submits that the slip rule reasons are attended with sufficient doubt to warrant it being reconsidered by the Full Court. It is submitted that the primary Judge in dismissing the slip rule application relied upon matters which were not contained in either his first or second reasons, and that the approach is inconsistent with the requirement that the Court should objectively consider whether the Court's orders reflect the published reasons. 44 Triad submits that the primary Judge appeared to proceed upon the basis that Triad carried an onus to propose a new regime of orders to give effect to the Court's reasons as set out in [23] of the slip rule reasons. Further, it is submitted that Order 6 was equivalent to specific performance of Option B which the primary Judge had found was not enforceable as acknowledged in the first reasons at [198]. It is submitted that the Court cannot objectively have intended to both extinguish Triad's action against BGR for the debt and also to have effectively ordered specific performance of Option B. 45 Additionally, it is submitted that the Court proceeded beyond the relief sought and made orders which were unnecessary or inappropriate: see Cadwallader v Bajco Pty Ltd & Ors [2002] NSWCA 328 at [251] . The relief claimed in the proceedings only sought orders for the winding up of BGR, the appointment of a liquidator and the repayment of overpaid consultancy fees in order to address the oppression. 46 Triad submits that the Court must have expected the liquidator would perform its statutory duties in connection with the administration of BGR as required by ss 474 and 477 of the Corporations Act 2001 (Cth) and reg 5.6.53 of the Corporations Regulations 2001 (Cth). Triad submits that an order such as Order 6 interferes or displaces the function of the liquidator to adjudicate in respect of a proof of debt, and accordingly such order could not reasonably be an accurate reflection of the Court's intention. 47 Triad submits that the objective intention of the Court is to be gleaned from its reasons for judgment. Even if the primary Judge considered that the challenged order correctly reflected his intention, the objective test prevails: see Gikas and Others v Papanayiotou and Another [1977] 2 NSWLR 944 at 951-954; Owston Nominees No 2 Pty Ltd v Branir Pty Ltd [2003] FCA 629 at [25] - [27] . An application to vary an order of the Court to give effect to that Court's intention is within the ambit of the slip rule: see Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 at 391. Triad also submits that the fact that Triad had changed its legal representation is also relevant, as 'there was understandably a period of time after judgment where Triad was seeking new lawyers and they were digesting a complicated history and regime of reasons and orders' . 50 Triad submits that no obvious prejudice would be caused to the respondents if leave were granted and that the draft notice of appeal has reasonable prospects of success. The draft notice of appeal contains 13 grounds of appeal relating to Order 6. 51 Grounds 1, 2 and 13 of the draft notice of appeal raise the question whether the Court has power under s 233 of the Corporations Act 2001 (Cth) to extinguish a debt owed by the company to another person. Triad submits that these grounds raise a constitutional issue, namely whether s 233 allows for the acquisition of property otherwise than on just terms as required by s 51(xxxi) of the Commonwealth of Australia Constitution Act 1900 (Cth) ('the Constitution '). Triad seeks to argue that the debt owed by BGR to Triad for consultancy fees was Triad's asset which could only be extinguished or released by agreement for valuable consideration or under seal: see The Commissioner of Stamp Duties for the State of New South Wales v Bone and Others (1976) 135 CLR 223 at 229. In the absence of any agreement between the parties, Triad did not surrender its claim. 52 Triad also seeks to argue that clear and unambiguous words are required before a provision will be construed to take away property without compensation: Bropho v State of Western Australia and Another (1990) 171 CLR 1 at 17-18. It is claimed that s 233 of the Corporations Act 2001 (Cth) should not be construed as permitting the Court to remove the property rights of another person other than the company against which orders were sought (BGR). 53 Grounds 3 to 7, 9 and 10 of the draft notice of appeal raise the question whether, even if power were available to the primary Judge to make Order 6, his Honour erred in making such order. This question raises the issue of the statutory construction of s 233 of the Corporations Act 2001 (Cth). 54 Grounds 8, 11 and 12 of the draft notice of appeal also raise the issue of the appropriateness of Order 6 in respect of other relief which was granted by the Court pursuant to the orders of the primary Judge. They submit that no proper or satisfactory explanation has been provided by Triad for the delay in bringing of the application for leave and that there would be substantial and material prejudice to TFI, Mr Bax and all BGR companies if leave were granted. They also assert that the proposed appeal is futile and a waste of costs and resources. TFI and Mr Bax submit that it is inconceivable that Mr Gulson could not have understood the reasons of the primary Judge. 56 TFI and Mr Bax submit that there were two scenarios which the primary Judge had to consider in remedying the oppression of TFI, namely Option A and Option B. His Honour made orders having the effect of Option B. TFI and Mr Bax challenge the factual assertion by Mr Gulson that Mr Gulson acted promptly after learning of Order 6. It is submitted that Mr Gulson was fully aware of the consequence of the primary Judge making orders in accordance with Option B, but that he consciously chose not to appeal whilst costs were being incurred by the other parties. 57 TFI and Mr Bax also submit that there is no evidence that Triad's former lawyers did not understand the effect of Order 6. In the absence of evidence from them it is submitted that the Court could not be satisfied that there exists a proper or satisfactory explanation for the delay in pursuing the appeal. 58 It is claimed that TFI has to date paid $75,000 to fund recovery action by the liquidator and both TFI and Mr Bax have incurred heavy legal costs. The liquidator has made interlocutory applications to the courts, served statutory demands and incurred costs which would have been avoided had Triad filed a notice of appeal in time. It is submitted that the continuation of these proceedings would be wasteful and cause severe inconvenience. 59 TFI and Mr Bax also oppose the application for leave to appeal from the order dismissing Triad's slip rule application. The grounds relied upon in opposition to the application are essentially the same reasons as those relied upon by TFI and Mr Bax in opposition to the application for leave to file the application to appeal out of time. By 12 September 2007 Triad had not paid the debt and accordingly Mr Kerr arranged for proceedings NSD1140/2005 to be listed before the primary Judge on 14 September 2007. It was not until 12 October 2007 that Triad filed its application under the slip rule. On 30 October 2007 Mr Kerr instructed his solicitors to serve a statutory demand on Triad for recovery of the debt. He instructed his solicitors to write to Triad's solicitors on 13 November 2007. No response to such letter has been received. Accordingly he instructed his solicitors to seek funding from Mr Bax and TFI. Mr Kerr has deposed that substantial legal expenses have been incurred and had Mr Gulson proceeded early to appeal he would not have instructed Gadens to issue demands, would not have sought funding from TFI, nor taken recovery action for the legal costs ordered against Triad. The Court must consider whether there has been a satisfactory explanation for the delay; whether there is prejudice to any other party; and whether the grounds for appeal satisfy the Court that there are prospects of success: see Hunter Valley Developments Pty Limited v Cohen (1984) 3 FCR 344 at 349; Parker v The Queen [2002] FCAFC 133 ; Jess v Scott and Others (1986) 12 FCR 187. The Court will consider each of the above hereunder. 66 The first reasons were delivered on 12 February 2007. Order 6 was made on 19 February 2007 and on 28 February 2007 the primary Judge delivered his second reasons. There is no evidence of any legal advice that might have been provided to Mr Gulson and Triad by their lawyers concerning the effect of his Honour's judgment and orders by Cordato who conducted the proceedings for Triad. 67 Mr Gulson acknowledged that he read the first reasons carefully. Orders were thereafter made on 14 February 2007. He did not attend the making of the orders on 19 February 2007 and was not present in Court on 28 February 2007 when the second reasons were delivered. He states that he did not recall the second reasons being brought to his attention. He also states that he instructed new solicitors to act on behalf of himself on or about 13 March 2007. 68 Mr Quigley was instructed after the letter of demand was received from the liquidator. Mr Quigley has testified that he asked his client to provide him with copies of the relevant documentation concerning the litigation and was provided with a copy of the first reasons. Order 6 was not provided, nor was any other judgment provided to Mr Quigley by Mr Gulson. Mr Quigley was provided with the orders made on 12 February 2007, being the first orders arising out of the first reasons. Mr Quigley deposed that his instructions on behalf of his client were to prepare a letter in response to the letter of Gadens, solicitors for Mr Kerr, dated 13 March 2007. Mr Quigley did not make any inquiries of counsel that had been retained by Triad, nor is there any evidence that he sought information from Triad's former solicitors. Mr Quigley prepared his letter which was forwarded on 5 April 2007 in reply to Gadens' letter. Such letter did not refer to the implications of Option A or Option B in the first reasons but instead referred to one portion of the first reasons where his Honour found that both TFI and Triad were entitled to consultancy fees in excess of $1,000,000. 69 The Court observes that Mr Quigley's letter dated 5 April 2007 refers to his awareness that orders had been made by the Court. The various further orders give effect to the Court's conclusion in relation to a variety of matters of financial adjustment as between the respective shareholders in BGR. Mr Quigley testified that at that date he had not been provided with a full set of orders and that he was unsure of what orders had been made. Mr Quigley said that he was not aware that the proceedings had been stood over after the first reasons had been given. Mr Quigley said that only after receiving the letter from Gadens dated 24 July 2007, which Mr Quigley pointed out was more than three months after he had written his letter, did he become aware that Order 6 existed. He said there was 'some confusion about how many orders have been made' and only then made an enquiry of the previous solicitors in relation to a full set of orders. The implication arising from this answer is that the former solicitors apparently held a full set of the orders. 71 The Court accepts that Mr Quigley was not fully informed of the orders of the Court, especially Order 6, at the time he wrote his letter dated 5 April 2007. The Court also accepts that Mr Quigley's retainer was limited to the purpose of writing such letter. 72 On 7 August 2007 Mr Quigley responded to Gadens' letter of 24 July 2007 but made no mention of the orders. Rather the letter refuted the right of the liquidator to issue any demand. Such correspondence was followed by a letter from Gadens to Mr Quigley dated 8 August 2007 which threatened to re-list the matter before the Court to have the issue resolved. 73 Mr Gulson claimed that he 'decided to await the outcome of the Applicant's slip rule application before filing an appeal because if the slip rule application succeeded there would be non [sic] need for an appeal' . There is no evidence to suggest that any inquiries were made by Mr Gulson of the second reasons or of the orders, especially Order 6. 74 The cross examination clearly establishes that Mr Gulson was acutely aware of the primary Judge's proposals in respect of consultancy fees contained in the first reasons. Mr Gulson acknowledged that he 'read what his Honour said about consultancy fees, and that really focussed my mind, and that's what I recall, and that's where I form my views' . He was aware from reading the first reasons that his Honour made orders which had the effect of implementing Option B. He also knew after reading the first reasons that under Option B the amount of $500,000 payable to TFI was a compromise claim for its consultancy fees. That nothing was payable to Triad for consultancy fees?---Correct. 76 Mr Gulson said he had not read the second reasons. Mr Gulson also said that he had not been given 'any advice to the effect that the Court had made Order 6 of the 19 February' and that he was not told by his lawyers, prior to 24 July 2007, that Triad would not have any entitlement to consultancy fees. 77 It is immaterial that Mr Gulson may not have read the second reasons. Mr Gulson was well aware, having read the first reasons, of the effect of Option B and of the Court's decision to make orders effectively implementing that proposal. The Court finds that Mr Gulson knew from reading those reasons that there would be no consultancy fees payable to Triad as a result of the Court making orders to give effect to Option B. 78 As the Court is satisfied that Mr Gulson was fully aware of the effect of the primary Judge's first reasons, Triad's submissions claiming that its instruction of new solicitors contributed to Triad's delay in filing the notice of appeal can be discarded. For the same reason, Mr Quigley's claimed ignorance of the primary Judge's orders is immaterial. Further, the absence of any evidence from Triad's former lawyers entitles the Court to draw the inference that their evidence would not have assisted Triad's application: see Jones v Dunkel and Another (1959) 101 CLR 298. 79 The Court is satisfied that in respect of its delay Triad has 'rested on its rights' (per Fisher J in Doyle v Chief of General Staff (1982) 42 ALR 283 at 287). Accordingly the Court finds that the explanation for the delay in seeking leave to appeal is not satisfactorily explained. Costs of the proceedings have been itemised at $675,188.05. On 18 July 2007 the Registry provided a Preliminary Notice of Taxation in the amount of $529,450. 81 Mr Bax has testified that he provided $77,004.59 towards the liquidator's costs in respect of recovery actions taken by Gadens on behalf of the liquidator. 82 Mr Kerr deposed that he made demands for payment upon Triad and that he issued statutory demands for payment. On 19 November 2007 Triad began proceedings to set aside the statutory demands in the Supreme Court of New South Wales (proceedings No. 5605 of 2007). 83 Based on the above evidence, the Court is satisfied that material prejudice, being the substantial costs incurred, would be caused both to TFI and Mr Bax and to the liquidator if leave to appeal were now granted. The company therein referred to is the company which is alleged to have been the subject of oppression, in this instance BGR. 85 The proposed grounds of appeal are predicated upon a misconception of the powers of the primary Judge. The power vested in the primary Judge was not confined to the power contained in s 233 of the Corporations Act 2001 (Cth). Nor do I consider it to be appropriate to invoke O 35 r (2)(e) [sic]. In my opinion, the orders which I made, and in particular order 6, have not been shown to have failed to reflect the intention of the Court as reflected in the reasons for judgment, objectively read, in the context of the dispute between the parties. Rather, the extinguishment of Triad's right to consultancy fees (even if such extinguishment could be categorised as an acquisition) resulted from a court order. Accordingly the Court considers that this ground of appeal would not have any prospects of success. 89 The Court is not satisfied that grounds have been advanced 'to suggest that any appeal would enjoy any prospects of success' : see Savage v Cranstoun (Trustee) [2001] FCA 1789 per Spender J at [22]. The orders made by the primary Judge are beneficial to all parties, and the combined effect of his Honour's orders implemented a scheme to address the oppression caused by Triad. In these circumstances the applicant has not demonstrated any prospect of success in the appeal: see Jeffers v R [1993] HCA 11 ; [1993] 112 ALR 85 at 86. Such interests include the interest of obtaining finality in litigation. It is that there be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of twenty-one days. In that context, the expression "special reasons" is intended to distinguish the case from the usual course according to which the time is twenty-one days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the Court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression "for special reasons" implies something narrower than this. (b) The Court orders that, subject to sub-paragraphs 1(i)(a) and 1(i)(b) above, and subject to the second defendant issuing to the first defendant proper tax invoices, the second defendant's entitlements to payment of consultancy fees of $20,833.33 per month (plus GST) for the period 1 July, 2000 to 20 July, 2005 (to the extent they are payable) are not otherwise [affected] by sub-paragraphs 1(i)(a) and 1(i)(b) herein. 95 In considering an application for leave to appeal from an interlocutory judgment the Court is required to consider whether the decision sought to be appealed from is attended with sufficient doubt to warrant it being reconsidered by the Full Court and whether substantial injustice would result if leave were refused supposing the decision to be wrong (see Sharp & Anor v Deputy Federal Commissioner of Taxation & Ors (1988) 88 ATC 4184 ; Decor Corporation Pty Ltd and Another v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397 ; Cadence Asset Management Pty Ltd and Others v Concept Sports Ltd and Others (2006) 58 ACSR 435 at 440-441). They bear upon each other, so that the degree of doubt which is sufficient in one case may be different from that required in another. Ultimately, a discretion must be exercised on what may be a fine balancing of considerations. 96 Triad submits that it will suffer substantial injustice if leave is not granted to appeal against the dismissal of the slip rule application. Triad submits that the dismissal of the slip rule application occurred after the time expired for Triad to appeal against Order 6 and if the Court does not grant leave to appeal from his Honour's decision (either under the principal application for leave to extend time or under the leave application) Triad would have no rights to challenge Order 6. 97 Triad also submits that there is sufficient doubt to warrant the slip rule decision being reconsidered by the Full Court because the primary Judge relied upon matters not contained in his Honour's earlier reasons to dismiss the slip rule application which is inconsistent with the requirement that the Court should objectively consider whether the orders reflect the published reasons; the primary Judge appeared to proceed on the basis that Triad carried an onus to propose a new regime of orders to give effect to the Court's reasons; the Court must have contemplated that the liquidator would perform his statutory duties in connection with the administration and that Order 6 would, uncorrected, interfere with the liquidator's functions; the Court's intention is its objective intention to be gleaned from its reasons; the Court could not have intended by Order 6 to objectively extinguish Triad's action against BGR and to have effectively ordered specific performance of the alleged agreement; and the Court could not have intended to make orders which afforded TFI relief beyond which was necessary or appropriate (see Cadwallader v Bajco Pty Ltd [2002] NSWCA 328 at [251] ). 98 With regard to the last submission, Triad submits that an order compelling the winding up BGR, the appointment of Mr Kerr as liquidator and the repayment of the overpaid consultancy fee (i.e. those incurred in 2005 and 2006) would have addressed the oppression. 99 The answer to each of the submissions concerning 'sufficient doubt' lies in the clear findings of his Honour contained in the first reasons. Contrary to Mr Gulson's contention, the primary Judge found that the debt owed by BGR to both TFI and Triad for consultancy fees in the period 2001 to 2005 had not been extinguished. However his Honour found that the oppression which existed in the management of BGR against TFI caused by Triad would be remedied by the refund by Triad and Cordato of consultancy fees paid during 2005 and 2006; by repayment of the overpaid monies arising from the February 2006 distribution; by payment of the sum of $500,000 to TFI; and by distribution of the proceeds of the sale of the Main Camp Station by way of fully franked dividends to all parties in accordance with their shareholding. By virtue of such orders, the oppression which his Honour found resulted from Triad's actions would be remedied. The Court finds that such orders reflected the intentions of the primary Judge. 100 Order 6 gave effect to part of the arrangement resulting from his Honour's findings. The relief which was sought in the slip rule application by Triad would have resulted in an order directly contrary to his Honour's findings, namely that upon payment of the fully franked dividends to the shareholders after the payment of $500,000 by BGR to TFI, neither TFI nor Triad would have any entitlement to consultancy fees. 101 The order which was sought in the slip rule application would have resulted in the dismantling of one of the essential orders made by his Honour to redress the oppression. In response to the submission that his Honour relied upon matters in the slip rule application not previously contained in his reasons, it is apparent that such matters are merely explanations for his reasons rather than matters upon which he relied in reaching his decision. 102 The Court can find no error in the primary Judge's approach. Comparing Order 6 with the primary Judge's findings, it is apparent that it gives effect to that part of his Honour's decision which was integral to the scheme to overcome the oppression. 103 For the reasons indicated above the Court finds that the decision of the primary Judge is not attended with sufficient doubt to warrant it being reconsidered by the Full Court. 104 In considering whether substantial injustice would result if leave to appeal were refused supposing the decision to be wrong, the Court notes that a refusal to grant leave to appeal to Triad would result in the extinguishment of Triad's action against BGR. However, the considerations of sufficient doubt and substantial injustice 'bear upon each other' ( Sharp & Anor v Deputy Federal Commissioner of Taxation & Ors (1988) 88 ATC 4184 per Burchett J at 4,186). It follows that, supposing the primary Judge's decision to be wrong, the level of injustice suffered by Triad would need to be substantial before the Court could exercise its discretion to grant leave from the primary Judge's decision. In light of the Court's above findings regarding the lack of doubt attending such decision, the Court does not consider that such threshold of substantial injustice has been reached. 105 For the above reasons the Court dismisses the application for leave to appeal from the decision of the primary Judge dismissing the slip rule application. I certify that the preceding one hundred and five (105) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. | oppression application for leave to appeal out of time application for leave to appeal from interlocutory judgment. corporations |
The appellant arrived on a false passport and a tourist visa. On 29 August 1996, the appellant lodged an application for a protection visa with the Department of Immigration and Citizenship (the department). This application was lodged by a migration agent on behalf of the appellant. It contained a four page statement setting out the appellant's claim. The appellant signed the protection visa application and each page of the statement. The appellant's visa application form claimed that the appellant had a well-founded fear of persecution due to China's one child policy. The completed visa application form stated that the appellant's religion was Guanyin Buddhist and gave the appellant's address as an address in Campsie. In support of her application, the appellant claimed that after the birth of her first child in China she was forced to use an IUD contraceptive device and that this harmed her health. She claimed she was forced to have one abortion and the Chinese authorities attempted to force her to have another abortion before she gave birth to her second child. The birth was discovered by the authorities and she was detained for three months until she paid a heavy fine. The appellant claimed that she became pregnant again in 1996. She said that she and her husband moved to live with relatives in another city, to avoid detection by the authorities. She claimed that in March 1996, local family planning officials searched houses in the night and that she and other pregnant women were taken by truck to a hospital. She said that during the journey she gave birth and that a doctor from the hospital reportedly killed the baby by an injection. The appellant said she was so sad that she tried to commit suicide, but her husband saved her. She then, with her husband's help, escaped from China and came to Australia. On 2 July 1997, a delegate of the first respondent refused the application for a protection visa. The appellant signed the application form which also recorded her address as the Campsie address. On 11 February 1998, the appellant's migration agent wrote to the Tribunal advising of the appellant's change of address. The new address given was an address in Lidcombe. By a letter dated 3 December 1998, addressed to the appellant at her Lidcombe address, the Tribunal invited the appellant to attend a hearing. A copy of this letter was also sent to the appellant's migration agent. The letter was headed "Notice under Section 426 of the Migration Act 1958 ". The migration agent completed the "Response to Hearing Offer" form accepting the invitation to attend the hearing and returned it to the Tribunal. This document was received by the Tribunal on 19 December 1998. The Tribunal wrote to the appellant setting the date of the hearing as 21 January 1999. The appellant, however, did not attend the hearing. By a decision handed down on 7 July 1999, the Tribunal found that the non-discriminatory implementation of China's one child policy does not by itself constitute persecution for a Convention reason. Further, the Tribunal said that it could not be satisfied, on the limited evidence available to it, that the policy had been applied to the appellant in a discriminatory way or that it would be in the future. The Tribunal concluded that the appellant did not have a well-founded fear of persecution. The appellant relied upon the following grounds of review: I have been mistreated and prosecuted by Chinese authority not only because of my offence of "One Child Policy", but also my involvement in underground Catholic church activities. However, my PV application prepared by my migration agent did not include religious matters and any details of my prosecution. Due to the lack of knowledge of legal procedures of the PV application, I missed the RRT hearing at which I might have given evidence and clarify my claims. The lack of communication and misunderstanding between me and my migration agent also directly caused my absence from the RRT hearing and hence resulted in the adverse decision. There was a hearing of the first respondent's objection to competency on 12 April 2007. At that time the appellant was a detainee in the Villawood immigration detention centre. The appellant was unrepresented at the hearing. The appellant gave evidence at that hearing and was cross-examined by counsel for the first respondent. The appellant deposed that she did not attend the handing down of the Tribunal's decision. The appellant deposed that she had been informed by her migration agent in 1999 that the Tribunal had refused her application for review. The appellant had then at the migration agent's suggestion instructed him to join her as a party to the Muin and Lie class action. The appellant said she had not received the reasons of the Tribunal until 12 March 2007. She had obtained the reasons after a friend assisted her in writing to the Tribunal. The appellant also said that she had not tried to contact her migration agent after 2003 because she had gone to his office in 2003 and found it had been closed. The Federal Magistrate held that the application was competent. This decision was upheld by the Full Court of the Federal Court ( Minister for Immigration and Citizenship v SZKKC [2007] FCAFC 105 ; (2007) 241 ALR 523). The first respondent was granted special leave by the High Court to appeal the Full Court decision, but the first respondent subsequently withdrew the appeal. The matter was returned to the Federal Magistrates Court for determination of the application. ... (Original emphasis. However, the first respondent contended that relief should be withheld on the basis of unwarranted delay. The hearing was adjourned to permit evidence to be led and submissions to be made on whether relief should be withheld in the exercise of the Federal Magistrate's discretion. The issue to be decided by the Federal Magistrate at the hearing was whether the court should in the exercise of its discretion withhold relief, notwithstanding that jurisdictional error was conceded by the first respondent. At the hearing, the first respondent relied upon the affidavit of Nicola Johnson sworn on 11 April 2007 which deposed that the Tribunal's decision had been handed down on 7 July 1999 and that the appellant was a member of the Muin and Lie class action from at least 17 August 2000. The first respondent submitted that the appellant took no steps to seek review of the Tribunal's decision from the determination of the class action in 2003 until she filed her application in 2007. This delay, contended the first respondent, was unexplained and unwarranted and the court should exercise its discretion to withhold relief on that ground. The Federal Magistrate proceeded on the basis that the Muin and Lie case concluded on 20 June 2003. The appellant relied upon an affidavit sworn on 27 June 2008 in opposition to the first respondent's contention that relief should be withheld in the exercise of the Federal Magistrate's discretion. The appellant deposed that in August 1996, she saw an advertisement by a migration agent in a Chinese language newspaper in Sydney. She contacted the migration agent, who listened to the appellant's story in a two hour interview conducted in Mandarin, and then agreed to take her case for a fee. The appellant said that she told the migration agent that she was a Catholic and told him about her arrest for printing pamphlets about the Catholic church, and also that the government had killed her baby and forced her to be sterilised. The appellant said that she returned to the office of the migration agent a week later and signed the application forms. She deposed that nobody read the content of the forms to her in Mandarin before she signed them. The appellant said that she signed the forms because she trusted her migration agent to include all of her story in the application and to know the procedures for becoming a refugee. The appellant also deposed that she did not give the migration agent her address, but gave him a landline telephone number on which he could contact her. The appellant went on to depose that she had subsequently found out that the address which was included in her protection visa application prepared by the migration agent was false. The appellant deposed that there were a number of other statements in the forms she signed which were wrong. The appellant said that her religion was recorded as Guanyin Buddhist, not Catholic, and that her claim based on her persecution because she was Catholic was omitted from the statement. She said there were also other factual errors regarding her pregnancies, and some dates were incorrect. The appellant then deposed that in or around July 1997, she received a telephone call from her migration agent in which he told her that her case would be going to the Tribunal and that she would have to pay more money if she wanted to continue with her application. The appellant agreed and was told that the migration agent would call her when there was news. The appellant signed more forms which were in English. The appellant also said that the new address in Lidcombe given by the migration agent to the Tribunal in February 1998 was false. She deposed that she had moved a number of times since first meeting the migration agent, but she never told him her addresses. The appellant said that she had another telephone conversation with the migration agent in or around early June 2000. The migration agent told her that she was unsuccessful before the Tribunal and advised her to become part of the Muin and Lie class action. The appellant agreed to this and paid the migration agent's fee. The appellant said that she was taken into immigration detention on 27 September 2000 and released on the third day. She said that she went to her migration agent's office about two days after she was released. The migration agent said that everything was "okay" and that her case was continuing. The appellant deposed to two further telephone conversations that she had with the migration agent in late 2000 or early 2001. On both occasions, the migration agent told the appellant that he would telephone her when he had further information. The appellant said that she trusted the migration agent and believed that he would telephone her when he had more information. The appellant deposed that in January 2003, when the appellant still had not been contacted by the migration agent, she went to his office, but the office had been closed and she had no way of contacting him. The appellant said that she, nevertheless, expected that her migration agent would contact her if he had further news about the class action. She said that she trusted the migration agent. The appellant went on to say that in early 2007, she started to get worried about what was happening to her application. She consulted a friend who suggested that she contact another migration agent. The appellant deposed that until she was taken into detention in March 2007 she had no idea that she was in Australia illegally because she thought her case was still ongoing. The appellant said that she did not know that she could contact the department or the Tribunal directly. The appellant was cross-examined at some length on her affidavit evidence during the hearing before the Federal Magistrate. In his reasons, the Federal Magistrate first referred to and summarised the appellant's evidence. The Federal Magistrate found the evidence to be "in some respects unsatisfactory". The Federal Magistrate referred to a number of claims made by the appellant in her evidence that the migration agent had failed to act on her instructions and had inserted false information in her visa application. These included the fact that the appellant had told the migration agent that she was a Catholic, but he had stated in the form that she was a Guanyin Buddhist and had not included a claim for a protection visa based on her persecution as a Catholic. There was also the assertion that the migration agent had included a false address in Campsie in the initial visa application and then submitted a further false address - this time in Lidcombe - to the Tribunal in February 1998. The Federal Magistrate observed that the appellant could not explain why the migration agent would include a false religion, "unprompted" give two false addresses, and leave out a claim based on her Catholicism. The Federal Magistrate also referred to the appellant's evidence that the migration agent had telephoned her at a different address to that for which she had given the migration agent a telephone number and that she had been unable to explain how the migration agent could have had that telephone number. The Federal Magistrate also noted that the appellant had acknowledged "factual inconsistencies between her affidavit and oral evidence she gave on 12 April 2007". The Federal Magistrate said that he preferred the earlier oral evidence, which had "the ring of truth about it". The Federal Magistrate then dealt with the submissions of the parties. The Federal Magistrate referred to the case of Minister for Immigration and Citizenship v SZIQB [2008] FCAFC 20 ( SZIQB ) as an example of a case where the Full Court had withheld relief on the basis that there was an unwarranted delay in seeking relief, notwithstanding that there was a jurisdictional error. If it were otherwise, and the Court were required to inquire into the extent to which the failure by the Tribunal to comply with its statutory obligations to accord an applicant a fair hearing prejudiced the applicant, the imperative obligation imposed on the Tribunal might well be blunted. The Federal Magistrate observed that the Full Court had emphasised the consequences of the breach of "the code of procedure in the Migration Act " and had referred to the case of SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 228 CLR 294. Accordingly, said the Federal Magistrate, the "exceptional circumstances" referred to by the Full Court needed to be put into context. The Federal Magistrate went on to say that this case involved a "breach of a superseded form of s 426 of the Migration Act , enacted well before s 422B of that Act". The Federal Magistrate also observed that s 426 , in the form then applicable, was no longer part of the code of procedure in the Act and that the same public policy considerations did not apply in this case as applied in SZIZO . Further, the Federal Magistrate found that the breach of procedure in this case did not deprive the appellant of a hearing. The Federal Magistrate said that it appeared that the appellant had failed to keep her migration agent appraised of how to contact her. The Federal Magistrate said that on her evidence the migration agent did not know the appellant's address because she did not inform him of it. It appeared, therefore, that the appellant's failure to attend the hearing before the Tribunal was a result of a lack of communication between her and her migration agent. The Federal Magistrate found that the appellant's explanation for the delay in filing the application well over three years after the conclusion of the Muin and Lie class action on 20 June 2003, was unsatisfactory. The Federal Magistrate found that the appellant did nothing to check the status of the class action after losing contact with her migration agent. The Federal Magistrate found that it was implausible that the appellant assumed her migration agent was still attending to her affairs and would contact her with advice when she knew his office had closed. The Federal Magistrate observed that the appellant had acknowledged in her oral evidence at the interlocutory hearing that when she was taken into detention in 2000 she was advised by officers of the department that she would have to leave Australia as soon as the class action was finished. The Federal Magistrate said that the appellant had acknowledged that she was afraid of being taken into detention again and this had happened in 2007. His Honour said that whilst the fear was understandable it was not an adequate explanation for the delay by the appellant in bringing the present proceedings. The Federal Magistrate also considered the appellant's contention that a further relevant consideration in the exercise of the discretion, was that the appellant had been denied a hearing before the Tribunal "on the basis of at least irregular conduct by her migration agent". The irregular conduct was said to be the provision of two false addresses to the department and the Tribunal, the nomination of her religion as Guanyin Buddhist rather than Catholic, and the failure to include the appellant's claim based on her fear of persecution because of her Catholicism. The Federal Magistrate rejected the appellant's contention that the migration agent had engaged in irregular conduct. This is because the Federal Magistrate found the appellant's evidence in support of this contention to be implausible. The Federal Magistrate found that the appellant's failure to attend the Tribunal was on the balance of probabilities attributable to her own fault in failing to keep the migration agent informed of her contact details, rather than the fault of the migration agent. As to the strength of the appellant's claim before the Tribunal, the Federal Magistrate acknowledged that the appellant's claim was founded upon the one child policy in China. However, the Federal Magistrate said that it was difficult to see what future harm the appellant would suffer on that basis. The Federal Magistrate also referred to the appellant's claim that she feared harm as a Catholic. Further, I do not accept the [appellant's] evidence that she told her migration agent of that claim at her first interview with him but that he left it out of her statement, and falsely claimed her religion to be Buddhist...It is a claim that could be considered by the Minister if he was minded to do so. In my view, the existence of a claim for protection that has not been previously considered does not outweigh the considerations of the length of the [appellant's] delay in bringing these proceedings, and my rejection of the [appellant's] explanation for that delay. I reject her explanation for the delay. The surrounding circumstances support the withholding of relief in the exercise of discretion. I will, therefore, order that the application be dismissed. By an amended notice of appeal filed on 31 October 2008, the appellant raised six grounds of appeal. I granted the appellant leave to rely on her amended notice of appeal. The evidence on which the appellant seeks to rely is that contained in an affidavit sworn by the appellant on 31 October 2008. The appellant deposed to the claims she would make to the Tribunal about her Catholicism, in the event that her case is remitted to the Tribunal. I accepted the affidavit provisionally and said that I would rule on its admissibility in these reasons. Counsel for the appellant argued that the evidence should be admitted because the Federal Magistrate's reasons establish "a new principle or burden on applicants in cases where the Court is considering withholding relief on the basis of delay". This new principle was said to be that the applicant must bring evidence of the merits of a claim to be a refugee to the court, so the court can assess the strength of a claim that was not considered by the Tribunal. Counsel for the appellant based her argument on a comment by the Federal Magistrate that the appellant's claim, if accepted, might support the granting of a protection visa, but that he was unable to express a view on the strength of it. In my view, the Federal Magistrate did not establish a new principle. The Federal Magistrate recognised that it may be open to the appellant to seek to rely upon a different or additional ground if the matter was remitted to the Tribunal. However, this prospect was also recognised by the appellant at the hearing before the Federal Magistrate on 12 August 2007. This accounts for the reference to the claim relating to Catholicism in the appellant's affidavit. All that the Federal Magistrate was saying in his reasons was that on the basis of the evidence before him, he was not able to make any assessment of the strength of the claim. There is nothing novel in this approach. It was always open to the appellant to have led the evidence which the appellant now seeks to lead before the Federal Magistrate. The evidence is, accordingly, not fresh evidence and is not admissible. In addition, the appellant did not comply with O 52 r 36 of the Federal Court Rules . It was said that the court took an approach of effectively requiring the appellant to show why relief should be granted, rather than requiring the respondents to show why relief should not be granted. The appellant contended that the error of the Federal Magistrate was demonstrated by two factual matters. First, the Federal Magistrate appeared to assume that the migration agent was competent, diligent and/or honest and this imposed a greater evidentiary and persuasive burden on the appellant. Secondly, the Federal Magistrate appeared to hold against the appellant her inability to explain the alleged conduct and motives of the migration agent, and this reinforced the evidentiary and persuasive burden on the appellant, rather than on the first respondent. In my view, there was no error by the Federal Magistrate. Insofar as there was a persuasive onus on the first respondent, the first respondent discharged the onus. The first respondent had demonstrated that there was a long period of delay and relied principally upon the appellant's evidence that she took no steps to advance her case since 2003, when she lost contact with her migration agent. Further, the Federal Magistrate accepted the first respondent's contention that the appellant's explanation for the delay, namely, that she thought the migration agent was still dealing with her case and would contact her, was implausible. As to the appellant's contention that the Federal Magistrate erred in making assumptions about the propriety of the migration agent, this misapprehends the position. It was the appellant that was asserting that the migration agent acted improperly by inserting false addresses and a false religious denomination into the visa application, and in leaving out a claim based on her Catholicism. This allegation was made in the face of the fact that the appellant had signed the visa application confirming the correctness of the information contained therein. It was incumbent on the appellant to lead plausible evidence in support of her contention that the migration agent had acted improperly. This she failed to do. The Federal Magistrate found that it was inherently implausible a migration agent would insert a false address in a visa application form and then some time later send the Tribunal a second false address or would leave out an obvious claim made by the appellant during the course of a two hour interview at a time when the visa application and statement were prepared by the migration agent. The Federal Magistrate also referred to the fact that the appellant was unable to explain the inconsistency in her evidence that the migration agent had contacted her by telephone at an address she had not given to the agent. It was, in my view, open to the Federal Magistrate to come to the view that the appellant's evidence in support of this contention was implausible. The appellant impugned the comments of the Federal Magistrate in his reasons to the effect that the appellant could give no explanation for why the migration agent would include false information in the visa application or leave out the claim based on Catholicism. The appellant relied upon observations of the High Court in the case of Palmer v The Queen [1998] HCA 2 ; (1998) 193 CLR 1 ( Palmer ) in support of this submission. Palmer was a case involving a sexual offence. In Palmer , the majority observed that there was a danger that the jury would be misled by questions to the accused as to whether he had any explanation as to why the complainant would lie. In my view, the observations of the High Court have no application in these circumstances. They refer to the risk of a jury being misled by questions of that kind. In making observations as to the appellant's lack of explanation, the Federal Magistrate was doing no more than saying that when given an opportunity to point to any circumstances which may support her contention as to the migration agent's impropriety, she was unable to do so. The Federal Magistrate was not, thereby, imposing any additional burden on the appellant but reporting the evidence as it unfolded before him. I, accordingly, dismiss ground one of the grounds of appeal. The Federal Magistrate noted at [16] of his reasons that the appellant's claim based on her Catholicism "is a claim that could be considered by the Minister if he was minded to do so". Both parties have taken this to mean that the first respondent could exercise his or her discretion under s 417 of the Act, which allows the Minister to substitute his or her own decision for that of the Tribunal, if he or she thinks that it is in the public interest and if the Minister's decision is more favourable than the Tribunal's decision. The appellant contended that the Federal Magistrate, by considering this factor, has erroneously and inappropriately equated the process under s 417 of the Act to the process that applies when a person applies for a protection visa. These procedures, said the appellant, should not be equated. In my view, the Federal Magistrate did not equate the process under s 417 of the Act to that of the review process before the Tribunal. The Federal Magistrate dealt with the potential claim that the appellant may raise before the Tribunal if the matter was remitted to the Tribunal. He gave little weight to the existence of that claim because there was little evidence before him elucidating the claim. Further, the Federal Magistrate had rejected the evidence of the appellant that she had told her migration agent of the claim based upon her Catholicism. It was open to the Federal Magistrate to adopt that approach. The Federal Magistrate made his observations in relation to the existence of a further process under s 417 as a subsidiary comment. It was a subsidiary comment because he had already come to the view that he was unable to place significant weight on the existence of the appellant's potential additional claim based upon her Catholicism. The reference by the Federal Magistrate to the process under s 417 did not affect the exercise of his discretion based on the existence of the additional potential claim. This is apparent from the Federal Magistrate's reference to weighing up the existence of the potential claim against the length of the delay, in the concluding sentence to [16] of his reasons. The appellant submitted that the Federal Magistrate erred by not giving due weight to the concession by the first respondent that the Tribunal's decision was affected by jurisdictional error. The appellant said that the Federal Magistrate's comment that s 426 was no longer in the same terms as prevailed at the time that the notice was sent to the appellant, was not relevant to the question of whether to withhold relief in the exercise of the discretion. The appellant also submitted that insofar as the Federal Magistrate had regard to public policy considerations, these considerations should inform the question of whether there was jurisdictional error in the first place. Once such error is conceded, as it has been here, said the appellant, the inquiry into public policy considerations was no longer relevant. The Federal Magistrate distinguished between those cases where the discretion to withhold relief was exercised on the basis of delay by the party seeking the relief, and those cases where it is withheld on other grounds. The Federal Magistrate characterised the decision of the Full Court in SZIQB as falling into the former category, and the decision of the Full Court in SZIZO as falling into the latter category. The evidence and submissions of the first respondent bearing on this issue do not constitute a satisfactory explanation. Rather they have satisfied us that he deliberately undertook a course of conduct that would render it difficult, if not impossible, for the Tribunal, his migration agent and the Department of Immigration to find him. We are also satisfied that he made no real effort to ascertain the fate of his application to the Tribunal. These considerations render it unnecessary for us to consider the apparent strength of the first respondent's claim to be entitled to a protection visa. (Emphasis added. However, in light of the observations of the Full Court in SZIQB referred to at [60] above and the Federal Magistrate's findings that the appellant's delay in commencing the proceedings was unwarranted, it was unnecessary for the Federal Magistrate to have regard to whether there was a further ground on which to withhold relief in the exercise of the discretion. On the authority of SZIQB , the appellant's unwarranted delay was a sufficient basis to support the Federal Magistrate's decision. In any event, it was open to the Federal Magistrate to have regard to the nature of the jurisdictional error and its impact upon the impugned decision and decision-making process in considering whether to withhold relief in the exercise of his discretion ( SZBYR v Minister for Immigration and Citizenship [2007] HCA 26 ; (2007) 235 ALR 609 at 618 and 623-631 ( SZBYR )). In SZBYR , the High Court emphasised the discretionary nature of the relief granted under the constitutional writs, and, whilst recognising a number of established categories when relief may be withheld, did not state that the categories were closed nor that the circumstances which could be taken into account were circumscribed. Accordingly, I do not accept the submission of the appellant that the Federal Magistrate erred in having regard to those circumstances. I, accordingly, dismiss this ground of appeal. The appellant submitted that the Federal Magistrate erred by attributing a level of diligence, competence and honesty to the migration agent, without any evidentiary basis for doing so. There was, said the appellant, no material before the court from which the Federal Magistrate could infer that the migration agent was competent, diligent or honest. This ground of appeal raises the same considerations as are raised in relation to the first ground of appeal. As I have previously held, it was incumbent upon the appellant to adduce plausible evidence in support of her claim that the agent had acted improperly. This was particularly so in light of her previously having certified the correctness of the information in the visa application. This she failed to do. Accordingly, I dismiss this ground of appeal. This ground of appeal raises the same considerations as were dealt with in the first ground of appeal. For the reasons given in relation to this contention when considering the first ground of appeal, I dismiss this ground of appeal. In her written submissions, the appellant construed the Federal Magistrate's observations on inconsistencies to mean that he found the appellant's oral evidence that she trusted her migration agent, to be inconsistent with her subsequent affidavit evidence that she no longer trusted him. The appellant submitted that there was no such inconsistency because the appellant had said that she trusted her migration agent in both her oral and her affidavit evidence. The first respondent submitted that the appellant had mistaken the inconsistencies to which the Federal Magistrate referred. The first respondent contended that the inconsistencies could be identified by comparing the transcript of the interlocutory hearing with the affidavit. Examples of inconsistencies included that the appellant said at the hearing that she became aware of the Tribunal's decision in 1999, whereas in her affidavit, she said she became aware of it in 2000; the appellant said at the hearing that she was detained by immigration officials for one day in 2000, whereas in her affidavit she said she was detained for three days; and approximations of dates on which the appellant met her migration agent differed in her oral and affidavit evidence. At the hearing, counsel for the appellant suggested that these inconsistencies were trivial. She claimed that these minor inconsistencies informed the Federal Magistrate's decision that key parts of the appellant's evidence were unsatisfactory and should be rejected. In my view, the first respondent's contention as to the inconsistencies to which the Federal Magistrate was referring in his reasons, is to be accepted. The Federal Magistrate said at [8] of his reasons that the appellant "acknowledged factual inconsistencies" between her oral and affidavit evidence. This was a reference to a concession which the appellant made during her cross-examination. It is to be inferred that the concession related to the matters identified by the first respondent. It was open to the Federal Magistrate to refer to the appellant's acknowledgement of the inconsistencies in her evidence. He did not err in making reference to the inconsistencies and placing some weight on the inconsistencies. They were not, as the appellant suggested, trivial. It was also open to the Federal Magistrate to prefer the oral evidence that the appellant gave on 12 April 2007 to that contained in her subsequent affidavit. He was in the position to make that judgment. I have understood the Federal Magistrate's reference to preferring the appellant's oral evidence on 12 April 2007 to be directed primarily to the evidence that the appellant gave during cross-examination that she did nothing to find out what had happened in relation to the class action during the period 2003 to 2007 "because I knew [the migration agent's] office had been closed and I didn't try to contact him again". During her oral evidence, the appellant did not say anything about continuing to hold a belief, after she found that the migration agent's office had closed, that the migration agent was still working on the case and that he would contact her if there was a further development --- which is what she deposed to in her affidavit. Further, the Federal Magistrate's rejection of the appellant's evidence was not based only on the findings as to the inconsistencies and the preference for the oral evidence of 12 April 2007, but also on the inherent implausibility of the appellant's evidence in relation to the migration agent giving the Tribunal false addresses, misstating her religion and leaving out her claim founded on her Catholicism, as well as the appellant's inability to explain how the migration agent could have telephoned her, as she said that he did, when she had not given him the telephone number for the address at which she was then staying. It was also based on the implausibility of the appellant's evidence that she continued to believe that the migration agent was still working on her case and would contact her. It was open to the Federal Magistrate to reject the appellant's evidence on these grounds. This ground of appeal is dismissed. The appeal is dismissed with costs. I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | whether fresh evidence may be led on appeal whether the federal magistrate erred in the exercise of his discretion to withhold relief whether the federal magistrate was entitled to take into account the nature of the jurisdictional error and its impact on the decision-making process migration |
It raises a question as to the construction of s 105-65 of Schedule 1 to the Taxation Administration Act 1953 (Cth) ( the Administration Act ) and a question as to whether the taxpayers should, as a condition of being entitled to recover the overpaid GST, be required to account for the refunded amount to persons who paid the amount of the GST to the taxpayers. 2 The proceeding has been conducted on the basis of agreed facts. The parties have posed two specific questions for the Court on the basis that the outcome of the proceeding will be determined by the answers to those questions. Section 7-1(1) of the GST Act relevantly provides that GST is payable on taxable supplies and s 7-1(2) relevantly provides that entitlements to input tax credits arise on creditable acquisitions . Amounts of GST and input tax credits are set off against each other to produce a net amount for a tax period. Under s 7-15, the net amount in a tax period is the amount that a taxpayer must pay to the Commonwealth or that the Commonwealth must refund to the taxpayer, in respect of the period. The net amount is ascertained by deducting the amount of input tax credits from the amount of GST. However, a supply is not a taxable supply to the extent that it is GST free or input taxed . The GST Act thus expressly contemplates that there may be a supply that is not a taxable supply. The significance of that will become apparent. 5 Accordingly, for there to be a taxable supply , there must first be a supply for consideration . By reason of s 9-10(3), it does not matter whether it is lawful to do, to refrain from doing or to tolerate the act or situation constituting the supply. However by reason of s 9-10(4), a supply does not include a supply of money unless the money is provided as consideration for a supply that is a supply of money. 6 Under s 9-15, consideration includes any payment or any act or forbearance in connection with a supply of anything and any payment or any act of forbearance in response to or for the inducement of a supply of anything. It does not matter whether the payment, act or forbearance was voluntary or whether it was by the recipient of the supply. 7 A person is entitled to an input tax credit for any creditable acquisition made by the person. Thus, for an acquisition to be a creditable acquisition, the supply of the thing to the person must be a taxable supply and the acquisition must have been for a creditable purpose . Under s 11-15, a person acquires a thing for a creditable purpose to the extent that the person acquires the thing in carrying on an enterprise. 8 If the net amount in respect of a taxpayer for a relevant tax period is greater than zero, the taxpayer is required to remit that amount to the Commissioner. If the net amount is less than zero, the Commissioner is required to pay a refund of that amount to the taxpayer. The net amount is determined under a self-assessment régime by a taxpayer lodging a GST return, referred to as a business activity statement. 9 Section 105-65 of Sch 1 to the Administration Act applies, relevantly, to so much of any net amount or amount of indirect tax as a person has overpaid. Indirect tax includes GST. The second applicant, ACN 087 069 065 Pty Ltd (ACN 087 069 065) formerly known as GAP Motors (NT) Pty Ltd ( GAP Motors ), was registered under the GST Act for the period 1 July 2000 to 8 March 2006. GAP Motors was placed under voluntary liquidation on 8 March 2006. 11 At all material times both KAP Motors and GAP Motors carried on the business of retail dealers in new motor vehicles. The new motor vehicles sold by KAP Motors and GAP Motors included Nissan, Holden, Mazda, Land Rover and BMW motor vehicles. KAP Motors entered into dealership agreements with Holden Limited, Nissan Motor Co. (Aust) Pty Limited, Mazda Australia Pty Limited and Premier Automotive Group Australia Pty Limited (trading as Land Rover Australia). GAP Motors entered into dealership agreements with BMW Group Australia and Premier Automotive Group Australia Pty Limited. 12 KAP Motors and GAP Motors also entered into agreements with finance companies to finance the acquisition of new motor vehicles from those motor vehicle distributors. KAP Motors entered into an agreement with Esanda Finance Corporation Limited. GAP Motors entered into agreements with Esanda Finance Corporation Limited, BMW Finance and Primus Financial Services. 13 The agreements entered into by KAP Motors and GAP Motors with the finance companies were known as floor plan arrangements . • The motor vehicle distributor would sell the motor vehicle to the finance company and would issue an invoice in relation to the sale of the motor vehicle to the finance company. • The finance company would bail the motor vehicle to KAP Motors or GAP Motors and the motor vehicle distributor would deliver the motor vehicle to KAP Motors or GAP Motors for display and sale. • KAP Motors or GAP Motors would negotiate the sale of the motor vehicle to the ultimate retail customer. Immediately prior to sale to the customer, KAP Motors or GAP Motors would purchase the motor vehicle from the finance company. Until that time, the motor vehicle would remain the property of the finance company. • The finance company would issue an invoice in relation to the sale of the motor vehicle to KAP Motors or GAP Motors. 14 At all material times there was in place between each motor vehicle distributor and KAP Motors or GAP Motors an arrangement pursuant to which the distributor, in relation to each new motor vehicle ordered from the distributor and acquired and sold pursuant to a floor plan arrangement, would pay a rebate to KAP Motors or GAP Motors, known as a holdback payment . The arrangement in relation to the payment of holdback payments did not form part of the dealership agreements between motor vehicle distributors, on the one hand, and KAP Motors or GAP Motors, on the other. 15 When a motor vehicle was sold by the motor vehicle distributor to the finance company, the holdback payment to be made by the distributor to KAP Motors or GAP Motors was generally not referred to in the invoice issued by the distributor to the finance company. The holdback payment did not change the consideration paid by the finance company to the distributor, or the consideration paid by KAP Motors or GAP Motors to the finance company, in respect of the purchase of the motor vehicle. 16 Once a motor vehicle had been dispatched pursuant to the floor plan arrangements, the motor vehicle distributor would, at a point in time after the vehicle was dispatched, issue a Recipient Created Tax Invoice to KAP Motors or GAP Motors. The recipient Created Tax Invoice would include details of the holdback payment relating to that motor vehicle. Recipient Created Tax Invoices issued by some of the motor vehicle distributors would contain details of holdback payments that related to a number of motor vehicles dispatched during a particular period. 17 During the period 1 July 2000 to 30 April 2005 in relation to KAP Motors, and the period 1 July 2000 to 29 February 2004 in relation to GAP Motors, the Recipient Created Tax Invoices issued by the motor vehicle distributors in relation to holdback payments separately identified the holdback payment or payments and the GST that was payable in respect of the holdback payment or payments. In accordance with the Recipient Created Tax Invoices, the motor vehicle distributors made holdback payments to KAP Motors or GAP Motors at certain intervals (which varied from distributor to distributor) after dispatch of the motor vehicles to which the holdback payments related. The internal accounting systems of KAP Motors and GAP Motors separately accounted for the holdback payments and the GST payable in respect of the holdback payments they received from the motor vehicle distributors. 18 During the period 1 July 2000 to 30 April 2005, KAP Motors received holdback payments from motor vehicle distributors and remitted to the Commissioner GST referable to those holdback payments, being the amount of GST identified in the Recipient Created Tax Invoices issued by the motor vehicle distributors to KAP Motors during that period. The amount of GST remitted by KAP Motors to the Commissioner during that period referable to the holdback payments it received was $312,531.73. 19 During the period 1 July 2000 to 29 February 2004, GAP Motors received holdback payments from motor vehicle distributors and remitted to the Commissioner GST referable to those holdback payments, being the amount of GST identified in the Recipient Created Tax Invoices issued by the motor vehicle distributors to GAP Motors during that period. The amount of GST remitted by GAP Motors to the Commissioner during that period referable to the holdback payments it received was $94,655.77. 20 The proceeding has been conducted on the basis that it is common ground between the parties that the holdback payments received by KAP Motors and GAP Motors during those periods were not consideration for any goods or services supplied by KAP Motors or GAP Motors to the distributors. The parties have agreed, therefore, that there was accordingly no taxable supply (within the meaning of that term as defined in s 9-5 of the GST Act) and that KAP Motors and GAP Motors were not liable under the GST Act to pay GST referable to the holdback payments that they received during the relevant periods. 21 When they remitted the GST referred to above, KAP Motors and GFAP Motors acted under the mistaken belief that the holdback payments were taxable supplies and that they were liable to GST referable to them. KAP Motors and GAP Motors have not reimbursed to the motor vehicle distributors amounts corresponding to the GST that they remitted to the Commissioner under that mistaken belief. KAP Motors and GAP Motors have not agreed or undertaken to reimburse to the motor vehicle distributors amounts corresponding to the GST that they remitted to the Commissioner under that mistaken belief. Does s 105 - 65 , on its proper construction, operate to preclude the entitlement of KAP Motors and GAP Motors to a refund of GST paid by them after 1 July 2000 to the Commissioner in respect of holdback payments received by them? 2. Is the entitlement of KAP Motors and GAP Motors to a refund of GST paid by them after 1 July 2000 in respect of holdback payments precluded by the general law in the absence of their refunding or undertaking to the Court to refund a corresponding amount to the persons from whom they received the holdback payments (including the GST component) in respect of which GST was paid? In the event that either of the questions is answered "Yes", the proceeding will be dismissed by consent. The Ruling is concerned with the question of whether holdback payments of the kind presently under consideration constitute consideration for a supply for the purposes of the GST Act and concludes that the answer to that question is 'No'. 26 The Ruling states that such holdback payments are made by a distributor to maintain a dealer's profit margin on the sale of a vehicle, so that the dealer may remain a viable business. It also states that such payments are made to maintain the existence of the dealers through which the distributor's vehicles are sold. The Ruling recognises that, within the structure through which a dealer operates, there may be other supplies made by the dealer to the distributor in relation to the performance of dealer services. However, in relation to holdback payments of the kind presently under consideration, the dealer supplies no goods or services to the distributor in return for the holdback payments and the dealer does not come under any obligation in return for the payments. That conclusion is based on the premise, which it is common ground is established in the present case, that, while the dealer and the distributor are parties to a dealership agreement that sets out their respective obligations, the holdback arrangements do not form a part of such a dealership agreement. 27 While the parties have agreed the facts set out above, there is no agreement as to the precise arrangements between GAP Motors and KAP Motors, on the one hand, and the distributors, on the other, concerning the holdback payments. That is to say, there has been no evidence as to any communications that occurred concerning the holdback payments. Rather, in the light of the Ruling, the proceeding has been conducted on the basis that the arrangements between KAP Motors and GAP Motors, on the one hand, and the distributors on the other, did not involve any supply within the meaning of that word when used in the GST Act and the question of whether there has been such a supply has not been the subject of argument. The Court has been invited to proceed on the assumption that there has been no supply within the meaning of the GST Act. Without necessarily accepting the correctness of that assumption in the circumstances of the present case, I have proceeded on that basis. The Court may do so by considering the context of the provision, which will include the existing state of the law and the mischief that the provision was intended to remedy (see CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2 ; (1997) 187 CLR 384 at 408). It will be permissible to depart from the literal meaning of the words used in a statutory provision in order give effect to the intention of the legislature if that intention sufficiently appears ( Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26 ; (1981) 147 CLR 297 at 307). Where to give a provision its literal application would defeat the object of a statute rather than carry its object into effect, an alternative construction may be permissible ( Cooper Brookes at 311). If the literal interpretation of a provision results in an operation that is capricious and irrational, it may be permissible to depart from the literal interpretation ( Cooper Brooks at 321). The Commissioner contends that those principles justify a departure from a literal construction of s 105-65 of the Administration Act. The Commissioner contends that such a construction should be given to s 105-65 in order to achieve the purpose of the provision, as gleaned from the Explanatory Memorandum that was promulgated in connection with the Bill for the A New Tax System (Goods and Services Tax Administration) Act 1999 , which included s 39(3), the predecessor of s 105-65. A supplier will need to satisfy the Commissioner that an amount corresponding to the refund will be passed on to the persons who ultimately bore the cost of the overpaid GST. The Commissioner contends that the clear purpose behind the inclusion of the provision that became s 105-65 was to prevent a windfall accruing to those who, though having remitted GST to the Commissioner, had passed on that burden. 31 However, it is significant that, in the Explanatory Memorandum, reference is made to payment of GST in respect of supplies . There is no reference to an overpayment of GST otherwise than in respect of a supply within the meaning of the GST Act. Rather, the Explanatory Memorandum refers, as does the language of s 105-65 itself, only to GST in relation to a supply that was not in fact a taxable supply. It is not difficult to postulate examples of a s upply within the meaning of that word when used in the GST Act that is not taxable supply. Thus, there is considerable scope for the operation of the provision construed literally as referring only to a supply as defined and not extending to cover a purported or putative supply. 32 The Commissioner's contentions involve construing the words actually used by the Parliament as if they contained additional words. That nevertheless involves a process of construing the words actually used. However, the occasions on which the words actually used should be construed as if they contained additional words, so as to expand the sphere of operation that could be given for the words actually used, will be rare, assuming it would ever be a permissible way of construing a provision, in a statute relating to taxation (see for example R v PLV (2001) 51 NSWLR 736 at [88]). 33 Section 105-65 should not be given an expansive construction. While its object may be commendable, in seeking to avoid windfall gains for taxpayers, it is, in a sense, a paternalistic interference with the rights of taxpayers. It proceeds on the basis that GST that should not have been paid has been paid by a taxpayer. Its operation is to ensure that the Commissioner receives a windfall rather than a taxpayer. 34 As I have said, the term supply as it appears in s 105-65, is defined for the purposes of the GST Act and s 105-65. To depart from the defined meaning given to a term, even if it is done by reading words into the context surrounding the use of the defined term, requires a particular justification. Such justification must be all the stronger in a case involving the interlacing complexity and delicate wording of a statute constituting part of the federal tax system. No such justification is present in this case. 35 The drafter of the provision must be taken to have adopted a logical, albeit in some respects arbitrary, approach to the question. In its terms, s 105-65 is limited to circumstances where there is a supply that is not a taxable supply. It does not in its terms extend to some transaction that does not involve a supply within the meaning of the GST Act. 36 To construe the provision as extending to a transaction that is not a supply is calculated to give rise to difficulties in the way in which the provision operates. Thus, it is necessary to identify the extent to which something that is not a supply is not a taxable supply in order to apply s 105-65(1)(b). It is then necessary for the Commissioner to form a state of mind as to whether the taxpayer has reimbursed a corresponding amount to the recipient of something. That is to say, it is necessary to postulate some person who is a recipient of something that was not supplied. There is no reason to conclude that the drafter intended such a difficult philosophical enquiry on the part of the Commissioner. 37 There may be circumstances in which a taxpayer who obtains a refund from the Commissioner will derive a windfall gain, if the provision is construed literally. However, that is not a reason for construing the words of the provision as meaning something that they do not say because the explanatory memorandum says that the purpose of the provision is to preclude a windfall in connection with a supply. That cannot be a justification for saying that the provision should be construed as precluding a windfall in connection with something that is not a supply. One could equally contemplate circumstances where a refund did not result in a windfall to a taxpayer, even though there was no reimbursement to the recipient of a supply. 38 In circumstances where the Commissioner has conceded that there has been no supply involved in or in connection with the making of the holdback payments, s 105-65 does not operate to preclude KAP Motors and GAP Motors from recovering any GST overpaid to the Commissioner by reason of a mistake on the part of KAP Motors or GAP Motors as the case may be. The Commissioner contends that any amount refunded by the Commissioner to KAP Motors or GAP Motors would be impressed with a constructive trust under which KAP Motors or GAP Motors as the case may be, would, as constructive trustee, hold the money for the benefit of the distributor who made the holdback payment to which the GST refund related. The internal accounting systems of KAP Motors and GAP Motors separately account for an amount of GST in respect of the holdback payments. The Recipient Created Tax Invoices issued by the distributors in respect of the holdback payments clearly identify a GST component. 40 Accordingly, so the Commissioner says, there would be no difficulty in identifying the person on whose behalf KAP Motors or GAP Motors received an amount of refund as constructive trustee. Therefore, the Commissioner says, since any moneys recovered by KAP Motors or GAP Motors from the Commissioner under a common law action for money had and received would be impressed with such a constructive trust, the absence of an undertaking on the part of KAP Motors and GAP Motors to refund the relevant amount to the relevant distributor must necessarily defeat the action. 41 A constructive trust is not premised upon what the parties intended or whether KAP Motors or GAP Motors earmarked the funds received from the distributors. Such a trust would arise from any unconscionability that would otherwise flow if KAP Motors and GAP Motors retained, as a windfall gain, any refund made by the Commissioner. A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property to assert his own beneficial interest in the property and deny the beneficial interest of another ( Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64 ; (1984) 156 CLR 41 at 108). 42 In circumstances where a dealer, such as KAP Motors or GAP Motors, received from a distributor a payment of a separate amount described as a tax that the dealer must pay, which the dealer was collecting from the distributor in order to pay to the Commissioner, the dealer may become a constructive trustee of the amount received from the distributor. In such a case, the amount of the tax may be received by the dealer as a fiduciary on the footing that it would apply the money in payment of the tax. If that purpose failed or could not be effected because the tax was not payable, the dealer may hold the moneys for the benefit of the distributors who paid them. The same result may ensue if the dealer recovered from the Commissioner a payment that had been made as and for tax that was not payable (see Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61 ; (1994) 182 CLR 51 at 77). 43 However, the question in the present context is whether the possibility that KAP Motors and GAP Motors may receive the amount of any refund from the Commissioner on constructive trust for a distributor is a matter that can be raised by the Commissioner as a defence to a common law claim for money had and received. The action for money had and received is not concerned with the recovery of compensation for loss or damage suffered by the claimant. 44 An action for money had and received is not defeated simply because the claimant has recouped the outgoing from others. It is difficult to understand why, as between KAP Motors and GAP Motors, on the one hand, and the Commissioner, on the other, the failure to pass on refunded GST to the relevant distributors should constitute conduct that would disentitle KAP Motors and GAP Motors from recovering from the Commissioner moneys that should never have been paid to the Commissioner. The concept of impoverishment as a co-relative of enrichment is foreign to Australian law. Even if there were any equity in favour of the distributors attaching to the fruits of any judgment that KAP Motors and GAP Motors might recover against the Commissioner, that circumstance would be quite irrelevant to this proceedings (see Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68 ; (2001) 208 CLR 516). Declarations should be made accordingly. In the absence of any other arrangement, the Commissioner should pay the costs of KAP Motors and GAP Motors. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | goods and services refund of gst paid to commissioner under the mistaken belief that transaction involved a supply whether section 105-65 of schedule 1 of the taxation administration act 1953 (cth) applies to transactions involving no supply whether s 105-65 relevant only to transactions involving a supply whether a common law action for money had and received can be resisted by a respondent on the basis that the applicant may be a constructive trustee of the funds for a third party whether constructive trust relevant to the enforcement of common law claim taxation restitution |
The present proceeding, which was instituted by AWB on 30 May 2006, relates to claims for legal professional privilege over a large number of documents. 2 I have two notices of motion before me. Under the first motion, AWB seeks the continuation of an interim injunction (which Kenny J granted on 20 June 2006) until the hearing and determination of the proceeding or further order of the Court. By the second notice of motion, the Commonwealth seeks to have certain preliminary questions determined pursuant to O 29 r 2 of the Federal Court Rules prior to any trial of the issues of legal professional privilege that are raised by the proceeding. 3 The Commonwealth has informed the Court that it will consent to the continuation of the injunction pending the final determination of this proceeding if it is unsuccessful on its notice of motion. The Commonwealth also said that it would consent to the continuation of the injunction pending the determination of its notice of motion. The Commissioner has indicated that he will abide any order of the Court, save as to costs. The Commonwealth therefore submitted that there is no present controversy as to the continuation of the injunction until the determination of this proceeding. 4 In these circumstances, the argument was confined to the Commonwealth's notice of motion. 5 Both the Commonwealth and AWB came prepared to argue both the question whether the Court should exercise its discretion under O 29 r 2 to order a trial of the separate questions propounded by the Commonwealth, and the issue of how those questions should be finally determined. However, after hearing submissions from AWB and the Commonwealth, I directed that argument should be confined in the first instance to the question whether the Court should exercise its discretion under O 29 r 2 to order a separate trial of the questions proposed by the Commonwealth. These reasons for decision are directed to that matter only. Between 23 November 2005 and 20 March 2006, 12 notices to produce documents were directed to AWB. In addition, various notices to produce documents were directed to employees of AWB in or about January 2006. From early 2006, AWB has maintained that numerous documents falling within the scope of these notices are the subject of legal professional privilege. 7 In this proceeding, AWB seeks a declaration that a large number of documents are protected by legal professional privilege and are not required to be produced to the Commission pursuant to any of the notices that have been issued. Pursuant to directions made by the Court, AWB has filed a consolidated list identifying the documents over which privilege is claimed ('the documents'). 8 On 15 June 2006, the RCA was amended by the Royal Commissions Amendment Act 2006 (Cth) ('the Amending Act'). The amendments confer a number of new powers on commissioners appointed under the RCA. 9 Most significantly, s 6AA(3) empowers a commissioner to serve a written notice requiring a person to produce a document for inspection by a member of the commission (or a person authorised by a member of the commission) for the purpose of the commissioner deciding whether or not to accept or reject a claim of legal professional privilege. Subsections 6AA(2), (4) and (5) confer power on a commissioner to accept or reject a claim of legal professional privilege. 10 By letter dated 15 June 2006, the solicitor assisting the Commission advised AWB's solicitors that the Commissioner intended to exercise the powers conferred upon him by the Amending Act to require the production of documents over which AWB claimed legal professional privilege, and in respect of which AWB was seeking declarations from this Court that the documents were privileged. It will exclude documents which have been produced to the Inquiry in whole. Those not produced to the Inquiry to date, or produced in part with portions blanked out as being the subject of claims for legal professional privilege, will be within the purview of the notice. A draft of the notice intended to be issued is attached. It will be made returnable by 12 noon on Thursday 22 June 2006. When that notice is served the Inquiry will inform you that further compliance with existing notices is not required. That will ensure that AWB Limited is subject to obligations only in respect of one notice. This new notice requires production of those documents. In respect of those for which AWB wishes to maintain its claim for legal professional privilege, it is the Inquiry's intention to issue a notice pursuant to section 6AA(3) requiring that those documents be produced for inspection for the purpose of the Commissioner deciding whether to accept or reject the claim for privilege. I am advised that the government proposes to recommend the making of regulations prescribing the manner of service of the notice contemplated by section 6AA(3) to the Governor-General-in-Council on 22 June 2006. If the regulations are made on that date, such a notice will be served on AWB Limited on 23 June 2006. That the question set out in paragraph 1.1 be answered 'yes'. That the question set out in paragraph 1.2 be answered 'no'. That the proceedings be dismissed under Order 29 Rule 4 of the Federal Court Rules . That the Applicant pay the Second Respondent's costs. Such further or other orders as this Honourable Court sees fit. Paragraph 1 of AWB's prayer for relief claims a declaration that specified documents are protected from production to the Commissioner by legal professional privilege. Paragraphs 2 and 3 of the prayer for relief seek declarations in relation to the validity of the Amending Act and construction of the RCA (as amended), and a declaration that the exercise of powers by the Commissioner under the RCA (as amended) in respect of the same documents as those which are the subject of this proceeding would constitute a contempt of Court. Paragraph 4 seeks an order permanently restraining the Commissioner from exercising its powers in that way. The essential claim in the proceeding is that the documents are the subject of legal professional privilege and consequently they are protected from production to the Commissioner. This claim falls squarely within the Court's jurisdiction under s 39B(1) and (1A)(c) of the Judiciary Act 1903 (Cth). 16 The Commonwealth does not suggest that the Amending Act deprives this Court of its jurisdiction to hear and determine AWB's claims for declaratory and injunctive relief. On the contrary, the Commonwealth argues that the Court continues to have jurisdiction to determine whether the documents attract legal professional privilege, but it should as a matter of discretion decline to make a declaration that the documents are the subject of legal professional privilege. The Commonwealth also argues that this discretion should be exercised by the Court at a preliminary stage and without embarking upon any examination of the merits of the claim to legal professional privilege. 17 The documents which the Commissioner wishes to inspect under s 6AA(3) of the RCA, with a view to making his own determination under ss 6AA (2), (4) and (5) as to whether or not they are the subject of legal professional privilege, are the very same documents as those which are the subject of this proceeding. AWB wishes to have, and it says that it is entitled to have, its privilege claims determined by this Court, independently of the Commissioner, to establish what its legal rights and obligations are in relation to the production of the documents to the Commissioner. Rather, the Commonwealth submitted that, on its proper construction, s 6AA imposes what might loosely be called an 'onus' upon the person who asserts the privilege either to make the claim before the Commissioner within the time allowed for production of the document, or alternatively to take steps to obtain a decision form a Court that the document is subject to legal professional privilege. 21 Sections 6AA(1)(a) and 6AB(5) use the expression 'a court has found'. The Commonwealth submitted that this expression can be read so that it applies where a court subsequently finds that a document is privileged. It argued that the plainly preferable construction of s 6AA(1)(a) is that it provides that it is a reasonable excuse to refuse or fail to produce a document where the court subsequently determines that it is privileged. In that context, it makes little sense for the Parliament to enact a law which fixes upon the date on which a court delivers judgment upholding a claim, rather than upon the substantive rights declared by the decision. (b) It is consistent with a Parliamentary intention to ensure that the immunity against production of communications subject to legal professional privilege is preserved and not abrogated. (c) There is nothing in the explanatory memorandum or second reading speech which suggests any legislative intention to abrogate legal professional privilege. (d) It is consistent with the fact that s 6AB(4) and (5) provide that the existence of legal professional privilege is a 'reasonable excuse' for the purposes of establishing a defence to a prosecution for refusing or failing to produce a document. (e) It receives further support from the legislative note to s 2(5). 23 Thus, the Commonwealth submitted that the effect of the Amending Act is that there are now two mechanisms by which legal professional privilege can result in a document being excused from production: one is a finding by a Court that the document is subject to the privilege; the other is the statutory excuse that might arise from a decision of the Commissioner. The person claiming legal professional privilege can elect between them. 24 AWB advanced the same primary construction of s 6AA. Additionally, AWB submitted that any other construction of the Amending Act would lead towards constitutional invalidity. 25 For the purposes of the notice of motion before me, I do not need to express any firm or definite view about the proper construction of s 6AA. I am satisfied that the construction advanced by AWB and the Commonwealth is strongly arguable. 27 The legal principles that govern the exercise of the Court's discretion under this rule have been discussed in a number of recent cases, and are well established: see Bass v Permanent Trustee Co Ltd [1999] HCA 9 ; (1999) 198 CLR 334 (' Bass' ) at 355-359; Tepko Pty Ltd v Water Board [2001] HCA 19 ; (2001) 206 CLR 1 (' Tepko' ) at 55; Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495 (' Reading' ) at 497-500 [7]-[11]; Direct Factory Outlets Homebush Pty Ltd v Property Council of Australia [2005] FCA 1002 ( 'Direct Factory Outlets' ) at [2]-[4]; Souflett Beheer v AWB Limited [2004] FCA 518 ( 'Souflett Beheer' ) at [19]-[20]; Kockums AB v Commonwealth [2002] FCAFC 138 at [38] - [41] ; SmithKline Beecham (Aust) Pty Ltd v Chipman [2002] FCA 674 (' SmithKline' ) at [35]-[39]; SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd [2006] FCA 14 (' Diageo' ) at [22]-[27]; Save the Ridge Inc v Commonwealth [2005] FCAFC 203 ; (2005) 147 FCR 97 ( 'Save the Ridge' ) at 103-104 [15]-[17]; Rainsford v Victoria [2005] FCAFC 163 ; (2005) 144 FCR 279 (' Rainsford' ) at 291-294 36-44; Director of Fisheries (NT) v Arnhem Land Aboriginal Land Trust [2001] FCA 98 ; (2001) 109 FCR 488 ( 'Director of Fisheries' ) at 521 [139] and 526-527 [163]; and Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 (' Tallglen' ) at 141-142. 28 Rather than burden these reasons for decision with lengthy extracts from the authorities, I will summarise the principles which are relevant to the disposition of this application. 29 The starting point must be that, as a general rule, all issues of fact and law should be determined at the one time: Reading at 497 [7]; Tallglen at 141-142; and Diageo at [23]. 30 A party seeking the determination of separate questions must satisfy the Court that it is 'just and convenient' for the order to be made: Reading at 499-500 [9]-[10]. 31 It would not be appropriate to separate a question if it would not permit or involve a conclusive or final judicial decision that is based on concrete facts, either established or agreed, for the purpose of quelling a controversy between the parties: Bass at 355 [45] and 357 [49]; and Reading at 498 [8]. At best, the answers do no more than declare that the law dictates a particular result when certain facts in the material or pleadings are established. What those facts are is not stated, nor can they be identified with any precision. They may be all or some only of the facts. What facts are determinative of the legal issue involved in the question asked is left open. Such a result cannot assist the efficient administration of justice. It does not finally resolve the dispute or quell the controversy. Nor does it constitute a step that will in the course of the proceedings necessarily dictate the result of those proceedings. Since the relevant facts are not identified and the existence of some of them is apparently in dispute, the answers given by the Full Court may be of no use at all to the parties and may even mislead them as to their rights. Courts have traditionally declined to state - let alone answer - preliminary questions when the answers will neither determine the rights of the parties nor necessarily lead to the final determination of their rights. The efficient administration of the business of courts is incompatible with answering hypothetical questions which frequently require considerable time and cause considerable expense to the parties, expense which may eventually be seen to be unnecessarily incurred. In that situation, it is essential that there be precision both in formulating the question and specifying the facts upon which it is to be decided for the reasons given by Brooking J in Jacobson v Ross [1995] 1 VR 337 at 341. 33 In Reading at 498 [8], Branson J said that all of the facts that are on any fairly arguable view relevant to the determination of the separate question must be ascertainable, either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined. Where the separate question involves the grant or refusal of declaratory relief, the Court must be placed in a position where it can consider all relevant matters before it exercises its discretion to grant or refuse the relief: Reading at 500 [11]. 34 In Bass at 359 [56], the High Court said that it would be contrary to the judicial process and no part of the judicial power to effect a determination of rights by applying the law to facts which are neither agreed nor determined by reference to the evidence in the case. The Full Federal Court applied this principle in Rainsford at 291 [36] and Director of Fisheries at 526 [163]. In Rainsford at 291 [36], Kenny J said that, in order for a court exercising federal jurisdiction to utilise the separate questions procedure, either the parties must agree on the relevant facts or the court must determine the facts before deciding the question. 35 The cases indicate that great caution needs to be exercised in formulating a separate question for determination on the basis of assumed facts. The assumed facts may prove to be incomplete or insufficiently precise: Director of Fisheries at 521 [139] and 526 [163]. The parties may also have different views concerning the effect or duration of the assumptions; for instance, they may consider that they can depart from the assumptions and re-agitate the facts in another part of the case: see SmithKline at [23], [27] and [89]. 36 In CBS Productions Pty Ltd v O'Neill [1985] 1 NSWLR 601 at 606, Kirby P said that a matter is 'ripe' for separate and preliminary determination where it is a central issue in contention between the parties, and its resolution will either obviate the necessity of litigation altogether or substantially narrow the field of controversy. This proposition assumes, of course, that the factual foundation for the determination of the issue has been resolved: see Rocklea Spinning Mills v Anti-Dumping Authority (1995) 56 FCR 406; and SmithKline at [35]-[39]. In Tallglen , Giles CJ in the Commercial Division said at 141-142 that in the ordinary course all issues in proceedings should be decided at the one time, but the separate decision of a question may be appropriate where, for example, the decision of a question is critical to the outcome of the proceedings and (at least if decided in one way) will bring the proceedings to an end. His Honour added that, in particular circumstances, the separate decision of a question may be appropriate even if it will not bring the proceedings to an end, such as where there is a strong prospect that the parties will agree upon the result when the core of the dispute is decided or where the decision will obviate unnecessary and expensive hearings of other questions. 37 On the other hand, an issue will not generally speaking be 'ripe' for separate determination if it is simply one of two or more alternative ways in which an applicant frames its case, and its determination would leave other significant issues unresolved: Reading at 498 [8]; and Souflett Beheer at [20]. 38 The courts have repeatedly warned of the dangers that attend the trial of separate or preliminary questions. In Tepko at 55 [168]-[170], Kirby and Callinan JJ said that the attraction of trials of separate questions are often more chimerical than real; savings in time and expense can prove illusory and the process can generate other problems such as interlocutory appeals and consequent delays. Their Honours concluded that single issue trials should only be embarked upon when their utility, economy and fairness to the parties are beyond question: at 55 [170]. In Direct Factory Outlets , Sackville J said, quite correctly, that the dangers of separate trials are well illustrated by the numerous cases in which the process has miscarried. In Save the Ridge at 103 [15], Black CJ and Moore J said that the O 29 procedure is one that should be adopted with caution as it can be fraught with difficulties. In Tallglen at 141-142, Giles CJ said that the ordering of separate trials must be carefully controlled lest fragmentation of the proceedings (particularly when the exercise of rights of appeal is borne in mind) brings delay, expense and hardship greater than that which the making of the order was intended to avoid. Similar statements can be found in this Court: see eg Novartis Corp Protection Australasia Pty Ltd v Orica Australia Pty Ltd [2001] FCA 1013 at [7] per Stone J. 39 In Reading , Branson J at 499 [8] listed factors that have been taken into account by the courts in making or refusing orders for the trial of a separate question. 40 In Rainsford , Kenny J pointed out at 292 [39] that there is a clear difference between the separate questions procedure under O 29 r 2 and an application under O 20 r 2 for the summary dismissal of a proceeding or a cause of action: in the latter case, the issue would be whether the claim is so obviously untenable that it cannot possibly succeed: see General Steel Industries Ltd v Commissioner for Railways [1964] HCA 69 ; (1964) 112 CLR 125; and Australian Ocean Line Pty Ltd v West Australian Newspapers Limited (1983) 47 ALR 497 at 499 per Toohey J. I have concluded that it would not be just and convenient to make any of the orders sought by the Commonwealth under O 29 r 2. Indeed, I am satisfied that it would be inappropriate to do so. 42 My reasons for so concluding are set forth below. They address in turn matters which are discretely relevant to questions 1.1 and then 1.2, before canvassing matters which are relevant to both questions. 44 It is necessary to consider, first of all, the nature of the discretionary decision that would be sought from the Court under question 1.1, and the arguments that the Commonwealth and AWB intend to advance if that question were to be set down for separate trial. 45 It is a common misconception that a declaration is an equitable remedy. It is not; it is a statutory remedy that is conferred in terms emphasising that its grant or refusal is within the discretion of the Court: see Tito v Waddell (No 2) [1977] Ch 106 at 259; Mayfair Trading Co Pty Ltd v Dreyer [1958] HCA 55 ; [1958] 101 CLR 428 at 454 per Dixon CJ; and Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 4 th ed, Butterworths, 2002, at [19-159]. The discretion is to be exercised according to the facts and circumstances of the individual case, and the considerations that may be relevant to the exercise of the discretion are 'so numerous that it is not possible to enumerate them: see Salmar Holdings Pty Ltd v Hornsby Shire Council [1971] 1 NSWLR 192 (' Salmar' ) at 203. 46 While the refusal of declaratory relief on discretionary grounds will always be heavily dependent on the facts of the particular case, the discretion must be exercised within a framework of relevant legal principle. The cases afford guidance as to the way in which the discretion is to be exercised. In this sense, the question whether declaratory relief should be refused as a matter of discretion raises questions of fact and law, albeit heavily weighted towards the former. The separation of such a question poses special problems for the reasons stated by the High Court in Bass at 358 [53] and by Brooking J in Jacobson at 341. 47 The basal reason that the Commonwealth advances in support of its argument that declaratory relief should be refused is that there is now an alternative procedure for the determination of AWB's privilege claims. In essence, if question 1.1 is set down for separate trial, the Commonwealth proposes to argue that the Commissioner is already well placed to determine the privilege claims under s 6AA of the RCA, and to do so efficiently, whereas it contends that the determination of the privilege claims by this Court is likely to prove more complex, time-consuming and costly, and less efficient. 48 The Commonwealth relies upon Forster v Jododex Australia Pty Ltd [1972] HCA 61 ; (1972) 127 CLR 421 (' Forster' ) and Salmar for its contention that the Court might refuse declaratory relief where the issue is one which the Parliament has entrusted to a specialist body or tribunal, or a more convenient or satisfactory remedy otherwise exists. In Forster , the Court in fact granted declaratory relief, notwithstanding the existence of pending proceedings before the mining warden in which the same issue would arise for decision. The leading judgment was delivered by Gibbs J, with whom McTiernan, Stephen and Mason JJ relevantly agreed. It is of course important that the proceedings in the present case were not pending in an ordinary court. However, there were some obvious reasons why a judge should hesitate before intervening when the matter was about to come before the warden. It was, of course, possible that the warden would give effect to the contention that Jododex held a valid exploration license and would therefore refuse to grant any authority to enter to the appellant. The warden might have declined to grant the appellant's applications for some other reason. Moreover, if it were ultimately held that Jododex's contention ought to fail, the proceedings before the warden would have been delayed and the appellant would have been put to additional cost and inconvenience. On the other hand, to determine the existence of the right which Jododex sought to establish, it was necessary to ascertain the true meaning and effect of a statutory provision and of an instrument in statutory form. These were pure questions of construction such as would appropriately be decided in the Supreme Court. They were difficult questions, and apparently rights of considerable value depended on the answers to them. When all these conflicting considerations are weighed, it seems to me that it cannot be said that it was not a proper exercise of judicial discretion to proceed to make a declaration in all the circumstances of the case. In other words, I think that it will ordinarily be a wise exercise by the Supreme Court of the discretion which it has under s. 10 of the Equity Act to decline to undertake the tasks which have been committed by the Parliament to a specialized tribunal. Whilst I agree with Gibbs J. that s. 10 ought not to be construed as if it contained words excepting from its operation cases arising under the Act, I think that the procedure set out in the Act itself should be regarded as the normal procedure for dealing with such cases. The significance and weight of this consideration becomes the greater if it appears that questions of the kind sought to be determined ordinarily fall within the jurisdiction of a court or tribunal having a special capacity or experience in dealing with questions of that kind. It is clearly undesirable that there should be a departure from the ordinary and established course of deciding matters in the absence of a discernible advantage to be derived from that departure. In this case, so it seems to me, advantage or utility lies with the making of a declaration. The question is, as I have remarked, one of general significance of a kind which the Equity Court is frequently called upon to decide. However, AWB disputed that the procedures now available under s 6AA constituted another suitable remedy, and that the Commission can be regarded as, or equated with, a specialist tribunal of a kind described in Forster and Salmar . AWB also said that a judicial determination of the subsistence of legal professional privilege offered it discernible advantages which it is entitled to pursue. 52 Question 1.1 is framed as a question that turns on the Court's discretion. This is understandable as the Commonwealth accepts that this Court is properly seised of jurisdiction to hear and determine AWB's privilege claims and that this jurisdiction is not impaired by the Amending Act. Moreover, the Commonwealth accepted that the Amending Act allows a person in AWB's position the option of having its privilege claims determined by this Court. AWB has elected to have its claims determined in this Court and submits that there are legitimate juridical advantages for it to do so. Amongst other things, AWB submits that, unlike the Court, the Commissioner is not independent: he is charged with a duty of investigating and reporting whether AWB committed a breach of any law of the Commonwealth, or of a State or Territory, and whether any criminal or other legal proceedings should be taken against AWB. The Commissioner is not bound by the rules of evidence. AWB submits that, if and to the extent that the Commissioner may be bound to accord procedural fairness in making a determination of legal professional privilege under s 6AA, AWB could not expect the same standards of procedural fairness as would apply in this Court. AWB also submits that it would be disadvantaged by reason of the fact that the Commissioner, as a person investigating possible offences by AWB, has been given and intends to use the power to inspect the documents over which privilege is claimed. Lastly, AWB argued that there is a risk that the Commissioner's determination of privilege under s 6AA may only be amenable to judicial review or review for jurisdictional or other legal error, rather than merits review. 55 For present purposes, the question is not how the Court might exercise its discretion when it reaches that point. Rather, the relevant inquiry is what issues, evidence, facts and circumstances might be relevant to the exercise of a discretion to refuse declaratory relief. That is why the parties canvassed the substantive arguments that would be put if a separate question in terms of question 1.1 were to be set down for trial. Those matters, and the extent of any dispute concerning them, bear directly on the question whether question 1.1 can be, and ought to be, tried separately. 56 In my opinion, the statements of principle by Branson J in Reading (which are summarised above in paragraph 33) are directly applicable. So too are the principles stated in Bass and Jacobson concerning mixed questions of fact and law. I am not satisfied that all of the necessary facts have been ascertained, agreed or proven so as to permit the judicial determination of question 1.1 as a separate question. Further, I am not satisfied that, on a separate trial of question 1.1, the Court would be placed in a position where it can consider all relevant matters before it exercises its discretion to grant or refuse relief. 57 There is no agreement between AWB and the Commonwealth as to the facts and circumstances which are relevant to the exercise of the Court's discretion. The argument before me made it plain that there would be significant factual disputes if I proceeded with an immediate trial of the separate questions, as requested by the Commonwealth. And there is a real prospect that significant contested factual issues would arise between the parties if question 1.1 were to be set down for preliminary hearing at a future date. In Reading at 499 [8], Branson J said that a factor which tells against the making of an order under O 29 r 2 is that the question may give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial. 58 The Commonwealth's argument that s 6AA offers an alternative remedy that would be more efficient and less time-consuming than court proceedings was advanced largely by way of assertion. It was disputed by AWB, and the Commonwealth's contention was not made good by placing relevant facts and evidence before the Court. 59 The Commonwealth submitted that, by virtue of the extensive investigations that have already been conducted by the Commissioner, the Commissioner and those assisting him are already familiar with the factual background to AWB's privilege claims. This was not disputed by AWB. At this stage, however, it is unclear whether, and to what extent, the resolution of the privilege claims will turn on the evidence that has already been gathered by the Commission. AWB has not argued these privilege claims in the Commission or adduced any evidence in support of them before the Commission. Over the past week, pursuant to directions made by this Court, AWB has filed affidavit evidence in support of its privilege claims in this proceeding. The Commonwealth has not suggested that any of this evidence has previously been considered by the Commissioner. In the course of its submissions, the Commonwealth asserted that the Commission is already in possession of much of the evidence necessary to determine AWB's privilege claims. But, again, this assertion was not supported by evidence. On the material before me, I am not in a position to form any view as to the extent to which the evidence already possessed by the Commission will be directly relevant to the determination of AWB's privilege claims. 60 The Commonwealth submitted that issues of waiver of privilege are likely to arise, and it filed evidence that was said to illustrate AWB's waiver of privilege over particular documents or categories of documents. The Commonwealth also referred to the possibility that the fraud or iniquity exception to legal professional privilege might be raised against AWB. At the same time, however, the Commonwealth submitted that the nature and scope of the issues that will arise in resolving AWB's privilege claims is uncertain. In particular, it submitted that in this proceeding the process of defining the nature and extent of the dispute about privilege, identifying and particularising objections to privilege such as waiver, fraud or illegality, and reducing the class of documents that is in dispute, has not been completed. This is the position at present, but it will not remain so for very long in this Court. 61 In my opinion, the presently incomplete definition of the issues that will have to be determined to resolve AWB's privilege claims hardly assists the Commonwealth in its application for an order setting down separate questions for trial. Quite the contrary; in my view, it is inappropriate to order a separate trial of question 1.1 when the Court does not have a full and complete picture of the issues of fact and law that will arise for decision in connection with AWB's privilege claims. 62 So far as the definition of the dispute is concerned, there is no reason to think that the Court's position is very different from that which would confront the Commissioner under s 6AA. The Commonwealth acknowledged that the nature and extent of the dispute would need to be defined, and objections such as waiver, illegality and fraud would need to be particularised, at least to some extent, if the Commissioner were to embark on the determination of the privilege claims under s 6AA. 63 The Commonwealth expressly conceded that this proceeding is neither hypothetical nor abstract, and raises a genuine controversy that constitutes a 'matter' appropriate for judicial determination: Bass at 355-356; Ainsworth v Criminal Justice Commission [1992] HCA 10 ; (1992) 175 CLR 564 at 581-582 and 596; and Oil Basins Ltd v Commonwealth [1993] HCA 60 ; (1993) 178 CLR 643 at 649-650. Nonetheless, the Commonwealth submitted that, because of the presently incomplete definition of the issues that will have to be resolved in this Court, the proceeding is premature. In my opinion, this submission does not assist the Commonwealth's application for separate trials. In any proceeding, the process of joining and defining the issues of fact and law that will fall the decision takes some time, and will ordinarily follow the institution of proceedings. The issues in this case are still being defined and there are several reasons why that process is incomplete: the Commonwealth wished to pursue its notice of motion for separate questions at this hearing, which the Court had originally set aside as a hearing at which it was anticipated that there would be a trial of all issues; AWB has filed most but not all its evidence in support of its privilege claims; and the Commissioner has, thus far, taken the stance that it would be inappropriate for him as a submitting respondent to assist the Commonwealth, or the Court, to determine the merits or otherwise of AWB's claims for privilege. 64 At root, the prematurity argument seems to amount to a contention that the Commissioner should be given the opportunity to determine AWB's privilege claims before those claims are considered by the Court. The submission stands in some tension with the Commonwealth's acknowledgment that the Court's jurisdiction has been properly invoked. It tends to beg the question whether, having regard to all relevant discretionary factors, including any discernible advantages that inhere in this proceeding for AWB, it would be appropriate for the Court to exercise a discretion to decline declaratory relief. 65 The Commonwealth submitted that another reason why there should be a separate trial of question 1.1 is that, if the Court proceeded to determine the issues of legal professional privilege, its findings may relate to matters which are the subject of investigation by the Commission. This submission seems to invert the normal relationship between the Court and a process of executive investigation and report. Sections 6AA and 6AB are drafted on the footing that the Commissioner must respect and abide any finding by the Court as to the subsistence of legal professional privilege. In my opinion, the possibility that the Court's decision on legal professional privilege may touch matters which are the subject of investigation by the Commission does not strengthen the Commonwealth's case for separate questions. 66 The Commonwealth could not refer me to any case in which the Court has made an order under O 29 r 2 for the separate trial of the question whether declaratory relief should be refused as a matter of discretion, prior to any consideration of the merits of the claim for declaratory relief. It did, however, refer me to McGowan v Migration Agents Registration Authority [2003] FCA 482 ; (2003) 129 FCR 118 ( 'McGowan' ) which concerned the dismissal of a judicial review application. 67 In McGowan , the applicant sought judicial review of a decision by the Migration Agents Registration Authority to suspend her registration as a migration agent until she satisfied certain conditions. The applicant made an application to the Administrative Appeals Tribunal under s 306 of the Migration Act for a merits review of the Authority's decision to suspend her registration some days before she instituted proceedings in the Federal Court seeking judicial review of the Authority's decision. The application was founded principally on the provisions of the Administrative Decisions (Judicial Review) Act 1977 ( 'ADJR Act' ), but also relied in the alternative on s 39B(1A)(c) of the Judiciary Act . The relief sought by the applicant included an order pursuant to s 16(1) of the ADJR Act setting aside or quashing the Authority's decision, and in the alternative, orders by way of prohibition and injunction pursuant to s 39B. 68 By notice of motion, the Authority applied for orders dismissing the application on the basis that it disclosed no reasonable cause of action or alternatively on the basis that it should be dismissed pursuant to s 10(2)(b)(ii) of the ADJR Act. The first ground was not pursued. Section 10(2)(b)(ii) provides that the Court may refuse an application for judicial review on the ground that adequate provision is made by any law other than the ADJR Act under which the applicant is entitled to seek a review of the relevant decision. Order 54 r 7 of the Federal Court Rules requires that a party who seeks to have an application for review dismissed on the ground set out in s 10(2)(b)(ii) or in the exercise of the Court's discretion must apply promptly for such dismissal. This rule is designed to avoid the necessity for a court to consider the whole of the applicant's case where, even if otherwise the applicant would succeed, it is clear that no order would be made in favour of the applicant: Edelsten v Minister of Health (1994) 58 FCR 419 at 422. 69 Branson J held that the same principle should be applied where a claim for judicial review is made under the ADJR Act and alternatively under s 39B. In such a case, Branson J said at 130 [47] that 'the power of the Court to dismiss the application summarily where it is clear that no order would be made in favour of the applicant if a hearing were conducted, extends to the alternative claim formulated by reference to s 39B of the Judiciary Act '. Having regard to the fact that the Migration Act provided that the Authority's decision was amenable to full merits review before the Tribunal, and the fact that the applicant had already commenced proceedings in the Tribunal, Branson J concluded that a more convenient and satisfactory remedy existed before the Tribunal. Accordingly, she dismissed the application. 70 McGowan stands for the proposition that, in the context of judicial review, the court has the power to dismiss a judicial review application summarily where it is clear that the court would decline to grant relief at a final hearing. It does not assist in resolving the present application under O 29 r 2. It is not in dispute that this Court has power to refuse declaratory relief in the exercise of its discretion. The only question is whether, in the circumstances of this case, it is appropriate to order that this question be the subject of a separate preliminary trial. That question turns on the particular facts and circumstances of this case. 71 McGowan forms part of a line of cases which recognises that the Court has a discretion to decline to embark on the judicial review of an administrative decision if a full merits review of that decision is available before an independent statutory tribunal, and the tribunal's decision can then be appealed to, or reviewed by, a court: Edelsten at 423-424; Swan Portland Cement Ltd v Comptroller-General of Customs (1989) 25 FCR 523 at 530; Bragg v Secretary of the Department of Employment, Education and Training (1995) 59 FCR 31 (' Bragg' ) at 33; Yarmirr v Australian Telecommunications Corporation (1990) 96 ALR 739 at 750; Du Pont (Australia) Ltd v Comptroller-General of Customs (1993) 30 ALD 829; Saitta Pty Ltd v Commonwealth [2000] FCA 1546 ; (2000) 106 FCR 554 at 575 [104] ; and Re Kamha v Australian Prudential Regulation Authority [2005] FCA 480 ; (2005) 146 FCR 24 ( 'Re Kamha' ) at 35 [41] and 36 [46]. In Re Kamha , Gyles J declined to exercise his discretion at a preliminary stage of the case: at 35 [39]. However, after the evidentiary case had been completed and the applicant had completed its submissions, Gyles J determined that it was appropriate to decline judicial review. In doing so, his Honour emphasised that a full merits review before the Administrative Appeals Tribunal was the appropriate means of reviewing the decision, and that means was likely to provide a more satisfactory remedy than the Court could provide on judicial review: at 35 [41] and 36 [46]. In Bragg at 33, Davies J said that the alternative method of review referred to in s 10(2)(b)(ii) of the ADJR Act is one involving 'an independent exercise of powers directly affecting the decision reviewed'. Courts have taken a range of considerations into account in exercising the discretion to decline judicial review, including matters such as whether the alternative form of review will be conclusive of the dispute, whether it is to be undertaken by a specialist tribunal that operates in a technical field, the inability of the court to provide a review on the merits, and whether any hardship or disadvantage will be caused by the applicant being forced to pursue the alternative remedy. 72 AWB submitted that, by propounding question 1.1 as a separate question, the Commonwealth is in substance making a summary dismissal application based on discretionary grounds. In practical terms, the difference between the two forms of application is that a summary judgment application would require the Commonwealth to establish that AWB's claim for declaratory relief is so untenable that it must be refused on discretionary or other grounds. I do not think that the comparison with summary judgment forecloses the Commonwealth's application or taints it as some kind of abuse. AWB disavowed any intention to argue abuse of process. The comparison does, however, afford a reminder that it would be an exceptional step to order a separate trial of a discretionary question of the kind posed by question 1.1, prior to any consideration of the merits of the privilege claims, and that the application needs to be approached with due caution. 73 Question 1.1 is not 'ripe' for determination in the sense discussed in the authorities. The core issue in this case is the subsistence of legal professional privilege. The Court's discretion to refuse declaratory relief necessitates all relevant facts and circumstances being placed before the Court. That has not occurred, and it is unlikely to occur in the absence of a trial of all issues. 75 It is common ground between the Commonwealth and AWB that questions 1.1 and 1.2 are linked: if any order is made for the separate trial of question 1.1, a similar order would have to be made in relation to question 1.2 because the Commonwealth's case on the discretionary refusal of relief proceeds on the basis that the Amending Act is wholly valid. Put another way, there would be no point in separating question 1.1 without also separating and determining the questions of constitutional validity that arise under question 1.2. 76 On the other hand, if the Commonwealth's application is refused, and the Court proceeds in the ordinary way to hear and determine AWB's privilege claims by means of a single trial, it may not be necessary for the Court to determine any of the constitutional questions. There are reasonable prospects that the only issue requiring judicial determination at a single trial would be the subsistence of legal professional privilege. The existence of an alternative remedy under s 6AA could still be advanced by the Commonwealth at a single trial as a discretionary reason for refusing to grant declaratory relief in respect of the legal professional privilege claims, although I note the Commonwealth's submission that the point may have less attraction at that stage because the Court would by then have heard detailed evidence and argument concerning the privilege claims. The Commonwealth also submitted that it may raise other discretionary arguments at a single trial of all issues, including an argument that declaratory relief would have the undesirable consequence of preventing the Commissioner reconsidering the privileged status of particular documents in the event that new and contrary evidence comes to light. This submission is troubling because it suggests that the Commonwealth wishes to advance some, but not all, of the relevant discretionary considerations at a preliminary trial. Be that as it may, a single trial of all issues offers the advantage that the Court might be able to deal with discretionary arguments of this kind on the assumption that the Amending Act is constitutionally valid. The point is that, if the Commonwealth's application for separate trials is rejected, the Court would only have to determine the constitutional questions if it needs to do so. But if the Court were to accede to the Commonwealth's motion for separate trials, it would be committing itself to the hearing and determination of constitutional questions which might not have to be decided if the litigation were to proceed in the ordinary way. 77 I do not think that these observations are affected by the other aspects of question 1.2. Paragraphs 3 and 4 of the prayer for relief seek, in effect, a declaration that it would be a contempt of Court for the Commissioner to proceed under s 6AA while these proceedings are pending, and a permanent injunction restraining the Commissioner from doing so. I agree with the Commonwealth's submission that the question of final relief in this form may not arise at trial. If the steps which the Commissioner has proposed under s 6AA are restrained by interlocutory injunction pending trial, no question of contempt would arise. As the Commonwealth put it in its written submissions, 'the question whether certain acts by the Commissioner would constitute a contempt of Court if undertaken prior to the determination of these proceedings can be relevant only to the interlocutory injunction and is otherwise hypothetical'. Similarly, there may be no need for the Court to consider the grant of a permanent injunction against the Commissioner, as by that point the Court will have determined the question of legal professional privilege and that determination will be binding on the Commissioner, the Commonwealth and the AWB. In those circumstances, there would be no outstanding issues of legal professional privilege that would be susceptible to determination by the Commissioner under s 6AA. 78 In these circumstances, I have concluded that it would not be just and convenient to order a separate trial of the questions posed by question 1.2. To do so would require the Court to decide questions that may not need to be decided if the case takes its ordinary course and all issues of fact and law are determined at the one time. 79 Furthermore, the separate determination of the constitutional issues would not bring the litigation to an end. In fact, whichever way the constitutional questions were determined, the Court would still be seised of, and would be required to determine, the central question of legal professional privilege. Only question 1.1 offers the prospect of bringing the litigation to an end, and then only if the Court determines that it ought to refuse declaratory relief as a matter of discretion. 80 In short, the questions posed by question 1.2 are not 'ripe' for decision because the Court may not need to decide them, and whichever way they were decided they would not of themselves dispose of this litigation. 82 Nor is this simply a case where there is a risk that the asserted advantages of separate trials will prove to be illusory. It has not been demonstrated that the proposed separate trial would deliver any savings of time and cost, when compared with a single trial of all issues. If a separate trial were to be ordered, and if that trial resulted in the dismissal of the proceedings on discretionary grounds, the question whether legal professional privilege attaches to the documents would then be susceptible to determination by the Commissioner under s 6AA. The process of determination before the Commissioner would, it seems to me, give rise to issues which would be no less complex than those presently before this Court. In addition, determinations by the Commissioner may not finally resolve the issue of legal professional privilege. The Commonwealth accepted that those determinations could be directly challenged in this Court under s 39B of the Judiciary Act , as the Commissioner has no authority to make determinations that are wrong in law. Alternatively, determinations by the Commissioner could be the subject of judicial review proceedings in this Court pursuant to the provisions of the ADJR Act. 83 The Commonwealth argued that if this Court refused to make a declaration in favour of AWB on discretionary grounds, and thereby allowed the Commissioner to proceed under s 6AA, this Court in any subsequent proceedings under s 39B or the ADJR Act would have the benefit of the issues having been properly joined and defined in a reasoned decision by the Commissioner. The Commonwealth added that the Commissioner's determinations could reduce the number of documents in dispute, either by upholding claims to legal professional privilege or by concluding that particular documents are irrelevant to his inquiries. However, on the material before me, it is equally arguable that the processes of a separate trial of questions 1.1 and 1.2 in this Court, potentially complex proceedings before the Commissioner pursuant to s 6AA, and then further applications to this Court challenging or seeking to review determinations by the Commissioner, will be productive of greater delay and greater costs than would be incurred if the current proceedings proceed in the ordinary way to a trial of all issues. The evidence before me does not satisfy me that the multiple processes envisaged by the Commonwealth are likely to prove to be more efficient, less costly and less protracted. 84 In my opinion, the order sought by the Commonwealth would also lead to an undesirable fragmentation of the proceedings. There is at the very least a reasonable prospect that the Court's decisions on any separate questions would be appealed, and the appeal process could be protracted. 85 It should not be supposed that this Court will not resolve all of the issues raised by this litigation in an expeditious and efficient manner. The present hearing, which commenced yesterday, was originally envisaged as a trial of all issues raised by the case. While that target was not achieved, the Court will take all reasonable steps, consistent with the proper administration of justice, to achieve the prompt and efficient resolution of this litigation. It has made, and will continue to make, directions designed to achieve that end. The Court recognises that there is an important public interest in the Commissioner being able to complete his investigations and report as soon as practicable, and in the early determination of this litigation. 86 On the whole, I have formed the view that an order for separate trials is likely to bring delay, expense and hardship greater than that which the making of the order seeks to avoid. The Court's jurisdiction has been properly invoked. Both AWB and the Commonwealth submit that the Court should hear and determine this proceeding. The issue raised by the Commonwealth's application under O 29 r 2 is whether the Court should do so by ordering a trial of separate questions, followed if necessary by a final trial of the remaining issues, or by the usual procedure for a single trial of all issues. 88 I am not satisfied that the separate trial of the questions proposed by the Commonwealth would be just and convenient. 89 I will order that the Commonwealth's notice of motion be dismissed. | whether separate questions should be heard and determined under o 29 r 2 of the federal court rules relevant legal principles whether just and convenient to order trial of separate questions no order under o 29 made practice and procedure |
The Bankruptcy Notice was founded on a judgment of the District Court of Western Australia entered against the appellant in favour of the respondent on 16 September 2005 (the "Judgment") in action 970 of 2000 (the "District Court action"). The Judgment was in the sum of $240,512.51 for unpaid legal fees together with interest. The respondent, a law firm, acted for the appellant and two other parties as plaintiffs in litigation in the Supreme Court of Western Australia. The other parties were Mr Bill Paligorov and Actus Australia Pty Ltd (formerly known as Camila Pty Ltd). 3 The appellant's grounds of appeal together concern whether the primary judge erred, in the exercise of his discretion, in not going behind the Judgment, which was a default judgment, to consider whether, in truth and reality, the appellant was indebted to the respondent and, accordingly, whether the requirements of s 52(1) of the Bankruptcy Act 1966 (Cth) ("the Act ") were not satisfied, alternatively the conditions of s 44(1) of the Act were not satisfied. The only ground of opposition before the primary judge was whether in truth and reality there was an antecedent debt which gave rise to the Judgment. The respondent did not claim, nor does the Judgment include any so-called success fees. The defendants in that action filed a defence in September 2001 which I infer was drawn on instructions from the defendants in that action, including the appellant. 3. 6 The Judgment was entered following the dismissal of an appeal by the appellant and Mr Paligorov against a springing order that had been made by a Deputy Registrar on 5 May 2005 following a series of defaults by the appellant and Mr Paligorov in providing proper discovery. As the springing order had not been complied with, judgment was entered for the respondent: Leonard Cohen & Co v Richardson [2005] WADC 172. 7 An appeal from the Judgment was dismissed by the Court of Appeal of Western Australia following further procedural defaults by the appellant and Mr Paligorov: Richardson v Leonard Cohen & Co (a firm) [2006] WASCA 64. Wheeler JA at [2] in reasons for judgment noted that the appellants had "... demonstrated a continuing disregard of their obligations ... over a considerable period of time". An application by the appellant to extend time for a review of that decision was dismissed: Richardson v Leonard Cohen & Co (a firm) [No 2] [2008] WASCA 101. 8 In September 2006 the appellant applied to the District Court for orders extending the time to comply with the springing order and setting aside the Judgment. That application was dismissed by a Deputy Registrar on 3 October 2006. An appeal from that decision was dismissed by the District Court on 12 January 2007: Richardson v Leonard Cohen & Co [2007] WADC 128. An appeal from that decision was dismissed by the Court of Appeal on 20 September 2007: Richardson v Leonard Cohen & Co (a firm) [No 2] [2007] WASCA 205. 9 In September 2006 the appellant also applied unsuccessfully for time to comply with the Bankruptcy Notice to be extended. An application for review to the Federal Magistrates Court was dismissed in February 2007: Richardson v Leonard Cohen & Co [2007] FMCA 78. 10 Despite these numerous proceedings across a period of years the merits of the respondent's action have never been tried. Further, s 52(1) of the Act provides that, at the hearing of the creditor's petition, the Court shall require proof of the matters stated in the petition. Those matters include the debtor's indebtedness to the petitioning creditor. The Court can only make a sequestration order if it is satisfied that there is proof of those matters. If any genuine dispute exists as to the liability of the debtor to the petitioning creditor it ought to be investigated before he is made bankrupt: Ahern v Deputy Commissioner of Taxation (Qld) [1987] FCA 312 ; (1987) 76 ALR 137 at 148. 12 The Court, considering the petition, may, in its discretion, accept a judgment as satisfactory proof, or not, of the petitioning creditor's debt. Such a judgment is prima facie evidence of the antecedent debt. The discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner: Wren v Mahony [1972] HCA 5 ; (1971) 126 CLR 212 at 224-5 per Barwick CJ with whom Windeyer and Owen JJ agreed. 13 The Court will not go behind a judgment as a matter of course, but where a judgment is obtained by default the Court in bankruptcy will more readily look behind the judgment than it would if the judgment were obtained following a hearing on the merits: Wolff v Donovan (1991) 29 FCR 480 at 486 per Lee and Hill JJ. Once the judgment is proved, and it is prima facie evidence of the existence of the underlying debt, there is a tactical onus on the debtor to show that there are circumstances which make it appropriate to go behind the debt to see whether the judgment was in truth and reality a true debt. The overall onus of proof of the existence of a real debt underlying a judgment, however, remains always with the petitioning creditor. All that is required of a respondent debtor was to show that there was "substantial reason for questioning whether there is ... a debt": Joosse v Deputy Commissioner of Taxation [2004] FCAFC 245 ; (2004) 137 FCR 576 at 579 [6] per North and Finkelstein JJ. There is a general principle of comity and recognition of other courts' judgments which also underlies this Court's view. The Applicant was entitled to be paid for its services as a professional service firm, and the Respondent agreed to do so on the terms of a standard Law Society of Western Australia costs agreement. The express terms of that agreement preclude the implication of a term as to a success fee. Further, the evidence of the success fee agreement relied upon by the Respondent is, in any event, entirely hearsay and not admissible. Further or alternatively, the Primary Court erred in fact and law in holding that the evidence of a success fee agreement relied on by the appellant was entirely hearsay and not admissible when the Primary Court should have held that there was direct, admissible and uncontradicted evidence of those matters. The second and third grounds concern findings made by the primary judge which led him to exercise his discretion in the way that he did. The first ground complains, in effect, that the discretion miscarried. The grounds are directed to a consideration of the "success fee" which, in the context of his Honour's reasons, is the alleged $50,000 success fee said by the appellant to support the defence of illegality by reason of champerty and maintenance. Before me it was also said to ground a defence of breach of fiduciary duty by the respondent to the appellant although this was not pleaded in the District Court action. 18 The appellant submits that the affidavit evidence was sufficient to establish a "bona-fide allegation" that no real debt lies behind the judgment: Corney v Brien [1951] HCA 31 ; (1951) 84 CLR 343 at 357-8. Putting it another way, he submits that substantial reasons had been demonstrated for questioning whether behind the Judgment there was in truth and reality a debt due to the respondent: Wren at p 224-5. He relied upon his own affidavits sworn on 22 and 24 May 2007 and that of Mr Richard Kurland sworn on 5 November 2007. Mr Kurland was engaged by the appellant and the other litigants to assist them in their Supreme Court action. The application to set aside the Judgment and the appeal from the dismissal of that application were both dismissed on the basis that the District Court lacked power to set aside the Judgment and not on the merits. Further, the appeal from the Judgment to the Court of Appeal was dismissed due to procedural default. 20 I accept the appellant's submission that the mere fact that the appellant failed in every appeal he prosecuted is not of itself a reason not to go behind the Judgment which was obtained by default. None of these appeals considered the merits of the defence in the District Court action. I also accept that, in this case, the matter of comity between courts in respect to judgments is not relevant to the exercise of the discretion whether or not to accept the Judgment as prima facie evidence of the antecedent debt. 21 Nonetheless, for the following reasons I consider that it was open to the primary judge to conclude, by reference to the history of the litigation, combined with his consideration of the affidavit evidence, that the allegations of illegality, by reason of champerty and maintenance, made by the appellant, could not succeed nor were they genuinely arguable. I take his Honour, there, to be saying that the champerty and maintenance defence of the appellant in the District Court action which depended upon proof of the $50,000 success fee term, allegedly made on 21 September 1995, was not capable of being made out on the evidence because it was hearsay and that in any event this allegation was not genuinely made. 22 It will often be necessary, in considering whether or not to exercise the discretion to go behind a judgment to conduct some preliminary investigation of the merits of the attack on the judgment: Corney v Brien at 358. The primary judge took that course. His Honour gave consideration to whether the allegation that the parties agreed on 21 September 1995, to an oral term for payment of a $50,000 success fee could succeed and whether it was, in effect, a bona fide allegation. 23 There is no suggestion in the reasons of the primary judge, in the papers before me or the submissions of the parties, that the court below was asked to enter upon a two-staged process involving, first, the adjudication of a preliminary issue, whether reason was shown for questioning whether behind the Judgment there was really a debt, before proceeding at a later hearing to determine the issue of whether there was in truth a real debt: Wolff at p 486. 24 Rather, the court below was invited to consider such evidence as was before it and to exercise its discretion one way or the other. If it exercised its discretion in favour of going behind the Judgment, it would then, on the same body of evidence, adjudicate the question whether a debt was truly owed. If it exercised the discretion against going behind the Judgment then a sequestration order would immediately follow. 25 The affidavit evidence concerns what allegedly occurred at a meeting on 21 September 1995 at the respondent's offices and in a later alleged telephone conversation a few weeks after 21 September 1995. The defence in the District Court action did not plead or particularise that any term of the "Terms of Engagement" was made on any date other than 21 September 1995. The background to the meeting according to Mr Kurland was that he had come to Perth with the appellant in September 1995 to attempt to identify a law firm which would act for the appellant and the other litigants in the Supreme Court action on a "no win-no fee" basis. The respondent was identified by him as such a firm and he arranged a meeting for 21 September 1995 to discuss the matter of fees. I have been informed by Mr Richard Kurland, and I do believe, that Mr Kurland, acting as my agent, instructed the applicant to act for Mr Paligorov, Actus and me at a meeting held on 21 September 1995 attended by Mr Leonard Cohen and Mr Melvin Levitan on behalf of the applicant. At that meeting, Mr Cohen, Mr Levitan and Mr Kurland agreed that the applicant would act on behalf of Mr Paligorov, Actus and me on the basis that we would be required to pay the applicant's normal fees and disbursements together with a success fee in the sum of $50,000 if we were successful in the Supreme Court action. Mr Kurland agreed to the applicant being engaged on this basis. Mr Cohen and Mr Levitan informed Mr Kurland that the terms of the agreement reached at that meeting could not be reduced to writing. On 21 September Mr Kurland and I attended a meeting at the offices of the applicant. The meeting was also attended by Mr Leonard Cohen and Mr Melvyn Levitan, both of the applicant. During the course of the meeting, we discussed the Supreme Court action and Mr Paligorov's, Actus' and my financial situation. At one point during the meeting, Mr Cohen took Mr Kurland out of the room for a short period. When Mr Kurland returned to the room, Mr Kurland said to me words to the effect that the applicant was agreeable to take on our case. 14. I have been informed by Mr Kurland, and I do believe, that Mr Kurland, acting as my agent, instructed the applicant to act for Mr Paligorov, Actus and me during that point in the meeting when Mr Kurland and Mr Cohen left the room. Mr Cohen and Mr Kurland agreed that the applicant would act on behalf of Mr Paligorov, Actus and me on the basis that we would be required to pay the applicant's normal fees and disbursements together with a success fee in the sum of $50,000 if we were successful in the Supreme Court action. Mr Kurland agreed to the applicant being engaged on this basis. Mr Cohen informed Mr Kurland that the terms of the agreement reached at the meeting could not be reduced to writing. On 21 September 1995 I attended a meeting at the offices of the applicant. The meeting was also attended by the respondent and Mr Leonard Cohen and Mr Melvyn Levitan, both of the applicant. During the course of the meeting, we all discussed the Supreme Court Action and the financial circumstances of the respondent, Mr Paligorov and Actus. 7. When discussions turned to the question of the applicant's fees, Mr Cohen took me aside and asked me to leave the room briefly. I then left the room with Mr Cohen and Mr Levitan. We then had a private discussion regarding the terms on which the applicant was prepared to act on behalf of the respondent, Mr Paligorov and Actus. Mr Cohen said to me words to the effect that the applicant was prepared to act on behalf of the respondent, Mr Paligorov and Actus on the basis that they would be required to pay the applicant's normal fees and disbursements on a "no win---no fee" basis. 8. At this time, I had been informed by the respondent, and did believe, that the respondent, Mr Paligorov and Actus had very limited resources and were concerned that, if they could not engage solicitors to represent them in the Supreme Court action on a "no win- no fee" basis, they would not be able to afford legal representation. Consequently, I agreed with Mr Cohen and Mr Levitan, on behalf of the respondent, Mr Paligorov and Actus, that they would engage the applicant on the terms we had discussed. Mr Cohen and Mr Levitan then said to me words to the effect that the terms of the agreement that we had reached could not be reduced to writing. 9. Mr Cohen, Mr Levitan and I then returned to the meeting room. I said to the respondent words to the effect that the applicant was agreeable to taking on the respondent's Mr Paligorov's and Actus' case. The appellant further submits that this evidence is not inherently incredible. He identifies what he characterises as a minor discrepancy between para 11 of his own affidavit and paras 7 to 10 of Mr Kurland's affidavit. This he submits reveals nothing more than imperfect recollection and that there is no substantive discrepancy which ought to have led to the Court below to reject Mr Kurland's evidence. It follows, the appellant contends, that his and Mr Kurland's evidence ought to have been accepted by the Court below. 30 At its highest, the alleged oral agreement, said to have been reached on 21 September 1995, can only be the version deposed to by Mr Kurland. The appellant's evidence was hearsay as to what had allegedly been agreed to on behalf of himself and the other Supreme Court litigants by Mr Kurland on that date. The appellant, according to his affidavit sworn on 22 May 2007, was not present during the alleged discussion said to have taken place between Messrs Kurland, Cohen and Levitan outside the meeting room. In his affidavit of 24 May 2007, by contrast, he deposed that only Mr Kurland and Mr Cohen left the meeting room to discuss the question of fees. The primary judge was correct when he said at [18] that the evidence of "the success fee agreement relied upon" by the appellant was inadmissible hearsay. It is clear, I think, that his Honour was there considering the $50,000 success fee "relied upon" pleaded at para [2] of the defence in the District Court action and which is repeated at para [4] above. It was pleaded as a term agreed at the 21 September 1995 meeting. 31 Mr Kurland who gave direct evidence, rendered a version of this alleged agreement which is significantly at odds with the hearsay account given by the appellant and does not support the pleaded defence in this respect. 32 The allegation pleaded in the defence of the appellant and the other defendants in the District Court action accords with the appellant's hearsay version of the alleged oral agreement made on 21 September 1995 but not that of Mr Kurland. 33 The appellant says that he was told by Mr Kurland that it had been agreed that the respondent would act on behalf of the appellant and the other litigants on the basis that they would be required to pay the respondent's normal fees and disbursements together with a success fee in the sum of $50,000 if the Supreme Court action was successful. According to Mr Kurland however, Mr Cohen had said to him words to the effect that the respondent was prepared to act on behalf of the appellant and the other litigants on the basis that they would be required to pay the respondent's normal fees and disbursements on a "no win-no fee" basis. It was to this which Mr Kurland said he agreed at the meeting on 21 September 1995. To that extent, the pleaded defence was incapable of being established and the primary judge was correct in so finding. It is the $50,000 success fee term which the appellant pleaded in the District Court action and submits before this Court, made the respondent's retainer one which was both champertous and a contract by way of maintenance . He further submits that this term also constitutes a breach of fiduciary duty on the part of the respondent. 34 Mr Kurland did give evidence that a $50,000 success fee was allegedly agreed to between himself and Mr Levitan a few weeks after the 21 September 1995 meeting. This evidence is inherently improbable, a characterisation of his evidence which supports the primary judge's view that the allegation concerning a success fee, whether made on 21 September 1995 or some few weeks later was not genuine. It does not support the pleaded defence. During the course of this telephone conversation, Mr Levitan said to me words to the effect that he had to pay off his mortgage and was looking forward to a good result. During the conversation, the number $50,000 was mentioned. Consequently, I said to Mr Levitan words to the effect that the respondent, Mr Paligorov and Actus would pay the applicant a success fee of $50,000 if they were successful in the Supreme Court action. That fee would be additional to the applicant's usual fees and charges. 35 There is no obvious rational connection between the alleged statement that Mr Levitan had a mortgage and was looking forward to a good result in the Supreme Court litigation on the one hand and the alleged agreement as to the $50,000 success fee on the other. There are other matters which also support the primary judge's view that the allegation was not genuinely made. 36 First, it cannot be assumed that Mr Levitan had actual or ostensible authority to act on behalf of the respondent. He was a consultant solicitor employed by the respondent and not a principal of that firm. 37 Second, it is evident from Mr Kurland's affidavit that the question of a $50,000 success fee had not been mentioned before, yet, apparently, he committed the appellant and the other litigants to paying it in the event of "success" without first taking their instructions. 38 Third a complete costs agreement had already been concluded. 39 Fourth, the alleged discussion took place after the execution of the Retainer Agreement which contains a term that amendments are required to be in writing (Condition 1). No such amendment was effected. Mr Kurland does not say that there was any arrangement between he and Mr Levitan that the term not be evidenced in writing. By contrast, Mr Kurland had previously negotiated a success fee for himself with the appellant and other litigants. It was committed to writing. It was executed by the parties to it on 10 November 1993. 40 Fifth, the alleged term is uncertain and almost certainly unenforceable. Liability had already been established in favour of the appellant and the other litigants by a judgment of the Supreme Court and only an assessment of damages remained: Camila Pty Ltd v Actus Australia Pty Ltd (1994) 16 ATPR 41-367. What did "success" mean in those circumstances? If such a term had been agreed I would have expected that the parties would have spelt out what was the minimum amount of damages such as to constitute a "success". Mr Kurland does not depose to having discussed or agreed what circumstances would constitute "success" in the context of the litigation. This is to be contrasted with his own success fee agreement to which I have referred. There Mr Kurland was to receive $50,000 plus 20% of all gross amounts (after first deducting the $50,000) paid by the respondent to the appellant and the other litigants as a result of the Supreme Court action. 41 Sixth, Mr Kurland has a history of demonstrated dishonesty. Some six years before the events in question here, on 30 October 1989, acting pursuant to the Legal Practitioner Act 1898 (NSW), the Solicitors' Statutory Committee made an order that no solicitor should, in connection with his practice as a solicitor, take into or retain in his employment or remunerate Mr Kurland except in accordance with permission in writing granted by the Law Society of New South Wales for such a period and subject to such conditions as the Law Society might think fit to specify in the permission. The Committee had considered serious allegations made against Mr Kurland concerning his employment as a Clerk in the employment of two separate firms of solicitors. The allegations concerned Mr Kurland holding himself out as being a legally qualified practising solicitor when he was not, as well as misappropriating cheques, misappropriating trust funds and failing to account for deposit monies under a contract. The Committee found that the allegations had been established. The dishonesty variously described involved significant sums of money. In addition the Committee took into account the fact that Mr Kurland had been convicted at Hornsby Local Court in February 1987 with a criminal offence of obtaining financial advantage by deception. There is no corroboration of Mr Kurland's evidence as to the success fee. Indeed, Mr Kurland's evidence as to the $50,000 success fee allegedly made a few weeks after the 21 September 1995 meeting is contradicted by the fact that no amendment was made to the Retainer Agreement to include this term. 42 Seventh, the defence filed by the appellant and Mr Paligorov in the District Court action denied that the respondent had been engaged to act for the appellant and the other litigants in the Supreme Court proceedings in writing and in particular denied that the respondent had been instructed pursuant to a Law Society costs agreement relating to hourly charges. This denial was contrary to the true position as the appellant must be taken to have known. Before the primary court, for the first time, the appellant said that the costs agreement was partly written and partly oral. It was admitted by the appellant that a Law Society of Western Australia's written Retainer Agreement was entered into on or about 1 October 1995 between himself and the other litigants, as clients, and the respondent as solicitors. The agreement provides for payment based on an hourly rate fee. It does not contain a "no win---no fee" term or any term for a success fee of $50,000 or otherwise. 43 Eighth, the "no win-no fee" term is inconsistent with the terms of the Retainer Agreement. I have set out below part of the terms dealing with costs and disbursements. They, self-evidently, are at odds with any oral "no win-no fee" term. AGREEMENT BY CLIENT 3. The Client agrees to pay the Solicitor money in advance when required by the Solicitor. This can be done as often as the Solicitor thinks necessary. The Solicitor will, when requested by the Client at any reasonable time, provide to the Client particulars of costs incurred to date, and the costs then estimated which the Client will have to pay to the Solicitor to complete the matter. 5. The Solicitor may send accounts monthly or at such other times decided by the Solicitor or when expenses are incurred and the Client agrees to pay those accounts when sent 6. If an account, interim account or a request for money in advance is not paid within 14 days of the date of the account or request, the Solicitor may withdraw from the case. RECOVERED COSTS 7. The Solicitor can keep any legal costs, fees or expenses received on behalf of the Client and use those costs, fees or expenses to pay any outstanding accounts due by the Client to the Solicitor. AUTHORITY TO DEAL WITH TRUST FUNDS 8. . . APPOINTMENT OF AGENT 15. The Client appoints the Solicitor as agent to incur expenses including barristers fees. 44 Ninth, I consider it to be inherently improbable that Mr Cohen would have agreed to a "no win-no fee" term on 21 September 1995. Such a term, as with the alleged $50,000 success fee term, is incapable of being given effect. What circumstances would constitute a "no win" such that the respondent would be paid nothing? Furthermore, such a term is not unlawful. There is no reason why, if agreed, that it should not have been contained in the written Retainer Agreement entered into on or about 1 October 1995. It could have been included as a "Special Clause" at item 8 on page 1 of the Retainer Agreement. It was not. Clause 1 provides that: "These (written) terms are the agreement between (the parties) and remain in effect until varied by agreement in writing". The explanation deposed to by the appellant as to his reason for signing the Retainer Agreement without this term is, as I have said, highly improbable. 45 The relevance of the "no win-no fee" clause is that the appellant says that he and the other litigants did not win their litigation. The entirety of the defence in the District Court action was not before the Court. In the part provided there was no plea that the defendants were not liable to pay the respondent's fees and disbursements because the case had not been won. The first suggestion that the Supreme Court action was settled for a sum much less than what the respondent had allegedly said was achievable is found in the appellant's affidavit of 22 May 2007 at [15]. There the appellant deposed that he believed the settlement did not constitute success in the Supreme Court proceedings and that the respondent had said that the appellant and Mr Paligorov would receive and could expect to settle for a sum not less than twice and possibly eight times the actual settlement sum, which was approximately $1.375 million. The appellant does not say who allegedly said this on behalf of the respondent, or where, or when. Counsel for the appellant conceded that "success" and, implicitly, a "win" had to mean a specified quantum and that there was no evidence that this was discussed. He submits nonetheless, that because of what he was told, that "success" meant at least $2.75 million, being twice $1.375 million. I reject that submission. If it had been said at the 21 September 1995 meeting, then Mr Kurland, it may be assumed, would have deposed to it. He did not. 46 Tenth, even if I were to assume for present purposes that the Retainer Agreement was partly oral and partly written, and included a "no win-no fee" oral term, it is highly probable that it would avail the appellant nothing. First it seems to me that the term would fail because it is uncertain: Scammell & Nephew Ltd v Ouston [1941] AC 251 at 268 (approved Upper Hunter District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8 ; (1968) 118 CLR 429 at 437 per Barwick CJ). Second the respondent was unable to finalise the Supreme Court litigation as its retainer was terminated by the appellant and the other litigants in April 1999 before the litigation was resolved. At this time the appellant retained Mr Levitan who had by then left the employ of the respondent and established his own law firm. In those circumstances the appellant could not rely upon a "no win-no fee" term for refusing to pay the respondent's costs on a quantum merit basis. It cannot be doubted that these would have exceeded $2,000. 47 Eleventh, apart from the fact that a written Retainer Agreement was executed at all, given the evidence of the appellant and Mr Kurland, the explanation given by the appellant as to why it was executed is, in my view, highly improbable. He deposes that he signed the written Retainer Agreement on or about 1 October 1995 and did so although it did not provide that the alleged $50,000 success fee or the applicant's usual fees and disbursements would only be paid on success because he said that he believed, from his discussions with Mr Kurland, that, nonetheless, it was upon these oral terms that the respondent was to be engaged. The explanation is implausible, given that the written terms contradict the alleged oral terms. Further, it cannot be the case that Mr Kurland spoke to the appellant on or about 1 October about a $50,000 success fee because according to Mr Kurland's written evidence that matter was not raised until the telephone discussion he allegedly had with Mr Levitan "a few weeks" after 21 September 1995. 1 October 1995 was only a little over one week after the 21 September 1995 meeting. 48 The appellant submits that Mr Kurland's testimony is uncontradicted in that Mr Levitan did not provide an affidavit concerning this alleged telephone conversation. It is by no means clear that Mr Levitan is a witness who would ordinarily have been expected to be called by the respondent. Mr Levitan acted as the appellant's solicitor in the Supreme Court litigation after the respondent's retainer ended. He was, at least, equally available as a witness for both parties in this matter and possibly more available to the appellant given the past relationship of confidence between them as solicitor and client: Payne v Parker [1976] 1 NSWLR 191 at 201-202. More importantly the evidence of a $50,000 success fee term agreed to orally a few weeks after 21 September 1995 does not support the appellant's pleaded defence in the District Court action: a defence from which he did not resile in the court below. 49 Finally, I consider that the primary judge was correct to take into account the history of the District Court action and the appeals by the appellant to the Court of Appeal of Western Australia, particularly the criticisms made by Sleight DCJ and Wheeler JA respectively. They are testimony to the improper conduct of the appellant in the litigation but for which the merits of the respondent's claim and more significantly the appellant's defence would long ago have been heard and determined. This conduct, in my opinion, is a relevant factor in the Court's overall consideration of the merits of the defence and whether the evidence of the appellant and Mr Kurland raise genuine issues and a reason therefore to go behind the Judgment. These considerations weigh in the balance against the appellant. I am not satisfied that the appellant has demonstrated that the discretion of the primary judge miscarried. The appeal should be dismissed with costs. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | creditor petition founded on money judgment entered by district court default judgment appellant deliberately frustrated respondent's efforts to obtain discovery further default before court of appeal continuing disregard by appellant of its procedural obligations over considerable period of time discretion to accept, or not, judgment debt as prima facie evidence of antecedent debt preliminary investigation of merits of challenge to judgment debt whether substantial reasons demonstrated for questioning whether behind the judgment there was in truth a debt owed to the petitioner pleaded defence by appellant in suit for debt not supported by admissible evidence and contradicted by other evidence evidence supported conclusion that allegations in defence were not genuinely made conduct of appellant giving rise to procedural default relevant to whether pleaded defence was genuine discretion of primary judge did not miscarry appeal dismissed. bankruptcy |
For the reasons explained below, the respondents have succeeded on the first of these motions. By a notice of motion dated 10 February 2009, the respondents --- Waterco Ltd and Denby Falls Pty Ltd trading as Swimart Balwyn --- sought various orders, principally that the proceeding not continue as a representative proceeding. At the hearing, the respondents relied on two affidavits of Scott Robert James Sloan of 11 February 2009 and 18 February 2009. After the hearing, the respondents sought leave to file a third affidavit of Mr Sloan. I discuss this affidavit below. Accordingly, Stacey Brothers sought leave to amend. In support of its motion and in opposition to the respondents, Stacey Brothers relied on the affidavit of Joel Pascual Dy of 11 February 2009. After the hearing, Stacey Brothers sought leave to issue a subpoena to Waterco --- a matter referred to below. Leave has yet to be granted. In his affidavit, Mr Dy sets out the background to the proceeding and the applicant's current motion. Mr Dy deposes that Stacey Brothers is the registered proprietor of an innovation patent no 2007100141 for an invention entitled "Pool Filtering System". This is the patent in suit. The patent was filed with the Australian Patent Office on 22 February 2007 and was certified on 28 August 2007. The patent in suit is a divisional patent of patent application no 2006201905, which was filed on 5 May 2006, and in turn claims priority from provisional patent application no 2005902284 filed on 5 May 2005. The complete specification of the standard patent application was published by the Australian Patent Office on 23 November 2006 and the patent in suit, on 22 March 2007. The applicant's director, Graham Stacey, visited the retail premises of Swimart Balwyn in August 2008, where he saw the Poster and the Display System referred to in the applicant's statement of claim. Swimart Balwyn is part of the Swimart franchise owned by Waterco. Mr Stacey's partner had earlier discovered the Drawing referred to in the statement of claim in the course of an internet search. Mr Stacey formed the view that Waterco had distributed the Poster to some, if not all, Swimart franchisees. Stacey Brothers filed an application and a statement of claim on 18 November 2008, and an amended application and an amended statement of claim, on 5 December 2008. The respondents objected that Stacey Brothers had no leave to amend, such leave being required. Hereafter, I refer to the amended statement of claim without addressing the leave issue. I address this issue at the end of these reasons. No defence or counterclaim has yet been filed. In its pleadings, Stacey Brothers describes itself as a designer and installer of swimming pool water filtering systems that include at least a swimming pool and drain. According to the pleadings, Waterco is the franchisor of a chain of franchises in Australia trading under the brand name 'Swimart'; a manufacturer of pool filtration components; and a supplier of these components to Swimart franchisees. The amended pleading of 5 December 2008 would extend this supply to "other retailers of pool filtration components and installers of pool filtration systems". Stacey Brothers alleges that each franchisee of Swimart "conducts the business of a retail pool and spa store and the provision of on-site pool services". Swimart Balwyn is said to be a Swimart franchisee and a supplier of pool filtration components supplied to it by Waterco. I interpolate here, that, in his affidavit of 11 February 2009, Mr Sloan deposed that there are presently 58 franchisees in Australia and that "the vast majority are independently owned and operated". Relying on s 13 of the Patents Act 1990 (Cth), Stacey Brothers alleges that Swimart Balwyn and the represented persons (as defined in the pleadings) have directly infringed the patent in suit. The infringement is said to be constituted by Swimart Balwyn and the represented persons offering to make pool filtration systems as claimed in claims 1 and 5 of the patent, without Stacey Brothers' licence or authority. The infringement allegedly occurred in the following circumstances. According to the pleadings, a Mr Moutafis, trading as Xenomedia, made a 3D computer drawing of a pool filtration system as claimed in claims 1 and 5 of the patent, which Waterco incorporated in a Poster supplied to Swimart franchisees. In his affidavit of 11 February 2009, Mr Sloan said that the only use that Waterco made of the Drawing was to put it in the Poster. Hereafter in these reasons, a reference to the Poster includes a reference to the Drawing. Stacey Brothers alleges that Swimart Balwyn and the represented persons displayed the Poster, or a Display System in accordance with the Poster, at their retail premises and, I interpolate, thereby offered to make a pool filtration system within claims 1 and 5 of the patent in suit. Alternatively, Stacey Brothers alleges that Swimart Balwyn and the represented persons have infringed claims 1 and 5 of the patent, by making a pool filtration system in accordance with the Poster and/or the Display System. Mr Sloan's affidavit of 11 February 2009 indicates, however, that only Swimart Balwyn made the Display System photographed in its store and referred to in the statement of claim. Relying on s 117 of the Patents Act , Stacey Brothers also makes an indirect infringement claim. Stacey Brothers alleges that Swimart Balwyn and the represented persons indirectly infringed claims 1 and 5 of the patent in suit by supplying to installers of pool filtration systems at least one pool filtration component in circumstances where the installers have used that component or components to make a pool filtration system as claimed in claims 1 and 5 of the patent in accordance with instructions or inducements contained in product information published by Swimart Balwyn, or the represented persons, as the case may be. Stacey Brothers pleads that Waterco authorised Swimart Balwyn and the represented persons to exploit the invention as claimed in claims 1 and 5 of the patent, thereby infringing those claims. Waterco is also alleged to be a joint tortfeasor with, and to have procured and directed the wrongful conduct of, Swimart Balwyn and the represented persons. Further, Stacey Brothers claims against Waterco that Waterco was involved in misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) in that it failed to warn Swimart Balwyn or the represented persons that making a pool filtration system in accordance with the Poster would infringe the patent. Stacey Brothers seeks declaratory and injunctive relief, damages or an account of profits in connection with its infringement claims, and damages in respect of its claim of misleading and deceptive conduct. As amended on 5 December 2008, Stacey Brothers proposed that the group include all persons who had done these things. In support of Stacey Brothers' present motion, Mr Dy explained that, at the commencement of the proceeding, Stacey Brothers did not know that Waterco had delivered the Poster to retailers and installers other than Swimart franchisees. It is this conduct that identifies Swimart Balwyn and each Represented person as having the 'same interest' within the meaning of the Rule. The group definition will no longer extend to persons who have merely displayed the Display System or have installed pool filtration systems in accordance with the Poster, Drawing or Display System. The amendment to the group definition is made to remove any doubt that a direct link exists between the conduct of Waterco and each of Swimart Balwyn and the Represented persons. Alternatively, as a matter of discretion, the Court should not permit the proceeding to continue as a representative action. In support of these propositions, they advanced the following propositions. The proposed groups of represented persons were uncertain, too broad, and in the nature of a "moving feast". There was no common interest in the proposed groups except an interest in defending the litigation. No group met the "same interest" criterion in O 6 r 13. The representative action rules were not a substitute for the applicant "correctly identifying proper respondents and identifying a basis to issue against each of those respondents prior to the issuance of proceedings as is the normal course". In its original statement of claim, Stacey Brothers identified the represented persons as a subgroup of the Swimart franchisees --- those franchisees displaying the Poster or Display System, or installing a pool filtration system in accordance with the Poster or Display System. This original group was not capable of being identified without controversy. In its amended statement of claim of 5 December 2008, the group was defined as any person displaying the Poster or Display System, or installing a pool filtration system in accordance with the Poster or Display System. This group was no less uncertain since it defined a group based on issues of fact in dispute in the proceeding. Defining the group in terms of Stacey Brothers' notice of motion did not cure these defects. Moreover, all the proposed groups were open-ended in the sense that persons might enter the group at any time while the proceeding was on foot. The defences and/or cross-claims of persons within the proposed groups of represented persons and Swimart Balwyn were likely to differ. There could be an infringement only if what was in question was an installation of a pool filtration system within claims 1 and 5 of the patent in suit. This was likely to be denied. Possible defences might also depend on the particular facts relating to the business of a person in the group: see, e.g., ss 119 or 123 . Persons within the group might challenge the validity of the patent on different grounds. The quantification of damages might also depend on the particular conduct of the group member: cf s 122(1A). The position of Strathfieldsaye Pump & Pool Shop (referred to in Mr Dy's affidavit of 11 February 2009 and Mr Sloan's affidavit of 18 February 2009) illustrated that there were likely to be relevant differences between group members. Further, Swimart Balwyn's liability for the Display System depended on circumstances peculiar to it. The pleading did not depend only on the display of the Poster, as Stacey Brothers alleged at the hearing of the motions. The relief sought emphasised the broader character of its claims. Swimart Balwyn was not "in management" of any of the proposed groups. Swimart Balwyn operated its business independently and had no legal relationship with the represented persons. Reference was made to Mr Sloan's affidavit of 11 February 2009. Other deficiencies in the proposed groups included that the groups included persons displaying the Poster since 22 February 2007. There could be no infringement until the patent in suit became open for inspection on 22 March 2007. Persons displaying the Poster between 22 February and 22 March 2007 could not have infringed. Moreover, Stacey Brothers neither pleaded nor put forward evidence to show that the five other business listed in Schedule 1 to the statement of claim had displayed the Poster or Display System. Stacey Brothers "has approached matters in the wrong order". Order 6 r 13 did not permit the making of orders expanding the class of represented persons after proceedings are brought. The amendments proposed by Stacey Brothers on 5 December 2008 and in its present motion would expand the represented group beyond the Swimart franchisees. Further, O 13 r 2 did not support the addition of new parties. Stacey Brothers supported the maintenance of a representative proceeding under O 6 r 13 and the amendment of its definition of the represented group on the following bases. Order 6 r 13 was a rule of convenience, designed to avoid a multiplicity of proceedings. The Dy affidavit showed that the rights of many might effectively be determined in this proceeding. The alternative would be that Stacey Brothers initiated possibly 58 proceedings or had as many respondents joined to the one proceeding. The Dy affidavit showed that "the Swimart Franchisees [were] scattered throughout Queensland, New South Wales, Victoria and the Australian Capital Territory and that there would be substantial cost and inconvenience in identifying which ones displayed the Poster or installed the pool filtration system in accordance with it and then joining them to this proceeding or commencing fresh proceedings against them". There were common questions of law and fact as to whether there was infringement and whether the conduct of the represented persons and Waterco was linked. The represented persons had the same interest in the proceeding as a result of displaying the Poster to the public. The same interest requirement might exist notwithstanding the representing party and the represented persons had individual interests in addition to common interests. Whether the same interest existed was determined by reference to the pleadings. By reason of the group definition, the represented persons and Swimart Balwyn will have either: "(a) displayed the Poster ... or Display System ...; or (b) installed or procured the installation of a pool filtration system in accordance with the Poster, ... or Display System". Thus, the represented persons and Swimart Balwyn had the same interest in having the Court determine whether a pool filtration system in accordance with the Poster or Display System would, if built and used, infringe claims 1 and 5 of the patent in suit. If yes, then any such franchisee would have infringed the patent if the franchisee offered to make, or made, the system in accordance with the Poster. Such a finding would also be relevant to the issue of indirect infringement. The Poster was "the key element". A group as defined in the motion would be confined to people who had some interest in pool filtration equipment or in installing pool filtration systems and had displayed the Poster to the public. The common questions was "whether or not a pool filtration system built in accordance with the Poster, as the Poster depicts the pool filtration system, falls within claims 1 and 5 of the patent". Whilst the original definition of the represented persons had the potential to extend to all who had infringed the patent, this might be cured by the proposed amendment. Whilst the represented group was open-ended, this could be corrected later in the proceeding. The group was properly defined by reference to 22 February 2007. Alternatively, the pleading might be amended to avoid this issue, because Waterco did not distribute the Posters until mid 2007. Different defences and cross-claims might be managed under subrules (4), (5) and (6) of O 6 r 13. Even if direct and indirect infringement depended on the particular circumstances of a group member, O 6 r 13(6) provided the necessary protection. Order 6 r 13(2) (alternatively, the "control power" and O 6 r 13(1)) permitted the Court to extend the group of persons a respondent is to represent after the commencement of the proceeding. After amending the group, the next step would be discovery against Waterco, to ascertain the group of represented persons. The outcome of discovery might be an application for joinder, especially if the group were found to be small. The members of the class might be named after discovery. The Court should not rule on the representative proceeding until after discovery. The present application to discontinue the proceeding as a representative proceeding was premature, because there were various ways in which the Court might manage it, and the size of the group was not yet known. Notice might later be given to each represented person to afford an opportunity to apply to become a joined party. Whether this challenge succeeds depends on O 6 r 13 of the Rules. This requirement must be satisfied at the time the proceeding is commenced. The interest in question is an interest in the proceeding, to be judged by reference to the effect of the matters at issue on the rights and obligations of the representing respondent and the represented persons. A representative proceeding will not necessarily be defeated because some members, or even the representing party, have separate interests additional to a common interest, providing there is a common interest: compare Duke of Bedford v Ellis [1901] AC 1 at 7 per Lord Macnaghten. Thus, on the respondents' motion, the basic question is whether, at the time the proceeding commenced, it could be said that numerous persons had the same interest in the proceeding as between themselves and Swimart Balwyn. For the reasons stated below, I would answer this question in the negative. In order to understand my reasons for ruling against Stacey Brothers, it is necessary to refer to the case law on the operation of O 6 r 13 and provisions like it. The High Court considered Pt 8 , r 13 of the Supreme Court Rules (NSW), which at the time was relevantly the same as O 6 r 13 of the Federal Court Rules , in Carnie v Esanda Finance Corporation Ltd [1995] HCA 9 ; (1995) 182 CLR 398 and Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41 ; (2006) 229 CLR 386: contrast Wong v Silkfield Pty Ltd [1999] HCA 48 ; (1999) 199 CLR 255 , an applicant representative action under Pt IVA of the Federal Court of Australia Act 1976 (Cth). As noted in Carnie , "the ancestor" to these Rules "is to be found in the English Rules of the Supreme Court", which was "in turn derived from an earlier rule which itself was derived from the practice of the Court of Chancery": see Carnie 182 CLR at 415 per Toohey and Gaudron JJ and 427-429 per McHugh J. Some care needs to be taken, however, with regard to Carnie and Campbells Cash since both concerned plaintiff representative actions, not defendant representative actions. Thus, in Carnie 182 CLR at 404, Mason CJ, Deane and Dawson JJ said that the purpose of the representative procedure was "to facilitate the administration of justice by enabling parties having the same interest to secure a determination in one action rather than in separate actions". An important indication of the nature of the interest that numerous persons must have in proceedings instituted under Pt 8, r 13 was given by Pt 8, r 13(4). A judgment entered or order made in the proceedings 'shall be binding on all the persons as representing whom the plaintiffs sue'. What the rules were intended to achieve was a single determination of common issues in a way that binds those who were interested in those issues. There are, however, differences in the purposes of applicant and respondent representative proceedings. In the present case, in contrast to an applicant representative action, the question is whether there can be a single determination of a common issue of law or fact in a way that binds those interested to justify some relief the applicant seeks against them. This must be determined by reference to the issues that the proceeding raises and the relief that is sought. As Carnie and Campbells Cash show, though simply expressed, the requirement of "same interest" has presented difficulties. In Carnie the High Court held that persons having separate causes of action in contract and tort might have the same interest in a proceeding for the purposes of the representative proceeding rules as they then stood in the NSW Supreme Court. The fact that the represented persons' claims arose under separate contracts was held insufficient to defeat the requirement that there be numerous persons having the same interest. In Carnie 182 CLR at 405, Mason CJ, Deane and Dawson JJ held that, in the circumstances of that case, numerous persons had "the requisite commonality of interest" to satisfy the jurisdictional requirement of the rule. Toohey and Gaudron JJ reached a similar conclusion, holding that the onus was on the named plaintiffs "to identify the class with sufficient particularity", without necessarily identifying every member, and that they had done so, noting that "[t]he class is not open-ended; it is limited to those persons who have credit sale or loan contracts with the respondent which have been varied in circumstances where the variation has been executed in such a way as to be inconsistent with the [Credit] Act": see Carnie 182 CLR at 422. Brennan J (at 408) agreed with this test. Toohey and Gaudron JJ said (at 421) that persons would have the same interest in proceedings if there was a significant question common to all members of the class and they stood to be equally affected by the (declaratory) relief sought by the appellants in the instant proceedings. Mason CJ, Deane and Dawson JJ thought (at 404) that the 'same interest' requirement 'may ... [extend] to a significant common interest in the resolution of any question of law or fact arising in the proceedings'. Gummow, Hayne and Crennan JJ accepted, at 421 [54], that "the rule did not require the separate identification of, and consent from, those who were said to constitute the 'numerous persons'". In Campbells Cash , their Honours held, however, that, at the commencement of the proceeding, there was no person, other than the named plaintiff, who had an interest in the proceeding, because no order or judgment given in the proceeding would have bound any other person: see Campbells Cash at 422 [57]-[58]; and see also 472-473 [222]-[226] per Callinan and Heydon JJ. Accordingly, the jurisdictional requirement was not met. As foreshadowed, I accept that there are significant differences between plaintiff (or applicant) representative actions and defendant (or respondent) representative actions: see also BT (Australasia) Pty Ltd v New South Wales [1997] FCA 1553 per Sackville J. As Sackville J noted, members of a represented group may have much to gain when represented by a plaintiff and everything to lose when represented by a defendant. The development of the law relating to defendant representative proceedings reflects the fact that they have typically been used in the past against members of unions and unincorporated associations: see, e.g., Taff Vale Railway Co v Amalgamated Society of Railway Servants [1901] UKHL 1 ; [1901] AC 426 at 438-439 per Lord Macnaghten, 443 per Lord Lindley; London Association for Protection of Trade v Greenlands Ltd [1916] 2 AC 15 at 30 per Lord Atkinson, 39 per Lord Parker; and John v Rees [1970] 1 Ch 345 at 371 per Megarry J. Amos Removals & Storage Pty Ltd v Small [1981] 2 NSWLR 525 is illustrative of this history. The plaintiffs, who were members of the New South Wales Road Transport Association, sued 19 members of the Committee of Management of the Shipping Section of the Federated Clerks Union of Australia (NSW Branch) as representing the Section, or at least those members of the Section that attended a meeting at which certain resolutions were passed. The plaintiffs relied on the representative procedure of the NSW Supreme Court, which, as we have seen, was then equivalent to O 6 r 13. In giving reasons for judgment in the case, Hunt J identified three requirements for a defendant representative procedure: first, that the persons to be represented formed an identifiable group or class; secondly, that the person selected as a representative must be in management of the group or class and have control of its funds; and thirdly, that those selected to be represented must have a common interest or a community of interest with all other members: see Amos Removals [1981] 2 NSWLR 525 at 529-530. Hunt J held that this last element was satisfied in Amos Removals because "the liability as alleged against the members ... was ... enlarged to become one of conspiracy, based upon what is said to be the history of concerted action by those members and the resolution" at the meeting: Amos Removals [1981] 2 NSWLR 535 at 520. The respondents in this case made much of the "management" issue. Subsequent cases indicate, however, that "management" is neither a sufficient nor a necessary requirement, although there must be something that binds the group together so as to give rise to a commonality of interest and render a representative proceeding appropriate. In truth, in Amos Removals , Hunt J's first two "requirements" are to be understood as factors that were strongly indicative of a commonality of interest. In other circumstances, respondent representative orders have been made where there has been no management and control, although there has been some other factor linking the group. For example, a respondent representative order was made in an action involving breach of trademark to support an ex parte interlocutory injunction against the members of the represented group where the evidence indicated that there was in fact a group of persons acting in a co-ordinated way: see Tony Blain Pty Ltd trading as Acme Merchandising v Jamison (1993) 41 FCR 414. See also EMI Records Ltd v Kudhail [1985] FSR 36. In these cases, there were factors other than mere management and control that supported the representative order, such as knowledge within the group of the group's members, co-ordinated action, and common purpose. Even against unincorporated associations and unions, a representative proceeding is not properly brought where the essential inquiries concern the individual circumstances of the members. For example, in Geelong Wool Combing Ltd v Textile, Clothing and Footwear Union of Australia [2003] FCA 773 ; (2003) 130 FCR 447 at 452 [12] , Finkelstein J held that the representative procedure of this Court was unavailable and that the union could not represent its members participating in a picket. First, the evidence did not establish that the members of the group were acting with a common purpose and, secondly, the proceeding was one to recover penalties. As his Honour said, the applicant had to establish that each respondent had contravened the legislation, which involved an inquiry into each respondent's conduct and purpose and, if the contravention were established, separate consideration of the amount of the penalty. There was, therefore, "no community of interest" amongst the members of the group. In the context of a defendant (or respondent) representative proceeding, the nature of defences may be especially significant. The authorities support the proposition that a proceeding will generally not disclose persons in the same interest where defendants are entitled to raise different defences, although this is not an absolute rule. I agree with Mason P who said, in Trustees of the Roman Catholic Church v Ellis 70 NSWLR at 582 [74], that "[t]he requirement that each member of the class have identical defences may not be an absolute proposition". Whether the fact that different defences may be taken will defeat a finding of commonality of interest depends on the nature of the case, the centrality of any common questions of law and fact, and, having regard to the proceeding as a whole, the reality, importance and likely scope of the different defences. For example, the general rule (that separate defences defeat the same interest criterion) did not prevent insurers being sued via representative orders in Irish Shipping Ltd v Commercial Union Assurance Co Plc [1991] 2 QB 206 , where a shipowners' contractual claim, which all insurers had an interest in resisting, disclosed a community of interest amongst the insurers, even though there was a possibility that some foreign insurers might have a defence not available to all insurers: see [1991] 2 QB at 227 per Staughton LJ, 231-232 per Sir John Megaw, and 240 per Purchas LJ. An argument that the representative order might work injustice because a represented insurer might wish to contend lack of authority, fraud or misrepresentation was put aside on the basis that there was "no suggestion" that any such contention would be made, and appropriate steps could be taken if there were: see [1991] 2 QB at 232. In other circumstances, however, the availability of different defences has precluded a finding of community of interest. Thus, in Mercantile Marine Service Association v Toms [1916] 2 KB 243 , the members of an unincorporated association were to be represented on the defendant's side in a libel action against them. It might be that their defence would be that the words complained of were not capable of the meaning alleged or of any defamatory meaning, or that the words did not refer to the plaintiffs. The other members of the association, if sued, might say that, however defamatory the words complained of might be, they did not authorize their publication; that they were on the high seas and knew nothing about the matter. Slade J held that the representative proceeding rule was not available against the defendants because members of the group were likely to have separate defences. His Honour said that "where separate defences may be opened to some members of the class in question, there can be no common interest within the rule": see [1982] 2 All ER at 434. Further, if membership of a defendant group is liable to fluctuate, then this may indicate a want of sufficient particularity and a lack of commonality: see Hardie & Lane Ltd v Chiltern [1928] 1 KB 663 and Minister for Industrial Development of Queensland v Taubenfeld [2003] 2 Qd R 655. In Taubenfeld at 659, Mackenzie J pointed to "the difficulty in establishing the necessary identity of interest of all persons against whom the [representative] order was sought and of eliminating the possibility of different defences" on account of the fluctuating nature of membership of the group. Having discussed some of the authorities, I turn to this proceeding. The jurisdictional question presented by O 6 r 13(1) requires me to decide whether there was a commonality of interest amongst Swimart Balwyn and the members of the putative group at the time the proceeding commenced. That is, O 6 r 13(1) requires the Court to be satisfied that numerous persons had the same interest in the proceeding at the time it was commenced. If this requirement is not satisfied, then the proceeding was not properly begun and there is no representative proceeding to continue. Having regard to the original statement of claim, the jurisdictional question thus becomes whether there was a commonality of interest amongst Swimart Balwyn and the Swimart franchisees displaying the Poster or Display System, or installing a pool filtration system in accordance with the Poster or Display System. It is plain enough that Stacey Brothers has had difficulty in defining the group to be represented. This problem is not merely the result of the fact that it knows insufficient about Waterco's business and the Swimart franchise, although lack of knowledge is a contributing factor. The problem is also attributable to Stacey Brothers' attempt to capture too much in the representative net, with the result that there is a lack of commonality of interest amongst members of the group and between the group and Swimart Balwyn. In my view, bearing in mind all relevant matters, including the following, there was no such commonality of interest within the putative group and with Swimart Balwyn to permit Stacey Brothers to rely on O 6 r 13(1). The group would include persons whose allegedly infringing conduct differed in significant respects. Some but not all members of the group would be franchisees who displayed the Poster. Some members of the group would be franchisees who installed a pool filtration system allegedly in accordance with the Poster, even though not displaying the Poster. Further, Swimart Balwyn's conduct was unique in the sense that it made the Display System. It follows that, although some members might have an interest in resisting the allegation that, in displaying the Poster, they infringed Stacey Brothers' patent rights, there are likely to be other members of the group with no such interest. Indeed, there might be no community of interest amongst installers of pool filtration systems, if some urge that their installation differs relevantly from other installations and the installation depicted in the Poster. Furthermore, Swimart Balwyn's interest in resisting the infringement allegation is likely to become an interest in showing that the whole of its conduct, as defined by reference to the Poster and the Display System, did not amount to an infringement. In these circumstances, having regard to the nature of Stacey Brothers' claims, it would be open to Swimart Balwyn and the group members to rely on various defences of significantly different kinds. The respondents touched on some of these defences in their submissions. The availability of different cross-claims would in such a case as this also be pertinent. In this case, the possibility of separate defences and cross-claims does not merely signify that injustice might be done if the Court does not manage the proceeding so as to allow these defences and cross-claims to be run. Rather, it signifies that there is in truth no commonality of interest between the members of the group and with Swimart Balwyn. Accordingly, this is not a case in which it can be said that, at the time the proceeding began, Swimart Balwyn and the represented persons had the same interest in the determination of some substantial question of law or fact. Nor can it be said that there was a significant question common to all members of the group. When the proceeding commenced, there was no common question concerning the display of the Poster in which all members of the group had an same interest, notwithstanding that this is the question that Stacey Brothers would now seek to put forward as common to all. The relief, including the declaratory relief, sought by Stacey Brothers also emphasises that there is in truth no commonality of interest in the group. Further considerations militating against a finding of same interest include that Swimart Balwyn has no relevant relationship with the members of the group. Swimart Balwyn is not in control in any sense. Nor does it know of, or co-operate or have a common purpose with, members of the group. The group is open-ended. Persons may enter the group in the course of the litigation, as, for example, where, during this time, they install a pool filtration system in accordance with the Poster. It would, therefore, be difficult to identify the separate defences that might be open to all members of the group. The fact that Stacey Brothers might close the group in the course of the litigation would not cure the jurisdictional difficulty that existed when the proceeding commenced. The provisions of O 6 r 13 that operate to protect a represented person in a properly constituted respondent representative proceeding cannot make up for a failure to meet the jurisdictional requirement in O 6 r 13(1). Whilst it may in many cases be appropriate to defer ruling on the appropriateness of a representative proceeding, when it is clear that there is no commonality of interest as required by O 6 r 13(1), the proceeding simply cannot be a representative one. Bearing in mind the above considerations, I conclude that, at the time the proceeding commenced, there was no commonality of interest among the group that Swimart Balwyn was to represent and with Swimart Balwyn. Accordingly, the representative proceeding --- as it was framed --- was not properly commenced and cannot be continued. If Stacey Brothers had (contrary to the above conclusion) made out the "same interest" requirement, there would be a further question whether the same interest was shared by numerous persons. The respondents pressed this issue in this case. They referred to Mr Sloan's statement in his affidavit of 11 February 2009 that some Swimart franchisees claimed not to have displayed the Poster at all. Whether there are sufficient persons to constitute "numerous" persons has been said to depend on whether "the parties were so numerous that you could never 'come at justice' ... if everybody interested was made a party": see Duke of Bedford v Ellis [1901] AC at 8 per Lord Macnaghten. Today, the question may be put a little differently --- whether the representative proceeding can be regarded as an efficient and just way to proceed, having regard to the likely costs, the issues involved and the capacity of the Court to manage the proceeding suitably. In view of my conclusion as to lack of commonality of interest, it is unnecessary to explore this question further. It is also unnecessary to consider the effect on this issue of Mr Sloan's third affidavit, as to which see below. Carnie also showed that, even if the jurisdictional requirements of O 6 r 13(1) are satisfied, the Court may nonetheless consider, as a matter of discretion, that the proceeding ought not continue as a representative proceeding. Various factors might be relevant to this determination, including whether alterations to the group description can be allowed, notice requirements for group members, and the practicalities of settlement or discontinuance of the proceeding. As Mason CJ, Deane and Dawson JJ said in Carnie at 405, determining the importance of such matters in the context of the particular case is not necessarily straightforward, especially in the context of a defendant representative proceeding. Again, having regard to the conclusion I have reached on the lack of commonality of interest, it is strictly unnecessary to explore these discretionary considerations further. Since, however, Stacey Brothers specifically sought to amend the definition of the group, in order, so it said, better to "capture" the group, I discuss briefly whether the amendment might be made. If granted, the amendment that Stacey Brothers seeks by its motion would expand the group of represented persons in the sense that the group would henceforth include persons who were not Waterco franchisees. In SZ v Minister for Immigration and Multicultural Affairs [2000] FCA 458 ; (2000) 172 ALR 172 , at 179, Lehane J held that O 6 r 13 did not allow an amendment that would expand the group of person on whose behalf an applicant had commenced a proceeding. The case might be distinguished on the basis that it concerned an applicant representative proceeding, as opposed to a respondent representative proceeding. I do not, however, consider that this approach would withstand scrutiny, because his Honour's reasoning is applicable in both kinds of representative proceedings. Further, there is no reason to doubt his Honour's reasoning. In this proceeding, if there were to be an amendment to expand the persons sought to be bound, the amendment would need to take place under O 6 r 2, governing the joinder of parties. This is not an amendment of a kind that might be made under O 13 r 2. Having regard to the terms of O 6 r 2, Stacey Brothers would be obliged to seek leave to amend pursuant to O 6 r 2(b). There is power under O 6 r 2(b) to join additional parties after the commencement of the proceeding. It is, however, a discretionary power. Stacey Brothers did not apply for leave under O 6 r 2 in respect of any particular respondent. Nor did it advance submissions in support of any discretionary exercise of the power in its favour in respect of any respondent. It is therefore inappropriate to say anything more about the possible application of O 6 r 2. It should be borne in mind that any amendment under O 6 r 2 would require amendment of the terms in which the substantive relief claimed in the proceeding is framed. This and other matters would fall for consideration in an application under O 6 r 2(b) to join additional parties. Stacey Brothers relied on passages in Bright v Femcare Ltd [2002] FCAFC 243 ; (2002) 195 ALR 574 at 580 [18] and 589 [79] per Lindgren J, in support of its argument that the respondents' challenge to the representative character of the proceeding was premature. I observe that this was a case under Pt IVA of the Federal Court of Australia Act , and that his Honours' comments were clearly directed to this legislation. Different considerations apply in a case such as this, where it is apparent even at this early stage that the putative group is not held together by the same interest, so as to satisfy O 6 r 13(1) of the Rules. Stacey Brothers will have seven days to file and serve an amended statement of claim in conformity with this order. Since the respondents have succeeded on their motion, they should also have their costs. This affidavit concerned various matters, chiefly the printing and distribution of the Posters, and the information obtained as a result of inquiries made of Swimart franchisees. If the Applicant wishes to be heard on matters arising from the affidavit then we propose that they be given the opportunity to file supplementary written submissions limited to those issues. For the reasons earlier stated, it has proved unnecessary to refer to Mr Sloan's third affidavit in determining the outcome of the present motions. I have not formally granted leave to file this affidavit, although I have had regard to the exchanges at the hearing of the motions and would hear the parties briefly on the question if they so wished. If leave were pressed, this might be the occasion for Stacey Brothers to renew its application for leave to issue the subpoena directed to Waterco. Whether or not Stacey Brothers wishes to do so may depend on the status of Mr Sloan's third affidavit and the manner in which Stacey Brothers proposes to pursue the present proceeding. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | respondent representative order sought against a franchisee as representative of other franchisees in respect of alleged patent infringements application made to amend pleadings to expand the group to include persons who were not franchisees whether proceeding should continue as a representative proceeding under o 6 r 13 of the federal court rules whether "same interest" and "numerous persons" criteria satisfied to enliven jurisdiction lack of commonality of interest in the putative group and the representative proceeding not to continue as representative proceeding o 6 r 13 of the rules does not allow amendment to expand group of represented persons practice and procedure |
These companies are not related but before their windings up they were connected with, or under the control of, one Cardamone. There had been dealings between the companies such that some have made claims in the liquidations of the others. No-one yet knows whether the claims have merit. In some instances only Cardamone knows the relevant facts. He may or he may not tell them to Mr Cant. More likely than not he will only tell Mr Cant what best suits his (Cardamone's) interests and Mr Cant will have to do the best he can with what he is told. This has put Mr Cant in an impossible position. As liquidator of one company he may wish to believe Cardamone. As liquidator of another he may not. This is a problem when one has several masters. Mr Cant owes duties to each and there now is a conflict between duty and duty. 2 After some initial reluctance to face up to the problem Mr Cant now acknowledges that something must be done. Where the parties are at odds is as regards the proper course to adopt. The plaintiffs, National Personnel Pty Ltd (in liq) and its liquidator, say that Mr Cant should be removed as the liquidator of both Greight and Stafford Services and replaced by new liquidators. That is the purpose of their application. Mr Cant says that a special purpose liquidator should be appointed to each company to deal with those issues which cause him embarrassment. He has filed his own application for appropriate orders to bring this about. 3 The first question to consider is whether the plaintiffs (really only the corporate plaintiff) have standing to apply for the removal of Mr Cant. The application is made under s 503 of the Corporations Act 2001 (Cth). That section reads: "The Court may, on cause shown, remove a liquidator and appoint another liquidator. " The section does not say (and none of its predecessors have said) who may make the application to remove a liquidator. That is left for the court to determine. As a matter of principle I think that any person with a real interest in the winding up of a company ( In re Rubber and Produce Investment Trust [1915] 1 Ch 382) has standing under the section. By a person with a real interest in the winding up, I mean one whose rights or interests will directly be affected by action taken by a liquidator in the course of performing his (the liquidator's) duties. If the company is solvent the persons with a real interest are the contributories. If it is insolvent they are the creditors. The Privy Council recently considered this question in Deloitte & Touche A.G. v Johnson [1999] UKPC 25 ; [1999] 1 WLR 1605 in relation to the Companies Law of the Cayman Islands which, having regard to its origins, is rather similar to the Australian statute. There joint liquidators caused the company in liquidation to bring proceedings in negligence against the company's former auditors. One of the defendants to the action applied for the removal of the joint liquidators on the ground that they had a conflict of interest. The Privy Council advised that the liquidators ought not be removed. It did so on the basis that the plaintiff did not have standing to make the application. Lord Millett, who delivered the judgment of the Privy Council, said (at 1611) that in the case before the Board "[t]he only persons who could have any legitimate interest of their own in having the liquidators removed from office as liquidators are the persons entitled to participate in the ultimate distribution of the company's assets, that is to say the creditors. I do not think that the advice of the Privy Council goes that far. The important features in that case were that the plaintiff was not a creditor of the company in liquidation and its interests were adverse to those of the creditors. In effect the plaintiff had no legitimate interest in the identity of the liquidator. In my view there can be no hard and fast rule. In the end it will depend upon the circumstances of the case. 5 Now, in this instance the corporate plaintiff may be a creditor of Greight and Stafford Services. In order to explain why I must first say something about events which occurred before the defendant companies were wound up. For the most part the events are not controversial. 6 The corporate plaintiff (which was then under the control of Vassilopoulos) was the trustee of the National Personnel Trust, a trust which was established in early 2002. In its capacity as trustee of that trust, the corporate plaintiff conducted what is commonly referred to as a "labour hire" business. That is to say it provided a workforce to an organisation that needed work to be done but did not wish to retain its own employees to carry out that work. Usually a labour hire firm has its own workforce which it "hires" to its clients. This was not the precise situation here. When the business was first set up the corporate plaintiff obtained from Stafford Services the employees that were "hired" to clients. As a result of a restructure in 2003 the corporate plaintiff became the trustee of a new trust known as the NP Trust and in its capacity as trustee of that trust took over the employees of Stafford Services. Then, when employees were to be "hired" to a client the contract was entered into by the corporate plaintiff as trustee for the National Personnel Trust which in turn "obtained" the workers from itself as trustee of the NP Trust. Although the evidence does not say so, it seems tolerably clear that these structures were designed to "split" the profits from the labour hire business between Vassilopoulus' interests and Cardamone's interests. 7 In its dealings as trustee of the NP Trust, the corporate plaintiff incurred a debt of around $17 million to the Commissioner of Taxation. As a trustee it is entitled to be indemnified for that expense out of the trust fund of the NP Trust ( Octavo Investments Pty Ltd v Knight [1979] HCA 61 ; (1979) 144 CLR 360, 367) and has an equitable lien on the fund for such expense ( Jennings v Mather [1901] 1 QB 108). The equitable lien is a proprietary interest in the trust property: Octavo Investments Pty Ltd v Knight [1979] HCA 61 ; (1979) 144 CLR 360, 370. If the trust fund were in the hands of the corporate plaintiff, it could apply those funds in payment of the debt: Jennings v Mather [1901] 1 QB 108, 113-114. If necessary the trustee could sell trust property to pay out the debt: In re Blundell (1888) 40 Ch D 370, 377; (1889) 44 Ch D 1. 8 The corporate plaintiff is not in a position to exercise its right of indemnity in respect of the liability to the Commissioner. The reason is that it no longer has possession of the trust fund. On 21 February 2005 Cardamone removed the corporate plaintiff as trustee of the NP Trust pursuant to a power conferred in that behalf in the trust deed and substituted Greight as the trustee. The trust assets were then surrendered to Greight. 9 The corporate plaintiff's proprietary interest in that part of the trust fund that remains with Greight still subsists provided, of course, that Greight is not able to show that it is a bona fide purchaser for value without notice: Chief Commissioner of Stamp Duties for New South Wales v Buckle [1998] HCA 4 ; (1998) 192 CLR 226. The probability of this defence being made out is so unlikely that it may be put to one side. On this assumption, the corporate plaintiff could obtain an order for the sale of the trust property in the hands of Greight and payment out of the proceeds of an amount sufficient to discharge the indemnity ( Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584, 604) or if the trust property is constituted by a fund an order for the payment out of that fund ( Hewett v Court [1983] HCA 7 ; (1983) 149 CLR 639, 663). These rights, however, are rights in rem. They impose no personal obligations on the person who holds the trust assets: In re Diplock [1948] 1 Ch 465, 521; In re Bank of Credit and Commerce International S.A. (No 8) [1998] AC 214. This notwithstanding, the person with the right is often called a secured creditor. But there is no debtor. 10 It is nevertheless possible that the corporate plaintiff has a personal claim against Greight. The trust fund presently in its possession is not sufficient to satisfy the indemnity. Shortly before its winding up, presumably at the instigation of Cardamone, Greight paid significant sums out of the fund. One payment which possibly came out of the fund was a sum of $2.290 million paid to Stafford Services. Why the payment was made is not known. If the corporate plaintiff can establish that part of the trust fund went to Stafford Services and that Stafford Services was not a bona fide purchaser for value, then the corporate plaintiff will be entitled to recover that property from it because its proprietary interest would not have been destroyed. On the other hand, if the right has been destroyed by Greight the corporate plaintiff may have an action against Greight for damages for the destruction of its lien. See Hovey v Elliott , 118 NY 124 (1890); Hale v Omaha National Bank , 49 NY 626 (1872); 1 Jones on Lien s, SS95 (1914) in relation to an action of this kind. Such a cause of action might also be maintained against Stafford Services if it has destroyed the charge in respect of any trust property coming into its possession. 11 So, returning to the question of standing, there is a possibility that the corporate plaintiff is a creditor of Greight and Stafford Services. Whether it is or not will depend upon facts not yet known. But the possibility is enough to give it standing to make the application under s 503. 12 If the corporate plaintiff could not claim standing as a creditor I think it would be impossible for it to proceed. I appreciate that the corporate plaintiff does have an interest in ensuring that the liquidator of each company gets in what he can and keeps down claims which may have priority over those of the corporate plaintiff. The liquidator may be better placed than the corporate plaintiff to achieve these objectives. I do not think that is enough to give the corporate plaintiff a sufficient interest in the windings up of Greight and Stafford Services to apply for removal of their liquidators. 13 Fortunately there could never be a difficulty in making an appropriate order here. Mr Cant has made his own application to regularise the situation. He asks for the appointment of special liquidators to deal with what is the known conflict. So, one way or another, the matter is before the court. 14 Before deciding what to do, let me make these preliminary observations. If there are, or are likely to be, disputes between companies in liquidation that are under the control of one liquidator then as a general rule different persons should be appointed as liquidator to each company: In re City and County Investment Co (Ltd) (1877) 25 WR 342; In re Britton & Millard Ltd (1957) 107 L Jo 601. This is not to say that it is inappropriate to appoint one person as liquidator of a group of companies or of companies that are closely connected: In re Western Life Assurance Society; Ex parte Willett (1870) 5 Ch App 396. But once the likelihood of conflict becomes apparent it is necessary to take action. 15 Having made those observations, there are two problems in the way of going along with Mr Cant's proposal. The first is the likelihood that, as the liquidations progress, other problems will come to light with which Mr Cant will be unable to deal. There will then be further court applications and their attendant expense. The second problem is that if special liquidators are appointed it is inevitable that they will be required to go over some of the ground already covered by Mr Cant and they will need to do so on a continuing basis. This has the potential to add significantly to the costs of the liquidations. 16 During the course of submissions I told Mr Cant's counsel that the position I favoured was for Mr Cant to resign from two of the companies and retain his position with the third. I would then appoint a new liquidator to each of the companies from which he had resigned. The corporate plaintiff has no standing to apply for Mr Cant's removal from Burns International so I suggested that Mr Cant might resign as liquidator of that company and Stafford Services, which claims to be a creditor of Burns International, could make application for the appointment of a new liquidator. Counsel agreed to that course and, indeed, an oral application for the appointment was made. Subject to one qualification, I still think my suggestion is the best way forward. 17 There was a discussion about which liquidations Mr Cant should give up. Plaintiffs' counsel suggested that as well as resigning from Burns International, Mr Cant should resign from Stafford Services. The latter is the most complex of the liquidations and, not surprisingly, Mr Cant wants to retain that liquidation. There being no allegation of improper conduct on his part, I see no reason not to go along with Mr Cant's wish. In any event, Stafford Services is involved in a complex piece of litigation instituted in the Family Court by Cardamone's wife to which Stafford Services is, or is about to become, a party, as the wife seeks orders in respect of that company's property. Mr Cant is on top of the litigation and it would certainly be wasteful if another liquidator were required to incur expense in reaching the same state of knowledge. 18 The qualification to which I referred is this. In most applications for the removal of a liquidator it is necessary to find out the wishes of the persons really interested, in this case the creditors : In re Association of Land Financiers (1878) 10 Ch D 269. I propose here not to require that a meeting of creditors be convened for that purpose (a step that is sometimes taken before a liquidator is removed) but to request the plaintiffs to provide a copy of these reasons to the Australian Taxation Office (the Commissioner being by far the largest creditor) for the purpose of ascertaining whether it has any objection to Mr Cant remaining on as liquidator of Stafford Services. I will direct the plaintiffs to report to my associate within fourteen days the response (if any) received from the ATO. In the meantime, the orders that I will make should not be perfected. It may be necessary to recall them if the ATO takes any objection. 19 There will be orders as follows. Upon Mr Cant undertaking to resign as the liquidator of Burns International that Dennis Turner be appointed in his place; and upon Mr Cant undertaking to resign as the liquidator of Greight that Mathew Muldoon be appointed as liquidator in his place. Mr Cant's costs and expenses will be secured. I will also direct that the costs of all parties are to come out of the funds of Greight and Stafford Services. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | removal of liquidator standing to apply single liquidator of several corporations actual conflict corporations |
2 In the result, the applicants for the orders were unsuccessful except to the extent that leave was granted to issue a subpoena to the Secretary of the Australasian Meat Industry Employees' Union ( the Federal Union ), the Newcastle and Northern Branch of the Australasian Meat Industry Employees' Union (the State Branch of the Federal Union) and the Newcastle and Northern Branch of the Australasian Meat Industry Employees' Union registered under the Industrial Relations Act 1996 (NSW) ( the State Union ) and to John Graham Broadway requiring the production of documents identified at paragraphs 10.2 and 10.3 of a report prepared by him dated 12 August 2003; McIlwain v Ramsey Food Packaging Pty Ltd [2005] FCA 1233. 3 As a result of the determination of those matters, an application was made by Northern Co-operative Meat Company Limited ("NCMCL") for an order that the costs incurred in resisting the application made against it pursuant to order 27A, rule 2 for leave to issue a subpoena calling for the production of five classes of documents described at paragraph 6 of the reasons of 2 September 2005, be paid by the applicant respondents. These reasons deal with the resolution of the application for the order for costs incurred by NCMCL. Reasons for judgment in the proceeding consequent upon the trial of the proceeding were published on 30 June 2006: McIlwain v Ramsey Food Packaging Pty Ltd [2006] FCA 828. A third party has no interest in the litigation at all, and there is no reason why it should be out of pocket for a reasonable approach to what is required of it. In my view, a respondent to a motion for third party discovery will almost always be entitled to appear on the return of the motion. That party does not know anything about the principal proceeding in any direct way, and is entitled to protect itself in all respects. They say the question is not whether the proceeding arises under the Act but rather whether the proceeding involves "a matter" arising under the Act and reliance is placed upon the decision in Thompson & Ors v Hodder & Ors 21 FCR 467 (Keely, Grey and Ryan JJ). 8 In Thompson's case , members (the appellants) of the Australian Workers Union (the Union) sought and obtained a rule to show cause against the Executive Council of the Union (the respondents) concerning certain charges laid against the appellants pursuant to the rules of the Union. An order was sought that the Executive Council of the Union dismiss the charges. Von Dousa J made an initial order, pending trial, restraining the respondents from proceeding with the charges. At the trial, Northrop J discharged the rule to show cause. Further steps occurred including the filing of a notice of appeal, an application for a stay of the discharge order (which was unsuccessful) and an unsuccessful application for leave to appeal from the unsuccessful stay application. The respondents then sought an order for the costs of the application for leave to appeal and, in answer, the appellants relied upon the prohibition contained in s 347 of the Workplace Relations Act 1996 (Cth) ('the Act'). There is much authority as to what constitutes a 'matter' for the purposes of Ch III of the Constitution . In substance, a 'matter' is a 'single justiciable controversy'. See the joint judgment of Mason, Murphy, Brennan and Dean JJ in Fencott v Muller [1983] HCA 12 ; (1983) 152 CLR 570 at 608. The alleged obligation to perform and observe the rules ... is thus the 'matter' upon which each proceeding between the present parties has been founded, namely the rule to show cause granted on 7 June, the interim orders made on 9 June, the appeal filed on 17 October, the motion for a stay of judgment filed on 25 October and the application for leave to appeal ... . Each of those steps is a 'proceeding' as defined in section 4 of the Federal Court of Australia Act. It is enough to say that, on any view, an application for leave to appeal, even from an interlocutory judgment, is a proceeding in its own right. That proceeding is, however, one in the same matter as were each of the earlier steps. It is plain that the matter arises under the Act. In the result, their Honours determined that the application for leave to appeal had been instituted without reasonable cause. 10 In the principal proceeding commenced by the Employment Advocate against the respondent applicants, the essential question was whether, in respect of the termination of employment in August or September 2002 of 12 individuals by the relevant employer entity amongst the four respondent entities engaged in activity at the South Grafton Abattoir and the failure to re-employ any one of 11 of those individuals (recognising that one of them --- Susan Jane Young --- was not said to have been refused re-employment), once the process of re-engagement began in September 2002, occurred for reasons that either were or included prohibited reasons under the Act. The guiding mind of the respondent entities, Mr Stuart Bruce Ramsey, contended in his affidavit sworn 17 November 2004 that a shortage of available stock due to the combined affect of the loss by the abattoir of a proportion of a United States Beef Quota allocation (with a significant reduction in access to the United States market for beef product produced by the abattoir) together with the continued affect of drought conditions were the reasons for the closure of the abattoir. As to the incremental re-engagement, Ramsey contended that re-engagement was a function of demand and the particular individuals re-engaged were determined by officers of the relevant respondent entity on a skills basis. 11 That is the justiciable controversy between the parties framed by the proceeding and is the 'matter' upon which the proceeding has been founded. 12 It seems to me that a notice of motion seeking the orders previously described and more comprehensively dealt with in McIlwain v Ramsey Food Packaging Pty Ltd [2005] FCA 1233 may be characterised as a proceeding between the respondent applicants and each respondent to the notice of motion in a matter arising under the Act. In relation to NCMCL, the notice of motion involves an application for leave to issue a subpoena seeking the production of five classes of documents described at [6] of the McIlwain decision [2005] (supra) all of which are directed to demonstrating that because NCMCL was able to secure and sustain a particular United States Beef Quota allocation and therefore maintain utilisation rates within the abattoir (so as to avoid the need to terminate the employment of workers and manage incremental re-employment), an inference might be drawn that a reduction in the quota allocation for the United States market available to the relevant Ramsey entity made it necessary to terminate the employees thus supporting the reason given by Mr Ramsey for the impugned conduct. In other words, the documents sought by the application are said to evidence facts from which inferences might be drawn about a fact in issue, that is, a non-prohibited reason. It seems to me that a proceeding by way of a notice of motion seeking access to documents by means of an order pursuant to order 27A, rule 2 or order 15A, rule 8 going to the central question in the principal proceeding might properly be characterised as a proceeding in 'a matter' arising under the Act. However, it seems to me that the preferred view is that 'proceeding' for the purposes of s 347 of the Act involves a proceeding between parties to the justiciable controversy concerning the matter arising under the Act. A non-party to that proceeding or an addressee of a subpoena who is also a non-party, has no interest in the matter. The scope of the immunity is one which protects a party to the proceeding in the matter the subject of the controversy from an order for costs by another party to that proceeding. The immunity does not extend to prevent an order for costs being made in favour of a non-party who has successfully resisted an application for an order. If the scope of the immunity does extend to a proceeding framed by a notice of motion issued by a party to the principal proceeding against a non-party so as to prevent an order for costs being made against the applicant party, a further question arises as to whether the relevant proceeding was instituted 'without reasonable cause'. 13 For the reasons indicated in the McIlwain [2005] decision (supra) at paragraphs [49], [50], [51] and [52], I took the view that the application for leave to issue subpoenas addressed to NCMCL was an entirely collateral analysis which would not provide evidence relevant to any matter in issue nor provide a basis upon which any inferences could be drawn about the matters in issue between the Employment Advocate and the respondents in the principal proceeding. 14 Accordingly, the application by the respondents was made without reasonable cause, in all the circumstances. 15 The prohibition does not operate. I am satisfied that according to normal principles, NCMCL would be entitled to an order for costs to be taxed subject to the question of whether those principles give way to the prohibition contained in s 347 of the Act. For the reasons indicated, it seems to me that the prohibition does not arise in the circumstances of the particular application and, in any event, the application is made without reasonable cause. | exercise of discretion in a proceeding involving a matter arising under the workplace relations act s 347 scope of the prohibition whether notice of motion is a proceeding whether proceeding instituted without reasonable cause. costs |
Ms Devers alleges that the respondent, trading as Focus ("Focus"), discriminated against her by reason of her disability in her employment with Focus from September 2003 to October 2008 in violation of ss 5 , 6 and 15 of the Disability Discrimination Act 1992 (Cth) ("the Act"). It is common ground that Focus is an employer for the purposes of the Act. She is unable to hear or speak and communicates by means of Australian Sign Language ("Auslan"). Ms Devers has limited written English and limited lip-reading ability. The respondent is a not for profit organisation and a registered charity which provides services to people with disabilities. It provides residential services in Victoria's Mornington Peninsula region. At all material times, Focus operated a Community Residential Unit ("CRU") in Bungower Road, Mornington. Ms Devers was employed by Focus at the Bungower Road CRU as a Disability Support Worker. Focus is not a specialist organisation catering for hearing impaired people. Its clients are primarily individuals with intellectual disabilities. Some of its intellectually impaired clients have also been hearing impaired. At all relevant times, two clients at the Bungower Road CRU were profoundly deaf as well as having cerebral palsy and intellectual disabilities. Ms Devers worked closely with those clients, David and Leigh Travaglia. A third resident of the Bungower Road CRU was also unable to communicate verbally and had "extremely limited" sign language skills. Her engagement at the CRU was arranged by Ms Leanne Van Opijnen of SensWide, an employment service for people with hearing or visual disabilities. On 23 July 2003, Ms Van Opijnen and Ms Devers met with Mr Terry Guest, the then residential manager of Focus. Ms Van Opijnen, a qualified Auslan paraprofessional interpreter, interpreted at the meeting. As a result of the meeting, Focus offered Ms Devers one hour of volunteer work each Saturday. Ms Devers gave evidence that, at the meeting, Ms Van Opijnen explained to Mr Guest "that interpreters needed to be provided" and raised the issue of the provision of special equipment, such as a telephone typewriter ("TTY"). Mr Guest stated that Ms Devers was able to perform her role as a volunteer without the assistance of a qualified interpreter and that nothing to the contrary was said by either Ms Devers or Ms Van Opijnen at the 23 July 2003 meeting. Mr Guest also gave evidence that he was not aware, following the meeting, that Ms Devers required a qualified interpreter for meetings. He said that "[t]here was no discussion" of equipment such as TTYs and flashing lights at the meeting. I am satisfied that the evidence discloses that Ms Devers's needs in the workplace were not discussed at the 23 July 2003 meeting. Ms Van Opijnen testified that she had no specific recollection of discussing such matters and her case progress notes confirm this. I reject Ms Devers's evidence, in cross-examination, that the provision of equipment was discussed at the 23 July 2003 meeting. That evidence is inconsistent with the evidence of Mr Guest and Ms Van Opijnen. Ms Devers appears to have been confused about the topics discussed at the two meetings that Ms Van Opijnen attended with Focus representatives, one on 23 July 2003 and one which occurred later during her employment. This type of confusion was present in much of Ms Devers's evidence. Generally, where there are conflicting accounts of events, I have preferred the evidence of other witnesses to that of Ms Devers. On 28 August 2003, Mr Guest offered Ms Devers paid casual employment with Focus, consisting of one shift per fortnight with the possibility of further periods of casual work when other staff members were unavailable. Ms Devers became an employee of Focus in early September 2003. At the commencement of her employment, Focus was not aware that Ms Devers required qualified interpreters or other equipment to perform her duties. It is not necessary at present to say anything further about the relief sought. Many of the issues which her counsel referred to were ones on which Focus called evidence from its witnesses. As counsel for Focus observed, the principle in Jones v Dunkel will not assist in the creation of evidence, merely the drawing of inferences where this is supported by Ms Devers's evidence. The evidence before the Court on the relevant issues raised by Ms Devers's application does not lead to the application of Jones v Dunkel , as there is nothing to suggest that Focus failed to called evidence on any matters of material significance from witnesses it would have been expected to call. The discrimination may have been either direct or indirect discrimination as defined in the Act. Section 15(4) of the Act provides protection for employers when hiring or dismissing a disabled person. The Act does not impose an affirmative obligation on an employer to provide aids to a disabled employee. In contrast to the position in the United States, if an employee asks for accommodation or additional services or facilities in order to be able to perform their employment the Act does not impose an obligation to provide "reasonable accommodations". Rather, the Act provides that when determining whether to hire a prospective employee or dismiss a current employee it is important to assess whether the disabled employee can carry out the "inherent requirements" of the particular employment and whether additional "services or facilities" would enable the person to meet these inherent requirements becomes relevant; see s 15(4)(a) of the Act. Discrimination towards an employee is not unlawful if providing the additional services or facilities would impose "an unjustifiable hardship on the employer"; see s 15(4)(b) of the Act. In this respect, Ms Devers relies on s 6 of the Act which deals with "indirect disability discrimination". She also claims that she was subjected to "other detriment" as a result of being unable to participate in training sessions as her skills stagnated, leading to reductions in the number of hours she worked and her income; see s 15(2)(a)---(c) of the Act. To establish that Focus indirectly discriminated against her, Ms Devers must demonstrate: that Focus required Ms Devers to comply with a requirement or condition; with which a substantially higher proportion of persons without her disability comply or are able to comply; with which Ms Devers does not, or is not able, to comply; and the requirement or condition is not reasonable having regard to all the circumstances of the case. The phrase "requirement or condition" in s 6 of the Act is to be construed broadly to include any form of qualification or prerequisite, although the actual requirement or condition itself should be formulated with some precision; see Clarke at [103] and Australian Iron and Steel Proprietary Limited v Banovic [1989] HCA 56 ; (1989) 168 CLR 165 at 185 per Dawson J. An alleged discriminator may be found to have insisted on compliance with a requirement or condition within the meaning of s 6 of the Act even though the requirement or condition is not explicitly imposed. It is sufficient that the requirement or condition is implicit in the conduct that is said to constitute indirect discrimination; see Waters at 360 per Mason CJ and Gaudron J, 392 per Dawson and Toohey JJ and 407 per McHugh J. For example, the Court in Waters considered that it was open to the trial judge to find that the removal of conductors from trams amounted to a requirement or condition that disabled people could fully avail themselves of the services only if they could use trams without the assistance of conductors; at 361 per Mason CJ and Gaudron J. Several cases have characterised the requirement to participate and receive classroom instruction without Auslan interpreters as a "requirement or condition" within the meaning of s 6 of the Act; see eg, Clarke and Hurst v Queensland [2006] FCAFC 100 ; (2006) 151 FCR 562. In Clarke both the trial judge and Full Court found that not providing Auslan interpreters to a student with a hearing disability imposed a condition on him with which he could not comply; at [11] per Tamberlin J, [126] per Sackville and Stone JJ. Similarly, the Court in Hurst held that a student would be "denied the opportunity to achieve her full potential" if she were required to undertake her education without the assistance of Auslan interpreters; at [130] per Ryan, Finn and Weinberg JJ. Focus submits that cases such as Clarke and Hurst must be treated with caution as they are education, rather than employment, cases. Ms Devers contends that these principles apply to both educational situations and her ability to participate in staff meetings and professional development. In particular, she argues that it was not sufficient for her to simply "cope" by attending some of the required training sessions and staff meetings and access the information through written English. Ms Devers alleges that she was denied meaningful access to her employment as she could not comply with the requirements imposed. Moreover, counsel for Ms Devers argues that Focus's submission that she accessed her employment as she attended work and received her wages over a number of years ignores the conditions of her employment which caused her detriment. There are significant difficulties with the case as formulated by Ms Devers, in particular the emphasis on her ability to "access her employment". Employment in that sense is ultimately the range of duties performed in the employee---employer relationship and it is not analogous to access to education, services or facilities. Ms Devers's emphasis on "access" to her employment is also not reflected in the wording of the Act which speaks only of employment and its terms and conditions. The notion of "access" to employment in the Act only arises in relation to access to the benefits associated with employment and not employment per se. The question posed by the Act is whether an employee has been subject to indirect discrimination in their employment. It is unhelpful to rely, as Ms Devers does, on an entitlement to "access" employment. The present case is not an education or a services case. Ultimately, whether a "requirement or condition" has been imposed is a question of fact. The Act defines discrimination and provides for specific contexts in which such discrimination is prohibited; including in employment, education, access to premises, goods, services and facilities. Each context is treated separately in the Act and raises different issues for consideration. In this respect, the "education cases" relied on by Ms Devers are of limited assistance. In the absence of evidence to establish that the requirement or condition was unreasonable, the conduct engaged in by Focus will not be discriminatory. As with the other aspects of her claim, the onus is on Ms Devers to prove that the requirement or condition imposed was not reasonable in all the circumstances. A TTY is a telephone device which can be used by deaf people. It looks like a small typewriter. One can dial a number and then communicate with another person by typing on the keyboard. It enables deaf people to communicate more efficiently than they otherwise could, especially with people who are not adept at texting on mobile phones. Ms Devers gave evidence that shortly after commencing employment with Focus in 2003, she asked her team leader, Mr Bruce Rickard, about Focus's buying of a TTY. She said that Mr Rickard did not deny her request but a TTY was not purchased at that time. She also said that she mentioned her need for a TTY to Mr Rickard a few times in 2003 and a few more times in 2004. Ms Devers then brought in a portable TTY from home and later her other TTY from home. She stopped bringing a TTY into work because other staff members were unhappy about it taking up the only telephone line available at the southern end of the CRU. Ms Devers's evidence about requesting a TTY in 2004 is curious because in November 2004, Mr Peter Brookhouse, the Chief Executive Officer of Focus, asked Ms Devers if Focus could assist her with the purchase of equipment, such as a warning light system. That was her perfect opportunity to request a TTY but she did not do so. This tends to suggest that the provision of a TTY was not a burning issue for her. In cross-examination, Ms Devers conceded that Mr Brookhouse asked how he could help her and that she said nothing about a TTY. In such circumstances, as at 4 November 2004, Focus could not be criticised for not providing a TTY. On 20 October 2006, Ms Gail Foster, the Residential Service Manager of Focus and Deputy Chief Executive Officer, offered to purchase a TTY for Ms Devers. Earlier, on 12 October 2006, Ms Devers had brought the issue to Ms Foster's attention by faxing to her a request for a TTY. It is unclear why Ms Foster's offer was not taken up. I find Ms Devers's response that she did not take up the offer for fear of losing more shifts to lack credibility. How could one realistically expect to lose shifts for taking up an offer from management for something which, on Ms Devers's own evidence, she had been "pestering" for repeatedly? Ms Devers gave evidence that she told Ms Foster she would bring in a TTY from home and that Ms Foster said that she could do so. Whether a TTY was necessary for Ms Devers's work is beside the point. There was no lack of will from Focus to provide one but Ms Devers did not press the issue with any fervour at any time between 4 November 2004 and mid 2007. Ms Sandra Haynes, a former employee of Focus, gave evidence that in December 2006 she told Ms Julie Dunn, Focus's Residential Co-ordinator, that Ms Devers had asked her to remind Ms Dunn that Ms Devers had sent Ms Dunn emails requesting a TTY. That evidence is unbelievable. Ms Dunn denies receiving any such emails. None is in evidence. At that time, all Ms Devers needed to do was to contact Ms Foster and take her up on her offer to provide a TTY. Prior to 5 July 2007 Focus could have considered with confidence that provision of a TTY to Ms Devers was not an issue at the CRU. However, on 5 July 2007, Ms Phillips (a self-styled "anti-discrimination consultant") wrote to Focus on behalf of Ms Devers. Ms Foster responded to Ms Phillips in writing on 6 September 2007. Any delay from 5 July 2007 is attributable to Ms Phillips's refusal to meet with Ms Foster, despite Ms Foster's willingness to meet at a place and time suitable to Ms Phillips and for Focus to pay for an Auslan interpreter for Ms Devers to attend the meeting. On each occasion Jane has told us that she has an old TTY at home that she could bring in and set up for herself. To date she has not provided this TTY writer and I presume she does not regard the matter as one of significance or priority. Focus arranged a meeting for 19 October 2007 to discuss the "non-provision of a TTY" and other issues but the meeting was cancelled due to the absence of a qualified Auslan interpreter. The evidence does not explain the circumstances that led to the provision of a TTY in July 2008. There is no evidence that Focus was at fault in not providing a TTY between October 2007 and July 2008. Ms Dunn gave evidence that she was not asked by Ms Devers for a TTY until 2008. I accept that evidence and Ms Dunn was not challenged on that aspect of her evidence. Ms Dunn frankly conceded that a TTY possibly should have been provided before 2008. But it was not until 2008 that it was clear to Focus that Ms Devers actually required one, as distinct from representations being made about wanting a TTY only for Ms Devers not to press the issue. It appears that Ms Devers did not consider the provision of a TTY a matter of high priority for her until 2008. There is no evidence to support the allegation that Focus engaged in indirect discrimination by not providing a TTY to Ms Devers. It is doubtful whether Focus can be said to have imposed a requirement or condition on Ms Devers prior to 2008 that she access her employment without a TTY, as it was unclear to Focus that Ms Devers required the provision of a TTY until 2008. In any event, even if such a requirement or condition were imposed by Focus, Ms Devers has not established that the imposition of that requirement or condition was not reasonable. As noted above, Ms Devers did not consider a TTY a high priority until 2008. In light of Ms Devers's failure to make her need for a TTY clear to Focus, the imposition of the requirement was reasonable. Indeed, in November 2004, Focus offered to purchase a TTY but this offer was not taken up by Ms Devers. Once Focus became aware of Ms Devers's request for a TTY in 2008, a TTY was provided. Accordingly, Focus did not engage in indirect discrimination against Ms Devers in relation to the failure to provide a TTY. In fact, at the time she did not believe a buzzer system was necessary to attract her attention. Ms Devers would have been expected to have said something about the installation of flashing lights given Mr Rickard's comments about her inability to attain "equal status" in the house because she could not answer the door or telephone. Ms Devers contends that she requested flashing lights, both directly, and through other staff members. Ms Dunn began work at Focus in May 2006 when Ms Devers was absent on long term sick leave. In her affidavit, Ms Dunn stated that Ms Devers did not "at any time" ask her to provide flashing lights for the CRU. Ms Dunn stated that the only request she ever received for flashing lights was from Mr Edo Travaglia, the father of Leigh and David Travaglia, and they were provided shortly after his request. In particular, Jane asked me to follow up her requests for this assistance by contacting our line manager, Julie Dunn ("Julie") on about 6 - 8 occasions to ask what was happening, and when her requests were going to be met. Ms Haynes said that she also reminded Ms Dunn, on behalf of Ms Devers, that Ms Devers had sent Ms Dunn emails requesting a TTY and flashing lights. Ms Haynes claimed that she had seen some of these emails. There is no other evidence of these emails. There are several emails exhibited to the affidavit of Ms Devers which are addressed to Ms Dunn discussing both pagers and a TTY. However, none of these emails mentions flashing lights. Ms Kendra Jones, who worked at the Bungower Road CRU between January 2006 and December 2007, said that "there was regular discussion from Team Leaders in relation to purchasing supporting equipment, such as a TTY and flashing lights for Jane, and providing interpreters". However, Ms Jones admitted in cross-examination that she was not a party to these discussions. The better view of the evidence is that Ms Devers did not ask Ms Dunn to provide her with flashing lights. On 12 October 2006, Ms Devers sent a fax to Ms Theresa Hughes listing questions for Focus management. Included was her query, "Why not have a page with vibrate or door's bel [sic] flash (deaf equipment) and don't need to hear TTY". Ms Hughes replied to Ms Devers stating that she had forwarded the questions to Ms Foster. I have put some copies of minutes etc in the post for you, to demonstrate that we have in fact gone over all these areas with Jane on numerous occasions; she just doesn't want to accept the answers. Ms Foster said in cross-examination that she did not address each of the queries raised by Ms Devers because "we had already offered to purchase anything that she needed". As of 12 October 2006, a request by Ms Devers had been made for the purchase of flashing lights. Ms Foster did not offer to meet with Ms Devers to discuss the purchase of the equipment, as occurred with the TTY. Although Ms Devers had not previously taken up the offer for equipment to be purchased, Ms Devers had expressed a willingness to use anything that would assist her in her employment. In 2007, flashing lights were installed at the Bungower Road CRU in response to the request made by Mr Travaglia on behalf of his sons. Prior to Ms Devers commencing paid employment with Focus, Ms Devers and Ms Van Opijnen did not ask Focus to provide qualified interpreters or any other facilities, including flashing lights, to assist Ms Devers in her employment. Accordingly, before 12 October 2006, Focus did not impose a condition or requirement on Ms Devers that she access her employment without flashing lights as the evidence indicates that Focus was unaware that Ms Devers required the installation of flashing lights and no such request had been made by Ms Devers. No indirect discrimination occurred in respect of this period. After Ms Devers's request for flashing lights on 12 October 2006 and until their installation in 2007, Focus imposed a requirement or condition that Ms Devers perform her employment without flashing lights. The requirement was one which the hearing staff at the Bungower Road CRU were able to comply with as they could hear if a visitor was at the door. Ms Devers was able to perform most aspects of her employment without the installation of flashing lights. She was unable to answer the door without the aid of flashing lights. Ms Devers was able to "cope" with the condition as another staff member was required to be in the CRU at all times. Nevertheless, the relevant test is whether Ms Devers was able to comply with the requirement; see Hurst at [134]. The Court in Hurst noted that an inability to comply may shown if "a disabled person will suffer serious disadvantage in complying with the requirement or condition"; at [134]. Ms Devers has not shown that she suffered any serious disadvantage from her inability to answer the door. There is evidence to suggest that in 2004 her inability to hear whether someone was at the door was a source of grievances among other staff members. However, there is no evidence to indicate that this was a live issue in 2006 when the request for flashing lights was made. By this time, Focus had also purchased a pager which provided staff members with a means of attracting Ms Devers's attention. Her work consisted of caring for the clients at the Bungower Road CRU and she has not shown that her inability to answer the door led to any serious disadvantage. It is a requirement with which Ms Devers was able to comply in performing her employment. Similarly, Ms Devers has not demonstrated that the requirement was unreasonable in all the circumstances. Her counsel placed considerable emphasis on Focus's failure to plead reliance on s 15(4) of the Act. However, the onus is on Ms Devers to demonstrate that the requirement or condition was one which was not reasonable in all the circumstances. At the time, Ms Devers was working approximately 15 hours per fortnight. It is also reasonable to infer that answering the door was incidental to the performance of her duties as a Disability Support Worker. In addition, Focus's policy was to not have staff members alone at the Bungower Road CRU at any time. Given Ms Devers's hours, the policy that staff members not work alone at any time and the incidental nature of the task, Focus's imposition of the requirement or condition that Ms Devers carry out her employment without the aid of flashing lights was reasonable. Ms Devers's claim of indirect discrimination as a result of the failure to provide flashing lights prior to their installation in 2007 fails. Ms Devers also made allegations in relation to the forms which she was required to complete in order to apply for training sessions. However this issue is irrelevant to the question of whether she was required to comply with a requirement or condition that she attend training sessions without the assistance of qualified interpreters. From 3 September 2003, Focus was aware of her need for interpreters following a conversation between Mr Guest and Ms Van Opijnen. Ms Van Opijnen discussed with Mr Guest the importance of a qualified interpreter to enable Ms Devers to access information at an upcoming first aid course. Mr Guest replied that Focus would "play it by ear". Ms Devers stated that from 2003---08 she attended only three training sessions where a qualified Auslan interpreter was present. Each session was held at an external location and qualified interpreters were booked and paid for by the external provider. These sessions comprised first aid courses in 2003 and 2007 held at Vicdeaf and an information session on the Disability Act 2006 (Vic) conducted by the Department of Human Services ("DHS") in July 2007. This differs from the case pleaded by Ms Devers which said that she only attended one training session with a qualified Auslan interpreter during her employment. Ms Devers said that she told Ms Dunn that she wanted to attend the DHS training session and as a result assumed that she would be attending the session. Similarly, Ms Haynes gave evidence that Ms Devers asked Ms Dunn at a staff meeting to secure an interpreter for the DHS training and that Ms Dunn said she would obtain approval from Ms Foster. Ms Devers said that once she arrived at the DHS training session and realised no interpreter had been booked she arranged an interpreter for the session. As a result, Ms Devers did not participate in the first hour of the training session. Ms Dunn denies these allegations. She sent a facsimile to Ms Devers on 14 June 2007 stating that she was not aware that Ms Devers was attending the DHS training as Ms Devers had not confirmed her attendance. Earlier, on 15 September 2005, Mr Guest wrote to Ms Devers in response to her request to Ms Jo Bloxidge for the provision of interpreters at various training courses during the remainder of the year. For up to 10 hours of additional training each year to attend Kindilan Society [Focus] training as selected by you and approved by your Team Leader or Coordinator, from the Annual Training Schedule. You will be supported to attend appropriate training through the Victorian Deaf Society's training calendar provided it relates to your work at Bungower. I will provide an update of their schedule as soon as it is available. At your request, arrangements may be made for you to receive copies of the written content, notes, or reports from courses which you do not attend, but which are relevant to your work. Ms Devers attended a training session with a staff member or other person acting as an interpreter on the following occasions: The evidence indicates that Ms Devers agreed to the use of an unqualified interpreter on several occasions. Firstly, Ms Devers agreed to Ms Blake providing interpreting services at the 2003 first aid course. Ms Devers subsequently told Ms Van Opijnen and Mr Guest that she was happy with both the interpreter and the arrangements made. In cross-examination, Ms Devers said that she accepted the arrangements because of the short notice and her belief that, as a volunteer, she had no other choice. Prior to Ms Devers commencing paid employment with Focus, and for the purpose of the 2003 first aid course, Ms Devers and Ms Van Opijnen did not request that Focus provide qualified interpreters or any other services to assist Ms Devers in her employment. In relation to the 2007 bullying training, Ms Dunn advised Ms Devers to organise an interpreter if she wanted an interpreter for the training session. Ms Dunn stated that she believed that Ms Devers would be better placed to arrange an interpreter as she believed that three weeks notice was required to book an interpreter. Ms Devers asserted, in cross-examination, that it was not her responsibility to book an interpreter as all requests to Vicdeaf had to originate from Focus. Ms Devers asked Vicdeaf to contact Focus and negotiate the booking, but was told that she needed to give at least three weeks notice. Ms Devers admitted that Ms Foster told her that Focus was unable to secure an interpreter for the training session, but that it would be repeating the bullying training at a later date and that if she agreed to attend the second training day, an interpreter would be booked. Ms Devers said that she was concerned that "an interpreter would not be booked, and I would miss out yet again". She insisted on attending the first training session and agreed to Mr Hyland acting as an interpreter for her. In choosing to attend the first training session, despite knowing arrangements for an interpreter could not be made, Ms Devers chose to attend without a qualified interpreter. In these circumstances, Focus did not impose a requirement on her to participate in the training session without a qualified interpreter as it suggested Ms Devers attend the later training session. As such, no indirect discrimination arises from this event. Focus imposed a requirement or condition that Ms Devers access training sessions without the use of a qualified Auslan interpreter, except on the occasions where she chose to attend a training session without a qualified interpreter. Hearing staff members were able to comply with the requirement or condition that they attend training sessions without the assistance of an Auslan interpreter as they were able to access the information aurally. Is Ms Devers unable to comply with the requirement or condition? Ms Devers indicated her discontent with the quality of interpreting provided by staff members. In relation to the 2005 health services training session, she alleged that "[w]henever Ross 'interpreted' I missed most of what was being said". She also stated that she "missed out on a lot of the information" provided in the April 2005 fire safety training session. Ms Devers nevertheless conceded that she received written materials containing the information which she studied at home. Ms Devers also alleged that Ms Gibbins treated the 2007 fire safety training session and her interpreting of it as a "bit of a joke". She said that Ms Gibbins did not interpret any questions or discussions by staff members during the training session. Despite her claims, Ms Devers acknowledged that she could receive the information provided in training sessions by means other than qualified Auslan interpreters. For example, on 17 July 2007, Ms Devers completed a training application form to attend a first aid training session. The form indicated that Ms Devers "would like a staff to help with interpreting Sally Gibbins or Ross Hiland [sic]" at the training session. Ms Devers said that this request was the result of her concern that an interpreter would not be booked, but the evidence indicates Ms Devers's willingness to use staff members as interpreters at training sessions. Although Ms Devers was able to "cope" with the requirement that she attend training sessions without a qualified interpreter, her evidence indicates that she was at a disadvantage in completing the training sessions and receiving information. The interpreting provided by staff members ameliorated this situation, as did the provision of information in other forms, such as workbooks. However, Ms Devers could not comply with the requirement to attend training sessions without qualified Auslan interpreters. The first ground relied on by Ms Devers is irrelevant to the issue of interpreters at training sessions. Qualified Auslan interpreters at training sessions cannot be said to have also been required by Focus's clients as there is no evidence to suggest that clients attended the staff training sessions. The second ground is misconceived. Ms Devers was not a client of Focus, but an employee. Focus's obligations in relation to the Act do not differ from any other employer merely because of the industry in which Focus operated; it is not held to a higher standard. Focus's provision of services to persons with disabilities is irrelevant to the reasonableness of the requirement that Ms Devers attend training sessions without a qualified interpreter. Ms Devers's reliance on the Charter of Human Rights and Responsibilities Act 2006 (Vic) is misplaced. The interpretation of the Act by this Court is unaffected by the Charter . The Charter applies only to the interpretation of Victorian, not Commonwealth legislation. Similarly, the Charter only applies to the functions performed by Victorian courts and tribunals and does not bind this Court; see ss 3(1) and 6 (2) of the Charter . The Charter does not elucidate the question of whether a requirement or condition was not reasonable. Reference to the Charter does not assist Ms Devers in her claim. Australia is a State Party to the Convention on the Rights of Persons with Disabilities , opened for signature 13 December 2006, [2008] ATS 12 (entered into force 3 May 2008). However, this does not lead to the conclusion that the requirement or condition imposed by Focus was not reasonable. It is well settled that the mere fact of ratification does not import any rights or obligations into domestic law; see Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20 ; (1994) 183 CLR 273 at 286---7 per Mason CJ and Deane J, 315 per McHugh J and see also Nulyarimma v Thompson [1999] FCA 1192 ; (1999) 96 FCR 153 at [20] per Wilcox and Whitlam JJ. A convention may aid in interpretation of an Act where there is ambiguity but the Convention cannot be relied on to reach the conclusion that the requirement or condition was not reasonable; see Teoh at 287 per Mason CJ and Deane J. The relevant terms of the Act are unambiguous and the situation is not one of legitimate expectations created by a decision maker as described in Teoh . The Convention is irrelevant to the present proceeding. Ms Devers points to the "significant adverse consequences of the discrimination" she is said to have experienced in support of the proposition that the requirement or condition was not reasonable. The "significant adverse consequences" which Ms Devers refers to were not particularised. The amended statement of claim alleges that Ms Devers suffered "diminished enjoyment of and participation in her employment" and "diminished training opportunities". Although she was disadvantaged by the failure to provide qualified interpreters at training session, this does not inevitably lead to the conclusion that the requirement or condition was not reasonable in all the circumstances. Whether the requirement or condition was unreasonable must be considered in light of all the relevant circumstances, not merely those which affected Ms Devers. Ms Devers claims that the requirement or condition was not reasonable due to "the relatively insignificant cost of compliance with the Act upon the Respondent's overall budget and other commitments". She did not adduce any evidence in support of this claim. Minimal evidence was adduced by Focus in relation to the cost of providing interpreters. However, the onus lies with Ms Devers to establish the unreasonableness of the requirement or condition. She has not shown that the provision of interpreters represented a "relatively insignificant" expense, nor adduced any evidence to demonstrate what impact may have been on Focus's budget or other commitments. Rather, Focus's evidence, including Mr Guest' s 15 September 2005 letter, suggests that the costs were significant. In this respect, it is worth noting that Mr Guest's letter related to interpreters "or other arrangements" and was not an unqualified offer of Auslan interpreters at all training sessions attended by Ms Devers. This claim also assumes that Focus has breached the Act, a matter which is not established until after the requirement or condition is shown to be not reasonable. The logic of Ms Devers's contention is fundamentally flawed. Ms Devers also relies on the alleged "savings the Respondent has made, and will continue to make, in discriminating against the Applicant" in support of the contention that the requirement or condition regarding interpreters was not reasonable. It is difficult to understand what is meant by this claim. Whether or not discrimination has occurred is a matter for this Court to determine. It has not been shown what "savings" were made by the imposition of the requirement. Ms Devers also failed to explain how the existence of any purported savings supports the proposition that the requirement was not reasonable. Until November 2007, Ms Devers was a casual employee of Focus. During her employment with Focus she was given the opportunity to access several training sessions run by both internal and external providers. Although qualified interpreters were not provided on many occasions, Focus sought to ensure that the information was conveyed to Ms Devers in other ways. As a not for profit, charitable organisation, its primary obligation was the care of its clients, within its budget. Ms Devers has not discharged her onus to demonstrate that the requirement was not reasonable in all the circumstances. As Ms Devers has failed to show that the requirement or condition that she participate in training sessions without the assistance of qualified interpreters was not reasonable, the allegation of indirect discrimination is not made out. Ms Devers claims that Focus imposed a requirement or condition that she attend staff meetings without a qualified interpreter. She contends that the requirement was one with which she was unable to comply and was unreasonable. Staff meetings at the Bungower Road CRU were initially held monthly. The staff meetings became fortnightly in late 2004. The meeting was organised in response to an email from Ms Devers to Ms Van Opijnen stating that she was experiencing difficulties with other staff members and in understanding the parents of some clients. Both Mr Rickard and Ms Emberson have concluded their employment with Focus and neither was called to give evidence. Ms Van Opijnen said that the participants at this meeting "acknowledged that communication was an issue and asked SensWide for support". She offered four Auslan classes for Focus staff members and to interpret at some monthly staff meetings. Ms Devers's shifts were to be increased to eight hours a week in order to ensure that Focus would be eligible for a wage subsidy from the Department of Workplace Relations. If it's under that, then they won't provide that but if it's over 16 hours, then you'll have these provisions. And this was all explained to our team leader and they said you're responsible to feed this information back up through the chain of the hierarchy back at Focus and she was responsible to tell the information when she returned. I find that Ms Devers is mistaken in her recollection of the date of this meeting and that this evidence relates to what was said in February 2004 not July 2003. I find that interpreters were discussed at the meeting on the 27 February 2004 as well as an increase in hours and wage subsidy, but not the need for special equipment, such as TTYs and flashing lights. As noted at [9] of these reasons, Ms Devers appears to have been confused about the topics discussed at the two meetings that Ms Van Opijnen attended with Focus representatives on 23 July 2003 and on 27 February 2004. Ms Foster acknowledged that staff meetings "formed part of Ms Devers's roster and she was expected to attend" the meetings. And if they're talking about incidents, or strategies --- behaviour management strategies, all of those sorts that would be used by all of the staff[. From 27 February 2004, Focus imposed a condition or requirement that Ms Devers perform her duties without the assistance of qualified interpreters at staff meetings as, with the exception of the limited interpreting services provided by Ms Van Opijnen, qualified interpreters were not provided at staff meetings. Staff members without a hearing disability were able to comply with the requirement or condition that Auslan interpreters were not provided at staff meetings. Hearing staff members could access the information discussed at staff meetings aurally without the need for Auslan interpreters. Is Ms Devers unable to comply with the requirement or condition? Ms Devers contends that she was unable to comply with the condition as she could not participate in staff meetings without a qualified interpreter and points to her difficulty in accessing the information discussed at staff meetings in other forms. Staff members interpreted for Ms Devers at staff meetings. Ms Foster gave evidence the relevant staff members had not undertaken any interpreting classes and that the staff member with the highest level of Auslan training, Ms Emberson, had completed three levels of basic Auslan. Ms Emberson resigned in December 2004. In early November 2004, Ms Foster met individually with Ms Emberson, Ms Sonja Kuzilny, and Ms Gibbins --- three staff members who were the subject of complaints by Ms Devers. Each staff member raised their concerns over communication difficulties they were experiencing with Ms Devers. On 27 January 2005, a follow-up meeting occurred between Ms Devers, Mr Rickard, Mr Brookhouse, Ms Foster, Ms Kuzilny and Ms Gibbins to resolve the issues between them and Ms Devers. A qualified interpreter was present at the meeting. General communication difficulties were identified as an issue by the participants. Focus considered that these methods of communication provided her with meaningful access to the information discussed at staff meetings. They have always been kept there. It is a staff responsibility to read through the minutes each fortnight. Jane cannot realistically claim that she is deprived of any information that arises in the course of staff meetings. At the time, Ms Dunn reported to Ms Foster. Ms Foster stated that Ms Devers seemed to be happy with other staff members interpreting for her at staff meetings. However, she also said that she did not usually attend staff meetings and that she had not asked Ms Devers what her preferences were in relation to interpreters. In cross-examination, Ms Foster admitted that she had received correspondence from Ms Phillips on behalf of Ms Devers in July 2007. That correspondence discussed communication problems Ms Devers was said to be experiencing. Ms Foster also acknowledged that interpreters were not provided for staff meetings until May 2008. Focus contends that the extent to which professional interpreters at staff meetings were required is debatable and cited examples when Ms Devers, by her own conduct, recognised the adequacy of the interpreting provided by staff members at meetings. On 19 February 2007, Ms Devers sought a meeting with Ms Foster and attended without arranging an interpreter. Similarly, on 21 May 2008, Ms Devers suggested an interpreter for a staff meeting could be obtained "from Focus or outside, not from B[ungower Road] House staff". Ms Devers acknowledged that as the meeting on 19 February 2007 was unplanned, Focus did not have time to arrange a qualified interpreter. She said that she had been waiting for "many, many months" to speak with Ms Dunn and Ms Foster. In relation to the second example, Ms Devers stated that she made the suggestion as a particular staff member from the day service, Ms Mia Tolvanen, had better signing skills than other staff members. She said that she believed that Focus would not book a qualified interpreter for staff meetings. Ms Devers also claimed that she suggested a staff member from outside the Bungower Road CRU act as her interpreter as she felt a CRU staff member could not participate in the meeting and interpret for her simultaneously. Much of the material before the Court relates to general communication difficulties experienced by Ms Devers rather than her ability to access information discussed at staff meetings. However, the evidence supports the inference that these difficulties extended to her ability to participate in staff meetings. The information arising from staff meetings was made available to Ms Devers in a number of other ways, such as staff members acting as interpreters and minutes of meetings. Nevertheless, Ms Devers's ability to cope with the requirement is not equivalent to an ability to comply with the requirement. She was unable to comply with the requirement or condition that she attend staff meetings without the assistance of a qualified interpreter. For the reasons outlined above, it is unnecessary to deal further with considerations (a)---(d) or (g) raised by Ms Devers. In relation to the alleged "relatively insignificant cost" of providing interpreters at fortnightly staff meetings, the evidence supports the proposition that the costs involved were significant. On 30 March 2004, a decision was made that Ms Van Opijnen attend and interpret at some staff meetings with SensWide to pay for the interpreting costs of some staff meetings and Focus to pay for the costs of other staff meetings. Ms Van Opijnen stated that this arrangement was to reduce the financial burden on Focus. Focus relied on the evidence of Ms Danielle Don, director of Echo Interpreting, as to the cost of obtaining interpreters for staff meetings. The figures provided by Ms Don indicate that the cost to Focus of accredited Auslan interpreters attending a two hour staff meeting would be approximately $700, an annual cost of some $18,000. Although Focus adduced no evidence as to its resources to meet that cost, the onus is on Ms Devers to establish that the requirement or condition was not reasonable. Ms Devers's payment summaries tendered to the Court show that her wages were: $12,428 in the financial year ending 30 June 2004; $22,901 in the financial year ending 30 June 2005; $8,927 in the financial year ending 30 June 2006; $9,317 in the financial year ending 30 June 2007; and $20,239 in the financial year ending 30 June 2008. In this respect, she has failed to show that the imposition of the requirement or condition was not reasonable. Ms Devers suggests that the "significant adverse consequences" she experienced indicate that the condition or requirement was not reasonable. Although Ms Devers's reception of the information raised in staff meetings would have been less than perfect, the evidence shows that the information was provided to her through other means. In Ms Foster's email of 21 May 2008, she offered to ensure that staff members with a higher level of Auslan training were in attendance at all staff meetings. Ms Devers's inability to comply with the requirement or condition does not result in the conclusion that she experienced significant adverse consequences. Ms Devers continued in her employment and was able to perform her duties. The evidence does not support her contention that her wages and hours were reduced. Additionally, the language of the Act requires consideration of all the relevant circumstances, not simply the effect of the requirement or condition on Ms Devers. In light of the significant costs involved in providing qualified interpreters at staff meetings; the provision of the information in other ways, including minutes and the use of staff members as interpreters; Ms Devers's status as a casual employee and the relatively few hours she worked; Ms Devers has not established that condition or requirement was not reasonable. No indirect discrimination arises in respect of the failure to provide qualified Auslan interpreters at staff meetings. Unlike the failure to provide qualified Auslan interpreters at staff meetings or install flashing lights, it is difficult to distil the requirement or condition alleged to have been imposed by Focus. It is unclear from her amended statement of claim what is meant by the claim. The allegation was not particularised. Ms Devers has not indicated in which situations it is said that "her hearing peers relied on the spoken word". At its highest, the claim suggests that interpreters should have been provided at all times while Ms Devers was working. As the requirement or condition cannot be assessed with precision, it is impossible to assess whether Ms Devers was unable to comply with the requirement or condition, if it were imposed or whether it was not reasonable. If the allegation Ms Devers seeks to raise is that Focus discriminated against her by not providing qualified interpreters at all times, even if such a condition or requirement were imposed by Focus, she has failed to show that the requirement or condition was not reasonable. No evidence was adduced in support of the proposition that the condition was unreasonable. Each of the factors discussed in relation to the provision of interpreters at staff meetings and training sessions applies equally to this claim. There is no evidence before the Court which suggests that Focus's failure to provide Ms Devers with a qualified interpreter at all times was not reasonable. This claim of indirect discrimination is not made out by Ms Devers. Ms Devers alleges that Focus directly discriminated against her in the terms or conditions of employment that she was afforded, in denying or limiting her access to opportunities for promotion, training or any other benefit and in subjecting her to other detriment; see ss 15(2)(a) , (b) and (d) of the Act. She submits that the "other detriment" includes loss of income resulting from a reduction in the hours she worked. She also contends that Focus discriminated against her by awarding permanent and casual shifts and rosters to hearing staff when, given her experience, length of time at the Bungower Road CRU, language ability and the preferences of clients, the shifts should have been allocated to her. She submits such conduct is a breach of s 15(1)(a) , (b) and (c) of the Act. (original emphasis. Section 5(1) of the Act requires that the circumstances surrounding the treatment of the disabled person are identified. What must then be examined is what would have been done in those circumstances if the relevant person were not disabled; see Purvis at [223] per Gummow, Hayne and Heydon JJ. These circumstances are the objective features that surround the actual or intended treatment of the disabled person by the alleged discriminator; see Purvis at [224]. If the comparison reveals that the disabled individual was treated less favourably, the further question which must be asked is whether that difference was "because of" their disability; see Purvis at [236] per Callinan J. The relevant questions for determination are, firstly, how would Focus have treated a person in these circumstances without Ms Devers's profound deafness? Secondly, if the treatment of Ms Devers was less favourable than the treatment that would be given to a person without her disability, was that difference because of her disability? Section 15 of the Act only applies if it is shown that Ms Devers was treated less favourably than a person without her disability would have been treated in circumstances that were the same as or were not materially different from the circumstances of Ms Devers's treatment. In the present case, that the relevant "comparator" is an employee of Focus, in a similar role, without Ms Devers's disability who also has her attributes. For example, the relevant comparator in Purvis was a child without the applicant's disability who nevertheless displayed the same violent behaviour as the applicant; Purvis at [222]---[225]. I will separately consider each allegation of direct discrimination and the relevant circumstances in relation to each allegation. She said that she was only permitted to attend medical appointments when she went with David and Leigh Travaglia's mother, Ms Blake, and did so on two or three occasions. Mr Edo Travaglia gave evidence that both Ms Sipthorpe and Ms Colleen McFarlane told him that "Focus management" had said that Ms Devers was not permitted to take clients to medical appointments as she was deaf and unable to communicate with doctors. However this evidence is hearsay and unsupported by other evidence. Ms Dunn stated that the majority of doctors' appointments were attended by the parents of clients and that Focus would provide a staff member, if requested, for support. There is also evidence that Ms Devers attended a medical appointment alone with Leigh Travaglia, where communication with the doctor occurred through written notes. On other occasions, Ms Sipthorpe and Ms Bloxidge each attended medical appointments with Mr Travaglia and his sons. This evidence is consistent with Ms Dunn's evidence that parents usually took clients to medical appointments and a staff member was provided, if requested, to accompany them for support. There is no evidence that Ms Devers was treated any less favourably than other staff members in this regard because the evidence fails to identify any occasion where a staff member attended a medical appointment alone with a client. This aspect of Ms Devers's claim fails. Ms Devers admitted that she had not asked Ms Dunn for the access code until 2008, at which point Ms Dunn gave it to her. She said that before Ms Dunn was employed at the Bungower Road CRU she had asked Ms Dowd for the access code but was told that casual staff members were not entitled to the code. Ms Devers also said that following this incident she noticed other casual staff had access to the code. Ms Jones said that Ms McFarlane had told her that she would give Ms Jones the access code, but added "you're not to give it to Jane". I found Ms Jones to be an unimpressive witness and give little weight to her statements. Ms Foster said that the access code to the key to the front door was given to all staff who worked at the Bungower Road CRU. Ms Foster also stated that the access code was not a secret, as it was the first four digits of the phone number. This seems to be an issue of mismanagement and miscommunication rather than discrimination. I accept the evidence of Ms Foster that all staff should have had the access code to the front door. I do not accept that Ms Devers was not given the access code prior to 2008 because of her casual status. That proposition conflicts with the evidence of Ms Foster. Nevertheless, once management knew Ms Devers had not been given the code, she was provided with the access code. There simply is no evidence to show any less favourable treatment in this regard and this allegation of direct discrimination is not sustained. She also alleges that Focus altered rosters to preclude her from working sleepover shifts. Ms Devers acknowledged that at the beginning of her employment with Focus she did not want to work sleepover shifts and made this known to Focus. She said that later in her employment there were sleepover shifts available and, as she desired more hours, she told Focus that she would be willing to work sleepover shifts. Ms Devers admitted that she did not ask Ms Dunn if she could work sleepover shifts. Ms Devers claimed that she had communicated her desire to work sleepover shifts to Ms Foster in a facsimile sometime in 2006 and at a meeting. Ms Devers was unable to produce this facsimile and there are no minutes of any meeting where Ms Devers requested sleepover shifts. Ms Foster denies this exchange occurred. This claim fails on the evidence. There is no evidence other than Ms Devers's own statements of her communicating her desire to do sleepover shifts. I accept Ms Foster's evidence that no request was made by Ms Devers to work sleepover shifts. As Ms Foster has no Auslan skills, any meeting between Ms Foster and Ms Devers would have been a formal occasion with an interpreter present. The absence of minutes recording Ms Devers's alleged request supports Ms Foster's evidence that no request was made. As far as management was concerned, Ms Devers had communicated early on in her employment her desire not to work sleepover shifts. Whether or not Ms Devers can or should work sleepover shifts is irrelevant. Ms Devers was treated the same as any other employee who did not have her disability who had told management he or she did not want to work sleepover shifts --- by honouring her request. She also alleges that permanent and casual shifts and rosters were given to hearing staff when the hours should have been allocated to her, in light of her experience, length of time at the Bungower Road CRU, language ability and preference of the deaf clients and their parents that she work with them. As discussed above, Ms Devers's claim that Focus would change rosters to preclude her from working sleepover shifts fails on the evidence. There is little evidence of a reduction in Ms Devers's working hours. The amended statement of claim states that Ms Devers's hours were reduced from approximately 68 hours per fortnight in 2003 to approximately: 45 hours per fortnight in 2004; 34 hours per fortnight in 2005; and 14 hours per fortnight in 2008. However, on Ms Devers's own evidence, she worked only 24---34 hours per fortnight in 2003. Similarly, the rosters relied on by Ms Devers show that in 2008 she was rostered to work between 15---33 hours per fortnight. This is supported by her payment summaries, referred to at [103] of these reasons, which show that her wages for the year ending 30 June 2008 were comparable to the years ending 30 June 2004 and 30 June 2005. It is also consistent with the evidence of Ms Foster who stated Ms Devers's core hours remained constant throughout her employment. Focus contends that there is no evidence that Ms Devers sought extra shifts. Ms Foster gave evidence that Ms Devers was invited to apply for additional shifts on the basis that whoever sought a roster line would have to commit to all the shifts on the roster line. The roster line will NOT be broken up so that existing staff can take the shifts they want. It was this practise that had led to so many problems at Bungower Road. You are welcome to apply but you must be able to commit to all the shifts in the roster line. Focus contends that Ms Devers's desire to only work at the Bungower Road CRU limited her opportunities to undertake additional shifts. Focus also argues that, contrary to Ms Devers's claims, she was not excluded from working on Sundays or until 10.00 pm and that on occasion she was given extra paid hours; such as being paid to go on holidays with the Travaglias to Sydney and Queensland, to go to the Deaf Olympics and to attend a conference in Geelong. Ms Devers alleged that the only reason she was given these extra paid hours was because Mr Edo Travaglia and his sons requested her personally. Ms Foster also rejected Ms Devers's claims that she was the most "qualified" to fill shifts at the CRU as Ms Devers had no professional qualifications for the role at the time. Ms Devers admitted, in cross-examination, that following Ms Powell's resignation in January 2007, she was offered and accepted an additional three hours work each fortnight. Ms Devers said that she would have welcomed the opportunity to apply for Ms Powell's entire roster line, as there were no sleepover shifts on the line. She also complained that Focus used casual and agency staff rather than increasing her hours. Ms Foster said that the roster was reorganised to "amalgamate unworkable short roster lines...to enable staff to meet the individual needs of the clients". Ms Foster also gave evidence that Focus used casuals and agency staff as "[w]e continued to be hopeful that we could recruit to the set roster lines and advertised positions regularly". She stated that all staff members, including hearing staff, were required to apply and interview for vacant positions. Ms Devers said that she did not know where positions were advertised and that she had requested for Ms Foster to personally advise her via letter or email if advertisements for roster lines were placed, but she was never notified. She argues that if Focus had sought to "encourage" her, it could have advised her when positions were being advertised and assisted her to complete the relevant application. As it was, no staff member assisted Ms Devers to apply for any positions. Ms Devers admitted that she did not apply for any positions offered by Focus. She stated that usually these positions did not suit her as they had a sleepover shift or conflicted with her classes. She also said that she sought to apply for some roster lines that had sleepovers but that Focus was unwilling to re-arrange the roster line to remove the sleepover shifts. Ms Devers claimed that when Focus hired new employees it was flexible in rearranging the roster lines. That is, an employee who did not posses relevant professional qualifications and did not apply for additional shifts or advertised positions, or was unable to commit to all shifts in a vacant roster line. Was there differential treatment? There is no evidence to show that Ms Devers was treated differently to a hearing employee in similar circumstances. Ms Devers was aware of the need to apply for vacant positions and Focus's policy of not altering roster lines. By not altering the roster lines, Focus did not treat Ms Devers differently to the relevant comparator. Similarly, Ms Devers was not treated differently to other employees who did not apply for advertised positions as Focus's policy was to require all employees to apply for positions. Ms Devers's claim in relation to roster allocations fails. She did not give evidence as to the ability of other staff members to enrol in or attend training sessions. Ms Foster stated that a training calendar was organised at the beginning of each year and was available to all staff, with staff members informed of additional training sessions by memoranda. Ms Dunn and Ms Foster each gave evidence that staff members applied for training sessions using an application form. Ms Dunn said that she never helped Ms Devers, nor explained to her how, to complete these forms. A memorandum from Mr Guest on 25 June 2007 listed available courses and instructed staff to apply for the training sessions "using the Staff Development Application Forms". Ms Devers signed this memorandum on 29 June 2007, acknowledging her awareness of its contents. Ms Devers said that her attempts at applying for training courses "rarely were successful" as she experienced the following difficulties: She was not at the CRU as much as other staff and...I was just not always at the CRU at the time memos were first put out about it. The training forms and/or memo were not in view even when I arrived for my shifts. ... At no time did a Team Leader approach me and tell me about training and ask if I wanted to go. ... There was no board for staff notices. Staff notices were often clipped to venetian blinds. There was no special time in staff meetings to discuss training. It was left to staff to watch out for forms. This changed a little in the last six months of my work. In February 2005, Focus offered Dementia and Down's Syndrome training. Ms Devers was not selected for inclusion in the first training session and attended a training session run in April 2005. Mr Guest said that 38 employees applied for the training session but only 22 places were available. Priority in the allocation of places was given to employees working in areas where there were greater numbers of older clients with Down's Syndrome. Ms Devers admitted in cross examination that she was aware that she was not the only Bungower Road CRU staff member who was excluded from the training session. Once Mr Guest explained that the training was not relevant to her role, she "accepted that fact". Ms Devers agreed that the April session was run for employees who had missed out on the first training session and that her inclusion in this session had nothing to do with interpreter arrangements, but was simply because a second session was offered. Ms Devers said that in 2005 she applied for a training course on Personal Outcome Measurement Systems; however her name was omitted from the list of staff members who were to attend the course. Ms Foster said that when she was employed by Focus, she was the only person able to facilitate this training and that in any training course there were many more applicants than could be accommodated. She also stated that throughout 2004 and 2005 preference in allocating places in the Personal Outcome Measurement Systems course was given to the senior staff at Focus as they were responsible for managing the changes that were discussed in the training session. Ms Devers conceded that she was never told by anyone at Focus that the reason why she was unable to attend a training session was because Focus did not want to book an interpreter. She also agreed that, on occasions, there were more applicants than positions available in a given training course. Was there differential treatment? Ms Devers has not shown that hearing staff were able to attend a greater number of training sessions, being training sessions which were not relevant to their roles, or were able to attend sessions without completing the relevant application forms. The failure to include Ms Devers in some training sessions is attributable to the training sessions not being relevant to her role or her failure to complete the necessary application forms. There is no evidence to indicate that there was any differential treatment of Ms Devers. Ms Devers has not shown that any direct discrimination occurred on this ground. This allegation was not particularised by Ms Devers. The allegation that Ms Devers was subject to unspecified "restrictions that hearing staff were not subject to" fails to enable Focus or this Court to determine what allegations of discriminatory treatment are made. A great deal of evidence was tendered by Ms Devers in relation to matters such as driving the Focus bus, access to client files and a sock thrown at her by a fellow employee in an attempt to gain her attention. The worker involved in the sock-throwing incident later apologised and was reprimanded. However, it is unclear which of these relate to allegations of direct discrimination or what the less favourable treatment is said to be. It is not the role of this Court to amend the failings in the amended statement of claim. Ms Devers was represented at the trial. That responsibility lay with her legal representatives. As the less favourable treatment or restrictions cannot be identified with any degree of precision or clarity this claim also fails. The application is dismissed. There are no special or unusual circumstances in this proceeding which dictate that costs should not follow the event; see Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [11] per Black CJ and French J. I certify that the preceding one hundred and fifty-four (154) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | discrimination hearing disability alleged indirect discrimination of applicant contrary to ss 6 and 15 of disability discrimination act 1992 (cth) whether respondent imposed requirement or condition that applicant perform employment without the assistance of flashing lights or telephone typewriter requirement or condition that applicant attend training sessions and staff meetings without qualified interpreters whether applicant able to comply with requirements or conditions applicant failed to show requirements or conditions not reasonable discrimination hearing disability alleged direct discrimination of applicant contrary to ss 5 and 15 of disability discrimination act 1992 (cth) whether less favourable treatment of applicant no less favourable treatment shown treatment not the result of applicant's disability human rights human rights |
The Deputy District Registrar's decision was made pursuant to O 46, r 7A(1) of the Rules. The Deputy District Registrar communicated this decision to Mr Pickering by letter dated 20 May 2009. Mr Pickering then made ex parte application pursuant to O 46, r 7(2) for the Court to give directions to the Deputy District Registrar to issue the proposed applications. In the second, he proposed to sue a Judge of the Federal Court of Australia for damages in the sum of $5.4 million. (2) A person may apply to the Court ex parte for a direction to the Registrar that he do any act which he is bound or entitled to do and has refused to do. In this regard, guidance may be obtained from decisions of the Court concerning the power of the Registrar under O 46, r 7A(1), to refuse to accept a document because it appears on its face to be an abuse of process, and that of the Court to give directions in relation thereto under O 46, r 7(2). In Bizuneh v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 42 ; (2003) 128 FCR 353 , the appellant appealed against the direction of the Court made under O 46, r 7A that the Registrar refuse to accept an application as an "originating document". The Full Court (Lee, Whitlam and Jacobson JJ) said that no judicial act is carried out by the Registrar under r 7A, and so far as the direction of the Court is concerned it is "administrative in character" (at 357). There is no application to the Court by motion or otherwise and no requirement for a party to be heard. It involves determination of administrative obligations with respect to documents presented to a Registrar having regard to the character of the documents on their face. It should be noted that in Paramasivam v Randwick City Council [2005] FCA 369 Sackville J doubted the correctness of the Full Court's statement that a direction given by the Court was not a judicial act, and referred to the decision of Toohey J in Letts v Commonwealth (1985) 8 FCR 585. However, His Honour accepted there was a serious question whether such a direction by the Court would constitute a "judgment" for the purpose of appeal or leave to appeal under the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) and Rules. Nonetheless, Sackville J considered himself bound by the decision of the Full Court. In Manolakis v District Registrar, South Australia District Registry, Federal Court of Australia [2008] FCAFC 162 ; (2008) 170 FCR 426 , another Full Court considered that it should now be accepted that a direction by the Court under O 46, r 7A is not a judgment from which an appeal may be brought pursuant to s 24(1)(a) of the Federal Court Act. We take this view for two reasons. First, the registrar is obliged to act in accordance with the direction of the judge. For this reason the person seeking to file the document is aggrieved not by the conduct of the registrar but rather by the direction given by the judge (see Letts v Commonwealth 8 FCR at 587). Secondly, s 35A(2) authorises a party to a proceeding to apply to the Court for review of the exercise of a registrar of any of the powers of the Court under s 35A(1). Where it is an originating process that is not accepted for filing the person concerned will not be a party to any proceeding at the relevant time. Even where this issue does not arise, the authority vested in a registrar by O 46, r 7A to refuse to accept a document, whether pursuant to a direction of a judge or of his or her own motion under O 46, r 7A(1), is not a power of the Court under s 35A(1). None of the powers identified in s 35A(1)(a) to (g) relates to the acceptance of documents for filing. Nor does any of the powers prescribed by O 46, r 7AA (see s 35A(1)(h)). However, the reaching of a concluded view on that question was not required and the Court said it was "best left for another day when the issue directly falls for consideration". In my view, these authorities directly bear on the nature of an application made under O 46, r 7(2), where a person applies to the Court ex parte for a direction to the registrar. It seems to me that the same principles enunciated in the two Full Court decisions apply with equal force to the Court's function under r 7. Plainly r 7(2) is designed to enable the Court to give appropriate directions to the registrar in aid of the administration of the Court. In that regard there is no "judgment" for the purposes of the Federal Court Act and Rules. It also follows that there is no obligation on the Court in dealing with an application under O 46, r 7, to give any person, other than the applicant perhaps, notice of the application or to require the Registrar whose decision is under effective review to appear or make submissions to the Court. The Registrar who refused to issue the process in the first instance, in a case such as the present, is not in any relevant sense a "party" to the application for a direction. However, I do not consider that the Court would be precluded from providing another person the opportunity to appear in an appropriate case. In this case I did not consider it necessary to give notice to the prospective respondents of Mr Pickering's applications or to require the Deputy District Registrar to appear before the Court. I did, however, following hearing from Mr Pickering, request the Australian Government Solicitor (AGS) to provide a copy of the release referred to by Mr Pickering in his submissions. The AGS subsequently provided a copy of the release to Mr Pickering and he then provided a copy to the Court. Of course, in most cases involving the refusal of an originating document, if any person who may have been considered interested later becomes a party to any proceeding that results from a direction of the Court, that person as a party to that proceeding will have all the rights of a party to apply to dismiss the proceeding and exercise other rights they have as a party to a proceeding. These are relevant to the matters that Mr Pickering would like to litigate. In Pickering v Chief Executive Officer of Centrelink [2006] FCA 477 the Court, in proceeding WAD 254 of 2005 (the 2005 Centrelink proceedings), dismissed an application brought by the respondent for summary dismissal of Mr Pickering's application by which he sought compensation of $520,000.00 in respect of his allegation that "I had a job to go to. Centrelink refused to help me get a job". The Court found at [21] that there were "potential causes of action" available to the applicant which could arguably be brought within the jurisdiction of the Court. Relevantly to the first of the current proposed applications, Mr Pickering achieved some success in the proceeding, in that following mediation in the proceeding on 8 June 2006, Centrelink agreed to pay him $6,000.00, but only did so after he agreed to sign the release referred to above in respect of the balance of the claim of $514,000.00. On 21 June 2006, the proceeding was dismissed by consent. In Pickering v Commonwealth [2007] FCA 1253 the Court, in proceeding WAD 226 of 2006 (the 2006 DEWR proceeding), dismissed a separate proceeding in which Mr Pickering sought damages from the respondent (identified in his application as the Department of Employment and Workplace Relations) in the sum of $520,000.00, because the Department "refused to help him get a job in Albany". The Court found it did not have jurisdiction to entertain the application (at [9-13]), and that there was no reasonable prospect of the applicant successfully prosecuting his claim for damages (at [14-17]). However the Court said that, if it had found that it had jurisdiction to deal with the application, it would not have dismissed the application on the basis that there was no factual foundation to the claim (at [18-25]). Rather the disputed factual matters would need to be determined by the Court following a trial. Each of these two proceedings involve the thwarted desire of Mr Pickering to travel from Perth to Albany to obtain work. In Pickering v Centrelink [2008] FCA 561 , in proceeding WAD 45 of 2008 (the 2008 Centrelink proceeding), the Court (on 18 April 2008) dismissed Mr Pickering's application by which he claimed damages of $2.7 million from Centrelink for "all the stress, aggravation, stupidity and time in jail that Centrelink has put me through for not doing their job in the first place". The Court held at [15] that the application as formulated did not disclose a cause of action for damages and, even if it did, there is no private right to damages arising from the exercise of administrative powers when there is statutory right of review of such exercise. The Court also held at [20] that even if the application were to disclose a cause of action for damages it would have no reasonable prospect of success in the light of established authority. The Court further held at [23]-[25] that it did not have jurisdiction to entertain the claim. Finally, the Court considered at [26]-[28] that the application should be dismissed because it was a "frivolous" proceeding, in the sense that despite whatever attempts were made to discern a cause of action it was still not arguable; and because it was without substance, or groundless or fanciful. SINCE 1975 I HAVE BEEN ARGUING WITH CENTERLINK (sic) ABOUT THEIR DUTIES AND OBLIGATION TO ME. IT HAS GOT TO THE SUITATION (sic) THAT THE CENTERLINK (sic) PHYSCHIRIST (sic) PETER CLARKE BELIEVES I AM MENTALLY UNSTABLE. NOW I CANNOT TALK TO ANYONE WITHOUT THREATENING TO KILL EVEN THE POLICE HAVE TOLD ME I AM MENTAL. THEY CLEARLY SAIN THAT UNLESS I SIGNED THE DOCUMENT I WOULD NOT GET THE $6,000 WE AGREED ON AT THE MEDIATION. ON THE 26 JUNE 2006 AT 10.00AM. I HAD NO WORRIES ABOUT THE $6,000 BUT NOW FIND THAT I CANNOT SUE CENTRELINK ABOUT ANYTHING BECAUSE OF THIS DOCUMENT. WHAT CENTRELINK HAS DONE IS AGAINST THE LAW AND BECAUSE I HAD NO LEGAL ADVICE OR KNOWLEDGE OF WHAT IS LEGAL AND WHAT IS NOT I AM NOT ALLOWED TO CHALLENGE CENTRELINK THROUGH THE "AUTHORISED REVIEW OFFICER" A.R.O. THAT IS CENTRELINK'S OWN COURT "SO TO SPEAK" INSTEAD OF GOING TO THE FEDERAL COURT ITS HANDLED IN HOUSE BY CENTRELINK THERE WAS NO DEAL IN THE MEDIATION ON 26 JUNE 2006 THAT STATED I HAD TO SIGN A DOCUMENT FOR CENTRELINK TO SAY I WOULD NOT SEE THEM AGAIN. Not unreasonably or surprisingly, Mr Pickering was required to give Centrelink a release from liability or claim for the balance of the $520,000.00 claim before the $6,000.00 agreed settlement was paid to him. He duly gave that release. However, notwithstanding that Mr Pickering received the $6000.00 settlement he now wishes to 'sue' Centrelink for the balance of what he considers is due and owing to him, namely, $514,000.00. On 12 September 2005 Mr Pickering filed an application in the Federal Court of Australia, File No. WAD 254 OF 2005 in which Centrelink was named as the respondent. On 4 November 2005 his Honour Justice Siopis ordered that the name of the respondent be amended to read The Chief Executive Officer of Centrelink. In the application, Mr Pickering stated 'I had a job to go to and Centrelink refused to help me get a job'. Centrelink denies that it or any of its employees refused to help Mr Pickering get a job. The CEO of Centrelink and Mr Pickering have agreed to settle the application on the terms set out herein. Mr Pickering and The CEO of Centrelink agree to bear their own costs in relation to the application. Within 14 days of the date of this Deed, Centrelink will pay to Mr Pickering the sum of $6,000 in full and final settlement of any and all claims, costs, expenses or other matter of whatsoever nature and howsoever arising that Mr Pickering has or may have against Centrelink, The CEO of Centrelink and/or any employee of Centrelink in any way relating to or in connection with the application. In consideration of the aforesaid payment by Centrelink, Mr Pickering, to the extent permitted by law, releases and discharges Centrelink and the employees of Centrelink absolutely from all and any liability in respect of any action, demand, claim or proceeding made, or which (but for this Deed) might be made, against the same or any of them in any jurisdiction in respect of, relating to, or in connection with the application. Each party must execute and do all acts and things necessary or desirable to implement and give full effect to the provisions and purpose of this Deed. Each party is responsible for its own legal and other costs and expenses in relation to this Deed. Centrelink will pay stamp duty on this Deed. This Deed shall be binding upon Mr Pickering, Centrelink and their respective successors and/or permitted assignees. If any part of this Deed is void or unenforceable, then that part will be severed from this Deed so all part that are not void or unenforceable remain in full force and effect and are unaffected by that severance. For all purposes this deed shall be governed by and construed in accordance with the laws of the State of Western Australia and, where applicable, the laws of the Commonwealth of Australia, for the time being in force. This deed may be executed in any number of counterparts and all of these counterparts taken together constitute one and the same instrument. In my view, a proceeding such as that now proposed by Mr Pickering cannot possibly succeed in light of the release. There is no arguable ground that the release is not enforceable. As the Court explained in Pickering v Centrelink [2008] FCA 561 at [27] , by reference to precedent authority, where a matter is without substance or groundless or fanciful it may be considered "frivolous" or "vexatious" and so constitute "an abuse of process" of the Court. The proposed application by Mr Pickering against Centrelink is simply a renewed attempt by Mr Pickering to pursue his original $520,000.00 claim against Centrelink, a claim he has already compromised and received a $6,000.00 pay-out for. Plainly Mr Pickering no longer has any rights of action against Centrelink in respect of the sum of $514,000.00. In that sense, the proposed proceeding is frivolous and vexatious, and would be an abuse of process of the Court if it were allowed to be issued. Further, so little detail of the statutory basis of the proposed claim against Centrelink is provided in the proposed application that the application should, for this additional reason be considered unreasonably vague and an abuse of process. For these reasons I decline to make the direction to the Deputy District Registrar requested by Mr Pickering, to cause the issue of his proposed application against Centrelink. The proposed application does not specify how damages in that sum have been calculated. It perhaps, not coincidentally, is twice the $2.7 million claim made against Centrelink in the 2008 Centrelink proceedings dismissed by the Federal Court Judge on 18 April 2008. The action proposed would be a private damages claim against a Federal Court Judge concerning his conduct in the performance of his duties as a Federal Judge under Chapter III of the Australian Constitution . Such an action is not competent. Judges of the status of a Federal Court Judge is not liable to be sued in respect of acts done in the performance of his or her judicial duties: Gallo v Dawson (1988) 82 ALR 401. Further, it is doubted that this Court has jurisdiction to entertain a damages claim, for the reasons concerning the Court's limited jurisdiction to entertain such private damages claims as explained in Pickering v Commonwealth [2007] FCA 1253 and Pickering v Centrelink [2008] FCA 561. Moreover, there is no factual basis to support the very serious allegations that the proceeding, if issued, would make. Mr Pickering asserts that the Judge in the course of dealing with his matter on 18 April 2008, made comments that he considers were "lies". A perusal of the reasons for decision dismissing the application and the transcript of the proceedings in Court on 18 April 2008 discloses no such thing. HIS HONOUR: But he made a decision in the court that you don't like. That's the basis, isn't it? MR PICKERING: No. He made a decision based on the fact that he lied to the Centrelink and the court about what happened. HIS HONOUR: Who did? MR PICKERING: He said that I never threatened Centrelink any time, yet I've got police records and the court records from the Magistrate Courts, District Court, the police, that says I did. He said at no time have I done that. Then he turned around and said that I threatened Centrelink there and then on that day when there was no threats at all made. It has got to the situation that the Centrelink psychiatrist ... believes I am mentally unstable. Now I cannot talk to anyone without threatening to kill. Even the police have told me I am mental. Therefore because of Centrelink and being in jail at times, I am now suing Centrelink for $2,700,000 for all the stress, aggravation, stupidity and time in gaol that Centrelink has put me through for not doing their job in the first place. Why $2,700,000? I don't know. It's the number that jumps into my head. The Judge then explained that a general claim for damages of $2.7 million could not be made in this Court. Towards the end of that hearing, when his application was dismissed, Mr Pickering was obviously so unhappy that he made what sounded like a threat. There is no need to repeat here what he said. Having said what he said, Mr Pickering added: "That's not a threat. That's what happens. That's what could happen, you know? " On that note the transcript and the proceeding before His Honour came to an end. Against this background, it is clear Mr Pickering misapprehended what the Judge said and ruled upon when he made a decision and gave reasons for decision on 18 April 2008. Plainly the Judge acted at all times in the performance of his duties as a Federal Court Judge. He is not liable to be sued for so doing. Finally, it must be observed that the terms of the proposed application against the Federal Court Judge are lacking in any detail sufficient to support such a serious claim. For that reason, as well, the proposed application should be considered vexatious and an abuse of process. In context, Mr Pickering's proposed proceeding against the Federal Court Judge can be seen to be the means of seeking some sort of retribution against the Judge for dismissing his application on 18 April 2008. For these reasons I decline to give a direction to the Deputy District Registrar to issue Mr Pickering's proposed application against the Federal Court Judge. The background I have provided above to Mr Pickering's litigation in this Court since 2006, goes to demonstrate that the proceedings Mr Pickering now wants to commence in this Court are misconceived and would constitute an abuse of process of this Court if he were to be permitted to issue such originating applications. For these reasons I decline to give any directions to the Registrar to issue either of the proposed originating applications lodged by Mr Pickering at the Western Australia District Registry of the Federal Court of Australia on 19 May 2009. The Court therefore formally orders that the application made by Mr Pickering pursuant to O 46, r 7(2), that directions be given to the Registrar to issue two originating applications lodged with the Western Australia District Registry of the Court on 19 May 2009, is dismissed. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | whether court should direct registrar to issue applications lodged by the applicant proposed applications frivolous, vexatious and if permitted to issue would constitute an abuse of process of the court no direction ordered application dismissed. practice and procedure |
The decision of the Tribunal affirmed a decision of a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs (the Minister) to refuse the appellant the grant of a protection visa. After hearing from the appellant I found no reviewable error in either the decision of the Tribunal or that of the Federal Magistrates Court. The appeal was therefore dismissed with costs. I publish my reasons for so ordering. He is a Muslim. He came to Australia on 24 November 2002 on a passport which was issued on 17 November 2002. His entry was under a business visa which had been issued on 8 November 2002. 3 On 23 December 2002 the appellant lodged an application for a protection visa. The reasons, stated in the application form, for claiming a protection visa were briefly put. He claimed to be in fear of harm or mistreatment by a Hindu group known as Veswa Hindu Paresad (VHP). He claimed that he was at risk of harm because of his Muslim religion and his involvement in activities, including the preaching of that religion to both Muslim and non-Muslim people. He said he would submit a more detailed description of his case as soon as possible. 4 The appellant submitted a handwritten statement through his migration agent on 28 January 2003. He claimed to have become an important member, in 1996, of a Muslim organisation known as Tamil Nadu Muslim Munatra Kalagam (TMMK). He said that at the end of 1997 some Muslim people in his village asked him about the possibility of constructing a mosque there. They were prepared to donate 300,000 rupees to that end. The appellant said that he and other members of the TMMK began collecting money from the villagers as well as from people in a neighbouring village. Hindu people in the area came to know that he was engaged in this activity and threatened his life. Those who made these threats were associated with three Hindu organisations, the VHP, the BJP (Barahaja Janaja Party) and the RSS (Rastria Swam Sebaci). The appellant subsequently became the acting secretary of the TMMK. 5 In mid 2000 people from his village asked him about the mosque and he told them that he had a problem with these organisations and other 'pro-Hindu' people in the village. He wanted TMMK members to support him with the construction of the mosque. In November 2001 he wrote to other TMMK branch leaders seeking support for the organisation of a rally to publicise the problems facing Muslim people. These included, he alleged, discrimination in education and employment. However some prominent Hindu leaders in his village came to his house and warned him not to carry on with the proposed meeting which would involve a discussion about the construction of a mosque. He claimed that they went as far as to threaten that he would be killed if he did so. 6 The appellant said that he was terrified by the threats he had received but was not prepared to give up. There was no help to be had from the Indian government. He also claimed, albeit without any elaboration or explanation, that he was arrested by police along with some TMMK members on 30 November 2001 and was released on 11 December 2001 without any charge being made. He claimed the police always favoured the ruling party. The police in Tamil Nadu, as well as in India, are pro-Hindu and anti-Muslim. 7 The appellant claimed that in September 2002 the Chief Minister of Tamil Nadu had proposed a law under which people could not change their religion. He arranged a public meeting in his village to protest against this. However pro-Hindu elements passed a message to the police who tried to arrest him. He claimed to have escaped from the police and gone to Bombay. Subsequently his parents told him that police and Hindu extremists were looking for him. His life was at risk. The appellant said he stayed two months in Bombay then arranged a visa with a friend who is a travel agent. He claimed that he could not return to India because his life was in danger from the three Hindu organisations he had named as well as from the police. 8 The appellant's application for a protection visa was refused by a delegate of the Minister on 6 March 2003. He applied on 27 March 2003 for review of that decision by the Tribunal. 9 On 15 September 2003 he was invited to a hearing by the Tribunal which was scheduled for 23 October 2003. On 17 September 2003 he was sent a letter by the Tribunal under s 424 of the Migration Act 1958 (Cth) (the Act) requesting details of his claims and, in particular, documentary corroboration of aspects of them. On 10 October 2003 his migration agent sent to the Tribunal a response to the hearing invitation, a statement from the applicant and copies of his passport. The letter set out some elaboration of factual issues raised in the request of 17 September 2003. 10 The Tribunal heard the application on 23 October 2003 and on that date decided to affirm the decision not to grant a protection visa. The appellant then sought judicial review of the Tribunal's decision in the Federal Magistrates Court. His application for judicial review was refused by Driver FM on 31 January 2006. 11 On 15 February 2006 the appellant filed a notice of appeal against the decision of Driver FM. It referred to the notice issued to him on 17 September 2003 and his response given to that notice. It then canvassed the appellant's evidence at the oral hearing and independent country information to which it referred relating to the thoroughness of checks at India's airports. 13 In its findings and reasons the Tribunal did not accept that the appellant had a genuine or well-founded fear of persecution by reason of his religion or his political opinion or for any other Convention reason. It was satisfied that he had fabricated his claims in order to extend his stay in Australia. It did not accept his explanation for failing to use any of three visas which he had obtained prior to departing India which would have allowed him to enter Malaysia, Singapore or Thailand. It did not accept that a person genuinely in fear of persecution would have failed to make use of three lawful avenues to escape such persecution. The Tribunal did not accept that he was a member of TMMK or the secretary of his local branch. His attempt to respond to the s 424 notice requesting details of his role in TMMK were 'unsatisfactory' and 'not what the Tribunal would expect from a long time member and senior office holder'. 15 The Tribunal did not accept the appellant's claim that he had been arrested in November 2001 or that the police had tried to arrest him again in September 2002 or that police in a different state (when he was in Bombay) wanted to arrest him. He had provided no corroboration of those claims and in his protection visa application form had failed to mention those episodes of investigation and arrest when specifically asked to give details of such matters. The Tribunal found that his explanation for his arrest had varied significantly in the hearing from that claimed in his written submissions, including his response to the letter of 17 September 2003. His explanation of how he effected a release after 11 days detention was 'particularly unconvincing' especially as he claimed that police continued to search for him after his release and right up to his departure from India. For this and a number of other reasons the Tribunal rejected the appellant's claims. Absent any further particularity there was no jurisdictional error to be shown on the first ground. 18 The second ground was also dismissed as 'without foundation'. The appellant's claim was never expressed in terms of membership of a particular social group. It did refer to his membership of the TMMK and the political and religious activities which he had undertaken in connection with that association. Those matters were 'fully explored by the RRT and their centrality to the applicant's claim to refugee status accepted'. The learned Federal Magistrate correctly referred to unavailability of judicial review on the factual merits of the case including matters of weight to be given to items of evidence and the credibility to be attached to witnesses. If it is suggested that there is a legal consequence, it may be necessary to be more precise as to the nature and quality of the error attributed to the decision-maker, and to identify the legal principle or statutory provision that attracts the suggested consequence. 20 The learned Federal Magistrate found no other possible assertion of jurisdictional error apparent from his own reading of the Tribunal decision and the book of relevant documents. He found that the Tribunal decision was free from jurisdictional error. He dismissed the judicial review application with costs. I was refused natural justice. The Tribunal identified the wrong issue. The Tribunal made jurisdictional error. He set out the factual and procedural background and a summary of the claims he had made before the Tribunal and of the Tribunal's finding. He then submitted that there were substantive errors in the Tribunal's decision. The Tribunal did not put any weight on the responses which he gave on 10 October 2003 to the letter of 17 September 2003 requesting the provision of information pursuant to s 424 of the Act. 2. He referred to the Tribunal finding that he had fabricated claims in order to extend his stay in Australia and that the Tribunal had based its finding on his failure to provide supporting documentary evidence. He submitted that he had provided all necessary supporting documents to the Tribunal. He said he promptly responded to the s 424 notice. He submitted that the Tribunal had made a wrong assumption about his documentary evidence. 3. The Tribunal did not accept that the appellant was a member of the TMMK or a secretary of his local TMMK branch. It also commented that in his response to the s 424 notice seeking details of his role in that organisation the information he provided was 'extremely vague and unsatisfactory'. The appellant submitted, in effect, that it was not open to the Tribunal to make such a comment without any investigation. 4. The Tribunal member had referred to not being satisfied of various things. The appellant asserted that the Tribunal had already made up its mind before the hearing that it would give a decision adverse to the appellant. He submitted that the Tribunal had acted in bad faith. He relied upon the Tribunal's use of the verbal formula 'I am not satisfied' without any investigation and without giving any weight to his evidence. 24 At the hearing of the appeal the appellant added very little to his written submissions apart from contentions about the facts of the case. No jurisdictional error is disclosed on the part of the Tribunal nor any error in the reasoning of the learned Federal Magistrate. The assertion of bias and bad faith is not supported by any evidence. The other matters raised go to the factual merits of the case. The appeal will be dismissed with costs. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | judicial review indian national tamil ethnicity muslim religious affiliation alleged fear of persecution by hindu elements in local village on account of muslim religion on account of public activities related to muslim affiliation claims rejected by refugee review tribunal no jurisdictional error disclosed application for judicial review by federal magistrates court dismissed appeal dismissed. migration |
2 He first entered Australia in October 1992 and left within two weeks. He again entered Australia in August 2000. On the latter occasion he was granted a special category visa. Both before and after entering Australia the Applicant committed a number of criminal offences. His visa was cancelled by a delegate of the Minister on 5 June 2008 pursuant to s 501(2) of the Migration Act 1958 (Cth). He appealed that decision to the Administrative Appeals Tribunal and on 29 August 2008 the Tribunal affirmed the decision: Re Kasupene and Minister for Immigration & Citizenship [2008] AATA 766. 3 On 23 September 2008 the Applicant filed a Notice of Appeal in this Court and an Affidavit . 4 An initial difficulty confronting the Applicant was the fact that the decision of the Tribunal is a " privative clause decision " and hence is not susceptible of appeal. (2) Where the Federal Court has jurisdiction in relation to a migration decision under paragraph (1)(a), (b) or (c), that jurisdiction is the same as the jurisdiction of the High Court under paragraph 75(v) of the Constitution . 5 Although the decision of the Tribunal was not susceptible of appeal, original jurisdiction is conferred on this Court by s 476A(1)(b) and (2) to review the Tribunal's decision. The jurisdiction conferred is the same as that of the High Court of Australia under s 75(v) of the Constitution . In order to obtain relief in this Court's original jurisdiction, the Applicant must demonstrate jurisdictional error: Cockrell v Minister for Immigration & Citizenship [2008] FCAFC 160 at [4] . The Minister did not deny that a failure to consider a relevant consideration could amount to jurisdictional error (eg, Aporo v Minister for Immigration & Citizenship [2008] FCA 102 ; see also: Green v Minister for Immigration & Citizenship [2008] FCA 125 at [21] ---[29], [2008] FCA 125 ; 100 ALD 346) ; nor was any submission advanced that a failure to comply with s 43(2B) of the 1975 Act may not constitute jurisdictional error. The submission which was advanced on behalf of the Minister was that the Tribunal had committed no error, be it jurisdictional or otherwise. 6 Although the constraint imposed by s 476A(1) cannot be disregarded, it did not appear that anything would have been gained had the Applicant been directed to file an application seeking judicial review as opposed to treating the Notice of Appeal as though it were such an application. The Minister did not oppose this course. It is not considered that such a direction would have facilitated the expeditious hearing and resolution of the proceeding. The matter first came before the Court on 13 October 2008. The Applicant was then in detention at Villawood Detention Centre and it was desirable to have his grievances resolved as quickly as was consistent with a proper resolution of the issues raised in his Notice of Appeal . It is the practice of this Court to hear such cases as quickly as possible: eg, Awan v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 594 at [42] , [2002] FCA 594 ; 120 FCR 1 at 11; SZLMA v Minister for Immigration & Citizenship [2008] FCA 69 at [1] . With the co-operation of those appearing for the Respondent Minister, arrangements were made to have the relevant evidence filed and served by 15 October 2008. The matter was listed for final hearing on 17 October 2008. 7 The Applicant appeared before the Court on 17 October 2008 and was then unrepresented. Subsequent to that hearing, further written submissions were filed on behalf of both the Respondent Minister and the Applicant. The most recent written submissions advanced on behalf of the Applicant were received this morning. A failure to take a consideration into account only gives rise to a reviewable error if the consideration was one which a decision-maker was " bound " to take into account: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 39---41 per Mason J. 9 The simple fact is that the Tribunal did consider the hardship which would be occasioned to the Applicant if the decision cancelling his visa was to be affirmed and it did make findings which referred to the evidence. The Applicant was given an opportunity for the merits of his position to be considered. Regrettably for the Applicant, the Administrative Appeals Tribunal resolved the merits of his claims adversely to him. 10 Even if there had been a failure to consider the impact upon the Applicant of a decision affirming the cancellation of his visa, it is not considered that any jurisdictional error would in any event have been committed by the Tribunal. TRIBUNAL'S ASSESSMENT OF THE EVIDENCE & REASONS PROVIDED: IMPACT UPON THE APPLICANT? A determination as to whether the Tribunal has failed to take into account a relevant consideration -- in the present proceeding, hardship to the Applicant -- necessarily depends upon the evidence before the Tribunal, the submissions in fact advanced for resolution, the ambit of the discretion vested in the Tribunal, and a consideration as to whether the Tribunal has adequately set forth its findings and reasons for the conclusion in fact made. 12 No error may be exposed where (for example) the Tribunal does not resolve a submission which was never advanced; and no error may be exposed if the Tribunal's reasons -- properly construed -- adequately explain the decision made. 13 Before the Tribunal the Applicant also appeared unrepresented. The evidence in support of his claim was his own evidence; the evidence of his father and the Applicant's younger brother and sister; and three letters of support, one from a Justice of the Peace who had known the Applicant for about five years, one from a former employer, and one from a person who had come to regard the Applicant as a trustworthy and hard worker. The Applicant, his father, and his brother and sister all gave oral evidence before the Tribunal. 14 When appearing before the Tribunal, s 39 of the Administrative Appeals Tribunal Act provides that the Tribunal is to " ensure that every party ... is given a reasonable opportunity to present his ... case ". The opportunity must be a " real and meaningful opportunity " and not a " hollow shell or an empty gesture ": cf Mazhar v Minister for Immigration and Multicultural Affairs [2000] FCA 1759 at [31] , [2000] FCA 1759 ; 183 ALR 188 at 194---5; Minister for Immigration and Multicultural and Indigenous Affairs v SCAR [2003] FCAFC 126 at [37] , [2003] FCAFC 126 ; 128 FCR 553 at 561. But it is no part of the Tribunal's task to ensure that a party takes the best advantage of that opportunity ( Secretary, Department of Family and Community Services v Verney [2000] FCA 570 at [45] , [2000] FCA 570 ; 60 ALD 737 at 748). " Neither the Act nor the common law imposes upon the tribunal the impossible task of ensuring that a party takes the best advantage of the opportunity to which he is entitled ": Sullivan v Department of Transport (1970) 20 ALR 323 at 343 per Deane J. And it is no part of the Tribunal's task to make out an applicant's case for him: cf Abebe v Commonwealth [1999] HCA 14 at [187] , [2004] HCA 32 ; 197 CLR 510 at 576 per Gummow and Hayne JJ. 15 Although an unrepresented applicant is relevantly in no different position, both courts and tribunals are conscious of the difficulties confronting unrepresented litigants and are conscious of ensuring that any hearing is fair and just: Rogers v Law Coast Mortgages Pty Ltd [2002] FCA 181 at [26] per Finn J. See also: Neil v Nott [1994] HCA 23 ; (1994) 68 ALJR 509. See also: Nipperess v Military Rehabilitation and Compensation Commission [2006] FCA 943 at [51] ---[54], [2006] FCA 943 ; 91 ALD 362 at 372 per Cowdroy J. 16 The task to be undertaken by the Tribunal in the present proceeding -- as in other applications coming before it -- was essentially a consideration of the evidence adduced and the submissions advanced. Its task was to resolve the case sought to be advanced by the parties in a manner consistent with determining the " correct or preferable decision ". That task was one of determining the correct or preferable decision on the basis of the material then before the Tribunal: Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal. These observations are oft cited with approval: eg, Esber v Commonwealth [1992] HCA 20 ; (1992) 174 CLR 430 at 440 per Mason CJ, Deane, Toohey and Gaudron JJ. See also: Bushell v Repatriation Commission (1992) 175 CLR 408 at 425 per Brennan J. 17 In determining the " correct or preferable " decision, the Tribunal will ordinarily be best " guided by the parties " in identifying the issues: Sullivan v Department of Transport (1970) 20 ALR 323 at 342. See also: A v Minister for Immigration & Multicultural Affairs [1999] FCA 227 at [36] per Katz J; NADB v Minister for Immigration and Multicultural Affairs [2002] FCA 200 at [21] , [2002] FCA 200 ; 189 ALR 293 at 298 per Hely J. Deane J, with whom Fisher J agreed, further observed in Sullivan however that "[c] ircumstances may ... arise in which ... a statutory tribunal, in the proper performance of its functions, will be obliged to raise issues which the parties do not wish to dispute ": (1978) 20 ALR 323 at 342. It is " the duty of the Tribunal ", it has been said, " to satisfy itself whether a decision in respect of which an application for review is duly instituted is a decision which in its view, was objectively, the right one to be made ": Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 at 429---30. Before the Tribunal there is no requirement that " the point be taken ": Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 54 FLR 334 at 348 per Fox J. 18 In determining the " correct or preferable " decision the Tribunal must also be satisfied that there is " enough material " before it on a matter of central importance to the decision to be reached ( Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 54 FLR 334 at 343 per Bowen CJ). And "[t] he tribunal [is] required to make the correct or preferable decision on the material before it, regardless of the form which the parties' submissions [take]": McKeown v Repatriation Commission (1995) 39 ALD 30 at 33 per Jenkinson J. An error of law may be committed if the Tribunal ignores a central issue, even if no submission at all is directed to it: Australian Trade Commission v F & F Asia Pty Ltd (1996) 69 FCR 252 at 266 per Carr J. See also: Transport Accident Commission v Bausch (1998) 4 VR 249 at 263 per Tadgell JA (Batt and Buchanan JJA agreeing). 19 Where one of the parties before the Tribunal is unrepresented, as in the present proceeding, the Tribunal is thus not absolved from itself considering the state of the evidence before it when determining the " correct or preferable " decision. The fact that an unrepresented party may not have advanced evidence peculiarly within his control and of central relevance to the decision to be made, nor made a submission in respect to such material as is before the Tribunal, may make the task of the Tribunal more difficult. In the case of an unrepresented party, the Tribunal will frequently not have the benefit of any " guidance " being provided by that party. But the task of the Tribunal remains the same. Not to be ignored is the obligation now imposed upon the person who made the decision to " use his or her best endeavours to assist the tribunal to make its decision in relation to the proceeding ": Administrative Appeals Tribunal Act , s 33(1AA). The less important the available evidence or an available submission may be, the lesser may be the necessity for either the Tribunal or a respondent to address the issue. The more important and the more centrally relevant available evidence or an available submission may be to the decision to be made, the greater may be the necessity for the issue to be addressed and resolved -- even if not otherwise addressed by an unrepresented party. Where the line is to be drawn will obviously depend upon all of the circumstances of an individual case. 20 But it is not a line to be drawn so as to impose upon the Tribunal any general duty to itself secure evidence which has not been otherwise adduced or any general duty to pursue submissions not otherwise advanced. The need to inquire into facts not otherwise before the Tribunal may not be confined to those facts going to jurisdiction, as in Kuswardana ; but should be confined to facts of central importance to the decision to be made: cf Prasad v Minister for Immigration and Ethnic Affairs [1985] FCA 47 ; (1985) 6 FCR 155. And the need to consider submissions or issues not raised by the parties may equally normally be confined to those submissions which are submissions of substance which emerge from the factual material before the Tribunal: cf NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 , 144 FCR 1. It was said there that a " judgment that the Tribunal has failed to consider a claim not expressly advanced is ... not lightly to be made. The claim must emerge clearly from the materials before the Tribunal ": at [68]. See also: SZITR v Minister for Immigration and Multicultural Affairs [2006] FCA 1759 at [50] , [2006] FCA 1759 ; 44 AAR 382 at 397 per Moore J; MZXMG v Minister for Immigration & Citizenship [2007] FCA 1884 at [13] ---[14] per Middleton J. In MZXLB v Minister for Immigration & Citizenship [2007] FCA 1588 at [14] Finkelstein J referred to NABE and observed that there " is no precise standard for determining when an issue is 'raised squarely', but it is clear the tribunal is obliged to consider any claim that is apparent on the face of the material before it ". 21 As a practical matter, a Court may be more willing to draw the line in favour of an unrepresented party than a party represented by counsel. Or, expressed differently, the issue may be more likely to arise in those cases where one party is not represented. 22 In performing its statutory functions, the Tribunal in the present proceeding also had to apply a direction given by a former Minister under s 499(1) of the Migration Act on 23 August 2001, namely a direction titled " Direction --- Visa Refusal and Cancellation under Section 501 --- No 21 ". Section 499(2A) provides that the Tribunal " must comply with a direction under subsection (1) ". 23 In Sales v Minister for Immigration & Multicultural Affairs [2006] FCA 1807 this Direction was described as " a comprehensive and careful document ". It makes clear in the preamble that the exercise of the discretion whether or not to cancel the visas will take into account a wide range of factors including the protection and the expectations of the Australian community, the nature of the crimes committed, the non-citizen's links to Australia and any relevant international law obligations of Australia. The preamble went on to say that the purpose of refusing or cancelling a visa under s 501 is to protect the safety and welfare of the Australian community and to exercise a choice on behalf of the Australian community as a whole as to who should be allowed to enter or remain in the community. The task to prepare material for a consideration of such matters, objectively understood, is wide-reaching and significant. Given the terms of s 499(2A) , it was Direction No 21 which properly provided the structure for the Tribunal's reasons and its consideration of the evidence. ... 2.3 In making a decision whether to refuse or cancel a visa, there are three primary considerations: (a) the protection of the Australian community, and members of the community; (b) the expectations of the Australian community; and (c) in all cases involving a parental or other close relationship between a child or children and the person under consideration, the best interests of the child or children. ... 2.5 The factors relevant to an assessment of the level of risk to the community of the entry or continued stay of a non-citizen include: ... (c) whether visa refusal or cancellation may prevent or discourage similar conduct (general deterrence). ... 2.6 It is the Government's view that the following are examples of offences which are considered by the Government to be very serious: ... (f) ... assault or any other form of violence against persons; ... (l) serious theft (including "white collar" crimes): • such crimes are of concern because of the amounts of money involved and/or the disruption caused to individuals, business and Government ... ... 2.11 General deterrence aims to deter other people from committing the same or a similar offence. While not a conclusive factor in itself, general deterrence is an important factor in determining whether to refuse or cancel a visa. The general deterrence factor may be relevant in a number of ways: (a) the nature of the offence may be such that visa refusal or cancellation may deter others from committing similar offences ... ... The Tribunal in the present proceeding addressed, as it was required to do, those matters set forth in Direction No 21 . 26 The Tribunal then proceeded to consider what it termed " other considerations ". It is in this part of the Tribunal's reasons that such consideration as was given to the effect of the decision upon the Applicant was addressed. These other considerations include: the extent of disruption that the visa refusal or cancellation would cause to the non-citizen's family; genuine marriage to an Australian citizen, bearing in mind the circumstances under which the relationship was established and whether the Australian partner knew that the non-citizen's character was of concern at the time of entering into the relationship; the degree of hardship caused to immediate family members; the family composition of the non-citizen's family, both in Australia and overseas; and any evidence of rehabilitation and any recent good conduct. [86] The applicant has no business or similar connections with Australia that would be jeopardised by visa cancellation. On the other hand, his father, siblings and a number of aunts and uncles live in Australia and they would suffer some emotional hardship if he were removed to New Zealand. Although he claimed to have no family in New Zealand, his grandmother and three aunts live in Auckland and his father is in regular contact with them. [87] He has lived in Australia for only eight years, having not arrived here until he was 20 years of age. His education and formative years were in New Zealand. He would face no cultural or language problems in reintegrating into New Zealand society. [88] There is some evidence of rehabilitation. He has undertaken useful courses, is no longer using drugs and has a good attitude to work (eg, Exhibit A6). His progress towards rehabilitation has not, however, been put to the test in the wider community because of the time he has spent in custody. He does not have a great deal of drug-free time in the community. He has given firm assurances of reform and rehabilitation in the past but has relapsed. Notably, he re-offended within weeks of receiving a suspended sentence conditioned on an intensive correction order in 2004. He went on to accumulate numerous convictions after that time. [89] Importantly, he has previously been warned about the risk of deportation in the event of re-offending. While he did not receive the actual final letter of warning, he received all the preceding documentary material and discussed the matter with a prison counsellor. He was actively involved with communicating with the department, and in arranging for his family to do so, in 2003 and 2004. Yet he resumed his established pattern of re-offending. [90] In my view, the primary considerations of community protection and expectations outweigh the primary consideration of the best interests of the children and the other considerations in this case. [91] The decision under review is affirmed. 27 The fact that the Tribunal did not use the language of " hardship " that would be suffered by the Applicant -- as opposed to the " hardship " that would be occasioned to others -- it is considered, is not decisive. That which is decisive against the Applicant is the fact that the Tribunal considered the entirety of the evidence, including the evidence as to the effect that the decision would have upon him. Subject to a proper application of Direction No 21 , the weight to be given to the considerations addressed is a matter for the Tribunal alone: cf Black v Minister for Immigration & Citizenship [2007] FCAFC 189 at [33] ---[37], [2007] FCAFC 189 ; 99 ALD 1 at 8---9; Tapel v Minister for Immigration & Citizenship [2008] FCA 857 at [27] . 28 Considerable reservation was expressed during the hearing on 17 October 2008 as to whether the Applicant had been given a " reasonable opportunity " to advance before the Tribunal his case as to " hardship ". That " opportunity ", it was then suggested, involved more than the mere allocation of time, a hearing room and an opportunity to appear. With the assistance of Counsel for the Respondent Minister, it appeared however that all that the Applicant wished to say as to " hardship " had been said. All, or substantially all, of the evidence that could have been adduced in respect to " hardship " had been made available to the Tribunal. 29 In the present proceeding it is considered that the Applicant was given a " reasonable opportunity " to present his case and that his lack of representation has not denied him a meaningful opportunity to advance his case. In particular, a reading of both the transcript and the reasons of the Tribunal disclose a careful consideration being given to both Direction No 21 and its application to the evidence. No instance of unfairness emerges from a reading of the transcript. No instance emerges of any submission being advanced by the Applicant not being considered. Moreover, there was nothing before the Tribunal which imposed upon either the Respondent Minister or the Tribunal itself any obligation or requirement to consider and resolve anything other than the evidence and the submissions in fact being advanced. It was properly " guided by the parties in identifying the issues ". An absence of legal representation is not to be equated in all cases with a denial of a " reasonable opportunity " to present a case. 30 The most that could be said in the present Application is that, had the Applicant been represented before the Tribunal, there may possibly have been further evidence as to the difficulties which would confront the Applicant if he were to return to New Zealand and a specific submission that the hardship to which he would be exposed was a matter in need of consideration. The delegate's decision referred only in passing to the difficulties to be confronted by the Applicant. I further noted that Mr KASUPENE spent all of his formative years in New Zealand and that his period of residence in Australia, while significant, is not so long that he may be expected to have lost his cultural connection with his homeland. Before the Tribunal, a substantial part of the cross-examination of the Applicant was directed to his criminal history. Few questions focussed upon the hardship to be faced by the Applicant if the delegate's decision was to be affirmed. I have a good relationship with my father, who raised me as a single parent when he and my mother separated when I was very young. I am forever thankful and proud of my father. One day, I would like to think he would feel the same way about my achievements and me. It is a very daunting prospect to think that I would possibly be deported. Most importantly all of my immediate family are here in Australia. I would hate to be far away from them. If I have to move to New Zealand I would have nowhere to live and worry about the negative situation I would be in as well as the negative influences around me. Such evidence could possibly have been supplemented had the Applicant been represented. Before the Tribunal there was, perhaps not surprisingly, no submission advanced by the Applicant which addressed the issues in need of resolution. No submission was advanced by him as to either the terms of Direction No 21 or to the hardship he would suffer. His concluding statements made to the Tribunal were an apology and an understandable plea " to remain in this country and get back into work instead of being in a detention centre or in a gaol wasting taxpayer's money ". The plea itself, however, may well have been a more effective submission as to the hardship facing the Applicant than any formal submission made by counsel. 31 But the fact that he was unrepresented before the Tribunal has not denied him a " reasonable " opportunity to present his case. Each of the witnesses called by the Applicant had previously prepared a written statement and each was tendered. The Applicant was asked at the end of such cross-examination as took place on behalf of the Minister whether there were any further questions he wished to ask of each witness. The " reasonable opportunity " to which s 39 of the 1975 Act refers is not to be judged by reference to what might have occurred had the Applicant been legally represented. The opportunity is to be judged by reference to the facts and circumstances of an individual case. The case confronting the present Applicant was within a comparatively simple legal and factual context. 32 The fact of the matter in the present proceeding is that the Applicant's long and repeated criminal past has ultimately been counted against him and led the Tribunal to affirm the decision of the Minister's delegate. The fact that the father and son will most probably be separated if the Applicant is returned to New Zealand is a matter of particular regret. But it is no part of the function of this Court to review the merits of either the delegate's decision or the decision of the Tribunal. Such is not the confined task entrusted to this Court by s 476A of the Migration Act . 33 The terms of Direction No 21 , and the requirements of s 39 , it may finally be noted, were considered by the Full Court in Scorgie v Minister for Immigration & Citizenship [2008] FCAFC 101. There was there held to be on the facts of that case no failure to comply with s 39. And in Weti v Minister for Immigration & Citizenship [2007] FCA 1531 there was no breach of s 39 occasioned by the Tribunal adjourning a proceeding on the application of an unrepresented applicant -- but only for one day. The applicant had there known of the unavailability of her solicitor for some time. The factual issues were said not to be complex and there were no legal issues. Edmonds J was there " not persuaded that the Tribunal's decision to limit the adjournment of the proceedings to one day, resulting in the almost inevitable consequence that she would not be legally represented at the hearing on the following day, constitutes a denial of natural justice or procedural fairness in the form of a failure to provide her with a reasonable opportunity to adequately present her case ": [2007] FCA 1531 at [38] . 34 Whether or not it would be preferable for Direction No 21 to make express reference to the hardship that a decision may have upon an applicant may be left to one side. In the absence of explanation, however, it seems surprising that there is no express requirement to consider the hardship which the cancellation of a visa pursuant to s 501 of the 1958 Act may cause. 35 Having considered the evidence and the submissions advanced, and extended to the Applicant a " reasonable opportunity " to present his case, the remaining task of the Tribunal was that set forth in s 43(2B) of the Administrative Appeals Tribunal Act , namely to make its findings on material questions of fact and refer to the evidence upon which those findings were based. This provision does not require the Tribunal to set forth all findings of fact, but only those findings on " material questions of fact ": cf Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 at [67] ---[68], [2001] HCA 30 ; 206 CLR 323 at 345---6. A more focussed submission in respect to hardship may have led the Tribunal to make a further finding. But the failure to make such a possible further finding does not expose reviewable error on the part of the Tribunal. 36 When determining whether the reasons for decision of the Tribunal have adequately dealt with the particular legal and factual issues which were advanced before it, the Court must take into account a variety of factors. These include the comparative importance (or lack of importance) of any particular submission being advanced for determination and whether the evidence being presented raises any issue in need of resolution (even if not expressly the subject of a submission, especially in the case of an unrepresented party). In the present proceeding, and in accordance with Direction No 21, the Tribunal gave consideration to those matters which the Minister and the Government " directed " should be given " particular importance " and those matters which it directed should be given " less individual weight ". Relevantly, " hardship " to a party whose visa was cancelled was not a matter specifically addressed by the Direction. A primary purpose in imposing such a requirement is to inform the parties as to why their evidence or arguments have prevailed or been rejected. Reasons provided by an administrative tribunal, it is well accepted, are not to be read with an eye keenly attuned to the perception of error: Minister for Immigration and Ethnic Affairs v Liang [1996] HCA 6 ; (1996) 185 CLR 259. In that case, a Full Court of the Federal Court (Neaves, French and Cooper JJ) collected authorities for various propositions as to the practical restraints on judicial review. It was said that a court should not be "concerned with looseness in the language ... nor with unhappy phrasing" of the reasons of an administrative decision-maker. The Court continued: "The reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error. " These propositions are well settled. They recognise the reality that the reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed. In the present context, any court reviewing a decision upon refugee status must beware of turning a review of the reasons of the decision-maker upon proper principles into a reconsideration of the merits of the decision. This has been made clear many times in this Court. No doubt because the Applicant was unrepresented, no clear submission was advanced that any particular aspect of hardship to the Applicant was a discrete matter which had to be separately addressed and resolved in any manner different to that set forth in the Tribunal's reasons. " Hardship ", it must be recognised, is a matter which may manifest itself in any one of a number of different ways. To that extent, it is a state of indeterminate content. But no particular piece of evidence could be identified which gave rise to any particular aspect of " hardship " which was not addressed by the Tribunal in its reasons. 38 Not surprisingly, the reasons of the Tribunal address the terms of Direction No 21. And, even though that Direction does not mention hardship to the Applicant as a matter specifically to be addressed, it was inevitable that a decision affirming the delegate's decision would operate to deny to him an ability to remain in Australia. His desire to remain was presumably the reason why he sought review by the Tribunal. Even though such reference as was made to the effect of the decision upon the Applicant may have been dealt with within the context of the Direction itself, hardship to the Applicant remained a matter taken into account by the Tribunal and adequately addressed by it in the reasons provided. 39 The manner in which the Tribunal has resolved the evidence and submissions advanced before it, it is considered, does not expose the Tribunal to any sustainable contention that it failed to consider the hardship that affirming the decision under review would occasion the Applicant, nor to any sustainable contention that it failed to make those findings of fact material to the decision it made. HARDSHIP: A CONSIDERATION WHICH THE TRIBUNAL WAS BOUND TO TAKE INTO ACCOUNT? 41 Even if there had been a failure on the part of the Tribunal to consider the hardship which the decision would have upon him, such a failure would not have amounted to a failure to consider a matter which the Tribunal was " bound " to take into account, and any such failure would not have amounted to jurisdictional error. A comparable argument was advanced and rejected in Cockrell v Minister for Immigration & Citizenship [2008] FCAFC 160. It is possible that in any event he did so when considering the best interests of [the Applicant's son], but even if he did not, he did not err in law in not doing so. ...: Cockrell v Minister for Immigration and Citizenship [2007] FCA 1779 , 100 ALD 52. An appeal was dismissed. Any evidence and submissions in support of the proposition that the appellant would suffer hardship is therefore vague, and is usually found in the context of assertions of hardship to others, particularly [his son]. It is difficult to see how the Tribunal could come to the conclusion that hardship to the appellant was a relevant factor, appropriate for it to take into account under cl 2.17 of Direction No 21. The specific mention in cl 2.17(c) of hardship to immediate family members lawfully resident in Australia tends to make it doubtful that hardship to the person cancellation of whose visa is being considered would be regarded as a relevant matter, at least in most cases. It must be assumed that the cancellation of a visa of a person who opposes that cancellation would cause that person hardship in any event. Unless a case of specific hardship were put before the decision-maker, it can hardly be expected that the decision-maker would take into account such a general consideration. To the extent to which hardship to the appellant by separation from [his son] is implicit in the cancellation of the appellant's visa, it is important that Direction No 21 only makes specific reference (in the circumstances of this case) to hardship to [his son]. It is at least implicit in the Tribunal's finding that the prospects of the appellant and [his son] developing a close relationship were doubtful that the Tribunal's view was that the appellant's removal to the United States would make no significant difference to his relationship with [his son], and therefore to any detriment he suffered from the absence of a such a relationship. His Honour found that the minister was aware of that fact and took it into account when making her decision. We have grave doubts that any of the particular matters of hardship identified by Mr Vu, even if not taken into account by the minister, would show jurisdictional error in her decision. The minister clearly addressed both the issue of hardship generally and each of the topics to which the direction issued under s 499(1) of the Act required the decision-maker to consider when exercising discretion. The particular matters of hardship raised by Mr Vu are not matters which, either expressly or by necessary implication from s 501 of the Act, required the minister to have regard to each of them: see Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1981) 162 CLR 24 ; 66 ALR 299 ; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 ; 180 ALR 1 ; 62 ALD 225 ; [2001] HCA 30. North and Mansfield JJ agreed. 43 The same comments and conclusions are equally applicable to the facts of the present case. There is no reason why the Applicant should not pay the costs of the First Respondent. The Application be dismissed. 2. The Applicant is to pay the costs of the First Respondent. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | applicant in detention early final hearing unrepresented party identification of issues to be resolved duty of decision-maker to assist no failure to consider relevant considerations reasonable opportunity to be heard review of reasons findings of fact made and evidence referred to no need for all findings on all facts migration |
In the year 2000, the HVO was formed by the merger of three mines comprising the Hunter Valley No. 1 Mine, the Hunter Valley No. 2 Mine and the Howick Mine. In about March 2001, a fourth mine comprising the Lemington Open Cut Coal Mine was acquired by CAO and integrated into the HVO. As operator of the HVO, CAO and certain persons engaged by CAO have been under obligations with respect to safety of the mining operations, being obligations imposed by the provisions of the Occupational Health and Safety Act 2000 (NSW) ('the OHS Act') and the Coal Mines Regulation Act 1982 (NSW) ('the CMR Act'). The latter of those statutes has since been repealed and replaced by the Coal Mine Health and Safety Act 2002 (NSW) ('CMHS Act'). CAO employed at the HVO at least one Mine Manager who had full charge and control of persons engaged at least physically in relation thereto, whether or not as employees of CAO according to law, and of all operations otherwise undertaken under the general description of the HVO. CAO employed a number of persons as Deputies to the Mine Manager and a number of Open Cut Examiners ('OCEs'). Hence at all material times, the Mine Manager, the Deputies and the OCEs have supervised the mining operations undertaken by CAO at the HVO. 3 On 20 October 2000 the Hunter Valley Operations Certified Agreement 2000 ('the 2000 Agreement') was certified by the Australian Industrial Relations Commission ('the Commission') under s 170LT of the Workplace Relations Act 1996 (Cth) ('the WR Act'), as in force prior to amendment by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth). From that time until 12 December 2003, CAO was bound by the 2000 Agreement in respect of its employees engaged in production and engineering functions at the HVO. On 12 December 2003 the Hunter Valley Operations Certified Agreement 2003 ('the 2003 Agreement') was similarly certified, and from that date to at least 31 December 2004, CAO was bound by the 2003 Agreement in respect of its employees so engaged. Both Agreements were tendered into evidence as Exhibit 1 to the Agreed Statement of Facts. Exhibit 1 was incorporated into a substantial compilation of so-called Judge's Copy Documents consisting of more than two thousand pages, along with certain additional documents. Hence Exhibit 1 came to embody two different pagination systems for each of the large number of pages therein contained. Because of the difficulty of locating so many documents of potential relevance to the respective cases of the applicants and CAO, I have adopted the expedient course of identifying those documents not only by name or other description, but additionally by their individual pagination numbers as incorporated within Exhibit 1. The parties to both Certified Agreements were CAO, the Construction, Forestry, Mining & Energy Union and The Automotive Food, Metals, Engineering, Printing and Kindred Industries Union, and in the case of the 2000 Agreement, 'in relation to employees engaged in production and engineering functions in the Hunter Valley Operation' (cl 4), including 'additional employees to meet increased workloads or cover for holiday or other absences through the employment of part-time, temporary or casual employees' (cl 13), and in the case of the 2003 Agreement, '... full-time, part-time, temporary or casual employees...' (cl 10). 4 On 9 February 1994, Mining & Earthmoving Services Pty Ltd ('MES') was incorporated. As the successor to business operations previously undertaken under the same or similar control in the Hunter Valley region, MES has engaged in business as a mining consultant, and in the supply of casual labour to the mining industry in which CAO has been for some time a substantial participant, at least principally by way of open cut mining operations. The activities of MES were mainly in the area geographically of the HVO. A copy of documents describing in detail MES's activities appear in detail at pages 31 to 63 of Exhibit 1. On 21 June 2001, the Mining & Earthmoving Service Pty Limited Certified Agreement 2001 ('the MES Agreement') was certified by the Commission under s 170LT of the WR Act, with effect from 25 May 2001 until 24 May 2004, the parties thereto being MES and '[p]resent and future employees of [MES]'. On or about 21 August 2002 MES tendered successfully 'for the supply of maintenance and production of labour hire' to CAO in relation to its Coal mining operations at Ravensworth in the Hunter Valley upon the basis of a detailed schedule of rates. 5 The central issue arising in the proceedings may be broadly described as whether the applicants were the subject of an employment relationship according to the general law, as between themselves as employees and CAO as employer, irrespective of the documentary arrangements put in place by MES as between itself as employer and its employees inclusive purportedly of the applicants. If the former situation constituted an employment relationship according to law in respect of each of the applicants, they would be seemingly entitled to look to CAO for remuneration and any other pecuniary employment benefits which may have accrued to each of them had they been recognised by CAO as its employees. The respective engagements (to use for the present a neutral term) of the applicants in mining activity in the HVO ceased, in the case of Mr Wilton, in May 2005, and in the case of Mr Cumberland at a time occurring during April 2005, and at about the same respective times, each of them commenced employment with the corporately unrelated Felix Resources Limited, being apparently another Coalminer. A declaration that the Respondent breached a term of the Hunter Valley Operations Certified Agreement 2000 (the 2000 Agreement) in that for the period 1 July 2002 to 30 June 2003 the Respondent failed to pay to the First Applicant the annual salary set out in clause 19 of the 2000 Agreement. 2. An order pursuant to section 178(6) of the WR Act that the Respondent pay to the First Applicant an amount of $4,697 being the amount the First Applicant was underpaid his entitlement under clause 19 of the 2000 Agreement for the period 1 July 2002 to 30 June 2003. 3. An order under section 179A of the WR Act that the Respondent pay interest at such rate as the Court thinks fit on the whole of the amount referred to in Order 2 from 30 June 2003 until judgment is entered. 4. An order imposing a penalty on the Respondent pursuant to section 178(1) of the WR Act for breach of clause 19 of the 2000 Agreement. 5. An order pursuant to section 356 of the WR Act that the penalty imposed under Order 4 be paid to the First Applicant. 6. A declaration that the Respondent breached a term of the 2000 Agreement in that for the period 1 July 2002 to 30 June 2003 the Respondent failed to pay to the Second Applicant the annual salary set out in clause 19 of the 2000 Agreement. 7. An order pursuant to section 178(6) of the WR Act that the Respondent pay to the Second Applicant an amount of $8,410 being the amount the Second Applicant was underpaid his entitlement under clause 19 of the 2000 Agreement for the period 1 July 2002 to 30 June 2003. 8. An order under section 179A of the WR Act that the Respondent pay interest at such rate as the Court thinks fit on the whole of the amount referred to in Order 7 from 30 June 2003 until judgment is entered. 9. An order imposing a penalty on the Respondent pursuant to section 178(1) of the WR Act for breach of clause 19 of the 2000 Agreement. 10. An order pursuant to section 356 of the WR Act that the penalty imposed under Order 9 be paid to the Second Applicant. 11. A declaration that the Respondent breached a term of the Hunter Valley Operations Certified Agreement 2003 (the 2003 Agreement) in that for the period 1 July 2004 to 31 December 2004 the Respondent failed to pay to the First Applicant the annual salary set out in clause 17 of the 2003 Agreement. 12. An order pursuant to section 178(6) of the WR Act that the Respondent pay to the First Applicant an amount of $12,845.31 being the amount the First Applicant was underpaid his entitlement under clause 17 of the 2003 Agreement for the period 1 July 2004 to 31 December 2004. 13. An order under section 179A of the WR Act that the Respondent pay interest at such rate as the Court thinks fit on the whole of the amount referred to in Order 12 from 31 December 2004 until judgment is entered. 14. An order imposing a penalty on the Respondent pursuant to section 178(1) of the WR Act for breach of clause 17 of the 2003 Agreement. 15. An order pursuant to section 356 of the WR Act that the penalty imposed under Order 14 be paid to the First Applicant. 16. A declaration that the Respondent breached a term of the 2003 Agreement in that for the period 1 July 2004 to 31 December 2004 the Respondent failed to pay to the Second Applicant the annual salary set out in clause 17 of the 2003 Agreement. 17. An order pursuant to section 178(6) of the WR Act that the Respondent pay to the Second Applicant an amount of $20,531.20 being the amount the Second Applicant was underpaid his entitlement under clause 17 of the 2003 Agreement for the period 1 July 2004 to 31 December 2004. 18. An order under section 179A of the WR Act that the Respondent pay interest at such rate as the Court thinks fit on the whole of the amount referred to in Order 17 from 31 December 2004 until judgment is entered. 19. An order imposing a penalty on the Respondent pursuant to section 178(1) of the WR Act for breach of clause 17 of the 2003 Agreement. 20. An order pursuant to section 356 of the WR Act that the penalty imposed under Order 19 be paid to the Second Applicant. 21. Such other or further orders as the Court considers appropriate. Section 412 of the WR Act confers jurisdiction relevantly on this Court. 8 Between at least 1 June 2001 and 31 December 2004, CAO engaged MES to supply certain classifications of workers for engagement at the HVO. MES provided inter alia the applicants Mr Wilton and Mr Cumberland for work at the HVO during those times. Initially the arrangements for that supply had not been formalised in a written document. Upon receipt of CAO's formal request for the provision of workers, MES would furnish a number of names and CAO would make its selection. Thereafter the selected workers would attend at the site of the HVO for work on shifts physically as part of CAO's workforce and in accordance with rosters prepared by CAO. Those selected workers were paid by MES for the hours they worked, and MES invoiced CAO on a weekly basis in respect of the work performed by workers supplied by MES. Those invoices were based upon MES time sheet forms which each such worker filled out and signed and submitted to MES. Each was allocated accordingly a MES employee number. No moneys were thus paid by CAO to either applicant for their respective services, MES performing the function of a labour hire provider. 10 In early August 2002 or thereabouts, CAO invited MES, and other employment personnel providing entities, to tender for a contract to supply labour to CAO for mining work being undertaken by CAO at the HVO, being Tender No. CNA-04-072; a copy of the letter dated 2 August 2002 constituting that invitation to tender forms part of Exhibit 1 at pages 534-582. On or about 21 August 2002, MES submitted pricing to CAO in relation to its tender, and a copy of that submission comprises pages 1 to 28 of Confidential Exhibit 2. Subsequently in about late August or September 2003, MES entered into a written agreement with CAO (or more precisely with Rio Tinto Coal (NSW) Pty Ltd as agent for CAO) for the supply of so-called 'supplementary labour hire', being Contract No. SA-01-073 ('the Supply Agreement'), a copy whereof comprises pages 29 to 67 also of Confidential Exhibit 2. The applicants contended, though apparently not until after principal written submissions of the respective parties had been furnished, that they were not 'supplied' to CAO under or pursuant to the Supply Agreement, for the reason that they had already commenced work at the HVO, and to use their description 'were attending in accordance with [CAO's] request that they turn up in accordance with a roster'. Upon that purported footing, the applicants submitted that the Supply Agreement 'has no relevance to the relationship between the applicants and [CAO]', that submission going to the nub of the issues arising in the proceedings, since the applicants' case was of course that in substance and reality and therefore according to law, the applicants were at all material times employees of CAO and should have been remunerated accordingly. At or around the same time, MES provided to Mr Wilton a crib bag to use during his work at the HVO. A copy of the form that Mr Wilton submitted to MES formed part of Exhibit 1 at page 1038. I re-affirm my declaration that I have never signed any agreement with Coal Mines Insurance which would prevent me from working in the Coal mining industry in New South Wales. I agree to accept the rates of pay and conditions actually payable on the particular client's site to which it is proposed that I am to be placed, (a schedule of which was handed to me to-day) and to the minimum rates and conditions set out in the copy of the Mining & Earthmoving Services Pty Limited Certified Agreement 2001 handed to me to-day. 16 On or about 6 May 2003, MES completed a document bearing the heading 'To Whom It May Concern' in relation to Mr Wilton; a copy of that document is at page 1039 of Exhibit 1. On or about 24 July 2003, Mr Wilton completed a form headed 'Voting form for method of payment'; a copy of that document is exhibited at page 1040 of Exhibit 1. 17 On or about 1 July 2004, Mr Wilton received a document bearing the title 'Superannuation Guarantee Contribution Report'; a copy of that document is at page 1041 of Exhibit 1. On or about 2 July 2004, Mr Wilton received a further document bearing the title 'Superannuation Guarantee Contribution Report'; a copy of that document is at page 1042 of Exhibit 1. 18 On 24 November 2004, Mr Wilton submitted a job application form for permanent employment with CAO at the HVO; a copy of that document is at pages 1043 to 1059 of Exhibit 1. This agreement does not apply to any production or engineering employee employed under an Australian Workplace Agreement (AWA). All AWAs operate to the exclusion of this agreement. It was contended that such relationship took effect from the time of their engagement to work at the HVO, or at least some time prior to 1 July 2002, that being in effect the commencement of the claim. In that regard it was pointed out that English authority, which I will later address in detail, has established that '[c]onduct which might not have manifested a mutual intention to enter a contract had it lasted only a brief time may become unequivocal if it is maintained over a lengthy period of time'. It was in the context of those critical considerations that each of the parties drew attention to many legal authorities and to the operation or otherwise thereof in relation to the circumstances of this case. 25 The evidence adduced by the respective parties to the proceedings was extensive, being evidence largely additional to those mutually agreed facts and circumstances I have already recorded in these reasons. The differences in approach of the parties to the significance of those facts and circumstances resided partly in relation to the inferences open to be drawn from circumstances which were substantially common ground. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance. The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance. It may be accepted that the contractual arrangements in operation as between CAO and MES at the material times are not determinative per se of the characterisation relevantly of the relationship in place between each of the applicants on the one hand and CAO on the other, though such arrangements were not of course irrelevant. 27 In Hollis v Vabu Pty Limited [2001] HCA 44 ; (2001) 207 CLR 21 at 31-32, to which I was next referred by the applicants, the need for caution in relying on earlier authorities relating to vicarious liability in tort, for the purpose of determining the existence or otherwise of an employment relationship in a business or industrial setting, appears at the threshold of the reasons for joint judgment of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ. The circumstances of that case concerned a courier business involved in the delivery by couriers of articles on bicycles on the basis of payment of fixed rates for each assignment, and in relation to which the High Court established (by a majority of five Justices to one) the existence of a relationship of employer and employee, contrary to the decision below of the New South Wales Court of Appeal. First, these couriers were not providing skilled labour or labour which required special qualifications. A bicycle courier is unable to make an independent career as a free-lancer or to generate any "goodwill" as a bicycle courier. The notion that the couriers somehow were running their own enterprise is intuitively unsound, and denied by the facts disclosed in the record. Secondly, the evidence shows that the couriers had little control over the manner of performing their work. They were required to be at work by 9 am and were assigned in a work roster according to the order in which they signed on.... The evidence does not disclose whether the couriers were able to delegate any of their tasks or whether they could have worked for another courier operator in addition to Vabu during the day. It may be thought unlikely that the couriers would have been permitted by Vabu to engage in either activity. Thirdly, the facts show that couriers were presented to the public and to those using the courier service as emanations of Vabu. They were to wear uniforms bearing Vabu's logo. The issues here involved boil down to identification of the employer of the applicants Messrs Wilton and Cumberland, whether being CAO as contended by the applicants or MES as contended by CAO, in the context of MES's function of labour hire. Nevertheless as I have also foreshadowed, the jurisprudence emerging from cases involving directly the issue as to whether an entity conducting a business retained a particular person as an employee, or else engaged that person as an independent contractor, contain judicial dicta which may assist the resolution of those issues so arising in the present context. Because the search for the "intention to create contractual relations" requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word "intention" is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties. Nevertheless the emphasis there given to the need to take account of the subject matter of a relevant agreement, the status of the parties thereto, their relationship to another, and other surrounding circumstances are factors of present importance. I would add reference to the need for the determination objectively of the mutual intention of the contracting parties, evidence of mere subjective intention being usually of controversial weight. 29 The applicants emphasised in the course of submissions that the present case did not involve the need for the Court to focus on all of the persons engaged by CAO on its mine site in the Hunter Valley, whether through contractors inclusive of MES, but rather must address the circumstances of the applicants in their interaction with and otherwise in relation to CAO. It involves the characterisation of the essence of a relationship by reference to given criteria. It frequently results (as cases both in Australia and elsewhere illustrate) in borderline decisions upon which different legal minds, properly instructed, can reach different conclusions. The context to Dalgety Farmers related to the labour hire of shearers undertaken by an organising entity for pastoralists. observed in Green v Victorian Workcover Authority [1997] 1 VR 364 at 375 "a mechanical one". Rather it is a matter of obtaining the overall picture from the accumulation of detail. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. . 31 It was submitted by the applicants in the light of the foregoing authorities that in determining whether each of them is entitled to the relief sought in the present proceedings against CAO, it is necessary to consider the total relationship between the applicants and CAO, and hence all the facts and circumstances bearing upon the applicants' particular employment. In so doing, it was further submitted that the Court is entitled to have regard to conduct that occurred after the relationship commenced. I was referred to what was observed by Heydon JA (as he then was) in Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 ; (2001) 53 NSWLR 153 at 163-164, commencing, 'The second relevant principle is that post-contractual conduct is admissible on the question of whether a contract was formed' , his Honour thereby citing authority, commencing with Howard Smith & Company Limited v Varawa [1907] HCA 38 ; (1907) 5 CLR 68 at 77, in the context of his discussion of principles of contract formation. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In any dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed. 32 The applicants cited extensively from the Full Federal Court judgments in Damevski v Giudice and Others [2003] FCAFC 252 ; (2003) 133 FCR 438, where the unanimous conclusion of Marshall, Wilcox and Merkel JJ was to the effect that the purported restructure of a cleaning operation from that of former employees to their ongoing provision of cleaning services as contractors, but nevertheless still engaged by their former employer as a principal to the ongoing controversial relationship, did not operate to terminate the pre-existing contracts of employment for the purpose of the operation of the WR Act, no change having occurred in any physical sense to the work activities of the purported contractors from what had previously been undertaken by them as employees. I would interpolate to observe that no such restructure of any existing employment relationship of relevance took place in the present context, and care therefore needs to be taken in relation to any application to the principled approach there taken. The extensive reasons for judgment of Marshall J (with whom Wilcox J agreed whilst adding observations of his own) included emphasis at [86] upon the practical difficulty of locating or demonstrating an offer and acceptance in the traditional sense in the kind of context for instance there involved, his Honour pointing to what was further observed by McHugh JA in Integrated Computer Services concerning the difficulty of fitting 'a commercial arrangement into the common lawyers analysis of a contractual arrangement' , and moreover as to the need to distil 'the precise moment when the legal criteria of a contract have been fulfilled' , given that '[i] n a dynamic commercial relationship new terms will be added or will supersede older terms. ' As McHugh JA had also emphasised, it is necessary '... to look at the whole relationship and not only at what was said and done when the relationship was first formed' . In the present case, however, the framework of the relationship between the applicants and CAO stood still relevantly from the outset, as it were. Subject to a rebuttal, it will be presumed in commercial agreements that the parties intend to create legal relations. Although the hiring agreement indicates Endoxos set about making arrangements to obtain its labour through MLC, this is not a clear rebuttal. Relationships can be established outside the hiring agreement. The hiring agreement cannot be determinative of the intentions of Endoxos and Mr Damevski to create legal relations. The evidence indicates that Endoxos wanted to maintain control of Mr Damevski, expected him to use their equipment and clothing emblazoned with Endoxos livery and, ultimately, wanted to be able to dismiss Mr Damevski. Endoxos directed Mr Damevski to worksites, called Mr Damevski to its offices for further instructions when necessary, gave Mr Damevski attire and equipment to enable him to perform work, and received pay slips from him. Mr Damevski also showed an intention to re-enter the legal relationship with Endoxos, by once again taking up the role he held with Endoxos before 19 August 2001. As previously pointed out, the only difference between the relationship before and after 19 August 2001 was that MLC was given the role of paymaster. 34 The reasons of Merkel J for concurrence with Wilcox and Marshall JJ in the outcome in Damevski revealed a varied approach from that of Marshall J undertaken at length, albeit variations which Wilcox J doubted to involve any 'difference [that] matters very much' (see [2] at 441). Nevertheless as his Honour also explained, care needs to be taken in applying principles along the lines of re-structured existing employment relationships from those of the purported hiring of employees from the outset. In those cases, in general, the hiring agency interviewed and selected the workers, and determined their remuneration, without reference to the client. Usually, a client requesting a worker with particular skills was provided with one, who may or may not have been "on the books" of the hiring agency at the time the order was placed. The workers of such hiring agencies were usually meant to keep the agency informed of their availability to work, and in many cases were not to agree to undertake work for the client which had not been arranged or directed by the hiring agency. Equipment was either supplied by the worker themselves [sic] or by the hiring agency, except for specialist safety equipment which the client often supplied. Dismissal of a worker was only able to be effected by the hiring agency. The client can only advise the hiring agency that the particular worker is no longer required by it. Had AICA/MLC acted as a labour hiring agency for Damevski to contract his services to other cleaning companies, as suggested in the chart and in the information pack, then the decisions in the above cases may have been applicable to this situation. However, that did not eventuate in the present case. The MES arrangements did not of course arise out of internally restructured employment arrangements, whether designed to obviate employment regulation, such as occurred for instance in Damevski . In Zuijs v Wirth Brothers Pty Ltd , the same concession had been made in the New South Wales Supreme Court but was held not to stand in the way of this Court hearing argument and, indeed, holding to the contrary on appeal. Moreover, it has not been demonstrated that any substantial prejudice would result to Vabu in allowing Mr Hollis now to argue this point. All the facts necessary for determination of the question were adduced and proved at trial and no new fact is sought to be or needs to be raised. Further, one might have thought that, as a practical matter, there would have been considerable obstacles in the path of any challenge to the finding of a relationship of principal and independent contractor at trial or in the Court of Appeal because it would have been contrary to the prior holding of the Court of Appeal in the taxation decision. Nevertheless I did not understand the applicants to distil, by way of any detailed or definitive description, the existence of any material difference between the arrangements made between MES and CAO for the utilisation of the services of Mr Wilton or Mr Cumberland and those of other workers introduced by MES to CAO, for what that might matter. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award and, as we have said, the award operates with statutory force to secure those terms and conditions. The applicants submitted that they were engaged in such work at CAO over approximately four years from June/July 2001 to April/May 2005. For that purpose they were provided by CAO at 12 monthly intervals with rosters which allocated them to designated crews and indicated their working times to apply for the ensuing year. Their respective periodic shifts rotated at weekly intervals from day shifts to night shifts, including weekends on the basis of payment of overtime. On occasions the applicants worked seven days in a given week. Timesheets in evidence filled out on MES forms provided to each applicant for completion reveal that Mr Wilton worked an average of 49 hours per week in the period of time up to 20 January 2002, and Mr Cumberland worked an average of 43 hours per week over a similar time. It was pointed out by CAO that the fact that the applicants performed duties similar to certain CAO employees was not surprising, given that CAO sought to achieve uniform levels of production, and further that it was efficient as well as safe for the applicants to work in the same physical contexts as CAO's employees. 38 From January 2002 onwards the shifts worked by the respective applicants were restructured. Each of the applicants was required to work a 12 hour shift roster rather than the eight hour roster previously in operation. MES timesheets filled out by each applicant were said by the applicants to show that 12 hour shifts were worked on two, three, four and sometimes five times per week, being rostered on any of the seven days of the week. An analysis of timesheets compiled after 20 January 2002, that is, after the applicants had been working 12 hour shifts, demonstrated that from that time until 15 May 2005, Mr Wilton worked on average 40 hours per week, and from 20 January 2002 until 26 December 2004, and Mr Cumberland worked an average of 36 hours per week. More significantly, so did Mr Thompson, an acknowledged employee of CAO at the HVO since 1979. Mr Thompson testified to the effect that his typical shifts involved a similar system of work to those undertaken by each of the applicants. He was thus subjected to similar supervision to that applicable to the applicants. CAO pointed out nevertheless that the fact that the applicants performed similar duties to Mr Thompson was 'not surprising', given that CAO sought to achieve projected levels of production, and that it was more efficient and safe for the applicants to work in the same manner as CAO's employees. Those circumstances did not however operate to establish a relationship between CAO and each of the applicants as one of employment, so CAO submitted. 41 The mining equipment used by each of the applicants was supplied and maintained by CAO; some personal protective equipment was additionally supplied to the applicants by MES. 42 As to the matter of so-called 'time off', it was mutually agreed between the parties that the applicants would be stood down by CAO for any day when work could not be performed due to bad weather or the unavailability of machinery. Standing down would occur before commencement of a shift by way of CAO communicating directly with each applicant, or during the course of a shift whereby a supervisor at the mine would send home the affected applicant. Mr Israel, who was a supervisor employed by CAO at the HVO, testified that it was his decision to stand down members of his crew due to bad weather, or the unavailability of machinery, and that he would inform the so-called 'Contractor personnel' of his decision; he testified that it was not his practice to inform MES of his decision in that regard. However what CAO emphasised on that score was that 'no leave benefits, or benefits by way of paid time off, were given by CAO to either of the [a]pplicants'. 43 Both the applicants testified that when they wished to take any form of leave, they were required to notify CAO in the case of sick leave, or request leave from CAO in the case of annual or other leave. It was common ground that when either of the applicants was unavailable for work due to illness, he was required to notify the relevant OCE (the abbreviation of course for 'Open Cut Examiner') stationed at the HVO, as well as MES. Both MES and its clients recognise the need for recreation and sick leave and will do the best in ensuring you have this leave for whatever reason. In most instances approval of leave by the client is seen as automatic approval by MES. The respondent submitted that 'it would be impossible to conduct an efficient commercial operation without such notification'. 45 The practice for taking recreation leave involved the initial indication to that effect by the contractually hired person (such as Mr Wilton or Mr Cumberland) to the CAO supervisor at the HVO, and the completion of an MES 'Application for leave form', subsequently changed to a 'Notification of not being available for work' form, and the submission thereof to MES. Evidence was given by CAO's Mr Israel that amongst the 'variety of duties' he undertook was to '... manage leave... within my crew'. Mr Touzell of MES testified as to the operation of 'the leave system'. He agreed that 'the MES people were put at the bottom of the pecking order' in terms of the operation of 'the leave system', in that '... they could only take their leave if sufficient Coal and Allied people were on duty', and further that '... Coal and Allied permanent employees received preference in filling the limit of how many people per crew could [have] leave at any one time...'. I have earlier referred generally to CAO's employment of at least one Mine Manager at the HVO and to the scope of that person's charge and control of persons there engaged to work. It now becomes necessary or appropriate to provide more detail in relation to those subjects, and the significance thereof. 47 The nature and scope of management responsibilities in relation to all open cut Coal mines in the State of New South Wales, as stipulated by the CMR Act or the OHS Act as I have foreshadowed, require that a particular management structure be in place, and further that the persons fulfilling the relevant roles comprise at least a Mine Manager, a Deputy Manager, and additionally open cut examiners appointed by the manager (ss 36, 37, 38 and 43 of the CMR Act and Part B of Schedule 1 thereto). For ease of reference, I reproduce below the text of those statutory provisions, to the extent asserted by the applicants to be material to the issues arising. . 52 I observe in passing that none of the provisions of the CMR or OHS Acts, nor of the Open Cut Regulations , which I have extracted above to the extent cited to the Court by the applicants, involve stipulations or provisions at least explicitly as to what may be described as industrial employment matters, such as wages and other emoluments, and absence on leave by reason of sickness etc. Rather such stipulations and provisions are directed to employment duties and supervision related directly or indirectly to safety matters. I have of course made reference earlier to Mr Israel's functions. The OCEs had charge of all workers in the examiner's inspection area and were required to ensure that those workers understood their duties, and all requirements of the WR Act and the regulations, rules and schemes provided thereunder. Mr Sargent testified that in relation to safety matters, CAO disseminated documents on a regular basis and promoted safety on a daily basis with the so-called 'contract personnel'. 56 On the subject of general control exercised or exercisable by CAO in relation to Messrs Wilton and Cumberland, counsel for the applicants submitted that the same involved or included, first, a requirement that the applicants 'sign on and off' the HVO site at the start and finish of each shift, secondly, the allocation of work to the applicants on a daily basis and thirdly, supervision of the applicants' work on a daily basis. In support of that thesis, the applicants pointed to a number of matters. One was that in 2002, CAO implemented a method of 'signing on and off' using a swipe card; CAO's so-called 'acknowledged employees' were not required to use a swipe card but they did 'sign on and off'. Each day CAO's supervisors filled out attendance sheets for what was described as both acknowledged employees and contractor personnel. 57 Mr Israel, who I have already identified as one of CAO's supervisors, summarised the day-to-day supervision of the crews. He would allocate work at the beginning of each shift and discuss that allocation with all members of his crew at the pre-shift toolbox talk, which would address the overall work expected of the crew for the ensuing day and safety matters and incident reports; that work so allocated by Mr Israel was recorded in his daily reports. He also described the supervision undertaken during a shift as involving monitoring of the work of the crew, inspecting the areas in which the crew was working, keeping in touch by two-way radio and visiting crew members on the ground to discuss their work. Also Mr Wilton testified as to each crew being addressed at the start of each shift by a CAO supervisor, who would discuss the work allocated and other matters that had arisen in the pit, inclusive of safety matters, incidents and the so-called shift plan; he testified that during a shift, the supervisors would communicate with him by two-way radio to assign work to him to undertake. 58 Both applicants and Mr Thompson testified that at the beginning of each shift, they would gather in the crew room to ascertain the names of the crew listed on a large whiteboard, and that alongside each name 'a piece of equipment' would be identified. Both Mr Israel and Mr Hendriks testified as to a practice of giving preference to those workers described as 'acknowledged employees' for the driving of certain pieces of mining equipment, leaving the contractor personnel generally speaking to drive the trucks. The timesheets for each of the applicants, which were attached to the Agreed Statement of Facts before the Court, showed the equipment in relation to which each applicant was designated to work, and in so doing demonstrated that each of the applicants worked on a range of equipment, and that each was not merely allocated to trucks. Mr Israel acknowledged that he did allocate to Mr Wilton the operation of equipment other than trucks, such as dozers, graders and loaders. The timesheets showed that in those weeks, Mr Wilton was supervised by Mr Israel, and during which he was rarely allocated to work on trucks. Mr Touzell acknowledged moreover that MES was not informed by CAO as to what work would be allocated to the applicants. 59 It was formally agreed between the parties that the applicants were subject to day-to-day supervision by CAO. Once work was allocated, the supervisors were responsible for supervising the work performed by the crews. As foreshadowed, Mr Israel described his duties as including the management of the 'time-keeping of people' and the 'resource usage on the crew itself, the assignment of tasks' and people thereto, and the monitoring of work to make sure that it was done effectively' and 'in line with the plan'. Moreover in relation to the equipment supplied to the applicants, CAO gave the applicants specific documents as to how to carry out the operation of that equipment, and further that it was constantly updating those documents. If anything, so it was contended on behalf of the applicants, there was more communication and supervision of the applicants by CAO's supervisors than took place in relation to CAO's acknowledged employees. 60 CAO responded to the applicants' emphasis on their 'general control' to the effect that the same was 'no more than one would expect in the operation of a mine where outside contractors work as part of a crew', and further that '... the assignment of specific tasks by [CAO]... and the reassignment by [CAO] of a worker to a different task if [CAO] was not satisfied with the performance being achieved, does not suggest that the person performing the task is the employee of CAO'. CAO emphasised that '... the assignment of work and the supervision of the performance of such work is a far cry from [CAO] having the legal authority to tell the applicants how to actually do a job', and moreover that 'all CAO is undertaking is assigning the job to be done and where'. From what I have already recorded of the evidence, I think that such emphasis was somewhat of an overstatement, for what that might ultimately matter. 61 In any event, it was submitted by CAO that '... it is well established that a worker may be subject to quite detailed control over what they do and how they do it, yet still not be an employee'. I was referred to Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 526, where MacKenna J observed, in relation to the services undertaken by certain owner-drivers engaged in the cartage of concrete by their own vehicles that '[a] man does not cease to run a business on his own account because he agrees to run it efficiently or to accept another's superintendence' . I observe that the issue there arising was whether a company marketing and selling concrete was an independent contractor and not subject to a 'contract of service' under section 3(a) of the National Insurance Act 1965 of the United Kingdom. That issue was not therefore in line at least precisely with the issue here arising as to whether the applicants were employees of CAO rather than MES. In that regard, Mr Cumberland testified that day-to-day issues that arose concerning work performance were dealt with by CAO's supervisors. And when you say that, you are referring, are you, to the fact that Coal and Allied had the power to prevent you coming back onto the mine site if they weren't happy with you?---Correct. Yes. And when you talk there about performance management, do you see that---?---Yes. ---what are you referring to?---For example, if I am running a dais or my performance is not up to scratch on that mine lease, I need reviewing. They might say you are not on the dais for a while until such time as you pick up your game. We are going to put you back to a truck or another piece of equipment on the job. So, that the Coal and Allied supervisor observing what you are doing, if he is not happy with the rate at which you are performing, he could say to you well, look, we are not happy. We expect more of you than that. We are going to re-allocate you to a different task?---Correct. Okay. And, of course, you may even be offered assistance, mightn't you? Someone might come along and say well, look, can we give you some assistance? I mean, is there something that you are concerned about?---Correct. In a labour hire context, the provider of the hired worker would seemingly have some responsibility in principle to its customer to whom a worker is hired as to for instance the hired person's working qualifications and skills necessary for the performance of his or her work mutually envisaged to be undertaken. 63 It was next submitted by the applicants that in conformity with their day-to-day supervision, CAO managed the performance of their work and disciplined them on a daily basis when their work was inadequate, and further that so much was conceded in the course of the presentation of CAO's evidence. Mr Israel testified as to how he would explain to the operators (such as the applicants) the task required to be performed, and if not being so performed, how he would 'like it done'. He further testified as to his function of ensuring that all crew members returned from 'crib break' on time. The next day he asked to see me in a small room, asked me why it had happened, why we took so long. I explained myself to Mr Israel, the circumstances that it took so long. And did he say anything else?--- He did, yes. And what did he say?--- Why it happened, why did I take so long. Don't let it happen again. Yes and just be aware of your times next time. Two incidents were exemplified. The first related to the collision of two vehicles, one being a dozer driven by Mr Cumberland, and the second not being actually driven at the time of the accident in which it was damaged. Reversed back to pick up lighting plant for relocation to new area. Grader was parked slightly to right, behind path of dozer as it was reversing back. Ripper on dozer contacted ram on grader rippers (814 grader), breaking ram. General reminder in crew briefing. 1 on 1 discussion with dozer operator ensuring working area is clear before proceeding. However the connotation of 'disciplinary action' tends not to appositely portray the significance of the CAO management conduct revealed by that report. What took place at the instance of the CAO management remains to be viewed in the entire context of the labour hire relationship to which each of the applicants was subjected. 65 The next or second incident of alleged disciplinary action on the part of CAO, as exemplified by the applicants concerning Mr Cumberland, occurred on 8 February 2002, in relation to which it was conceded by the Applicants to involve 'some contest in the evidence'. Failed to communicate with shovel operator. Shovel swung around with a bucket of overburden and saw the dozer within the area of the swing. Shovel operator tried to swing back but the bucket tripped dropping overburden onto the dozer. 66 That disciplinary action was said to have been allocated to Mr Hendriks to put in place; he outlined the same as involving his 'talking with MES about what they had done in relation to the incident'. I was referred to Mr Hendriks' affidavit evidence, which recounted that he had a number of discussions with Mr Touzell and Mr Cumberland, and also a meeting with Mr Touzell and Mr Hann (both of MES), but that he could not recall the precise discussions that occurred on the subject, only that they discussed that the incident was a major and serious incident due to the potential safety hazards involved. The incident resulted from a misunderstanding between the shovel operator and myself. An on site inquiry was conducted and I was called to a meeting with C&A management. I was subsequently stood down. During that period, I was provided with counselling by C&A. However, I was not paid. At the end of the period, I rang the MES office in Muswellbrook and asked an employee of MES whose name I cannot recall what was happening. I was told that MES would get back to me after they had spoken with C&A. Again I was subsequently telephoned by a representative of MES who told me that C&A would take me back subject to a further meeting. Present at that meeting were Messrs Ernst, Hendriks, Touzell, Morgan and myself. I was informed by Messrs Ernst and Hendriks that they were not happy with what had occurred and that I would have to be of good behaviour for the next 12 months. Mr Ernst was of course an officer of CAO. 67 Mr Cumberland testified further as to having been told by Mr Hendriks that he would not be allowed to return to work at the HVO until the investigation of the incident was completed, and further that Mr Touzell (of course from MES) had told him '[t]he Mine Superintendent suspended you'. Mr Ernst did not testify in the proceedings, and Mr Sargent said that he had no recollection of the detail of the incident. 68 In contrast, in his affidavit evidence Mr Touzell testified that at the foregoing 14 February 2002 meeting, Mr Ernst said to Mr Cumberland 'you will need to be on your best behaviour. Otherwise you won't be allowed to work on the site'. In the course of his cross-examination, Mr Touzell described Mr Ernst's words used as '[a]ny further bad behaviour will affect the continuation of your working at Hunter Valley. I will ask your employer to remove you from the site'. It was submitted by the applicants that since Mr Ernst was not called to deny Mr Cumberland's version of that conversation, nor Mr Touzell's contrary versions of the conversation, Mr Cumberland's version should be accepted. It was further said on behalf of the applicants that '[i]t is clear from the evidence that CAO was directly responsible for the discipline of Mr Cumberland over this incident', and that '[t]he actions taken by MES were essentially taken at the behest of [CAO] and the final decision to allow [Mr Cumberland] to return to work and to continue working was made by [CAO]'. 69 The next or third incident concerning alleged disciplinary action on the part of CAO involving Mr Cumberland was said on behalf of the applicants to have occurred on 10 March 2002. ... Employee was directed to Dam 9 water fill point. This filling station has restricted access due to barricading and is a reverse access not drive through. It also has a bend in the access. Reversing the operator realised he was too far to the right and could not see the stand pipe. He then braked and pulled forward but it was too late, the water cart came in contact with the stand pipe support column, bending it and moving the stand pipe in its coupling. The second course of action was described by Mr Hendriks in the report as 'Discuss incident with Manager on appropriate action for operator'. I believed that it was appropriate to discuss with the Mine Manager, Mr Ernst, the fact that Mr Cumberland had been involved in three incidents within the space of approximately one month and that this reflected a trend involving that particular contractor person. The outcome of this meeting was that Mr Cumberland could not attend work for a short period to allow him to obtain counselling to deal with those personal issues. The implications inter alia as to safety concerns may be observed. 72 Mr Touzell (of course on behalf of MES) emailed CAO on 13 March 2002 a report concerning the issue, which included 'Steve must also satisfy both MES and [CAO] that his problem is overcome sufficiently to ensure his return to work does not place him or others at risk', thereby implicitly highlighting the theme of safety to persons working in proximity to Mr Cumberland. Mr Touzell met with Messrs Sargent, Hendriks and Cumberland on 23 March 2002 on the subject of Mr Cumberland's return to work. It was further submitted that CAO required in any event that Mr Cumberland undertake counselling and determine when Mr Cumberland 'could return to work', and that 'it is clear from the evidence that [CAO] was directly responsible for the discipline of [Mr Cumberland] over this incident the actions taken by MES were essentially taken at the behest of [CAO] and the final decision to allow [Mr Cumberland] to return to work and to continue working was made by [CAO]'. 75 In any event, CAO challenged conceptually the notion of 'discipline' inherent in the applicants' submissions as to CAO's treatment of the applicants on the occasions when their work was considered by CAO to have been inadequate, and contended that the applicants' submission tended to merge that notion with the implications of so-called 'performance management'. . 76 Moreover in acknowledging that CAO could order the removal from the site of the HVO of any person, and prevent entry to the site by any person (other than a person entering or being on the site with statutory authority), CAO asserted that any such action was not what would ordinarily be described as ' disciplining ' a worker engaged in work activity on the site. It was further pointed out that CAO had the right under its contractual relationship with MES to refuse to accept a MES worker on the mine site and to request from MES another worker to work at the mine site (see cl 2.11 of the Supply Agreement). That right was described as an ordinary incident of the contractual relationship under which CAO, as a client of MES, requested the kind or specification of worker which CAO required to perform its mining activities. If CAO was to exercise that right, MES was said by CAO to be contractually entitled to place the worker not suitable to CAO for time being at any other site, or in any other position, for the time being available to MES for that purpose. 77 The applicants contended nevertheless that CAO had responsibility for discipline, and that MES had only token responsibility for discipline. That contention was said by CAO however to be not borne out by the evidence, and rather to be seemingly based upon an unrealistic or artificial view of what constitutes discipline. 78 As to what CAO described as the suggestion of the applicants that MES was other than responsible for disciplinary action taken against Mr Cumberland, CAO submitted that such suggestion 'strains the effect of the evidence'. CAO pointed out that MES was 'heavily involved' in the investigation following upon the second incident, being a matter said to have been recognised by the applicants in their submissions on the subject. In that regard, whilst CAO was considering whether Mr Cumberland should no longer be permitted to work at the HVO, no decision in that respect was made since MES decided to suspend Mr Cumberland. CAO asserted in effect that even if it had made and implemented such a decision, it was wrong to describe what subsequently occurred as 'disciplinary action', since CAO remained entitled, pursuant to its contractual arrangements with MES, to determine whom it would accept from MES by way of employment assistance and from whom it would not do so. 79 CAO contended moreover that the difficulty for the applicants in placing reliance on the alleged statement of Mr Ernst that 'any further incidents will jeopardise your job with C and A', was that the content of his statement was denied by the other participants in the meeting. In any event it was said by CAO that the words they attributed to Mr Ernst were of no significance to the issue arising in the proceedings, because they constituted merely an isolated statement by Mr Ernst falling for consideration amongst the numerous factors to be assessed in characterising the nature of the relationship between CAO and the applicants. CAO submitted moreover that any alleged statement by Mr Ernst was outweighed by the other factors asserted by CAO to support its case that the relationship between CAO and each of the applicants was not one of employment. 80 In relation to the applicants' assertion that the actions taken by MES in relation to Mr Cumberland were 'essentially taken at the behest of [CAO]', the response of CAO was that it was 'plain' that it made no suggestions to MES concerning the action, if at all, to be taken by MES against him. Moreover it was submitted by CAO that if by that assertion of the applicants, the same was intended to be of no more significance than that if the client of a labour supply company is unhappy with the supplied labour, then the labour supply company had better do something about it, or else lose the contract of labour supply. That did not mean in CAO's view that because the disciplinary actions of MES, such as were implemented, were reactive, they were merely token, and not indicators of where primary responsibility for the applicants contractually laid. 81 Generally as to the significance of the extent of direction and control of the applicants exercised by CAO, the applicants submitted that the Court was requested to look at all of the circumstances of the employment relationship, and in particular whether the label given to it reflects the reality, as well as the significance, of 'the control test' in any analysis of the employment relationship. CAO pointed however to the need to bear in mind that the contexts of the judicial observations for instance in The Queen v Foster; Ex parte Commonwealth Life (Amalgamated) Assurances Limited [1952] HCA 10 ; (1952) 85 CLR 138 at 151 (Dixon, Fullagar and Kitto JJ) and Dalgety Farmers were not related to labour hire arrangements, contrary of course to the situation here. That different context was said to reduce the reliance that may be placed on those judicial observations. Thus in terms of control, it was further said by CAO that the relevant inquiry is not confined to the party that has exercised control, but extends to the circumstances by which control came to be exercised, including any contractual allocation of control by an employer to that other party, and any contractual undertaking by an employee to accept control from such other party. Those submissions commenced with an acknowledgment of the applicants that 'in so far as matters relating to the employment arrangements of the Applicants were in writing, they mainly suggest employment by MES rather than [CAO]', given particularly that 'the Applicants were paid by MES and MES also made provision for superannuation, workers compensation and deducted and remitted income tax payments to the Australian Taxation Office'. Those circumstances as to payment of wages by MES, and of matters incidental thereto, such as the issue of group certificates and provision for superannuation, were said by the applicants not to constitute conclusive evidence of the existence of any employment relationship between the applicants and MES. Such paper matters can be no more effective than signed agreements in preventing a Court from discerning the real nature of the relationship between the parties. Whether it may operate adversely to the operation of the reality of the subject documentary arrangements as put in place by MES and CAO is however another matter. Brook Street was a United Kingdom Court of Appeal decision, the context whereof related to labour hire arrangements between Brook Street Bureau UK Ltd, a well known employment agency, and a local council's mental health hostel for the periodic cleaning thereof, which in the events that happened were physically undertaken at material times by the applicant Mrs Dacas. The Court of Appeal comprised Mummery and Sedley LJJ, whose reasons for decision were essentially in line, and Munby J who differed materially in what may be described as doctrinal reasoning to that of the other two members of the Court while reaching nevertheless the same ultimate decision. The difficulty to an understanding of the substrata to the appeal in its various aspects, as well as in its outcome, lies largely in relation to the procedural context to the appeal. For present purposes I will confine my consideration of the differences in principle concerning the implications of labour hire, though obiter , apparent in the reasons for decision of each of Mummery and Sedley LJJ compared to those of Munby J, and to the extent to which the statements of principle emerging from the respective reasons for judgment in Brook Street may have an operation in relation to the issues presently arising. 84 I would commence my consideration of the respective parties' approaches to the implications of Brook Street by recording that in the leading judgment, Mummery LJ observed that had the Court of Appeal been seized of all of the circumstances of the case, it may well have been open for the Court of Appeal to have found that Mrs Dacas was an employee of the local council to whom the services of Mrs Dacas had been provided by Brook Street Bureau by way of labour hire, and against which local Council their Lordships considered that her case for unfair dismissal should have been prosecuted rather than the labour hire agency Brook Street Bureau. As I foreshadowed, Sedley LJ took a similar approach in reasoning as well as in outcome to that taken by Mummery LJ. However Munby J adopted what I think may be described as the more conventional analytical approach. The critical point is that, although the construction of the contractual documents is important, it is not necessarily determinative of the contract of service questions, as contractual documents do not always cover all the contractual territory or exhaust all the contractual possibilities. In determining the true nature of the relationship (if any) between each of the respective parties, it is necessary to consider the total situation occupied by the parties ... Although there was no express contract between the applicant and the end-user in this case, that absence does not preclude the implication of a contract between them. That depends on the evidence, which includes, but may not be confined to, the contractual documents. ... The formal written contracts... may not tell the whole of the story about the legal relationships affecting the work situation. They do not, as a matter of law, necessarily preclude the implication of a contract of service... There may be evidence of a pattern of regular mutual contact of a transactional character... from which a contract of service may be implied by the tribunal... . I approach the question posed by this kind of case on the basis that the outcome, which would accord with practical reality and common sense, would be that, if it is legally and factually permissible to do so, the applicant has a contract, which is not a contract of service, with the employment agency, and that the applicant works under an implied contract, which is a contract of service, with the end-user and is therefore an employee of the end-user with a right not to be unfairly dismissed. The objective fact and degree of control over the work done by Mrs Dacas at West Drive over the years is crucial. The Council in fact exercised the relevant control over her work and over her... . The fact that the obligations were contained in express contracts made between Mrs Dacas and Brook Street and between Brook Street and the council does not prevent them from...being read across the triangular arrangements into an implied contract and taking effect as implied mutual obligations as between Mrs Dacas and the council. CAO seemingly acknowledged at the outset that in some circumstances there may be an overlap between the issue of intention to create legal relations and issues of agreement and consideration, reference being made in that regard to Carter J W and Harland D J, Contract Law of Australia (4 th ed, Butterworths 2002) p 163. In any event it was further submitted by CAO that whilst Mummery LJ did not explicitly identify what CAO described as that fundamental issue in contract law, there was conceivably 'just an echo of it' in his Lordship's reasons at [52] partly extracted above. Nevertheless, so the CAO submissions continued, his Lordship did not indicate it was necessary first to consider whether or not the relevant parties intended to enter upon legal relations. That absence of indication was said by CAO to also reside in the reasoning of Sedley LJ, where his Honour's discussion at [75] of the legal status of a worker was described by counsel for CAO as 'rather too compressed', and which reasoning had failed 'to address the fundamental questions of contractual analysis'. 87 CAO submitted further that it could not be correct, and would be contrary to Australian authority, for this Court to consider what is 'the nature of any implied contract before first answering the question --- did the parties intend to create legal relations', and further that '[t]he mere attendance by one party at the workplace of another does not give rise to the implication of a contract between those parties... [Sedley J's] reasoning impermissibly conflates the separate stages of contractual enquiry'. CAO further submitted, by way of contrast, that Munby J appeared to approach the case 'in a more conventional way' than was taken by Mummery and Sedley LJJ, and to have included the issue of intention 'in the mix of issues for considering what the facts actually proved including whether or not there was a contract with anyone at all'. I have explored in more comprehensive detail CAO's submissions in relation to Brook Street later in these reasons. 88 The applicants next drew attention to the decision of the United Kingdom Court of Appeal in Cable & Wireless plc v Muscat [2006] IRLR 354 handed down subsequently to Brook Street , where it was found by majority that a labour hire worker was employed by the host rather than by the agency through which the host had directed that he be engaged. Whilst the applicants acknowledged the facts in Cable and Wireless were distinguishable from Brook Street , the applicants placed reliance upon the acknowledgment by the Court of Appeal in Cable & Wireless upon the majority's views in Brook Street , which they submitted to be seemingly to the effect that so long as remuneration is being provided in reality by the employer, it matters not that it is not paid directly by that employer but by a third party pursuant to another arrangement made by the employer with that third party. Quoting from Cable & Wireless , the applicants asserted that a person who would otherwise be the worker's employer did not cease to be his employer by arranging for the wages to be paid per medium of a third party, and further that '[t]he essentials of a contract of employment are the obligation to provide work for remuneration and the obligation to perform it, coupled with control', whether the arrangements for payment are made directly or indirectly. I will later return to a further discussion of Cable & Wireless in the context of CAO's submissions. It was emphasised that if there was 'anything amiss with the performance of the Applicants it was CAO who detected this and took the practical steps to remedy it', and further that '[t]he supervision by MES was only notional in matters such as discipline and safety because for all practical purposes decisions in those matters were taken by [CAO]', and yet further that 'MES [did not] have any power to direct the Applicants to work at a different site'. It is unnecessary to pursue the question further in the present case where the indicia, including the legal right of control, point so overwhelmingly in favour of... the employers. However, where the factors are more balanced, the control test could well be seen to provide, in the limited situations I am discussing, the determinative test. Moreover it was asserted by the applicants that the circumstances of the case 'demonstrate that the arrangements for payment of wages and other "paper matters" were outsourced by [CAO] to MES'. I would think that description to be contrary to the reality of the relationship between MES and each of the applicants, and indeed that the exercise of the somewhat basic function alone of paying the applicants' wages tends against the viability of the applicants' case, the payment of wages and the obligation so to do being normally of the essence of an employer's obligation the subject of a contract of employment in relation to an employee. Counsel for the applicants drew attention further to the circumstance that '[w]hile the Applicants were remunerated by MES on an hourly basis for the work they performed with premiums for penalty payments, [CAO] paid to MES an hourly rate for the work done by the Applicants for [CAO] with a similar scale of premiums when the penalty payments were paid by MES to the Applicants'. 92 It was therefore submitted by the applicants that 'the facts as to the total employment relationship demonstrate that there was an employment relationship between each of them and [CAO] from the commencement of their employment at the HVO'. Alternatively it was submitted by the applicants that 'an employment relationship came into existence before 1 July 2002', that being 'the commencement time of the claim'. Additionally, as I have foreshadowed it was submitted by the applicants that in principle, '[c]onduct which might not have manifested a mutual intention to enter into a contract had it lasted only a brief time may become unequivocal if it is maintained over a lengthy period of time', referring thereby to the reasons of Mummery LJ at [17] in Brook Street. Of course as I have already mentioned, Sedley LJ adopted a similar approach, but Munby J chose to differ. 93 Counsel for the applicants next drew attention to the more recent case in England of Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd and others [2006] QB 510 as '[s]upport for a different approach depending on time and integration on the worksite, albeit in the context of vicarious liability', in the light of what was there postulated by Lord Justice Rix at [80] on the theme of 'practical and structural considerations' in relation to the engagement by a 'temporary employer' of a person who might still be 'recognisable as the employee of his general employer'. Is the employee, in context, still recognisable as the employee of his general employer and, in addition, to be treated as though he was the employee of the temporary employer as well? Thus in the Mersey Docks situation, it is tempting to think that liability will not be shared: the employee is used, for a limited time, in his general employer's own sphere of operations, operating his general employer's crane, exercising his own discretion as a crane driver. Even if the right of control were to some extent shared, as in practice it is almost bound to be, one would hesitate to say that it is a case for dual vicarious liability. One could contrast the situation where the employee is contracted-out labour: he is selected and possibly trained by his general employer, hired out by that employer as an integral part of his business, but employed at the temporary employer's site or his customer's site, using the temporary employer's equipment, and subject to the temporary employer's directions. In such a situation, responsibility is likely to be shared. A third situation, where an employee is seconded for a substantial period of time to the temporary employer, to perform a role embedded in that employer's organisation, is likely to result in the sole responsibility of that employer. 94 The further submission of the applicants was that '[t]o the extent that there is any uncertainty over whether the initial arrangements in June/July 2001 put in place a contract of employment between the applicants and [CAO], the evidence as to the full time continuing and exclusive relationship between [them] by 1 July 2002 removes that uncertainty'. By that later time, so the applicants' submission continued, 'it is abundantly clear that the reality of the work circumstances', which I have sought to fully outline in these reasons, 'rendered the relationship between the Applicants and MES as being one essentially relating to "paper" matters, such as the administration of the payroll. ' It was said further by the applicants that it was during that later time that the applicants 'had the real relationship' with CAO, it being said to be significant that it was CAO rather than MES which brought about a fundamental change in the applicants' contracts of employment in January 2002. That later time was said to be when the applicants at the direction of CAO 'commenced working a 12 hour shift roster rather than the 8 hour rosters they worked prior to this time'. By 'real relationship' however, the applicants' emphasis was upon circumstances continuing in substance and reality upon the basis of a hire of labour pursuant to a contractual arrangement between CAO and MES. 95 It was contended by the applicants nevertheless that indicia as to whether there is an employment relationship found in the reasons for joint judgment of Wilson and Dawson JJ in Stevens at 36-37 should here apply in principle. The appeal raised the issue as to whether a principal is liable for the negligence of an independent contractor on the basis that the activities he was engaged to perform were extra-hazardous. Unanimously the High Court held that the relationship was one of independent contractors. The principal judgment was written by Mason J (as he then was), with whom Brennan J expressed general agreement, and the fifth member of the Court (Deane J) agreed with the reasons for conclusion of Mason J. That authority related thus to vicarious liability in tort, and as I have foreshadowed, may be said therefore to be not operative at least directly on point in relation to the present cause of action. 97 I was referred by the applicants again to Hollis , and to the segments appearing at [47] - [57] of the reasons for joint judgment of the High Court. I have earlier extracted the text of [48]-[49] and part of [50] of that joint judgment, but I need say no more other than to repeat that the issue there was not, as here, the identification of the employer of persons having an acknowledged status as employees, but the identification of their employer in a tortious context. I do not therefore consider sufficient assistance to be available here from further passages in Hollis . 99 It was asserted on behalf of the applicants that they were paid as casual employees under the MES agreement, and hence at rates of pay said to be 'significantly less' than the rates that applied to both permanent or casual employees under the 2000 and the 2003 Certified Agreements. Those Agreements came into force respectively on 20 October 2000 for a term of three years and on 12 December 2003 for a further term of three years, and each related to 'employees engaged in production and engineering functions at the Hunter Valley Operation', in the case of the 2000 Agreement, and to 'employees of the company performing production and engineering work' in the case of the 2003 Agreement. The 25 percent premium added to the hourly rate is in lieu of entitlements under Part 6 --- Leave of this Agreement. The company may engage full-time, part-time, temporary or casual employees. A Full Time employee is engaged as such on a normal working week of 40 hours, and is entitled to all provisions of this Agreement. A Temporary Employee may be engaged for a fixed term up to 12 months or a fixed task on either a full time or part time basis. A Temporary Employee is entitled to the provisions of this agreement except for Clause 16 --- Redundancy. A Part Time employee is engaged on a regular and predictable roster of hours less than full time, and will be entitled to the provisions of this Agreement in the proportion their average hours bear to full time hours. A Casual Employee is engaged by the Company as such and paid by the hour for each hour worked. The Casual Rate includes a loading in lieu of all leave entitlements (except Long Service Leave). A Casual Employee has no entitlement to the provisions of Clause 16 --- Redundancy, Clause 24 --- Annual Leave, Clause 26 --- Sick Leave, Clause 27 --- Compassionate Leave, Clause 28 --- Jury Service, Clause 29 --- Parental Leave, and Clause 30 --- Special Family Leave. Clause 32 --- Public Holidays and Clause 33 --- Death Benefit. For the first 3 months of employment new employees will be probationary employees. ... . Indeed it is scarcely too much to say that it seems open to a tribunal of fact to treat most forms of intermittent or irregular work as casual. 104 More recently in A/asian Meat Industry Employees' Union v Sunland Enterprises Pty Ltd (1988) 24 IR 467 at 473, Gray J observed that the expression casual employee 'does not have a recognised legal meaning' , so that any issue as to the terms on which a casual employee is engaged 'becomes one of fact' . Accordingly it would seem that the expression has not materially changed in meaning since the High Court's decision in Doyle. Another characteristic is that there is no certainty about the period over which employment of this type will be offered. It is the informality, uncertainty and irregularity of the engagement that gives it the characteristic of being casual. Mr Wilton's analysis of timesheet data relating to times worked for the weeks respectively ending 27 January 2002 to 15 May 2005, similarly inclusively as to day, night and afternoon shifts, represented an average of 40.38 hours per week and Mr Cumberland's analysis relating to time worked for the weeks ended 27 January 2002 to 26 December 2004, again similarly inclusively, represented an average of 35.78 hours per week. So much was said to be at least implicitly exemplified by what appears in Byrne at 421 and 436. Given the variety of ways that a relationship of employer and employee may come about, formally or informally, the effectuation or otherwise of an employment relationship will not necessarily be readily cognisable, as the discussions for instance in Ermogenous at [24] and following under heading 'Intention to create contractual relations' exemplify and in Dalgety Farmers at [4] imply, see also the reference of Kirby A-CJ at [5] of Dalgety Farmers as to the need '... to look to the circumstances of the engagement and to ascertain who it was that offered employment, and whether the worker accepted that offer' . By the foregoing expression 'create legal relations', CAO used the same of course in a contractual sense. 111 As to the existence of any intention or otherwise to create legal relationships, CAO stated that 'it would be truly extraordinary if, from the requirement of [CAO] to supplement its labour force... by the supply to it... of MES' employees ..., one would conclude that [CAO] intended to enter into a contract of employment with each of the applicants'. On the contrary, it was said by CAO to be 'inherently improbable that despite it having made a contract with MES for the supply to it of MES employees to supplement its workforce and despite the fact that those supplied persons were to be paid by MES (which company would also look after their taxation and superannuation arrangements) and remain responsible for any disciplining of those persons for events occurring on the site of the client, [CAO] intended nevertheless to make separate and further contracts with each of the applicants so as to make them its employees'. CAO submitted in that context that 'such an intention would be the last thing that one would impute to [CAO]', and further that such a proposition 'defies logic --- and is not a correct conclusion to reach on the facts'. (ii) was there any evidence of contemplation by any of the applicants that they would create legal relationships with CAO? (iii) was there any evidence of consent by CAO to the creation of legal relationships with either of the applicants? By 'legal relationships', CAO appeared to include in particular contractual relationships. I will address those three issues under the various headings as denoted or formulated by CAO and in the sequence laid out by CAO. That sequence and its respective designations of subject matters addressed did not correspond at least entirely with the designations and sequences adopted in the applicants' submissions, but so much need not matter for practical purposes. These circumstances afford evidence, and indeed strong evidence, of contracts of service. There is certainly evidence to establish that neither Mr Mead nor Mr Crofts realized that he was an employed worker, but while this may be some evidence to rebut the existence of contracts of service, it does not, in the circumstances, seem to be of very much weight. The parties to a contract may well not be conscious either that the legal consequence of what they have done is the creation of an enforceable contract, or that the law will spell a contract of service out of their dealings. In any event, the matters discussed between Mr Randall and Ms Lister in terms of the creation of a legally enforceable contract, as Mr Macken suggested occurred, simply did not exist --- there was no mention of the wage rate to be paid, work to be performed (other than training), hours of work or conditions of employment generally; indeed, the omission of such matters, important as they are to the creation of a true legal relationship of employment as the consideration for any offer and acceptance. 115 Reference may also be made to Building Workers' Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104, where the context was that the respondent carried on business of supplying labour by way of hire to builders, construction managers and contractors in the building industry, and the issue arose whether workers thus sent to building sites by the respondent were the respondent's employees or the employees of the builder. A Full Federal Court (Wilcox, Burchett and Ryan JJ) found that no contract of employment, however characterised, had been made between the worker and the builder to whom his labour was supplied, because the element of consideration essential to a contract of employment, being the promise by the presumptive employer to pay for services as and where rendered, was absent in that case. In so finding, it was pointed out that the builder's only relevant obligation in that context was to make payment to the respondent labour supplier. It is clearly established that there cannot be a concluded agreement unless the parties are "of one mind" on all essential terms. The test for determining whether a term is "essential" is objective. One way of answering that question is to ask whether the contract would be "commercially viable" without such a term. In relation to the agreement of further, non-essential, terms, the question to be asked is: did the parties intend that the agreement would not become binding until there was agreement on the further terms, or did they intend to be bound forthwith, even if there were terms still to be agreed. In addition, there ought to be some indication that there has been an offer, and an acceptance of that offer, though many commercial dealings do not lend themselves to such an orthodox analysis. In determining whether the parties have reached a legally binding agreement, it is necessary to determine what is sometimes described as their objective intention. The legal rights and obligations of the parties turn upon what their words and conduct would reasonably be understood to convey, and not upon their actual beliefs or intentions.... The objective approach is said to lead to a greater degree of certainty in contractual dealings and in their assessment by courts. A party who on reasonable grounds supposes that he or she has entered into a contract with another cannot be defeated by a claim by the other that, despite appearances, he or she did not actually intend to enter into a contract. 118 CAO pointed further to evidence that the applicants perceived themselves as having a contractual relationship with MES. I was referred to a considerable body of affidavit evidence of each of the applicants, and their signed employment or application for employment forms relating to their subsequent purported employment by MES, together with employment undertakings, timesheets, superannuation documentation and leave applications. Additionally each of the applicants spoke periodically to MES in relation to leave and pay matters, and otherwise to employment problems. Mr Cumberland communicated with MES for example on the subjects of his having been stood down after an incident, and of his continuation of his status of casual employment, and of his having authorised his trade union to pursue legal proceedings against MES concerning the terms and conditions of his employment. The union appears to have subsequently initiated and conducted proceedings on Mr Cumberland's part against MES in relation to those matters. Both of the applicants described themselves as MES employees in their respective applications to MES in November 2004 for permanent employment, and otherwise as having an employment history with MES. 119 Moreover MES attended to matters incidental to the applicants' purported employment by MES such as payment of workers compensation insurance, superannuation and payroll tax, being matters said to evince further indicia of an employment relationship between MES and each of them, and a contractual relationship of employment in particular. CAO pointed out moreover that given its commercial relationship with MES and the agreement under which MES supplied employees to CAO, there was 'every reason to conclude that the last thing that [CAO] wanted to do was to take on, as its own employees, the employees of MES (including the applicants)'. Shortly stated, Mr Terkes obtained the work from the appellant and agreed to perform it on the appellant offering it to him; attendance by him at Warman's premises to commence and continue performance of the work involved no separate or distinct offer by Warman nor acceptance by Mr Terkes. It follows, in our view, that to the extent any legal relationship existed it did so between the appellant and Mr Terkes, although, of course, the nature of such relationship is another question. I have earlier cited dicta (see [31] to [34]) in that regard appearing in Brambles, Integrated Computer Services and Damevski . In his concurring judgment in Brambles , Mason P referred to 'the difficulties of pressing too far classical theory of contract formation based upon offer and acceptance' . At the bottom line there must be satisfied at least the notion or test of mutual assent, viewed objectively from the point of view of reasonable persons on both sides to the objective candidature for establishment of a concluded bargain. Further in Brambles at [81], Heydon JA observed that '[i] n the light of the above cases, it is relevant to ask: in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of the Council and a reasonable person in the position of the defendant think as to whether there was a concluded bargain? ' Merely because some dealings have occurred between the prospective parties to a bargain does not necessarily mean that a contract exists. As McHugh JA said further in Integrated Computer Services at 11,117, '[t] he question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement' , to which his Honour added '[t] he conduct of the parties, however, must be capable of proving all the essential elements of an express contract '. 127 CAO contended that the kind of circumstances in which a contract has been found to exist by mutual assent are far removed from the present case. I was referred in that regard again to Australian Broadcasting Corporation , where Gleeson CJ at 552 described 'the price' being 'the most important subject of their transaction' . CAO further emphasised that the applicants bore the onus of proof of the formation of an agreement referrable to essential terms. 129 CAO next addressed the relevance of control to the establishment of a contractual relationship and submitted to the negative of any proposition to that effect. 130 In any event, the fact that CAO did exercise 'some control' in relation to the applicants was said by CAO not of itself to lead to a conclusion as to the existence of any contractual relationship. 133 There is a body of authority bearing on the foregoing subject to which I have already made reference starting at [26] of these reasons, for instance Stevens, Hollis and Damevski. Attention was drawn by CAO also to ACT Visiting Medical Officers Association v Australian Industrial Relations Commission (2006) 153 IR 228 and BHP Billiton Iron Ore Pty Ltd v Construction, Forestry, Mining and Energy Union of Workers (2006) 151 IR 361, which will shortly be discussed. The majority of those decisions were made in the broader context of determining whether a particular worker was an employee or else an independent contractor of the beneficiary of his or her work. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question. Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee. These principles do not embody a definition of employment as such. They rely instead on a test which involves the consideration of a number of established factors or indicia, some of which are characteristic of a contract of service and others of which suggest a non-employment relationship. The task of the court which must assess the employment status of a worker is to consider the parties' relationship in light of each of these indicia and to determine, on balance, into which legal category the relationship falls. The exercise is not a mechanical one. Rather it is a matter of obtaining the overall picture from the accumulation of detail. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it. Standing back, it seems to me that in this case the subject matter of the contract between Drake and the temporary is casual employment. Once that step is taken, the rest falls into place. Drake can be seen, in a relevant sense, to be employing the temporaries to do casual work, albeit that the contract between the temporary and Drake arises only upon the temporary accepting the offer of work through Drake. The arrangement made with Drake is for casual work: the temporary is to go to the designated work-site and perform work according to the directions of the designated employer for the day; that all flows from the contract made by the temporary with Drake. Tomorrow --- or next week or next month --- it will be a different work-site and a different temporary employer, but again that will be the consequence of the temporary accepting an offer from Drake and a contract arising between Drake and the temporary. But given the contract made by the client with Drake and the contract made by Drake with the temporary, it seems to me perfectly consistent to conclude that the temporary is the employee of Drake in the relevant sense at common law. I think it is clear that, when a worker accepts an offer of work and goes to the client's premises to perform that work, the worker is subject to the immediate control and supervision of the client. The direction and control that the client has arises, I think, de facto rather than de [jure]. That is because ... there is no contractual relationship between the client and the worker. The worker is bound, by the terms of his or her contract with Forstaff, to accept "the care, control and supervision of [the] client" and acknowledges "the right of [the] client to direct my work activities". If the worker does not accept the care, control and supervision, or direction, of the client then the client may terminate the assignment. But the client is doing so pursuant to its contract with Forstaff, the effect of which the worker acknowledges in his or her contract with Forstaff. His Honour referred in that context to the indicia at [118] as tending to indicate the existence of a contractual relationship of employment, being the deduction of PAYE tax, the arrangement and payment of superannuation, the arrangement and payment of workers compensation insurance, entitlement to overtime, penalty rates, public holidays and other allowances. As to indications to the contrary, his Honour referred to the absence of entitlement to holidays or sick leave. 141 CAO submitted that the extent of control in a labour hire context is of less significance than in the normal employment context, and my attention was further drawn to the reasons for judgment of Merkel J in Damevski at [162], where his Honour referred briefly to Mason & Cox at [24]-[29] and Drake Personnel at [55] and observed that the entitlement of an employer to direct a purported contractor is '... relevant in determining whether an employment relationship exists although it is not as important as it may once have been, particularly in a labour hiring agency context'. In such a context, the fact that the client determines the hours of work should not preclude the existence of a contract of employment between a labour hire company and the worker, CAO thus contended and in my opinion rightly. CAO submitted moreover that '[s]ignificantly, the test for whether or not a contract is one of employment is not the "organisation test", which was identified by Mason J in Stevens at 26-29 and Wilson and Dawson JJ at 35-36, and where his Honour indicated at [27]-[28] that he was '... unable to accept that the organisation test could result in an affirmative finding that the contract is one of service when the control test either on its own or with other indicia yields the conclusion that it is a contract for services', because '[that] test does no more than shift the focus of attention to the equally difficult question of determining when a person is part of an organisation such that his wrongs may be imputed to that organisation'. Again of course as I have earlier emphasised, his Honour's consideration did occur in an immediate context of vicarious liability in tort, but nevertheless that dictum provides a measure of guidance in contexts involving issues as to the existence or otherwise of an employment relationship in an industrial setting. Moreover CAO emphasised that the factor of control was only one factor to be considered in assessing the existence of an employment relationship, and was not a determinative factor; I was referred in that regard to ACT Visiting Medical Officers at [19] and [27]. In relation to the analogous statutory obligation of an employer '... to ensure the health, safety and welfare at work of all employer's employees' imposed by s 15(1) of the precursor Occupational Health and Safety Act 1983 (NSW), it was said in Carrington Slipways Pty Ltd v Callaghan (1985) 11 IR 467 at 470 (Watson J) that 'the words "to ensure" are to be construed in... their ordinary meaning of guaranteeing, securing or making certain'. It was pointed out by CAO that the HVO remained at all material times a so-called controlled safety environment, as was acknowledged at least by Mr Wilton. 146 It was pointed out by CAO moreover that the obligation to ensure the safety of workers extended to every person working on site, whether as permanent employees, contractor personnel or some other persons; so much was said to have been testified by each of Messrs Wilton, Hendriks and Sargent. Moreover Mr Sargent further testified as to what CAO described as its proactive approach to safety precautions by way of policies and procedures designed to minimise safety risks to contractor personnel. Of course as an owner and occupier of its Ravensworth or Hunter Valley Operations, (to which I have been abbreviating as HVO), CAO would be subject to tortious duties of care in relation to visitors and other entrants and occupiers for the time being, irrespective of statutory liabilities flowing from its CAO mining operations. 147 CAO therefore submitted that the circumstances of exercise of control on its part, such as they were, did not demonstrate that CAO and the applicants were mutually involved in any employment relationship, and further that the explanation for the exercise by CAO of direction and supervision, to the extent of those CAO activities which took place, reflected the CAO case that the applicants were each employees of MES who had been supplied by MES to CAO in or towards discharge of the contractual obligations of MES to CAO. 148 It was further submitted by CAO that the manner in which the applicants performed work at the HVO, including their respective acceptances of directions of and supervision by CAO, reflected the contractual arrangements as between MES and the applicants, for which CAO contended, as well as the observance and performance of the statutory safety obligations imposed upon CAO and its relevant statutory officeholders. It was said in that regard that those factors did not support the applicants' contention that CAO and each of the applicants were placed in an employment relationship according to the general law, and that the explanations given in evidence for the manner of performance of work supported the CAO case that the applicants were employees of MES who had been supplied by MES to CAO in order to fulfil the contractual obligations of MES created by the Supply Agreement continuing in operation between CAO and MES. By way of contrast, CAO described the persons directly engaged by it as 'permanent employees' (and as so described in these reasons). The applicants were said by CAO to be at least inferentially aware that they were treated by CAO as contract labour. That factor was described by CAO as alone supportive of the proposition that CAO and each of the applicants was not engaged in an employment relationship with one or more of the others. 150 CAO emphasised of course that MES paid the applicants monies described as wages, and made such payments to the applicants directly and on a weekly basis, and before the time when it would be remunerated in respect thereof by CAO; in that regard, MES provided pay slips directly to the applicants. Moreover MES deducted income tax from the salaries it paid to the applicants and presumably therefore remitted the amounts so deducted directly to the Australian Taxation Office. Consistently with that course, MES made superannuation contributions on behalf of the applicants to the superannuation fund manager. Thus it was contended by CAO that it did not reward the applicants as such in any monetary sense for or in respect of the work they performed at the HVO. Those factors further support the proposition that CAO and each of the applicants were not engaged in an employment relationship at any material time. 151 Moreover as foreshadowed earlier, MES supplied the applicants with work wear for at least most of the time (as Mr Wilton and Mr Cumberland testified), inclusive of safety gear such as helmets, safety glasses, torches, ear muffs, and a crib bag. That factor of supply was asserted by CAO to be neutral upon the issue whether or not CAO and the applicants were in an employment relationship. That was said to be the case given that CAO supplied the mining equipment used by the applicants. 152 The obligations of the applicants to attend the HVO workplace was explained by CAO to be different to those of the so-called typical employee in the general workforce, in that each of the applicants had the right to take 'leave' when they wished to exercise the same, provided that he arranged for a replacement worker either directly or through MES. That asserted right was described by CAO as being further indicative of the circumstance that CAO and each of the applicants were not placed in an employment relationship inter se . 153 CAO submitted that there was no evidence to the effect that it held out to 'the world at large' that the applicants were part of its mining and industrial enterprise, and on the contrary, CAO pointed to the circumstance that MES supplied the applicants with work wear which was badged with the MES logo. CAO submitted further that 'on one view, the supply of work wear badged with a MES logo supports the position that [CAO] and each of the applicants were not in an employment relationship'. However, CAO conceded that such a factor is 'not as strong as some of the other factors'. 156 Whilst acknowledging that a balancing exercise was required, CAO submitted that the factors to which it has pointed as bearing upon what boils down to the critical issue arising as to the factor of control, support overwhelmingly the conclusion that CAO on the one hand and each of the applicants on the other were not engaged in an employment relationship. CAO's submission was to the effect that the reasons in both decisions, other than that of Munby J in Brook Street , should not be accorded any effective, much less decisive, operation in relation at least to the relevant circumstances of the present case which CAO has outlined. I will first address CAO's submissions relating to Brook Street. CAO contended that obiter observations to any such effect should not be adopted by an Australian superior court. Moreover CAO drew attention to what was said to have been acknowledged by Mummery LJ at [49]-[50] to the effect that the notion of a contract of service requires the existence of at least minimum obligations as to the provision of work, and conversely of obligations to perform that work in the context of control by the provider of the work. CAO further emphasised in any event what was said by his Lordship at [49] concerning the need to eschew notions to the effect that 'an individual is an employee simply because he is not a self employed person' , but contended that '[i]f there was no interposed employment agency there would be no doubt that, even in the absence of an express contract, Mrs Dacas worked under a contract of service with the council: it was managing and controlling work done by her in the mutual expectation that she would be paid for what she was told to do and had in fact done', being a contention not at least directly relevant. 159 CAO drew attention to the purported characterisation of the so-called triangular arrangement appearing at [52]-[53] of the reasons of Mummery LJ. I have already extracted earlier (at [85] in these reasons) much of what appears in [53]; in [51] his Lordship referred to the legitimacy of having regard to ' the fact, if it be the case, that a series or a number of transactions are intended to operate in combination with one another or are ingredients of a wider transaction intended as a whole'. That approach does not sit readily with the approach taken in the Australian authorities in relation to circumstances involving labour hire operators (such as in Forstaff). CAO's contentions were in summary to the effect that the analysis of Mummery LJ (and implicitly therefore also of Sedley LJ) fell 'rather short', in that the first issue normally required to be resolved in labour hire cases, such as Brook Street , is simply whether there existed a contract at all between the worker and the client of the labour hire agency, or else between the worker and the labour hire agency. I was referred to Ermogenous and Teen Ranch , both of which involved an issue as to whether the parties mutually intended to enter into a contractual relationship, the element of intention in that regard being paramount. The respective factual circumstances in those United Kingdom and Australian cases were some distance removed from the industrial context of the relationships involved in the present proceedings. 160 CAO contended further in relation to Brook Street that neither Mummery LJ nor Sedley LJ 'clearly and crisply asked and answered' what CAO would contend to have been the critical issue, namely 'did the Council and Mrs Dacas intend to enter upon legal relations', before proceeding to consider the nature of any implied contract. CAO contended that it could not be correct, and would be contrary to Australian authority, for a court to enter upon a consideration of the nature of an implied contract before first resolving the issue as to whether or not the parties in dispute intended to create or enter upon a legal relationship in the first place. It was emphasised by CAO in that regard that merely the regular attendance by a person at the workplace of another person does not give rise to the implications of a contract between those persons, and moreover that his Lordship's reasoning geared to the doctrine of implied contracts 'impermissibly conflates the separate stages of contractual enquiry'. There is in my opinion force in principle inherent in those CAO submissions as to shortfalls in any assistance to be derived from the leading judgments in Brook Street . 161 The differing approach of Munby J, as the third member of the Court of Appeal in Brook Street , adopted at [83] what CAO described as a more conventional position in terms of authority. His Lordship's starting point was that 'the mere fact that there is a contract between the worker and the agency, and another contract between the agency and the end-user, plainly does not prevent there also being a contract between the worker and the end-user. Nor, of itself, does it prevent any contract between the worker and the end-user being a contract of service'. That approach is more in line with Australian authority and also with the United Kingdom approach taken subsequently in Viasystems in relation to what was described in the concluding sentence of [80] by Rix LJ . Where Munby J's reasoning departed at least implicitly from the approach of the other members of the Court of Appeal was in his isolation at [83] of two critical elements of an employment relationship, namely 'the obligation to remunerate and the right to control' . Munby J cited authority stating that the 'mutuality of obligation and the requirement of control on the part of the potential employer [are the] irreducible minimum for the existence of a contract of employment '. His Lordship further cited authority to the effect that ' [t] he significance of mutuality [is] that it determines whether there is a contract in existence at all' , and that ' [t] he significance of control [is] that it determines whether, if there is a contract in place, it can properly be classified as a contract of service, rather than some other kind of contract' . Moreover Munby J considered at [87] that ' [t] he requirement that there be mutuality of obligation necessarily focuses attention on the obligations (if any) undertaken by the end-user ', which his Lordship described as not inclusive of any obligation 'to provide the servant with work in addition to wages' , any such latter obligation being 'not very often to be found expressed in written contracts of employment' . 162 The opinion of Munby J at [89] was therefore that '[i] f the obligation to remunerate the worker is imposed on the agency, there cannot be a contract of service between the worker and the end-user' , and conversely 'if, at the same time, control is vested in the end-user, then there equally cannot be a contract of service between the worker and the agency' . Those propositions were considered by his Lordship to reflect 'a consistent line of authority holding that in [such] circumstances there is no contract of employment --- indeed no contract at all --- between the worker and the end-user' . Moreover it is in line with Australian authority (for example Forstaff ) to postulate the need for there to be a contract in operation between a putative employer and a putative employee in order to establish the relationship of employer and employee. The extensive line of authority listed in [90] of his Lordship's reasons bearing upon the propositions which he enunciated include Stephenson . I would draw attention to the concluding sentence at [53] of the reasons for judgment in Stephenson , being that '[o] n any view it would, in our opinion, be unusual to describe an individual as having a contract of employment with a party who has no legal obligation to pay his wages and to whom he had no legal obligation to provide work' . Further authority in England conceivably to like effect was nevertheless cited by Munby J at [90] of his reasons. 163 As I foreshadowed, the submission of CAO on the implications of the authorities identified by Munby J was that his Lordship '... appears to have approached the case in a more conventional way', and seemingly 'to have included the question of "intention" in the mix of issues for considering what the facts actually proved --- including whether or not there was a contract with anyone at all'. There is in my opinion considerable force in that submission, in the light also of Drake Personnel and Forstaff more recently in Australia. Whilst agreeing with Mummery and Sedley LJJ upon the outcome to the appeal, Munby J parted company with the thrust of what I think may be described as their Lordships' obiter dicta , as Munby J at least implicitly indicated at [80]; indeed Munby J further expressed in [81] 'very serious misgivings about the course on which [such dicta] would have us embark' . 164 It was accordingly submitted by CAO that the reasoning of Munby J in Brook Street constituted 'a compelling demolition of the rather confusing approach by the majority [United Kingdom Court of Appeal] in that case', and a 'powerful cause for this Court not following that approach'. The first is the suggestion that the objective fact and degree of control over the work done by Mrs Dacas over the years is crucial. That, as it seems to me, somewhat overstates the position. And in any event it does not seem to me, with all respect, to meet the point made by Elias J in the Stephenson case. In this connection [Mummery LJ] asks rhetorically, What was the council paying for, if not the work done by Mrs Dacas under its direction and for its benefit? The difficulty with this approach ... is that the council had no obligation to pay Mrs Dacas, that Brook Street's obligation to pay her arose independently of whether or not Brook Street was paid by the council, and that the Council did not set the rate of her pay. It needs also to be borne in mind that the sum contractually payable by the council to Brook Street was not simply the aggregate of the sums payable by Brook Street to Mrs Dacas and her fellow workers. It will also have included, in addition to Brook Street's profit, an element reflecting the cost to Brook Street of meeting its various obligations to the council. The answer to my Lord's rhetorical question ... is that what the council was paying for was not the work done by Mrs Dacas and her fellow workers but the services supplied to it by Brook Street in accordance with the specification and the other contractual documents. The monies paid by the council to Brook Street were not payments of wages, nor were they calculated by reference to the wages payable by Brook Street to Mrs Dacas and her fellow workers. There was no mutuality. 165 Hence CAO submitted that it may 'clearly be seen', by reference to the evidence placed before this Court, that the critical elements identified by Munby J as fundamental to his Lordship's reasons for disagreement with the approach of the majority in Brook Street , and which were said by CAO to be fundamental to the resolution of the present issue arising according to the general law of Australia, require that this Court should find that there was no contract of employment made between CAO and each of the applicants. In that regard I was referred to [67] of the reasons for judgment of Mummery LJ, subsequent to which his Lordship acknowledged, at [68], at least the force of the arguments of Brook Street's counsel in attempted denial of the existence of any contract of service between that employment agency and Mrs Dacas. Incidentally in [67], his Lordship observed also that '[i] f the case raised policy issues as to the working conditions of people in the position of Mrs Dacas , that was a matter for legislation by Parliament and not for the courts' . 168 CAO drew further attention once more to the significance of the circumstance, that there was no contractual obligation imposed upon CAO to provide either of the applicants with work, and in that regard I was referred to Brook Street at [64]. CAO exemplified that circumstance by reference to the unavailability of work to the applicants, and hence of any requirement for them to report for work at the HVO, in the event of inclement weather or machinery breakdown, and further that it was open to CAO conversely to inform MES that it did not want a particular MES employee to work again at the mine for whatever reason (if any). 169 I would next move to a consideration of the detailed attention afforded by the parties to Cable & Wireless , which I have earlier foreshadowed that I would do more extensively in the context of my recitation of CAO's submissions than did the applicants, CAO having given perhaps more extensive attention to Cable & Wireless . That case was decided by the United Kingdom Court of Appeal subsequently of course to Brook Street by a different bench being Sir Anthony Clarke MR and Smith and Kay LJJ. The joint judgment of their Lordships at [35] expressed the opinion that '... the view of the majority in Dacas was correct'. It was submitted by CAO nevertheless that the decision in Cable & Wireless was 'not compelling', in that the United Kingdom Court of Appeal once more did not address 'the fundamental problem of intention to create legal relations as a threshold question', or more precisely, to create a contractual relationship. In that latter regard, it was submitted by CAO that the Court of Appeal's reasoning in Cable & Wireless was 'out of step with the law in Australia', exemplifying in that regard Ermogenous and Teen Ranch , and in any event, that the decision in Cable & Wireless was of little relevance to the present case because of what was described as its vastly different factual circumstances. 170 The factual context to Cable & Wireless was different and more complex than in Brook Street , and needs to be explained in some detail in order to provide an adequate understanding of the nature and extent of the issue which there arose for resolution, and any conceivably comparable context to that involved in the present case. The respondent Mr Muscat had been engaged as an employee of a telecommunications specialist with a company called Exodus Internet Ltd ('EIL'), when the company decided to reduce the number of its employees in order to facilitate a potential buy-out, but which nevertheless wanted to retain that worker's services. EIL informed Mr Muscat that he would have to become a so-called contractor, and to provide his services through a limited company. His employment was thereupon terminated and a company named E-Nuff Comms Ltd ('E-Nuff') was set up to receive his pay and car allowance. About three months later, EIL was effectively taken over corporately by Cable & Wireless. Mr Muscat was described by Cable & Wireless within the context of its organisational structure nevertheless as an employee, and he was given accordingly an employee number. The cost of all of the equipment upon or with which he worked was paid by Cable & Wireless. Mr Muscat continued to submit invoices for his services provided in the name of E-Nuff. Since however Cable & Wireless considered Mr Muscat to have remained associated with it, though by then as a contractor, Cable & Wireless informed him that it would not deal with him directly, but that as in the case of all other contractors seeking to make arrangements for the provision of their services to Cable & Wireless, he would have to engage with Cable & Wireless through an agency entity called Abraxas plc, which had been retained to supply contracted personnel to Cable & Wireless. On 13 August 2002, E-Nuff (at least implicitly at Mr Muscat's direction) entered into a contract for services in favour of Abraxas, which included as a retrospective element the period of time up to when Mr Muscat became aware of the requirement for him to deal with Cable & Wireless per medium of Abraxas. It was that contract for services which was described as crucial to the resolution of the Cable & Wireless proceedings, in that it was the case of Cable & Wireless that such contract for services changed the status of Mr Muscat from that of its employee. Subsequently in late November 2002 Cable & Wireless informed Mr Muscat that it would no longer require his services and on 31 December 2002 he ceased work directly or indirectly (that is, purportedly per medium of E-Nuff and no longer by himself directly) for Cable & Wireless. In March 2003 Mr Muscat made a claim for compensation upon Cable & Wireless for unfair dismissal. Cable & Wireless contended in response that Mr Muscat was not its employee, but that contention was rejected, it being found that Mr Muscat held an implied contract of employment with Cable & Wireless. The notion of implied contract of employment had been postulated by Mummery and Sedley LJJ in Brook Street . CAO contended however that nothing said in Cable & Wireless would suggest the result in the present case that each of the applicants were CAO's employees. There was no factual similarity of relevance between the circumstances of the present litigants and those of the parties to the Cable & Wireless restructured relationships. So much at least would seem to be correct, in that putting aside debate concerning the notion of implied contract of employment, the present circumstances did not involve any endeavour to restructure an existing employment relationship into a framework of labour hire which would no longer supposedly have the formal characteristics of any prior existing employment. 173 The concluding observations of the United Kingdom Court of Appeal in Cable & Wireless at [54] may therefore be conceivably pertinent to the approach which the courts may take in Australia in circumstances involving an employer's endeavour to alter an originally established relationship from that of a conventional contract of employment of a natural person to that of some form of principal and agent, such as was sought unsuccessfully to be achieved in Damevski ( ante ), but they have no sufficient connection to the circumstances of the present case, which involve no such alteration to the status quo of an employment relationship in favour of a natural person established in the conventional way, but rather the structure of genuine labour hire arrangements undertaken from the outset at arm's length. 175 Each of the parties has provided to the Court extensive references to the evidentiary material placed before the Court and comprehensive written submissions supplemented by oral submissions. Apart from material comprising common ground and recorded at the threshold of these reasons at [1]-[10], the parties have mutually agreed upon numerous matters contextual to the relationship and dealings between each of the applicants and MES and separately with CAO, and also between MES and CAO discretely, which matters have been recorded comprehensively at [11]-[19]. The formal circumstances additionally recorded at [20] and [22] were not in issue and were in any event duly established. The relief sought by the applicants, and wholly put in issue of course by CAO, is set out at [21]. 176 The parties are in agreement as to what may be described as the ultimate issue arising, that being whether each of the applicants on the one hand, and CAO on the other, were placed in an employment relationship inter se at the material times, which of course the applicants asserted CAO put in issue. Relevant to and on CAO's contention discretely critical to the resolution of that ultimate issue is whether each of the applicants was placed in a contractual relationship with CAO at any material time, which CAO further of course put in issue. Apart from the existence of the so-called 'Employment Undertaking' signed by Mr Wilton and provided to MES as set out at [15] above, each being implicitly predicated upon the signatory being 'placed for casual work on a [MES] client's work site', and upon documents not dissimilar in effect signed by Mr Cumberland and provided also to MES as set out at [19 (iii)] above, which documents reflected relevantly the records kept and maintained by MES, and did not apparently contradict any records maintained by CAO, a critical circumstance was that MES alone remunerated each of the applicants at the material times in relation to the provision of their labour to CAO, and did so in line with the apparent structure of so-called labour hire arrangements. 177 That MES and CAO were engaged together contractually by way of such labour hire arrangements was established formally by at least by the time of their entry into the comprehensive Supply Agreement in 2003, whereby persons retained by MES, such as the applicants, were placed by MES on labour hire with CAO. The formation of that Supply Agreement took place against a background at least inferentially of prior labour hire arrangements existing between MES and CAO. The applicants' threshold or preliminary contention to the contrary, purportedly based on their commencement of work for CAO at the HVO prior to the formation of that Agreement, should be plainly rejected as untenable (see [10] above). Prior to the taking effect of the Supply Agreement, the essence of the arrangement in operation between those two entities, apparently for some considerable time, was that each of the applicants was involved physically in the open cut mining undertaking conducted by CAO in the HVO under the auspices of labour supply arrangements in operation historically as between MES and CAO, whether on an ad hoc basis or more formally. So much is readily apparent at least from the circumstances I have recorded for instance at [11] above, which, as I foreshadowed, became subsequently reduced to writing to the extent set out at [15] in the case of Mr Wilton and at [19 (iii)] in the case of Mr Cumberland. 178 Moreover those evolving circumstances of labour hire in relation to the applicants ultimately so recorded in writing were augmented by further arrangements subsequently put in place by MES, such as payment by MES of the applicants' superannuation and taxation instalments out of their respective earnings derived from and paid by MES, and the absence of availability of work for the applicants at CAO's Coal mining operations in the HVO, and hence of remuneration from MES, in times of inclement weather or machinery breakdown. MES characterised each of the applicants in its records as engaged accordingly in casual or temporary employment. CAO made payment accordingly to MES direct of the charges for labour hire raised and invoiced by MES to CAO in respect of each of the applicants, without any deduction therefrom for income tax or superannuation, and did so at rates calculated to cover not only all costs inclusive of salaries sustained by MES related to its employment of the applicants, but additionally to provide a profit element for MES in respect of the exercise of its business operations of labour hire. Workers made available on hire by MES generally, such as the applicants, became thus available to CAO, and apparently to other mining employers engaged in Coal mining for instance in relation to mining companies operating in the Hunter Valley upon the basis of labour hire. 179 In a separate segment of these reasons for judgment, I sought to catalogue various matters regarding to those circumstances appertaining to the applicants, under the heading 'Circumstances beyond the scope of evidentiary common ground --- the operation of the mining equipment of CAO by the applicants and related matters'. None of those labour hire circumstances created individually or cumulatively a relationship between either of the applicants of the one part and CAO of the other part which could be rightly described as one of employment by CAO of either of the applicants, being employment according to the general law. The fact that each of the applicants undertook similar working duties and functions to many CAO directly retained and remunerated workers who were indisputably employees of CAO according to the general law, is not sufficient to indicate or require by any extent of analogy that the hired workers provided by MES to and thereby engaged by CAO should be relevantly characterised as employees of CAO. Aside from the labour hire character of the arrangements the subject of the Supply Agreement made between CAO and MES, reflecting labour hire arrangements not dissimilar to those described by various authorities I have cited, and in particular the Australian authorities, it may be rightly borne in mind that there is nothing unusual or enigmatic in the circumstances such as appear to have prevailed in the HVO where CAO at all material times has conducted Coal mining operations, that persons the subject of labour hire might be engaged in working actively alongside or otherwise in association with undisputable employees of the business entity which has engaged contemporaneously other workers by way of labour hire from third parties such as MES. 180 Nor does it make any difference of significance that by reason of statutory regulation of the physical conduct of segments of mining work by miners, and in particular Coal miners, any consequences should operate differently to what I have foreshadowed above to be the case. As I have emphasised already, much of the regulation I have identified is directed at least to issues of safety in relation to persons engaged physically in mining work, whether as an operator of mining machinery or as a person who may otherwise be present in the precincts of any such operations. It is apparent that safety concerns have been the reason for promulgation of many aspects of the regulations which I have either identified and/or additionally extracted, irrespective of the employment relationships inherently involved. The circumstance that the applicants worked shoulder to shoulder with CAO acknowledged employees, being employees thus appearing on the CAO employment payroll, is thus of no present consequence. 181 Significance was further sought by the applicants to be assigned to CAO's management, and in particular as to management's alleged discipline of each of the applicants, whereof evidence was adduced by the applicants, being management and discipline seemingly indistinguishable in principle, or at least largely so, from that in force for the time being in relation to CAO's mining workers acknowledged to be in CAO's employment. I have outlined the evidentiary material relied upon by the applicants in that regard, and the asserted ascription on the part of the applicants of relevance thereto said to be a factor pointing to an employment relationship in relation to each of the applicants. It is not foreign to or inconsistent with any such operational structure, whether as here involving mining with heavy machinery, or otherwise, that CAO took the purported disciplinary action that it did in relation to the alleged worksite misconduct on the part of Mr Cumberland complained of by CAO, given especially CAO's evident perception, rightly or wrongly objectively speaking, of the physical danger thereby caused by his operation of CAO's heavy machinery. In that regard I have already acknowledged the force of CAO's submissions. I have earlier at least inferred that the applicants' purported reliance upon The Queen v Foster needs to be discounted or else rejected in contexts of labour hire circumstances such as are here involved. 182 As to the controversial notion of implied relationships of employment and the significance thereof adopted by the two substantially concurring members of the United Kingdom Court of Appeal in the labour hire context of Brook Street , I would conclude, as I have foreshadowed earlier in these reasons, that there is no good reason for any imputation to the present circumstances of any such notion, assuming that notion to be rightly cognisable in the general law of Australia, to the extent and for the purpose indicated in the Brook Street context of labour hire arrangements, being an association which I think to be at best doubtful. 183 It follows therefore, from what I have thus far concluded in relation to the applicants' submissions, that there are doctrinal obstacles of significant judicial precedent cognisable by the general law of Australia which stand in the way of recognition of any entitlement to the grant of the relief sought in the present proceedings. That is not to say of course that a contract of employment, whether oral or in writing, may not contain implied terms, and indeed such would I imagine normally or often be the case. Where the difficulty largely lies, as exposed by the traditional approach taken by the third judgment in Brook Street , is in imputing any implied contract of employment in circumstances of labour hire, that being a transaction which inherently constitutes dual contractual arrangements, one being between the provider of the hired worker and the hired worker, and the other being between that provider of the hired worker and a third person who hires the second-mentioned person from the labour hire provider in order to obtain the performance of work from such hired person. The implications relevantly of labour hire postulated in the reasons for judgment of Merkel J in Damevski at [174], as outlined in what is extracted in [34] above, are in my opinion apposite to the present context. 184 Moving then to the submissions of CAO, outlined at [110] above, which put forward five reasons why a concluding inference is not open to be presently drawn as to satisfaction by the applicants of the existence of any contractual relationship between itself and each of the applicants. I would conclude that each such reason so propounded by CAO has been duly established. CAO is correct in its contention as to the absence of discussion, much less of agreement, whether oral or in writing, between CAO and either of the applicants, concerning remuneration or other essential conditions of employment. Those CAO submissions were directed of course to the need for satisfaction by the applicants of requirement for the characterisation of an employment relationship having regard to an established contractual relationship (see again [24] above). 185 To those circumstances may be added the four reasons set out in [117] above as demonstrative of and consistent with objective perceptions or intentions of each of the applicants as to an absence of his involvement in any contractual relationship with CAO consistently I think with the principle said to have been acknowledged in Australian Broadcasting Corporation . Moreover the further circumstances concerning the applicants enumerated at [120] are I think indicative of and consistent with the absence of a contractual relationship of employer and employee at all material times as between each of the applicants as an employee of the one part and CAO as the employer of the other part. Conversely, each of the matters enumerated in [122] and [123] above exemplify circumstances to the effect that CAO was privy to a contractual arrangement with MES for the supply to CAO of labour for reward to MES of persons (such as the applicants) engaged by MES to undertake mining work at the CAO mining operations conducted in the HVO, being work involving of course the operation by such persons of the mining machinery of CAO. 186 I am further of the view that CAO is correct in its postulation that each of the matters enumerated at [124] above demonstrate not only a lack of sufficiently compelling indications capable of bearing upon the existence of an employment relationship between CAO and the applicants, but indeed serve to evince the converse. Explanation is thereby implicitly provided as to why there was no requirement for CAO to enter upon, and moreover why it did not enter upon, any contract of employment with either of the applicants, and why CAO never recorded in any documentation the existence of any relationship of employment as between itself and either of the applicants. 187 I would therefore conclude that CAO is correct in its contention that in substance and reality, each of the applicants entered into a contractual relationship with and was employed by MES according to the general law at all material times, and that the applicants' respective attendances at the HVO to perform mining work, albeit for the benefit of CAO as a major operator in the HVO, as well as in a commercial sense for MES in the context of its business of labour hire, did not constitute or involve explicitly or implicitly any offer of employment by CAO to either of them, nor any acceptance by either of them of any offer of employment by CAO, explicitly or implicitly. The work which each of the applicants undertook in the HVO was undertaken by way of labour hire in the context of their respective employment functions undertaken contractually for MES, and thereby as employees of MES alone according to law. CAO's citation of Swift Placements in that context of labour hire precedent was appropriate. 188 Apart from an absence of evidentiary circumstances indicative explicitly or implicitly of any relationship according to law of the employment by CAO of either of the applicants at any material time, there are further factors and reasons which serve to demonstrate why the applicants' case for establishment of any employment relationship between themselves and CAO should fail. 189 There is force in the additional submissions of CAO, appearing under the heading 'Mutual assent analysis', contextually to a threshold acknowledgment of the principle that a viable contract of employment existing by mutual assent may be recognised by law in circumstances where the traditional analysis of offer and acceptance is inappropriate. For the reasons advanced however by CAO, and appearing in [126]-[128] above, I agree that the kind of circumstances in which a contract has been imputed by judicial precedent to exist in contexts yielding a conclusion of mutual assent are removed from the circumstances in evidence in the present litigation. 190 I further agree moreover with the contention of CAO that the fact that CAO exercised a measure of control over the activities of each of the applicants on the HVO sites of their respective physical engagements, to the extent relied upon by the applicants in their submissions, duly reflected the contractual arrangements prevailing between the applicants as employees and MES as employer that they would accept and obey the lawful and reasonable directions of CAO when given in the circumstances or kind of circumstances recorded in [130] above. Any such arrangement would be expected to subsist in labour hire arrangements generally. 191 There remains for consideration the implications of the aspects of the conduct and functions of the respective parties undertaken in the context of what may be described as the totality of the relationship between the parties to this litigation and the working out thereof. That notion has been substantially addressed already in these reasons, but it is necessary or appropriate to conclude additionally upon the evidentiary material addressed in the context of the invocation of authority undertaken by CAO in its comprehensive treatise reproduced by way of overview of the conduct and functions of the respective parties in the segment commencing at [132] of these reasons. In so doing, I would keep in mind what was pointed out in Roy Morgan Research at 5074 ( ante ) as to '... obtaining the overall picture from the accumulation of detail' , and 'the overall effect of the detail, which is not necessarily the same as the sum total of the individual details'. I would acknowledge the relevance and force of all of the factors formulated in [135], each having varying significance without each being determinative in any fulfilment of the need for undertaking a balancing exercise in relation to all relevant factors bearing upon resolution of the principal issue arising as the existence or otherwise of relationships of employment. I would further acknowledge the prospective operation, in cases such as the present, of the principles enunciated generally in Mason and Humberstone , as well as perhaps more specifically in Drake , and additionally of course in Forstaff where reference to and examination of authority is undertaken by way of focus on labour hire arrangements. 193 Adopting the broad approach mandated by those authorities, which I have of course earlier recorded or reviewed to an extent, I am of the opinion that the submissions of CAO in its approach to the notions of control, direction, supervision and exercise of discipline in the context of approaching and evaluating relationships of relevance generally, and as reflected in the particular circumstances of the case, and yet further as comprehensively summarised by CAO in [142] of these reasons, are soundly conceived in principle and in its analysis and summary of the facts and circumstances relevantly the subject of the proceedings. Moreover the further catalogue of circumstances propounded by CAO, and summarised in [144] above, demonstrate in outline the functions appropriate and necessary to be put in place in a labour hire context relating to Coal mining, and which do not necessarily operate of course wholly in the aggregate. Those circumstances do not in my opinion impute the existence of any employer/employee relationship in the context of the labour hire operations appertaining to the circumstances relevantly of either of the applicants. 194 Finally I would add that I am persuaded that the accumulation of the so-called '[o]ther factors' formulated and propounded by CAO in the segment of these reasons appearing in [149]-[156] comprise, as I have there foreshadowed, a further formidable accumulation of evidentiary material supportive of the CAO case as to the absence of any employment relationship having subsisted at any material time between itself and either of the applicants. 195 For the foregoing reasons which I have summarised, and in the light of the totality of the matrix of facts and circumstances which the respective parties have invited me to address, I have reached the conclusion that CAO must succeed and that the application must therefore be dismissed. I certify that the preceding one hundred and ninety-five (195) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. | applicants provided to respondent coal miner by way of labour hire entity coal miner additionally retained workers on its own payroll applicants worked on site alongside coal miner's employees whether applicants so hired became employees of coal miner according to law irrespective of extent of contractual relationship subsisting concurrently between labour hire provider and applicants examination of australian and united kingdom authority and of statutory and judicial indicia bearing upon issues arising inclusive of implications of labour hire whether employment relationship existed between applicants and respondent coal miner irrespective of labour hire arrangement no employment arrangement in operation between coal miner and applicants according to law workplace relations |
On 29 October 2003, the applicant was granted a Student (Temporary) Subclass 572 visa ('the student visa'). Prior to that date the applicant held a Student (Temporary) Subclass 573 visa. On 8 January 2004, a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs ('the delegate') cancelled the applicant's student visa under s 116 of the Migration Act 1958 (Cth) ('the Act') on the grounds that the applicant had breached a condition of his visa. 2 The delegate found that the applicant breached Condition 8202 which had been incorporated as a condition into his student visa. The condition prescribed a minimum level of attendance at classes in his course of study. Condition 8202(3)(a)(ii) of Sched 8 of the Migration Regulations 1994 ('the Regulations') sets out the circumstances in which a student visa holder in the applicant's position meets the requirements of that condition. 3 The applicant applied to the Migration Review Tribunal ('the Tribunal') to review the delegate's decision. On 1 November 2004, the Tribunal affirmed the decision of the delegate to cancel the applicant's student visa. The applicant now seeks judicial review of the decision of the Tribunal. 4 For the reasons which I set out below the application for review should be dismissed. 5 In accordance with the decision in SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162, I join the Migration Review Tribunal as the second respondent. However, later in that year, during a mid semester break, the IBC closed down and the applicant was required to transfer to the Alexander Education Group ('the College') to complete his course. At the College the applicant enrolled in a Diploma of Business course with the College's School of Business for the second term of semester 2 of 2003. The term commenced on 7 October 2003. 10 On 9 December 2003, the College issued the applicant with a notice under s 20 of the Education Services for Overseas Students Act 2000 (Cth) ('the s 20 Notice') advising that he had breached a condition of his student visa relating to attendance in the course in which he was enrolled. 12 On 15 December 2003, the College issued a Certificate of Attendance certifying that the applicant's attendance between 7 October 2003 and 28 November 2003 was 52 per cent and was characterised as 'unsatisfactory'. 13 The applicant reported to the Department's office in Perth on 5 January 2004 and he was given a Notice of Intention to Consider Cancellation of his student visa. 17 The Tribunal sent the applicant a letter dated 23 April 2004 seeking the applicant's comment on the Certificate of Attendance from the College dated 15 December 2004 which certified the applicant's attendance record of 52 per cent between 7 October 2003 and 28 November 2003 as unsatisfactory. The applicant responded to this invitation by a letter dated 28 April 2004. During my consultation with the counsellor, I was told that I will be enrolled to its' Diploma of Business Studies course, which was the same course I was undertaking in IBC. However, due to IBC being closed during my course's mid-semester period, I was told by the counsellor that initially I would be undertaking a "continuation course" instead of the academic institution's standard course. This 'continuation course', as explained by the counsellor, is actually a half semester course, which will continue on the course as set by IBC. However, I was not informed on how to drop these units officially. Therefore I have not been attending academic activities in relation to these units by taking that the counsellor had make [sic] the necessary arrangement in assisting me in dropping these units. In between 7 th of October and 28 th of November 2003, I am required to have an attendance level of 47 lessons, which according [to] the structure of the "continuation course" consists of 39 lessons of 4 hours long and 8 lessons of 1 hour long. According [to] the Certificate of Attendance as presented to me by authorities of Alexander College, during my "continuation course" period I have only achieved 52% of the required attendance level. However by taking in the units that I have dropped into account, 41.48% of absence level was recorded was due to the units that I have dropped. This is because Accounting is consists of a 4 hours long lesson, Project 2 is consists of an hour long lesson and Computing is consists of a 4 hour long lesson. During the "continuation course", I was not aware that these units are not officially dropped and were still taken into account for my attendance level. Therefore calculation for his attendance for this time period is 43% Attendance. The Tribunal also received from the College a statement of the academic record of the applicant at the College. This showed that he had failed four of the five subjects in which he was enrolled. 20 The Tribunal sent the applicant a second letter inviting him to comment on the further information which it had received from the College. This letter was in the same terms as the letter dated 28 April 2004 which the applicant had sent to the Tribunal in response to its earlier letter dated 23 April 2004. 22 By letter dated 4 August 2004, the Tribunal invited the applicant to appear before the Tribunal on 1 September 2004 to give evidence and to present argument on the issues in relation to his application. The applicant did not attend the hearing on 1 September 2004. By letter dated 2 September 2004 the applicant advised the Tribunal that 'he was not able to be at the hearing' because he had been advised by his migration agent that it was not compulsory for him to attend if he had provided all the relevant information. He said that he had already provided all the necessary documents relating to the requested information. Further, he said that he was still undertaking a course at the College and had to attend classes on the day of the hearing. 23 The Tribunal handed down its decision on 1 November 2004. The Tribunal affirmed the decision to cancel the applicant's student visa. 24 In its reasons, the Tribunal considered the applicant's submissions, contained in his letter of 15 July 2004, that he had not attended classes on the basis that he had already completed those units at the IBC, and he thought that he had 'dropped' those classes and assumed that the counsellor had made the necessary arrangements to assist him in dropping the units. However, the Tribunal rejected the claims made by the applicant on the grounds that the academic transcript from the College did not indicate that the applicant had withdrawn from any of his units. The Tribunal also said that there was no indication from the documents available to it that the applicant did anything to 'drop' the units beyond discussing that question with the counsellor at the College. As a result the review applicant has not satisfied condition 8202. The attendance of the Applicant for the period of 7 October 2003 and 28 November 2003 should be accounted at [sic] part of the Applicant ['s] overall attendance for the whole course. Further or in the alternative, the Tribunal committed reviewable error in not setting aside the Respondent's decision of cancellation of the Applicant's visa where the Respondent's decision was based on grounds other than those in respect of which, the Applicant was given notice under Section 119 of the Act. Further or in the alternative, the Tribunal's decision to affirm the Respondent's decision of cancellation of the Applicant's visa, and the Respondent's decision of cancellation of the Applicant's visa is contrary to the principal [sic] of substantive fairness having regard to all the circumstances referred about. Further or in the alternative, the issue of not to set aside the cancellation of the Applicant's visa failed to be reconsidered by the Tribunal in light of the matter referred to in paragraph 3 above. Further or in the alternative, the Tribunal committed reviewable error in applying the law and has failed to consider the Applicant's circumstance in its merit. Firstly, it is said that the Tribunal failed to consider the applicant's contention that the College had made a mistake in enrolling the applicant in those units which he had previously passed in the IBC. Secondly, it is said that the applicant's attendance record should have been considered in conjunction with his attendance record whilst at the IBC because the course he took at the College was a continuing course. 28 In my view, each of the grounds should be rejected. 29 Insofar as the first ground comprises a claim that the Tribunal failed to deal with the applicant's submission that the College was at fault in registering him for the five units referred to in his academic record, the claim must be rejected. The Tribunal considered and dealt with the submission that the applicant made regarding his conversations with the counsellor and came to the view that the question of dropping units had got no further than discussions with the counsellor. This was a finding of fact which was open to the Tribunal. 30 As to the second ground, Condition 8202(3)(a)(ii) provides that where a course runs for at least a semester the attendance requirement is necessary for each term of the semester of the course. The applicant completed the first term of the semester at the IBC. The applicant was enrolled at the College to complete the second term of a course that ran for at least a semester. The student visa condition required that he maintain an 80 per cent attendance record for each term of the semester. Thus, any attendance whilst undertaking the course at the IBC was irrelevant. In any event, in his letters of 28 April 2004 and 15 May 2004, the applicant did not set out his earlier attendance record at the IBC, and he advanced no argument that the applicant's earlier attendance record at the IBC should be considered. The Tribunal made no error in failing to consider the attendance record of the applicant at the IBC. However, in making its decision, the Tribunal considered the attendance of the applicant during the period 29 October 2003 to 17 November 2003 --- the applicant's student visa, having only commenced on 29 October 2003. The Tribunal based its decision to cancel the student visa by reference to the applicant's attendance record during that shorter period based upon the information obtained from the College on 31 May 2004 pursuant to the Tribunal's request in May 2004. 32 The Certificate of Attendance and the s 20 Notice issued by the College shows that the relevant term commenced on 7 October 2003 and ended on 28 November 2003. The applicant's academic record also shows that the relevant term commenced on 7 October 2003 and concluded on 28 November 2003. The student visa condition requires that the applicant maintain the attendance record for 'each term' of the requisite semester. The applicant's student visa did not contain a condition that called for, or permitted, an assessment of the attendance record to be made from the date of the commencement of the student visa. The assessment of compliance with the condition requires an assessment to be made of attendance over the duration of 'each term'. If the visa is in force at the end of the term and the applicant was in fact enrolled at the commencement of the term, even if under a different visa, then an assessment can be made of whether there was compliance with the attendance condition of the visa which was extant at the end of the term. In this case the applicant was enrolled at the commencement of the term. By assessing the applicant's attendance record by reference to a period other than a period comprising 'each term' of the semester the Tribunal asked itself the wrong question. Accordingly, the Tribunal committed a jurisdictional error. 33 The first respondent submitted, notwithstanding jurisdictional error, that no relief should be granted because it would be futile if the matter was remitted to the Tribunal. The first respondent submitted that had the Tribunal considered the applicant's attendance record by reference to the period of the whole second term, it would not have been satisfied that the condition of the student visa had been complied with, and the Tribunal would have been required, in any event, to have cancelled the student visa. 34 Further, counsel of the first respondent submitted that there would be no procedural unfairness to the applicant in declining relief. This was because the applicant was initially asked to make submissions on the basis that the requisite period was indeed the term as designated by the College. The comments which he made in his letter of 28 April 2004 were identical to the comments which he made in his letter of 15 July 2004 in relation to the subsequent request in respect of the shorter period. 35 I accept the submissions of the first respondent. In determining whether to withhold relief on the grounds of futility, the Full Court in VAAD v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 117 applied a test which asked whether the jurisdictional error was one 'which could possibly have deprived the appellants of a successful outcome to their application for review'. In this case, the jurisdictional error was not one which could possibly have deprived the applicant of a successful outcome to his review before the Tribunal. The evidence shows even if the attendance record is assessed by reference to the period of 7 October 2003 to 28 November 2003, which is the period referred to in the Notice of Intention to Consider Cancellation, and the period referred to in the s 20 Notice and the Certificate of Attendance, the applicant's attendance record did not meet the 80 per cent requirement. Accordingly, if the matter was remitted to the Tribunal, it could not possibly reach the necessary state of satisfaction as would permit compliance by the applicant in accordance with Condition 8202(3)(a)(ii). Further, there would be no procedural unfairness to the applicant in withholding relief on this basis because the applicant was given the opportunity to make submissions on his attendance record over the full period of the second term, and by his letter of 23 April 2004 took advantage of that opportunity. In my view, this is a case where, in the exercise of my discretion, relief should be withheld on the basis that it would be futile to send the matter back to the Tribunal. 37 This ground does not disclose a head of jurisdictional error. Counsel for the first respondent, however, treated this ground as a complaint about procedural fairness. There was, in my view, no breach of procedural fairness. 38 The applicant was given an opportunity to comment both on his attendance record as disclosed in the initial Certificate of Attendance issued by the College in respect of the period commencing on 7 October 2003, and also in relation to the College's subsequent facsimile of 31 May 2004 dealing with the applicant's attendance for the period from 29 October 2003. In both instances he made exactly the same comments. These submissions were considered by the Tribunal in reaching its decision. 39 Further, the applicant was invited to attend the hearing before the Tribunal. However, the applicant decided not to attend the hearing on the basis of advice from his migration agent. One reason for not attending was that he believed that he had provided all relevant information. There was no breach of procedural fairness on the part of the Tribunal in proceeding to make a decision in his absence. It dealt with the submissions which the applicant made in writing and rejected them. I, therefore, dismiss those grounds for the reasons set out above. 41 After the hearing the first respondent asked me to withhold delivering judgment until the outcome of an appeal by the first respondent against the decision of a Federal Magistrate in the case of Zhou v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FMCA 1826 ('Zhou') , on the basis that the outcome of that case could potentially provide the applicant with a further ground of review. The applicant agreed to this course of action. 42 In Zhou , the Federal Magistrate referred to the case of Morsed v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 193 and found that the s 20 Notice issued to the applicant, Ms Zhou, was misleading. This was because the notice represented that the applicant would have an opportunity to explain her breach of Condition 8202 to the respondent's compliance officer, whereas, in fact, the officer was obliged to cancel the visa once a breach was demonstrated. The Federal Magistrate went on to find that the s 20 Notice was an invalid notice and that the invalid notice had a vitiating effect on the resultant decision made under s 116 of the Act to cancel the visa. 43 The appeal in Zhou is still pending. However, the first respondent has drawn my attention to Humayun v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCAFC 35 ('Humayun') --- a decision of the Full Court which was delivered on 22 March 2006. That case is presently under appeal so it is preferable for me not to offer any views about its correctness. Counsel for the Minister contended that, even if the s 20 notice was incapable of having the consequences set out under Subdivision GB of Division 3 of the Migration Act (ss 137J-137P), that did not affect the power of the delegate to effect a visa cancellation under s 116 of the Act. They referred to the judgment of Allsop J (with whom Tamberlin J agreed) in Minister for Immigration and Multicultural and Indigenous Affairs v Yu [2004] FCAFC 333 ; 141 FCR 448. Furthermore, said counsel, a legal deficiency in the delegate's decision would not affect the power of the MRT to review the reported decision and to make such order as the delegate ought to have made. They cited three recent Full Court decisions: Zubair v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 248 , 211 ALR 261; Minister for Immigration and Multicultural and Indigenous Affairs v Ahmed [2005] FCAFC 58 , 143 FCR 314 and Uddin v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 218. There is nothing in this point. 45 I accordingly dismiss the application with costs. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | student visa breach of condition 8202 whether assessment of attendance record to be made from the date of commencement of visa futility relief refused migration |
Those paragraphs propose to recite the engagement of Emerald Ocean Distributors Pty Ltd ('Emerald Ocean') and Slendertone Health and Beauty Pty Ltd ('Slendertone') in trade or commerce in relation to the Slendertone products and that during those periods various express representations concerning the Slendertone products were made in promotional literature in terms set out elsewhere in the orders. They are preceded by the heading 'FOR THE PURPOSE OF SECTION 83 OF THE TRADE PRACTICES ACT 1974 (CTH), THE COURT MAKES THE FOLLOWING FINDINGS OF FACT AGAINST THE FIRST, SECOND AND THIRD RESPONDENTS:'. 3 The respondents contend that s 83 of the Trade Practices Act 1974 (Cth) ('the Act') is enlivened by the sealing of the judgment and that findings of fact by the Court are not confined to those matters proposed to be referred to in the orders and must include the findings in respect of the contraventions of the Act. In any event, the 'findings' sought to be included in the orders were not disputed as appear from [2]-[3] of the reasons. 4 The applicant accepts that the ordinary place for the statement of a finding of fact is in the reasons for judgment. However, it is submitted that the formal recording of a finding of fact 'reduces the difficulty facing courts in subsequent proceedings of determining whether a particular passage appearing in the reasons for judgment contains a finding of fact': Australian Competition and Consumer Commission v Emerald Ocean Distributors Pty Ltd [2004] FCA 303 at [17] . It is submitted that formal findings of fact would assist the Court in any subsequent application under s 87(1A) of the Act either by the applicant or any other person who has suffered loss or damage by the conduct of the respondents in contravention of Pt V of the Act. Such formal findings of fact are said to have been made in a number of cases including Australian Competition and Consumer Commission v International Technology Holdings Pty Ltd (1997) 37 IPR 573; Australian Competition and Consumer Commission v Health Partners Inc (1997) 151 ALR 662; Australian Competition and Consumer Commission v Hartwich [2002] FCA 273 ; and Australian Competition and Consumer Commission v The Tasmanian Salmonid Growers Association Ltd [2003] FCA 788. Alternatively, it is submitted, that should the Court decline to make a formal order as set out in the terms of orders 1 and 2 of the applicant's minute of orders, it should make an order that the seal of the Court be affixed to the reasons for the purposes of s 83 of the Act. 5 I am unable to agree with this latter alternative proposal. Section 83 is a section which may be availed of by a person or party entitled to obtain the seal of the Court upon reasons for judgment. It is not for the Court to order that the opportunity provided by the section be availed of. 6 As to the primary ground of the respondents' contention, I agree with the applicant's submissions. 8 The respondents accept that they cannot argue against these proposed orders where they relate to specific findings made in relation to the specific express representations found to have been made by them. However, the respondents contend that the orders should be shaped to take into account the reasons and the fact that the applicant has been unsuccessful in a number of claims. In particular it is said where the Court has ruled that the statements of the respondents have been found to be false and/or misleading or deceptive as a result of the 'absolute' nature of the representation, the orders should be shaped to reflect that fact. Also it is contended that regard should be had in the orders to the fact that the Court has found at [132]-[143] that the relevant technology supports representations which are qualified. 9 The applicant responds to this by referring to the wide discretion for the Court to make binding declarations of right pursuant to s 21 of the Federal Court Act 1976 (Cth); Trade Practices Commission v Santos Limited [1993] ATPR 41-221 and other matters pertaining to the Court's power. 10 In relation to the absolute nature of the statements, the applicant also submits in reply that the nature of the statements of whether the technology supports representations that are qualified is a consideration to be taken into account by the Court in resolving the legal controversy as to whether the representations were in fact false, misleading or deceptive. This, it is said, has been resolved by the Court because it was held that the absolute statements were false or misleading or deceptive. Accordingly it is said it is appropriate for the Court to make the declarations in support of those findings without qualification. 11 I agree with the applicant's submissions that the purpose to be served by the exercise of the Court's discretion to make orders is to solve the legal controversy at hand. That is, orders fall to be made in circumstances where the findings require orders to be made because the conduct has been found to have given rise to liability. Where orders are not required, because no contravention has been found, there is no requirement to craft an order recording the result. Additionally, there is no competing draft from the respondents to provide persuasion towards the form of order which they seek. 12 Therefore the applicant's proposed orders 3-7 should be accepted. 14 The respondents submit the injunctions sought are unnecessary and ought not to be made. This is based on the fact that the business which gave rise to the applicant's action has been terminated by the current action and there is no prospect of there being any revival in respect of the particular products. 15 The respondents concede that the statutory power to order injunctions pursuant to the Act is not subject to the same restraints of the power in equity as discussed by Selway J in 4WD Systems , and the Court should consider the complete circumstances. 16 The applicant submits that the proposed injunctions are consistent with the public interest as the respondents, including the natural person respondent, have not given any undertakings that they will cease to engage in the contravening conduct. It is that which is said to make this case distinguishable from the decision in Australian Competition and Consumer Commission v Danoz Direct Pty Ltd (2003) 60 IPR 296 where the respondent in that case provided undertakings to withdraw the relevant product from sale, not to sell it in the future, to destroy its existing stocks of the product and not to sell a similar device in the future. 17 Further it is submitted that the proposed injunctions are such that there is a clear nexus between each of them and the conduct giving rise to liability under the Act and that they are in clear terms and capable of being obeyed and are not too vague or imprecise or require continuing supervision by the Court. 18 In my view, in the absence of any undertaking such as proffered in the circumstances in Danoz , the public interest considerations are such as to make the injunctive orders generally appropriate. Even if the companies and person are not engaged in the future in business of the type proposed to be the subject of the orders, the absence of an undertaking without the injunctive provisions in place could raise a query in the mind of the public why the conduct was unrestrained in the face of orders finding breaches arising from conduct in that respect. 19 The respondents query whether the reference to 'any' benefit in proposed order 8 and to 'completely removing' in proposed order 9(f) correctly reflect the reasoning of the judgment. As to the former, I consider it would better reflect the reasons if amended to read in the relevant passage 'To obtain full benefit or result from the use of this product it must be used in conjunction with a healthy diet and regular exercise'. As to the latter, this should remain as it is, namely a reference to the injuncting of representations that Slendertone products completely remove cellulite and not injuncting a lesser representation in that respect. The cross-respondent opposes those orders because the section was not in force at the time of the conduct complained of in the proceeding. The applicant accepts this and proposes to rely on s 80A which was in force at that time. That section has relevant application until the date of its repeal by the Trade Practices Amendment Act (No 1) 2001 (Cth) effective 26 July 2001: s 8 of the Acts Interpretation Act 1901 (Cth) . Section 80 is also a source of authority to make orders injunctive in character and relating to advertising: Mundine v Layton Taylor Promotions Pty Ltd (1981) ATPR 40-211; Australian Competition and Consumer Commission v Real Estate Institute of WA Inc [1999] FCA 1387 ; (1999) 95 FCR 114 at [49] . 21 The cross-respondent also contests the making of the correctional orders on the basis of discretionary factors. It alleges the orders have the very real potential to cause damage to it and that factor either alone or with other discretionary factors should occasion the Court to refuse to make the orders in the terms proposed. It states that the name 'Slendertone' together with the Slendertone logo is used by it in its own advertising literature and correspondence. It exports its products to 40 countries throughout the world. However, as Slendertone and Emerald Ocean were neither exclusive agents nor any form of agency, there was and is no affiliation between the respondents and the cross-respondent. Therefore it is submitted that it would be unfairly prejudicial to the cross-respondent if the corrective order had the real potential for generating consumer confusion by being unfairly attributed to the cross-respondent or its products. This, it is urged, falls to be considered in the context where the business of the respondents was shut down in June 2000 and there is no evidence that products were sold after that date. Even at that date, the evidence was that the respondents did not have any products to sell. This is a position in relation to which it is said by the cross-respondent the applicant brought no challenge at the trial. Additionally reliance is placed on the fact that there is no evidence that the discontinued products pose any public safety issues. 22 As the applicant submits in response, the power to order corrective advertising is one to be used protectively and not as a punishment. The sole consideration for the Court is the protection of consumers: Hospital Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483 at 492. Advertising may be ordered even where there have been few complaints about the advertisements: Australian Competition and Consumer Commission v Dell Computers Pty Ltd (2002) ATPR 41-878. The applicant further submits that the cross-respondent's submissions go not to the fact of advertising but to the form of advertising. It proposes that schedules A and B to the orders, which set out the form of advertisements, be amended by the addition of the words '[T]he Federal Court's reasons for judgment relate only to the Slendertone products defined above, and only as those products existed in the first half of 2000'. I agree with this proposal. 23 Given that amendment, I do not think the other matters relied upon by the cross-respondent can outweigh the need for protective corrective advertising. In particular the application by the cross-respondent for leave to rely on the affidavit of Mr O'Donoghue sworn 14 February 2001 as to the circumstances of his incorporation of Slendertone being before any involvement by the respondents in the sale of the Slendertone products cannot result in the discretion being exercised to the contrary. 24 In relation to proposed order 11(a) the advertisements are confined to the Women's Health magazine; the Ultrafit magazine; The Australian newspaper; and The West Australian newspaper. I consider these to be reasonable in the circumstances. 25 In relation to proposed order 11(b) relating to use of the website of Slendertone to publish a correctional notice, the respondents submit this would force the re-opening of a closed site. However, the applicant brings evidence that the website is still operative and may be accessed by consumers and potential consumers. The applicant filed an affidavit of M/s Alison Shilkin sworn on 21 December 2005 in which she deposes to successfully accessing the website on 19 December 2005. She said the website displayed a Slendertone logo, stated that it was currently being updated and that product information could be obtained by calling a designated telephone number. Therefore it is submitted the website should be taken as operative and may still be accessed by consumers and potential consumers. Accordingly in my view, there is no reason this portion of the order should not be made. 26 In relation to proposed order 12 requiring Mr O'Donoghue to attend trade practices training, the respondents submit that participation in the proceeding has been education enough for him. In my opinion it cannot be said that the involvement in the proceedings is a substitute for the proposed education program. The program is supported by s 86C(2)(b) of the Act which gives the Court the power to order, in relation to a person who has engaged in contravening conduct, a probation order for a period of no longer than three years. Such a probation order is defined by s 86C(4) of the Act to include an order directing the establishment of a compliance program and an education and training program as well as the revision of the internal operations of a person's business. I accept the submission by the applicant that involvement in proceedings is not a substitute for a tailored education program and that if it were, it would have the effect of limiting the operation of s 86C of the Act to proceedings resolved by consent. If Mr O'Donoghue had given an undertaking not to be involved in trade or commerce in relation to the areas of activity involved in the proceeding the position may have been otherwise, but that is not the case. The proposed compliance program contains a nexus to the relevant conduct as it relates to sections of the Act which form the basis of the findings of contravention; it is formulated in terms able to be obeyed; and it is in the public interest, envisaging prevention of further similar conduct. 28 The respondents contend that the applicant is not entitled to all of their costs of the action. 29 It is submitted that the action was defended largely as a result of the applicant's insistence on the orders for refunds sought in the original application. These orders as originally sought required the respondents to refund any claimant who came forward, irrespective of the bona fide aspects of their claim. The last claim for a refund was removed by amendment to the pleadings by the applicant having been given leave to do so, (see Australian Competition and Consumer Commission v Emerald Ocean Distributors Pty Ltd [2004] FCA 303) on 23 March 2004, after the close of evidence. Therefore it is submitted by the respondents that they ought not to be made to bear the costs of the action up to the date of the change in the pleadings. It is said that the claim for relief pursuant to s 87 of the Act prior to the amendment was doomed to failure in that no consent (as required prior to the procedural change brought about by the decision in Medibank Private Ltd v Cassidy [2002] FCAFC 290 ; (2002) 124 FCR 40) had been obtained. Additionally the blanket refund orders originally sought were faulty. It is said that had not the change in the law by Medibank Private occurred thereby giving rise to the amendment to the pleadings, the respondents would have been successful in defending the part of the claim which, it is submitted, was the principal reason for the defence. 30 It is then said for the respondents that the possibility of reimbursement of costs by the applicant to the respondents in relation to the matters, which only arose because of the money claims made by the applicant and which were withdrawn and replaced by the current claim for findings of fact under s 83 of the Act, should be considered by the Court. In this regard the respondents contend that the cross-claim itself, which sought payment of money from the cross-respondents that has to be paid as a result of the order being sought, would not have been brought. In these circumstances it is submitted that such costs can reasonably be described as being within the concept of 'costs thrown away' payable by the applicant as the result of the amendment of the pleadings. 31 Additionally it is submitted that the Court must take into account that there were circumstances in the reasons where the Court was not persuaded by the evidence of the applicant in respect of a number of the claims. Therefore the respondents ought not to bear the costs of the applicant's expert evidence. Alternatively, there should be a percentage reduction in the amount of costs payable to the applicant. Further, this percentage reduction should be increased to reflect the comments in [13] of the reasons. There the Court stated that regard had not been had to what was said in Danoz Direct per Dowsett J at [79]-[90]. Further it was said that had the applicant accepted in respect of most of the pleaded representations that no determinative answer could be given on whether the Slendertone products had the performance characteristics claimed and had invoked s 51A of the Act, the evidence would have been confined to whether there was a respectable body of opinion or other information of which the respondents had knowledge such that the respondents had reasonable grounds for making the representations. It is therefore submitted that there is a public policy benefit in depriving the applicant of its costs in circumstances where the applicant, by initiating the proceeding in the manner which it did, prolonged the hearing and increased the complexity of the matter in that way. The public policy benefit pointed to is the encouragement of the applicant to approach future acts in the manner described by Dowsett J in Danoz Direct . 32 Relevantly to costs and the terms of proposed order 11 requiring advertising, it is submitted that the applicant originally sought an order for advertising in national newspapers and publications irrespective of whether or not the impugned representations had appeared in those publications. This has now been reduced to three publications. This needs to be considered, it is submitted, in the context of where very few complaints have been received by the respondents about the product (see the evidence of M/s Cook). In the circumstances, it is submitted that the applicant's approach to the proceeding precluded any settlement by requiring terms in respect of remedial advertising and refund guarantee which were unsustainable. 33 In submissions in reply the applicant points to the judgment delivered on 23 March 2004, referred to above at [29] where it was accepted that the application to amend the pleadings was made necessary by an unforeseen matter wholly outside the control of the applicant, namely a change of law resulting from a decision of the High Court refusing special leave to appeal. Slendertone did not discharge the onus of rebutting s 51A of the Act [207]. But even on the charges where it was unsuccessful the Commission succeeded on some issues such as market definition, market power and taking advantage of market power which were common to all charges. 36 Here it is submitted that the applicant has succeeded on almost all of its allegations of misleading or false representations and that where it has not succeeded the costs and expenses of the pleadings were minimal due to the interrelationship between all of the representations and the evidence pleaded. Therefore the applicant submits in these circumstances it is entitled to receive all of its costs from the respondents or, in the alternative, a de minimis reduction would be appropriate due to the few representations which were held not to be false and misleading. 37 As to the respondents' submission that the percentage reduction should be increased to reflect the comments in [13] of the reasons and the submission that the applicant's approach precluded settlement, the applicant submits that the reason the nature and the length of the proceedings were protracted was mainly as a result of the respondents' application to join a cross-respondent in an overseas jurisdiction as well as their application for further evidence and possible application to reopen the case. Additionally, the respondents had unsuccessfully appealed the decision made on 23 March 2004. These matters had entailed a number of directions hearings and special directions hearings and considerable costs were incurred by the applicant as a result. 38 Further, it is submitted that the applicant owed a duty to properly present its case and to pursue cases for policy and other reasons and is not under the same duty as a private litigant to attempt to settle a proceeding due to the public policy benefits in prosecuting alleged breaches of the Act. 39 In respect of the respondents' submissions of the impact on costs of the applicant's approach to the issue of advertising, the applicant repeats earlier submissions made in relation to advertising. 40 Taking all the submissions into account, I consider that this is a proceeding where the applicant is very substantially entitled to its costs and that the order should allow for such costs to 90 per cent. Order 13 should therefore be amended to read that Emerald Ocean, Slendertone and Mr O'Donoghue jointly or severally pay 90 per cent of the applicant's costs of the proceedings (including any reserved costs), in an amount to be agreed or, if not agreed, to be taxed. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson. | misleading and deceptive conduct certain slendertone products as existed in 2000 orders following delivery of reasons for judgement findings of fact appropriately in orders no basis to include declarations not going to offending conduct appropriateness of injunctions in absence of undertakings inactivity of business not outweigh public interest in orders limited possible effect on third party not preclude corrective orders trade practices |
The Tribunal had affirmed a decision by a delegate of the respondent Minister to refuse to grant the appellants a business visa under the Migration Act 1958 (Cth) ('the Act'). It was the second time the Tribunal had reviewed the appellants' application for the visa, the first Tribunal decision having been set aside by the Full Court of this Court and remitted to the Tribunal for reconsideration (see Lobo and Others v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 168 ; (2003) 132 FCR 93). She nominated an information technology business, City Professionals Pty Ltd ('City Professionals'), as her qualifying 'main business' in her application. The preceding 12 months of the business' operations, from 30 August 1998 to 30 August 1999, were relevant to the application. Mrs Lobo's husband (the second appellant) and two daughters (the third and fourth appellants) were included in her business visa application . 3 In the application, Mrs Lobo indicated that she had been involved in City Professionals since 1 October 1996 and owned 50 percent of the business. Mr Lobo owned the remaining 50 percent of the business. Mrs Lobo claimed she was the 'Managing Director' of the business. 4 On 22 March 2000, a delegate of the Minister visited the premises of City Professionals. Mrs Lobo was not present, but Mr Lobo was. He was interviewed by the delegate. He described his role in the business to the delegate, which included making decisions relating to staff, property leases and the direction of the business. Mr Lobo said that Mrs Lobo took care of all the accounts. The Tribunal found that Mrs Lobo did not meet two clauses within Part 845: cl 845.216 and cl 845.222. Rather, if an applicant satisfies this criterion in respect of a failed or declining business, this should be considered in assessing whether the applicant "has overall had a successful business career". Such score was the sum of points scored by the applicant under the Regulations. It is policy that "full-time" be regarded as referring to employees who normally work the agreed or award hours for employees in that occupation. If agreed/award hours do not apply, it is policy that "full-time" be regarded as meaning "not less than 30 hours a week". Pro-rata equivalent of the prescribed number of employees may be accepted for periods of less than a full fiscal year. For example, six (part-time) workers employed for six months may be considered equivalent to three (full-time) workers employed for a full fiscal year. (Note that paid holidays may be counted as employment. Full-time may also include, for example, positions subject to part-time and/or job-sharing arrangements provided the position is a discrete, identified job and the total number of hours worked by occupants in that position is at least 30 hours a week. It is policy that "employees" be regarded as meaning those persons (whether permanent, casual or, subject to paragraph 7, contract labour) paid a wage, salary, commission or fee by the applicant's main business. If the occupation has a legal minimum working age, only persons of at least that minimum age should be regarded as employees. as opposed to a dividend or director's fee) for their (full-time) work there. That decision was based on a finding that Mrs Lobo had failed to meet cl 845.216. (The second matter relied on in the second Tribunal decision, cl 845.222, was not then in issue). Gyles J found that the Tribunal had erred because it had assessed whether Mrs Lobo satisfied cl 845.216 based on paragraphs 3.5.1 to 3.5.3 of the Policy (extracted above at [6]) and not the statutory criterion in cl 845.216 itself (see Lobo v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 144 at [9] - [11] ). The Policy was inconsistent with the statutory criterion, and thereby without basis in the Act. By applying the Policy the Tribunal was led to ask whether or not Mrs Lobo controlled the company, a question distinct from whether or not Mrs Lobo was 'involved' in the company in the manner specified by cl 845.216. As a result, Gyles J held that the Tribunal had constructively failed to exercise its jurisdiction. This is linked with the fact that the clause contemplates that an applicant can be the owner of an interest in the business rather than the whole of the business. By contrast, the Policy refers to the applicant having the ability to manage and operate a whole business successfully. So far as cl 3.5.2 of the Policy is concerned, the use of the word "responsibility" in the first two dot points is different from the requirement of "involvement in". There is no basis in the statutory criterion at all for the third dot point. 12 The Full Court set aside Gyles J's judgment only in the latter respect, agreeing with his Honour that the Tribunal had applied a policy that did not accurately reflect the regulation, on the basis that the error was not protected by s 474. There is a variety of ways in which a person might maintain direct and continuous involvement in the management of a business and in making decisions affecting its overall direction and performance. 13 The High Court subsequently dismissed the Minister's application for special leave to appeal. The Tribunal then set out the portion of the Policy set out above at [6] and cited the passage from the judgment of Gyles J quoted at [10]. 15 Mrs Lobo declined an invitation to attend a further hearing before the second Tribunal. 16 At the first Tribunal hearing, Mrs Lobo had said that she became the managing director of City Professionals from 17 July 1998. Mr Lobo had been the managing director prior to this date. Mrs Lobo said that she had become the managing director because the managing director needed to be in Australia for more than nine months, and her husband had been overseas for a considerable time. The Tribunal noted that there was no nine month requirement for a managing director; such a period was a requirement of cl 845.212. Her spouse would provide consultancy services and she would prepare a report at his direction. [Mrs Lobo] did the banking and purchased stationery. She was also responsible for the petty cash and following up on payments. She screened telephone calls and diverted them to the relevant staff member. Prior to becoming managing director, [Mrs Lobo] stated that she had always been assisting her spouse in the business. She was attending the office and seeing to the administration and banking. At the same hearing, [Mr Lobo] stated that [Mrs Lobo's] role in the company was in looking after the administrative side of the business. She was responsible for invoices, banking, payrolls and correspondence. However, it found that 'none of these activities demonstrate an "involvement in the management of that business or those businesses from day to day and in making decisions that affected the overall direction and performance of that business". ' It described documents that Mrs Lobo had submitted as evidence of her involvement in the business, which included bank correspondence, employee superannuation arrangements and group certificates as 'essentially mechanical', or noted that the documents were signed by Mr Lobo. It found that '[n]one of these documents, in themselves, involve executive decisions or are indicative of an involvement in management'. In relation to the sub-lease for the business site, which had first been signed by Mr Lobo, but redrawn later the same day and signed by Mrs Lobo, the Tribunal found that Mrs Lobo 'had merely "stepped into" the shoes of Mr Lobo in order to create an impression of executive authority, after the executive decision had already been agreed to' by him. 20 The Tribunal found further support for its finding in Mrs Lobo's statements that she did not know about a booklet for the business which had been provided to the Department for the visa application, and did not have business cards because her husband had forgotten about them. The documentary evidence shows her role in the business as assisting in the office and acting under supervision. The documentary evidence fails to support the proposition that she is a decision maker in the business or that she is even fully cognisant of the overall direction and performance of the business. These comprised a project manager employed for 11 of the 12 months respectively; two software developers employed for seven of the 12 months and four of the 12 months; and an office assistant employed for the entirety of the 12 month period. 23 The office assistant earned an average weekly wage of $193. The Tribunal had regard to the fact that the weekly minimum federal wages for 1998 and 1999, based on Australian Industrial Relations Commission (AIRC) records which the Tribunal consulted, were $359.40 and $373.40 respectively. The Tribunal concluded that, given the low earnings of the office assistant, and assuming that City Professionals would be paying at least such minimum wages, the office assistant was not a full-time employee but rather a part-time employee. Consequently, the Tribunal found that such an employee could not have contributed the equivalent of 12 full-time employee-months, such that Mrs Lobo was not entitled to the requisite number of points under Div 1.4 of Sch 7, and, thus, did not meet the score on the business skills test as required by cl 845.222 either. The appellants were legally represented by experienced practitioners. The appellants there raised two grounds: first, that the Tribunal constructively failed to exercise its jurisdiction when considering whether Mrs Lobo met cl 845.216 --- based, inter alia, on the assertion that various factual matters were not taken into account; second, the appellants alleged that the Tribunal had breached s 359A of the Act. The latter claim was argued only as a denial of common law natural justice: s 357A did not apply to the Tribunal's decision such that the specific provisions in Div 5 of Pt 5 of the Act did not exhaust the requirements of natural justice. 25 In relation to cl 845.216, the applicants submitted that, in determining whether an applicant met the requirements of that clause, the decision maker must consider the whole of the circumstances and requirements of the subject business, including its size and the manner by which it was managed. Lloyd-Jones FM held that the test in cl 845.216 used 'ordinary words' in a 'non technical sense'. Accordingly, the Tribunal's role was one of determining a question of fact. His Honour concluded that even if the Tribunal had made a wrong finding on this factual issue, there was no error of law, let alone jurisdictional error, involved. His Honour observed that it was clear from the evidence that the driving force behind the business' activities was Mr Lobo (at [24]), and Mrs Lobo's role was 'residual' (at [25]). 26 As to the procedural fairness point, his Honour accepted the Minister's submission that the Tribunal had used the AIRC records 'in the context of its reasoning process as to why the company's office assistant was not a full-time employee' (at [39]) and that such 'thought process or preliminary conclusion did not have to be put to an applicant for comment' (at [37]). Nor was the material of a nature requiring disclosure (at [35]). 27 In addition, his Honour also observed that the employment details provided by Mrs Lobo, on the 'raw data', did not satisfy the skills test requirement; if the Tribunal had not had regard to the AIRC material and accepted that the office assistant was a full-time employee, and that her period of employment contributed as such to the required 36 months, Mrs Lobo would still have achieved only a total of 34 months' employment equivalent and would consequently have failed the test. 28 His Honour noted that the analysis by which the Tribunal concluded that the office assistant was not a full-time employee 'may not have been correct if the office assistant was a junior and paid under an award based on a percentage of the adult award', and he observed that '[t]his procedure is fairly common in a number of clerical awards for the payment of junior employees' (at [31]). 30 First, the appellants claim the court below erred in its construction and application of cl 845.216 in finding that the Tribunal did consider the question of whether Mrs Lobo maintained direct and continuous involvement in the management of City Professionals although she was not the moving force in the business. The appellants submitted that the approach taken by the second Tribunal to cl 845.216 is 'indistinguishable' from that taken by the first Tribunal, so that it repeated the error identified by Gyles J and the Full Court of approaching cl 845.216 in the manner suggested by the Policy instead of following the statutory criterion. 31 The appellants submitted in this regard that, statements made by the second Tribunal indicate that it took the erroneous approach alleged. First although the Tribunal observed that it was required to have regard to policy and apply it unless there were cogent reasons for departing from it, the Tribunal had inserted an extract of the impugned Policy (in an attempt to 'salvage it', suggested counsel). However, the Tribunal quoted an extract from the Full Court's judgment in which it criticised the Policy. Second, prior to setting out cl 845.216, the Tribunal made one of two observations which the appellants identified as crucial to their claim: that cl 845.216 'requires the Tribunal to assess the extent to which the visa applicant exercised direct and continuous involvement in the management and strategic decision making of the business...'. The appellants submitted that this sentence suggests that the Tribunal made a comparative assessment of Mrs Lobo's involvement in City Professionals with that of other officers of City Professionals, in this case, Mr Lobo. However, such an analysis is not required by cl 845.216: the clause refers to 'involvement', and does not require a ranking within the organisation. Nor is 'involvement' excluded by reason of the fact that ultimate decision making power rests with a person other than the appellant. 32 The second crucial observation made by the Tribunal, after referring to the documentary evidence, was that such evidence failed 'to support the proposition that she is a decision-maker in the business or that she is even fully cognisant of the overall direction and performance of that business'. The appellants submitted that Mrs Lobo was not required to show she was a 'decision maker' or that she was 'fully cognisant' of the direction and performance of the business; she had only to show that she had a direct and continuous involvement in the stipulated matters. In placing these requirements on Mrs Lobo, the appellant's submitted the Tribunal 'placed a gloss on the words of the regulation' and erroneously applied the Policy. Consequently, the Tribunal erred in its construction and application of cl 845.216. According to the appellants, the Tribunal set the bar 'too high'. 33 The respondent argued that this ground of appeal was not before the Federal Magistrates Court, the appellants require leave to raise it here, and such leave should not be granted. The appellants responded that a claim was made by them in the court below that the Tribunal had not understood cl 845.216 --- a consistent theme in their application. 34 The respondent further argued that the appellant's criticism is premised on a reading of the Tribunal's decision that is unfair and strained, contrary to Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 271-272 and 291. Further, whether or not Mrs Lobo was a decision maker, or whether she was fully cognisant of the overall direction and performance of City Professionals, were not irrelevant factors in reaching its conclusion. The respondent submitted that the Tribunal's conclusion was open to it, and referred to the Full Court's decision in which, the Court acknowledged that Mrs Lobo would have difficulty satisfying the relevant visa criteria on the material before it. 35 The second ground of appeal alleges that the court below was wrong to find that the Tribunal had not breached the rules of procedural fairness in relation to the use of the AIRC records, and/or that the Tribunal had also breached s 359A of the Act. As discussed at [24], the s 359A point was not pursued by the appellants in the Federal Magistrates Court. However, the appellants argued that the point was not abandoned in the court below, rather it was argued under the rubric of natural justice. They sought leave to raise it, submitting that the argument is purely legal, could not have been the subject of further evidence, will work no injustice, and is otherwise in the interests of justice (see Branir Pty Ltd and Others v Owston Nominees (No 2) Pty Ltd and Anor [2001] FCA 1833 ; (2001) 117 FCR 424). 36 Both aspects of this ground are supported by the same omission by the Tribunal: the failure to inform Mrs Lobo of, and to provide her with the AIRC information it intended to use against her, or to invite her comments. As to the procedural fairness claims, the appellants submitted that their right to have the AIRC information disclosed to them arose as part of the broader requirement of procedural fairness that Mrs Lobo have a reasonable opportunity to present her case (see, inter alia, Russell v Duke of Norfolk [1949] 1 All ER 109 at 118; Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 at 569 per Gibbs CJ; at 582 per Mason J; at 602 per Wilson J; at 628-629 per Brennan J; at 633 per Deane J). The appellant argued that their claim that procedural fairness was not accorded to them is to be viewed in the context of two things. First, Mrs Lobo had been advised by the first Tribunal that the information which it considered would be the reason, or part thereof, for affirming the decision under review was 'documentary evidence' about the employees, as detailed in a letter from the Tribunal. There was no mention by either the first or the second Tribunal about the possible use of other information concerning rates of pay. Second, as Lloyd-Jones FM observed, the reasoning of the Tribunal, based on the AIRC figures, that the office assistant must have been employed part-time, may not have been correct (for example, if the office assistant was employed as a junior person). Consequently, the Tribunal failed to accord procedural fairness to Mrs Lobo by failing to disclose to her that it had decided to discount the employment period of the office assistant based upon information that it had also not disclosed to her, and which in any event, may have been irrelevant. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question. Nor is it relevant that the AIRC material, to use the approach in NARV and Others v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 262 ; (2003) 133 FCR 89 at [18] (relied upon by the court below) might be, 'of a type which is difficult to controvert'. It is the use made of the material, and the analysis of it by the Tribunal, and not the validity or incontrovertibility of it, which is challenged. 38 The appellant submitted that the basis for Lloyd-Jones FM's decision against them was his acceptance of the respondent's argument that the Tribunal 'used the AIRC records in the context of its reasoning process' (at [39]), and that 'material of the nature that did not require to be disclosed' (at [35]). In any case, the Tribunal did not find against Mrs Lobo on the new basis introduced by his Honour, and there was conflicting and possibly erroneous evidence before the Tribunal about the number of staff employed by City Professionals, which the Tribunal failed to comment upon. The appellants submitted that, in the light of this, and the apparent fact that there was insufficient material before the Federal Magistrates Court on this issue, the decision by Lloyd-Jones FM that the alleged breach could not have made a difference to the end result is incorrect. 39 The appellants referred to the conflicting and possibly erroneous evidence about the number of employees as an unresolved question of fact. A document before the Tribunal and the Federal Magistrates Court revealed that City Professionals had employed five Australian citizens or permanent residents. The second Tribunal identified only four. 40 Counsel for the Minister agreed with the appellants' view as to the basis for the decision by Lloyd-Jones FM. However, counsel submitted that the Tribunal made a finding on the number of qualifying employees, and as a finding of fact, it cannot be challenged by the appellants in this Court. Further, counsel argued that the issue was one that should and could have been raised in the Federal Magistrates Court, and noted that Mrs Lobo had provided inconsistent evidence on the number of employees although the number identified by the Tribunal is the same as that suggested by Mrs Lobo's migration agent, that being four. 41 As noted earlier, Mrs Lobo declined an invitation from the second Tribunal to attend a hearing. However, she provided some additional financial statements for City Professionals. The Minister submitted that Mrs Lobo's decision not to attend the hearing, at which the AIRC information could have been put to her, prevents the appellants from now claiming she was denied procedural fairness. Further, there was nothing to suggest to Mrs Lobo that only those issues arising in the first Tribunal decision and subsequent appeals would arise before the second Tribunal (including nothing to suggest that the question satisfied whether the cl 845.222 would not be at issue before the second Tribunal) so that she need not attend a hearing. 42 The appellants responded that, given that Mrs Lobo had attended the first Tribunal hearing, their situation is no different from one in which the Tribunal, having conducted a hearing at which the applicant was present, proceeds to make a decision based upon information adverse to an applicant, not provided by the applicant and not put to him or her by the Tribunal at any stage. Counsel for the appellants referred to observations of Hayne J in SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162 at [192] that 'it is not right to see [an] applicant's appearance before the tribunal pursuant to s 425 ... as the focus or culmination of the review process. It is no more than one step in what otherwise is a predominantly documentary process'. 43 The appellants also claimed that the Tribunal had breached s 359A of the Act. They rely on VAF v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 206 ALR 471 at [41], in which Finn and Stone JJ said that, under s 424A of the Act, a provision applicable to the Refugee Review Tribunal ('RRT') which is similarly worded to s 359A, information which is integral to the reasoning process rejecting the applicant's claim, as a matter of fairness, must be disclosed to the applicant and the applicant must be told of its relevance to the review. The appellants submitted that the AIRC information fell within this category. The appellants further argued that the decision in SAAP, which also concerned s 424A, established that the duty in s 359A is strict. Therefore, unlike the procedural fairness claim, the appellants submitted that Mrs Lobo is not burdened with showing that she could have answered the material, and the issue of 'practical injustice' is irrelevant to the question of jurisdictional error. 44 The Minister submitted that there is nevertheless no merit in the appellants' claim because the AIRC information is caught by subs (4)(a) of s 359A: the section does not apply to information 'that is not specifically about the applicant or another person and is just about a class of persons of which the applicant or other person is a member'. The appellants responded that the information is specifically about the office assistant because it was 'brought back' to the office assistant. The appellants drew an analogy with Baig v Minister for Immigration & Multicultural Affairs [2002] FCA 380. In that case, the RRT rejected an application partly based on information contained in two newspaper articles. The articles concerned a by-election involving a political party whose campaign the applicant claimed to have supported, and as a consequence, claimed to fear persecution from other political forces. The articles referred to by-elections and the party, but not its supporters, and were not expressly about the applicant nor did they expressly or impliedly refer to the applicant. The RRT concluded that none of the by-elections discussed in the articles occurred in the region for which the applicant alleged to have campaigned, although Gray J held that, it was clear from those articles that they did occur on the date the applicant alleged the by-election for his region had occurred. The RRT did not invite the applicant to comment on the article and found the applicant's evidence to be unreliable, partly because it was inconsistent with the information contained in the articles. Gray J held (at [33]) that information in the articles did not fall within the exclusion in s 424(3)(a) because it was not just about a class of person of which the applicant or any other person was a member; it 'bore specifically upon the question of the applicant's involvement in campaigning in a by-election'. 45 Gray J's reasoning was accepted in later considerations of s 424(3)(a) by this Court. In VHAJ and Others v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 186 ; (2003) 131 FCR 80, Baig was approved by Kenny J at [51] and also by Downes J at [72]. 46 The appellants also referred to the joint judgment of Gyles and Conti JJ in VHAP v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 82 ; (2005) 80 ALD 559 in which their Honours agreed with the construction of s 424(3)(a) made by Kenny J at [50] and by Downes J at [71] in VHAJ . 47 The appellants argued that the AIRC information was relevant to the Tribunal's reasoning because it was used by the Tribunal to find that the appellant was not employed on a full-time basis and bore specifically upon that issue. As such, it does not fall within s 359A(4)(a). Further, I note that in SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 ; (2006) 150 FCR 214, the majority of the Full Court departed from the decisions in VAF and Paul v Minister for Immigration and Multicultural Affairs [2001] FCA 1196 ; (2001) 113 FCR 396 and held that, in light of SAAP , it is only necessary that the information be a part of the reason --- the stature, importance or character of the information is not determinative of a Tribunal's need to comply with s 424A (see Weinberg J at [155] and [182], and Allsop J at [215]). It is however unnecessary to decide those matters finally, because the respondent's submissions should, in my view, be accepted as to the supposed jurisdictional misapplication of the statutory 'involvement' criterion for the visa. The appellants needed to succeed as to both criteria issues. 49 If the appellants had a strong probability of success with their criticism of the Tribunal's approach, there might be a case for permitting them to raise those criticisms for the first time only on appeal. The matter concerns Mrs Lobo's status and would probably have a big impact on her family as well on herself. However, I think there is no substance in the criticisms. 50 In my view the appellants have seized on some merely infelicitous phrasing used in the Tribunal's reasons for decision to conjure a view of what the Tribunal did that a fair reading of the Tribunal's reasons as a whole does not warrant. 51 The Tribunal explicitly instructed itself as to the criticism of the earlier decision upheld by Gyles J and the Full Court. It is unlikely that the Tribunal would not have guarded against repeating the earlier mistake. In any case, in my opinion it did not do so. 52 The Tribunal began by observing that it had to assess 'the extent to which the visa applicant exercised direct and continuous involvement in the management and strategic decision-making of the business ...'. The expression 'exercised ... involvement' is awkward but, in the context, it appears to me to be an unobjectionable paraphrase of the regulatory requirement that the applicant should have 'maintained ... involvement'. The expression 'strategic decision', appears to me accurately enough to reflect the gist of the regulatory phrase 'decisions that affected the overall direction and performance of [the] business ...'. 53 Dealing with the evidence, the Tribunal observed that none of the activities Mrs Lobo had engaged in 'demonstrate involvement' of the relevant kind. Likewise, referring to certain documents said to evidence her involvement, the Tribunal said, 'None of these documents, in themselves, involve executive decisions or are indicative of an involvement in management'. As to a sublease of City Professionals' premises signed by Mrs Lobo, the Tribunal said 'the visa applicant had merely "stepped into" the shoes of [her husband] in order to create an impression of executive authority, after the executive decision had already been agreed to between [the husband] and the accountant'. Such expressions of opinion do not, in my view, betoken legal error. The documentary evidence shows her role in the business as assisting in the office and acting under supervision. The documentary evidence fails to support the proposition that she is a decision maker in the business or that she is even fully cognisant of the overall direction and performance of that business. On balance of the evidence, the Tribunal is not satisfied that the visa applicant "maintained direct and continuous involvement in the management of that business ... from day to day and in making decisions that affected the overall direction and performance of that business" in the 12 months prior to the date of application. The Tribunal finds that the primary visa applicant does not meet clause 845.216. If she had been a 'decision-maker in the business' or had been 'fully cognisant of the overall direction and performance of the business' such may have assisted the Tribunal to come to a contrary conclusion. The express reference to those matters does not, to my mind, sufficiently indicate that those unachieved qualifications were treated as if synonymous with the actual, regulatory test. 56 Taken as a whole, in my view the Tribunal's reasons do not indicate jurisdictional error. As the Full Court observed, the visa applicant apparently had no strong factual case, but a mere factual error by the Tribunal, even if one had been made, would not be enough to provoke judicial intervention. 57 It follows that, unimpeachably for the purpose of judicial review, the Tribunal found that Mrs Lobo failed to satisfy a mandatory condition for being granted the kind of visa she sought. The Tribunal's decision must, therefore, stand. 58 In these circumstances, leave to raise the additional matter on appeal should not be granted. The appeal will be dismissed with costs. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick. | migration review of decisions judicial review grounds of review jurisdictional error alleged error based on misapplication of departmental policy rather than legislation migration review of decisions judicial review grounds of review natural justice denial of procedural fairness alleged breach of s 359a of the migration act 1958 (cth) alleged breach of common law natural justice citizenship and migration citizenship and migration |
On 9 June 2008, Ms Zoe Lacey, a member, despatched an email to the secretary of the company, Mr John Thomas, on her own behalf and on behalf of 23 other members in which Ms Lacey said: "The members listed in this email hereby advise you that we call an Extraordinary General Meeting of [the company] on Saturday, 12 July 2008 commencing at 10am" at the nominated venue. The notice calling the meeting recited that it had been called to consider seven resolutions and in particular by proposed resolution 3, a resolution to remove Burnett-Smith, Mitchell, Telford and Mackareth as directors. 3 At that date, the directors of the company comprised the four nominated individuals to be removed should the resolution be passed and a further director, Suzanne Ryan. 4 Mr Burnett-Smith was elected to the board of the company for a two year term commencing in November 2007. He is the president of the Association which represents the business of the company and is chairman of the board of directors. On 10 June 2008, Mr Burnett-Smith convened by tele-conference a meeting of directors and sought legal advice on behalf of the board from the company's legal adviser in relation to the process to be adopted concerning the call for an EGM. Apparently, the meeting was called pursuant to s 249F of the Act which provides that members with at least 5% of the votes that may be cast at a general meeting of the company may call and arrange to hold a general meeting. The members calling the meeting must pay the expenses of calling and holding the meeting. A meeting so called must be called in the same way, so far as possible, in which general meetings of the company may be called (s 249F(2)). By s 249H(3) , at least 21 days notice must be given of a meeting of members of the company at which a resolution will be moved to remove a director under s 203D of the Act . By s 203D , a public company may by resolution remove a director from office (s 203D(1)). Section 203D(2) provides that notice of intention to move the resolution (to remove a director) must be given to the company at least two months before the meeting is to be held. 5 Section 203D further provides that the company must give the director a copy of the notice as soon as practicable after receipt; the director is entitled to put his or her case to the members by written statement in the manner prescribed; and the company is to circulate the statement to members in the manner prescribed (see ss 203D(3) , (4) and (5)). 6 Accordingly, notice of intention to move the resolution must be given to the company at least two months before the meeting is held and at least 21 days notice of the meeting at which the resolution will be moved must be given to members. The applicants say that Ms Lacey's notice to Mr Thomas on 9 June 2008 calling a meeting for 12 July 2008 was not preceded by two months notice to the company of an intention to move the resolution to remove any one of the four directors the subject of the resolution. Secondly, the notice by members said to represent at least 5% of the votes that might be cast at a meeting, calling the meeting for 12 July 2008 was not itself a notice of intention for the purposes of s 203D(2) because it did not give the company at least two months notice before the relevant meeting of an intention to move the resolution of removal. At best, it represents it might be said, a notice of intention to the company to move a removal resolution at a meeting called for 33 days after delivery of the notice. 7 Prima facie a notice of 9 June 2008 consistent with s 203D(2) would contemplate a meeting no earlier than 10 August 2008 ensuring that members were given at least 21 days notice of a proposed meeting to consider and if thought fit, pass the foreshadowed resolutions. 8 A company receiving a notice of intention "given under this subsection" (s 203D(2)) might elect to call a meeting to be held less than 2 months after receipt of the s 203D(2) notice of intention. That section makes it plain that such a meeting may pass the resolution notwithstanding that less than two months has elapsed between receipt of the notice and the convening of the meeting. However, if s 203D(2) requires as a mandatory integer of that section at least two months notice of intention to move a resolution for the removal of a director before the meeting is held, it may be that a notice of 33 days (if the call for the meeting is characterised as a notice of intention to move) is not, relevantly, a notice "given under this subsection" as it fails to meet a threshold requirement for a valid notice under the subsection. That may mean that the validation by the second limb or second sentence of s 203D(2) of a resolution for the removal of a director passed at a meeting held prior to the expiration of the two months notice, can not operate. For example, a notice given on 9 June 2008 for a meeting no earlier than 9 August 2008 would comply with the first limb of the subsection and in that event a meeting might be convened well earlier than 9 August 2008 at which a resolution may be passed. If the notice simply gives two weeks notice of intention to move and is thus non-compliant, the second limb may not operate. 9 Clause 44 of the Constitution of the company provides that the company may by ordinary resolution of which special notice has been given in accordance with s 203D of the Act , remove a director before the expiration of his period of office, and may by an ordinary resolution appoint another person in his or her stead. The person that is so appointed shall hold office only until the time when the person has been removed would have retired had they not been removed. 10 Mr Burnett-Smith deposes in his affidavit sworn 25 September 2008 to a number of exchanges he had with directors in relation to Ms Lacey's notice. Mr Burnett-Smith was in the United States at this time. Mr Burnett-Smith contends that legal advice given to the company was disregarded and that a director, Suzanne Ryan and the company secretary, Mr Thomas, took a decision on behalf of the company to call an EGM for 12 July 2008. On 18 June 2008, a notice of extraordinary general meeting was issued by Mr Thomas on behalf of the company calling a meeting for 10.00am on Saturday, 12 July 2008 at the RSL Resort at Dubbo in New South Wales. 11 The applicants contend that the notice was not issued pursuant to any resolution of the directors to issue such a notice and thus fails as a valid notice. 12 On 4 July 2008, Mr Burnett-Smith contends that he convened a meeting of directors of the company so as to fill existing unfilled vacancies within the board. Mr Burnett-Smith contends that by a majority of votes, Mr Alan Howe and Ms Patricia Edson were appointed as directors of the company. Suzanne Ryan was present. Mr Thomas was informed of the vote and the appointment of Howe and Edson as directors. The applicants contend that the company has failed to recognise those appointments, has failed to minute the appointments and has failed to notify ASIC of the appointments. Clause 43 of the Constitution provides that in the event of an extraordinary or casual vacancy occurring, the board may appoint a person qualified to be appointed as a director to fill such a vacancy and the person so appointed shall hold office until the expiration of the term of the person he or she replaces. 13 The applicants contend that the board has validly exercised a power to fill a vacancy. The first and sixth respondents contend that no such resolution was passed. They say that there is a controversy of fact about what occurred at the meeting and whether a resolution was cast. For present purposes, there seems to be no issue as to whether the board had power to appoint Howe and/or Edson as directors for the purposes of cl 43 of the Constitution . 14 On 12 July 2008, the extraordinary general meeting took place and the four directors were removed. Although the material is not entirely clear, it seems that immediately after the extraordinary general meeting held on 12 July 2008, Malcolm Morgan, Colin Murray, Sandra Strong and John Barrett were elected as directors of the company (to join with the continuing director, Suzanne Ryan). The newly elected directors were appointed to serve the company until the completion of the annual general meeting to be held no later than 30 November 2008. 15 On 13 October 2008, Mr Burnett-Smith received notice of a proposed extraordinary general meeting to be held on 1 November 2008 at which it was proposed to pass a resolution to "validate and ratify" the resolution passed at the EGM on 12 July 2008 removing the four directors. A second resolution was proposed to "reconfirm and ratify" the appointment of the interim board. On 14 October 2008, Mr Burnett-Smith received a further notice from the company that the annual general meeting would be held at 10.00am on Saturday, 8 November 2008 at 147 Cobra Street, Dubbo, New South Wales. The question of the ratification of the resolution for the removal of the four directors which was to be dealt with at the proposed EGM was now to be dealt with as an agenda item at the AGM. These directors being Geof Burnett-Smith, Vicki Mitchell, Glenn Telford and Colin Mackareth. 16 The applicants contend that the question of whether the four directors removed by the resolutions passed at the EGM on 12 July 2008 is the very matter to be determined in these proceedings. They say that the convening of the AGM on 8 November 2008 ought to be restrained as the meeting will purport to pass resolutions which in an extra-curial way purport to deal with the validity of the resolutions passed at the EGM on 12 July 2008. The applicants say that apart from a failure on the part of the requisitioners to comply with s 203D of the Act , the directors affected by the proposal to remove them were not given sufficient notice, were not provided with an opportunity to put their case on the merits and were not given the opportunity of having a statement circulated to members addressing those issues in accordance with the protocols provided for by s 203D(3) , (4) and (5). In addition, the applicants say that the requisitioners have failed to accept an obligation to meet the costs of convening the meeting called for 12 July 2008. Further, the required 5% of members entitled to vote did not sign the notice calling the meeting although it is conceded that the number in the aggregate supporting the call for a meeting represents 5% of members entitled to vote at such a meeting. 17 It seems to me that the interlocutory application must be resolved on the following basis. 18 The applicants have an obligation to show a sufficient likelihood of success in the principal proceeding to justify, in the circumstances, the preservation of the status quo pending trial. In that sense, the applicants must demonstrate a prima facie case ( Australian Broadcasting Corporation v O'Neill [2006] HCA 46 ; (2006) 227 CLR 57 [65] --- [72] and particularly [65] and [71] per Gummow and Hayne JJ, or a serious question as that term is understood at [71]). 19 The applicants have demonstrated a prima facie case of non-compliance with s 203D of the Act in relation to the removal of the four directors and although, of course, there is a controversy on the facts about matters going to that question and the issue of whether the board filled a vacancy or not, a prima facie case is made out in relation to the appointment of Howe and Edson. 20 An annual general meeting of the company must be held by 30 November 2008. The company needs to bring forward and deal with particular matters which must be addressed by a meeting of members at their annual general meeting. There is no suggestion by the applicants that the convening of the AGM involves a contravention of any provision of the Act . The relief sought by the motion of restraining the convening of the AGM is not supported by the material going to the contended failures in relation to the removal of the four directors and the appointment of the two directors to fill unfilled appointments. There seems to be no basis on which the Court ought to prevent the company from convening its annual general meeting of members and conducting its AGM. It may be that an order ought to be made preventing the company from bringing forward at the AGM the proposed board motion to ratify the removal resolution passed at the EGM on 12 July 2008. However, if a resolution passed at the AGM which purports to ratify the removal of the four directors is invalid, it will remain invalid at the time of the hearing of the principal proceeding. The validity of that resolution can then be determined and if the company has purported to act in reliance upon it by notifying ASIC of the passing of the resolution and otherwise implementing the resolution, orders might be made directing rectification of the ASIC records. Secondly, although it is not clear at the moment, it may be that there is power in the AGM to ratify the removal resolution which might otherwise be shown to be invalid. The source of that power and resultant legal effect of an attempt to exercise such a power is not demonstrated for the purposes of these proceedings. Alternatively, a resolution passed at the EGM on 12 July 2008 which is invalid might well remain invalid with no power in the AGM to ratify or confirm such a resolution, otherwise fatally flawed. It seems to me that the appropriate course of action is to allow the company to convene its annual general meeting of members and to allow those members to consider the proposed ratification resolution. It is either good or bad and will either stand or fall upon the determination of its validity in the principal proceeding. 21 The fact that the AGM might purport to deal with a subject matter which is also alive in the present proceeding is no basis for preventing the members from participating in their annual general meeting. Nor is it a basis for preventing the members from considering and if thought fit passing a motion to ratify the removal of the four directors. The members ought not to be prevented from meeting and both considering the proposed resolution and expressing views about it ultimately expressed in terms of whether such a resolution is passed or not. There is no demonstrated utility in granting either the injunction sought or an injunction limited to a consideration of a particular motion. Those who have assumed the governance of the company in reliance upon Ms Lacey's notice and the resolutions passed at the EGM on 12 July 2008 and those who rely upon a ratification resolution passed at the AGM, if it be thought that there is invalidity in the removal resolution, will no doubt be astute to the costs which will be incurred in testing these matters. Moreover, such individuals will be astute to the importance of discharging governance functions so as to ensure that the activities of the company are conducted in a way that discharges those activities that form only the ordinary course of business of the company and compliance with those obligations the company must meet, until these issues of validity of removal and appointment are determined. 22 A further question that will arise for determination in the principal proceeding is whether any deficiency in the earlier resolution is able to be cured by operation of s 13322(4) of the Act . It is not necessary to reach any conclusion on that question for the purposes of this application. 23 The further aspect of the matter is whether the applicants have demonstrated that the balance of convenience favours the grant of an injunction restraining the company from bringing forward the board motion at the AGM. Plainly enough, the balance of convenience does not favour the granting of an order restraining the AGM. Thus, in terms of the application as made, there is neither a prima facie case made for the relief sought and nor does the balance of convenience support the granting of that relief in any event. So far as a more limited order is concerned, it seems to me that the balance of convenience does not favour the granting of an order. The company ought to remain free to put the board motion to the meeting of its members for consideration. As I have already indicated, the resolution, if passed is either good or bad. If it fails to cure an invalid earlier resolution, that position will be capable of remedy at the trial. If it can be demonstrated that a properly convened AGM has power to pass a resolution which, by force of the will of the members, properly cures any invalidity in the earlier resolution then the members ought to be heard on that matter at their AGM. Additionally, the members of the company are broadly distributed and no doubt costs have or are being incurred in making arrangements for members to attend in Dubbo for the meeting. 24 Accordingly, I propose to dismiss the motion. I will reserve the question of the costs of and incidental to the interlocutory application for later determination. 25 The application came forward in circumstances where relief was said to be urgently required to prevent the annual general meeting of members from acting in a way which would, in effect, usurp the role of Court in the present proceedings. The applicants intended to initially bring on the application ex parte. However, since the sixth respondent, Mr Barrett, was represented by solicitors in the proceeding it was inappropriate for any application affecting him to be heard without notice to the lawyers representing his interests in the controversy whether in terms of final orders or proposed interlocutory orders. Thus, I required notice to be given to Mr Barrett's solicitors of the proposed application. Those solicitors now represent what I describe as the principal contradictor, the company. Ms Susan Brown of counsel appeared on behalf of the first and sixth respondents to respond to what was, in effect, an ex parte application although formally on notice to those parties. Ms Brown formulated submissions in the matter and sought and was given leave to read and file an affidavit by Suzanne May Ryan, the second respondent, sworn 31 October 2008. 26 It seems to me that the most efficient way to resolve these issues between these parties is to set the matter down for hearing as soon as possible. I am minded to allocate Friday, 28 November 2008 and Monday, 1 December 2008 as the dates for the hearing of the principal proceeding. I am minded to direct that the applicants file and serve all affidavits upon which they propose to rely by a particular date and order the applicants to file by that date a notice of contention setting out each of the contentions the applicants seek to make good in the proceeding. I am further minded to order that the respondents file and serve all affidavits upon which they rely by a particular date together with a notice of the contentions they propose to make good. I am further minded to order that there be no disclosure and certainly no interrogatories and it seems to me that it would be helpful if judgment could be delivered within approximately one week of concluding the hearing so that these issues of validity going to appointments of directors might be determined as promptly as possible. However, at the conclusion of the hearing on Friday, 31 October 2008, I invited the parties to submit to my Associate a time table for the completion of steps with a view to trial dates being allocated on 28 November 2008 and 1 December 2008. Regrettably, the parties have not been able to reach a consent order about these things. I have a proposal from the respondents which involves disclosure and other steps. It may be sensible for the parties to exhaust as soon as possible a mediation of these matters. Accordingly, I will shortly convene a directions hearing to resolve the most efficient way of advancing the matter. I invite the parties to contact my Associate and discuss a time within the next few days within which a directions hearing might be held. . I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | application for an interlocutory injunction to restrain the holding of an annual general meeting of members of a company corporations law |
He entered Australia on a business visa in 2001. Two years later he applied for a protection visa. A delegate of the Minister refused to grant the appellant a protection visa. The appellant applied to the Refugee Review Tribunal for review of the delegate's decision. His case was that if he returned to the United States he faced a real chance of being persecuted at the hands of members of organised crime syndicates. More specifically, the appellant's claim was that he feared being persecuted because of his membership of a particular social group which he described as 'persons who refuse to join the mafia' or 'persons who stood up to the mafia' or a combination of those two. 2 The tribunal conducted a hearing at which the appellant gave evidence. His claim was quite unusual. He said that there were over 200 instances where he had been targeted by certain organisations or gangs (in particular, the mafia) in the United States over a period of some 20 years. He also claimed being targeted by "agents of the United States government" including the CIA. 3 On 13 October 2004, the tribunal wrote and advised the appellant that the member reviewing his case had ceased to be a member of the tribunal and that his application would be considered by a reconstituted tribunal. The appellant was also informed that the reconstituted tribunal had listened to the tape of the hearing before the original tribunal and had read the transcript of the hearing and the relevant material from the appellant's file. In relation to this the Tribunal notes that in the hearing Mr Thompson raised with you his concerns about the credibility and plausibility of your claims and the issue of your mental capacity. The Tribunal shares these concerns as your oral evidence was often confused, unclear and difficult to follow and many of your claims appear unbelievable and implausible. If you or your adviser wish to provide additional submissions or comments on the Tribunal's concerns or information or documentation about your mental capacity this is to be done in writing and to be received by the Tribunal by 5 November 2005. This followed its rejection of the main plank of the appellant's claim namely that he had been sought out and targeted for harm by the mafia and the CIA. 6 The tribunal emphasised its concern about the appellant's mental health and credibility. ... As this Tribunal noted in its letters to the Applicant and his adviser on 13 October 2004, it shares the concerns of the first Tribunal, and this Tribunal gave the Applicant and his adviser a further opportunity to provide submissions, or information, or documentation about the Applicant's mental state. However, nothing was submitted, and even if some sort of assessment of the Applicant's mental health was submitted, the Tribunal is still left squarely with the claims put forward by the Applicant or that arise squarely from his evidence. 7 The appellant sought judicial review of the tribunal's decision in the Federal Magistrates Court. Three main issues were raised. First, that the reconstituted tribunal was required to invite the appellant to appear and give evidence and present arguments (the 'Reconstitution Issue'); secondly, that the tribunal failed to comply with s 420 of the Migration Act 1958 (Cth) because its review was not allegedly "fair, just, economical and quick" (the 'Fairness Issue'); and thirdly, that the second tribunal was obliged to make further investigation to substantiate the appellant's claims (the 'Investigation Issue'). 8 As to the Reconstitution Issue, the magistrate held that in consequence of ss 422 and 422A of the Migration Act there was no obligation, in the appellant's case, for a fresh hearing. Liu v Minister for Immigration [2001] FCA 1362 ; (2001) 113 FCR 541 was cited as authority. 9 The magistrate rejected the Fairness Issue in relation to which the appellant claimed that he had not been given sufficient time to explain all the circumstances that formed the basis of his claim. He told the court that he believed this would take approximately three days and he was only given a morning. It is clear from the transcript that during the course of the hearing the Tribunal asked the applicant to work out five or six dot points of the major incidents that occurred to him and the hearing was adjourned temporarily for that purpose. It is also clear that the applicant told the Tribunal that the case being made by him was a lengthy one but he did manage to bring it up to date and included incidents that he said involved his life being threatened whilst in Australia. The Tribunal has the power to control its own proceedings: see s.420 of the Act, and remarks of Ryan J in M17/2004 v Minister for Immigration (V543 of 2004) (2005) 85 ALD 597 at [51]). It is not required to be subjected to a filibuster. Obviously, if the Tribunal cuts an applicant short in a manner which indicates that it is not able to consider the whole of that applicant's claims it takes a risk that it will thereby fall into jurisdictional error. But the requirement of speed in decision-making in s.420 of the Act has been held to be "of a different order" than other aspirations in that section for "fairness and justice", and default of this provision would not, of itself, constitute jurisdictional error: as per Kirby J in NAIS & Ors v Minister for Immigration [2005] HCA 77 ; (2005) 223 ALR 171 at [75] . Indeed the Tribunal would not be able to achieve its s.420 objectives were it required "to accede to every request made of it": as per Ryan J in M17/2004 v Minister for Immigration (V543 of 2004) (2005) 85 ALD 597 at [51]. If, as here, it does at all times make the applicant aware of problems with the history the applicant is rehearsing and provides him with an opportunity to put more cogent arguments to it then there will be no error in bringing the proceedings to a conclusion after a reasonable period of time. This is what occurred. The magistrate found that although the tribunal had the ability to obtain additional information under s 427 , there was no duty to enquire in this case for the reason that the tribunal had offered the appellant the opportunity to put on further evidence: see generally, Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12 at [43] per Hayne and Gummow JJ and at [124] per Callanan J; SZATG v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1595 at [22] as per Hely J; VCAK of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 459 at [27] as per Crennan J; Hong v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1308 at [20] as per Finn J). 11 The appeal from the Federal Magistrates Court raises the same grounds. I will deal with them in turn. 12 Sections 422 and 425 enable the tribunal to be reconstituted when a member leaves and for that purpose permits the reconstituted tribunal to complete a hearing. The only question that arises is whether the tribunal should have held a further hearing. In Liu and Anor v Minister for Immigration and Multicultural and Indigenous Affairs [2001] FCA 1362 ; (2001) 113 FCR 541 at [37 ]-[43] ('Liu'), the Full Court held that it was not always necessary to hold a fresh hearing. "The reconstituted Tribunal [only had] to undertake what remains to be done in the review without interrupting the process, while picking up and carrying on the steps that have already been taken. " See also NADG of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 893 ; SXXB v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 537 ; and Abujoudeh v Minister for Immigration and Multicultural and Indigenous Affairs [2001] FCA 1351. 13 That said, the question still arises whether, in this particular case, the tribunal ought to have exercised its discretion to allow the appellant to present evidence at a second hearing --- particularly as the tribunal's decision was based on adverse credibility findings. 14 This very point was considered in Abujoudeh v Minister for Immigration and Multicultural and Indigenous Affairs [2001] FCA 1351. Rather, the Tribunal found those of the applicant's claims which it rejected to be implausible because they were inconsistent or difficult to reconcile with undisputed facts or general knowledge acquired by the Tribunal in the course of its experience. For example, the Tribunal pointed, in the passage quoted at [10] above, to the applicant's obtaining and continued possession of a current passport. The Tribunal also indicated, in the same context, the improbability that the applicant's parents were unaware, as he claimed, of his intensive Party activities. Similarly, the discrepancies which the Tribunal detected in the three summonses to the applicant to attend Court, could not have been overcome by an appearance of candour or truthful demeanour on the part of the applicant had he given evidence before the Tribunal as reconstituted. Likewise, the Tribunal's conclusion set out at [16] above in relation to the Good Conduct or Good Character Certificate depended on its own examination of that document and its objective assessment of the likelihood of its having been issued in the circumstances asserted by the applicant. The Tribunal also relied on internal inconsistencies between the applicant's claims to have been in hiding for some months before leaving for Australia and other parts of his account. It is therefore, highly unlikely that, had the applicant been personally heard and seen by Ms Wood, his explanations of the inconsistencies on which she relied would have been so convincing or that his demeanour would have been so disarmingly frank as to overcome all or most of her objections. 16 The tribunal's finding on credibility was not based on how the appellant gave evidence --- that is, the manner in which the evidence was given. The finding was based on the content of what the appellant said. The tribunal viewed the evidence as implausible based on the implausibility of its content. Considerations such as how the appellant conducted himself during the hearing were irrelevant. In any event, the accuracy and weight given to demeanour of a witnesses giving evidence is a controversial topic. Scepticism about the supposed judicial capacity in deciding credibility from the appearance and demeanour of a witness is not new. In Societe D'Avances Commerciales (Societe Anonyme Egyptienne) v Merchants' Marine Insurance Co (The 'Palitana'), Atkin LJ remarked that 'an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour'. The studies of experimental psychologists since that time had confirmed the danger of placing undue reliance upon appearances in evaluating credibility. Such studies were not available to the appellate courts when the rules of deference to the assessments of trial judges on questions of credibility were first written. They are available to us today. Although they have not yet resulted in a re-expression of the appellate approach (and by no means expel impressions about witnesses from the process of decision-making) the studies have two consequences. Trial judges should strive, so far as they can, to decide cases without undue reliance on such fallible considerations as their assessment of witness credibility. Instead, they require renewed attention to precisely what the advantages are which the trial judge has over those enjoyed by the appellate court, conducting a second look at the facts, usually with more opportunity to evaluate particular facts than is possible in the midst of a trial and with the appellate advantage of viewing such facts in the context of the record of the complete trial hearing. It was based on listening to the tapes and reading the transcript and having distinct difficulties in believing the claims. It was a situation where the Tribunal member simply found the claims implausible without receiving some other evidence, some other documentary evidence that might back them up. It was quite appropriate for the tribunal to base its findings on the tapes and the transcript. 20 The appellant claims that he not only survived attacks from the mafia, but the CIA as "agents of the United States government. " He says the mafia tracked him to Chicago. After reporting this to the Chicago Police Department, he was offered two options. One was to go to a mental hospital in Chicago, the second option was to go home. After two weeks at the mental hospital, the appellant went home. There he was then confronted by a person who resembled a "TV mafia hit man". The mafia hit man failed in his attack. The appellant said he escaped through a back door. This is one of numerous near miss attempts by the mafia on the appellant's life. The story is inherently implausible. 21 The tribunal was entitled to take into account, as it no doubt did, that the appellant had been in a mental institution for two weeks. It is true there is no medical report that explains the appellant's medical state, but the tribunal did ask the appellant to provide a report but he declined. 22 In light of the foregoing I am satisfied that the finding on credibility was open to the tribunal without the need for a future hearing. The Tribunal must give the reasons for its decision, not the sub-set of reasons why it accepted or rejected individual pieces of evidence. In any event, the reason for the disbelief is apparent in this case from the use of the word "implausible". The disbelief arose from the Tribunal's view that it was inherently unlikely that the events had occurred as alleged. I see no reason to depart from the reasons of the magistrate. 24 The third issue is whether the tribunal was obliged to carry out its own investigations to substantiate the appellant's claims. 25 As the magistrate pointed out, s 427 empowers the tribunal to make enquiries, but this duty is merely permissive . The principal authority is Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12. There the appellant claimed he was suffering from post traumatic stress disorder. The High Court held that although the tribunal was concerned about the appellant's mental health, it was under no duty to obtain medical reports or enquire about the mental health of the appellant. 26 Here, the appellant claims that his allegations should have been checked with the FBI, the Honolulu Police Department, the Memphis Police Department, the Tennessee Bureau of Investigation, and the Detroit Police Department. The investigations suggested by the appellant are more onerous than that suggested in MIMIA v SGLB . In my view this type of information, if it was available, should have been provided by the appellant as part of his own case. It was not for the tribunal to make his case for him. 27 In my view, the tribunal did not commit jurisdictional error and the appeal from the magistrate should be dismissed with costs. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | application for protection visa refugee review tribunal tribunal member ceasing to act before decision made whether reconstituted tribunal required to hold a further hearing. migration |
The Commissioner also seeks orders that these costs be paid forthwith and on an indemnity basis. The Commissioner relies on the affidavit of Stephen Antony Linden sworn on 5 September 2008. Mr Sobey has also sought costs thrown away by reason of the adjournment. Shortly before the hearing on costs, Mr Sobey's solicitors filed an affidavit of Effie Kavadas sworn on 16 September 2008 (although this was neither formally tendered nor specifically mentioned in Mr Sobey's oral or written submissions). 2 For the following reasons, I would order that Mr Sobey pay the Commissioner's costs thrown away by reason of the trial of the proceedings being adjourned, including the hearings on 5 and 18 September 2008. I would further order that these costs be paid on an indemnity basis. 3 I set out below a procedural history of the proceedings to date since this history is pertinent to the consideration of these costs applications. The Commissioner's assessments were made on the basis of tax returns prepared and electronically lodged by Mr Sobey's then accountant, Mr Gregory Basso. Briefly stated, as reflected in his amended appeal statement of 11 June 2008, Mr Sobey contends that: (1) the amounts described as interest were in fact returns of capital invested with one Guiseppe Mercorella under a scheme (which, unknown to Mr Sobey at the time of his investment, was a fraudulent 'Ponzi' scheme); and that his income was therefore overstated; and (2) the tax returns upon which the Commissioner based his assessments were lodged with the Commissioner without Mr Sobey's authority. 5 On Mr Sobey's motion, the proceedings were transferred to the Victoria Registry of the Court, where they were managed in accordance with the Tax List Directions dated 4 April 2008. On 28 April 2008, the Commissioner filed the documents required by O 52B r 5 of the Federal Court Rules (Cth) ("the Rules"). Mr Sobey filed his appeal statement on 29 April 2008 (which as indicated above was amended on 11 June 2008) and his preliminary witness list on 30 April 2008. In this list, he indicated that he proposed to give evidence and to call the following persons: Mr Mark Lipson, Mr S Davies, Mr Greg Basso, Mr Mercorella, Mr N Formichella, an "investigating officer --- ASIC" and a "NAB --- Bank Officer --- Borrowed money loaned to Mercorella and approved bank documents". 6 The judge coordinating the Tax List ("the Tax List Judge") held a scheduling conference on 30 April 2008, at which the Tax List Judge ordered, amongst other things, that: Mr Sobey was: (1) to file and serve any affidavit material on which he intended to rely relating to certain paragraphs of the Commissioner's appeal statement by 16 May 2008; and (2) to file and serve any affidavit material and submissions on which he intended to rely in relation to the matters referred to in his own appeal statement by 30 May 2008. Reference to the transcript of the hearing that day shows that the Tax List Judge sought to focus the parties' attention on the identification of operative issues and efficient preparation for trial. At this stage, the Tax List Judge encouraged Mr Sobey to get his "house in order as a matter of urgency and put on [his] affidavit material" and declined to make orders for discovery since discovery was likely to be "time consuming and voluminous". Finally, the issue of subpoenas was also canvassed when, amongst other things, counsel for Mr Sobey stated that the documents required to complete a forensic accounting analysis were held by the Australian Crime Commission ("ACC"). The Tax List Judge invited Mr Sobey "[i]n the mean time" to "[d]eliver [subpoenas] up to [Tax List Judge's] chambers" on the basis that her Honour would "give ... leave if ... appropriate". 7 On 26 May 2008, Mr Sobey's solicitors filed an affidavit that had been sworn by Mark Lipson, a chartered accountant engaged by Mr Sobey to carry out a prudential audit on the 2004 and 2005 returns of income that Mr Basso purportedly lodged for Mr Sobey. In this affidavit, Mr Lipson stated that there were deficiencies in the documents on which he based his audit apparently because "most of the relevant accounting records were with Mr Colin Nicol of McGrath [Nicol] and Partners, Chartered Accountants, who had been appointed as liquidators of the Mercorella Ponzi scheme". Mr Lipson added that he had been told that "the premises of [Mr Sobey were] raided by the Australian Crime Commission ("ACC") on 24 August 2004 and that all [Mr Sobey's] private and business records were seized on that day". Mr Lipson deposed that he had, however, been able to make findings "based on the amounts actually received into the bank accounts of [Mr Sobey]". 8 On 30 May 2008, Mr Sobey's solicitors filed an affidavit sworn by Mr Sobey, in which (amongst other things) Mr Sobey reiterated that: (1) Mr Basso had lodged returns for 2004 and 2005 in his name but without his authority; (2) Mr Sobey was persuaded by Mr Mercorella and Mr Formichella to appoint Mr Formicella and BCFR Accountants as his tax agents and to invest with them; and (3) Mr Sobey was subsequently persuaded by Mr Mercorella to appoint Mr Basso as his accountant. Further, Mr Sobey deposed to the fact that his home and the homes and businesses of other investors were "raided" by the ACC on 24 August 2004, with the result that "all [Mr Sobey's] private and business documents were seized". Apart from the BCFR documents, I do not at this time know if all of my documents have been returned by the ACC. The 10 boxes of documents are now with my accountant, Mr Lipson for his examination and report. 9 On about 4 June 2008, Mr Sobey sought leave to issue subpoenas against the Australian Securities and Investments Commission ("ASIC") and Messrs Nicol and Davies, both of McGrath Nicol & Partners, to produce certain documents, but leave was refused --- as indicated at the second scheduling conference --- on the basis that the subpoenas were too wide. On 11 June 2008, the Tax List Judge granted Mr Sobey leave to issue a subpoena to the ACC. 10 The second scheduling conference was held on 13 June 2008 before the Tax List Judge. It is clear enough that, at this stage, the Tax List Judge was highly critical of Mr Sobey's lack of progress and commented that Mr Sobey had "a large amount of work ... to do, and ... has to do it really quickly". And given the breadth of them and to whom they're directed, I'm not going to prejudge them, but someone is going to look at them very carefully before they make a decision about issuing subpoenas of that nature. ... [I]t seems to me that it's been a scattergun approach rather than someone stopping and taking stock about whether or not they're absolutely essential. 11 At this scheduling conference, the Tax List Judge ordered: (1) Mr Sobey to file and serve any material on which he intended to rely by 25 July 2008; (2) the Commissioner to file and serve any material on which the Commissioner intended to rely by 15 August 2008; (3) the parties to file and serve an outline of submissions and any objections to evidence by 29 August 2008; and (4) the matters to be set down for trial before me (as the docket judge) on 9, 10 and 11 September 2008. 12 On 24 July 2008, Mr Sobey gave notice of change of practitioner. On 25 July 2008, Mr Sobey filed an affidavit sworn by Giuseppe Falanga. 13 On 6 August 2008, the Commissioner sought leave to issue subpoenas against: (1) Messrs Nicol and Davies, to produce a copy of the transcript of examination of Mr Sobey on 22 December 2005 in this Court and the affidavit of Mr Davies sworn on 9 May 2007 and filed in this Court; and (2) Australian Securities and Investment Commission ("ASIC"), to produce copies of three affidavits filed in this Court on 12 July 2005 in SAD 160/2005. The Tax List Judge granted the requisite leave; and, at the return of the subpoenas on 20 August 2008, both parties were given leave to uplift, inspect and copy the documents that had been produced, subject to orders as to confidentiality in respect of the ASIC documents. On 28 August 2008, Damaris Amanda Sheldon, an ASIC employee, made an affidavit in support of ASIC's objection to access being granted to the parties in relation to specified parts of the documents that ASIC produced under subpoena. 14 On 29 August 2008, the Commissioner filed and served an outline of submissions as required by the orders of the Tax List Judge. These submissions concluded that Mr Sobey "has not discharged the onus upon him under s 14ZZO of the Taxation Administration Act 1953 " and "[t]he Application[s] must be dismissed with costs". 15 Also on 29 August 2008, the Commissioner served a notice of intention to adduce evidence of previous representations in relation to the affidavit of Mr Davies sworn on 9 May 2007 and specified parts of the affidavit of Russell Gibb, an ASIC investigator, sworn on 12 July 2005, both which were produced under the subpoenas referred to in [13] above. On the same day, the Commissioner filed a notice specifying the Commissioner's objections to the affidavit evidence filed by Mr Sobey. 16 On 2 September 2008, Mr Sobey was granted leave to issue a subpoena to Mr Basso to produce documents and to attend Court to give evidence. This subpoena was returnable on the first day of trial. Also on 2 September 2008, Mr Sobey notified the Commissioner that he required the attendance for cross-examination of Mr Davies, Mr Gibb and other ASIC investigators. On that day too, Mr Sobey filed and served his outline of submissions, in which counsel for Mr Sobey stated that Mr Sobey "will also seek to rely on further affidavits from Sobey and Lipson; and oral evidence from subpoenaed witnesses". Mr Sobey's solicitors filed further affidavits from Mr Sobey and Mr Lipson on 3 and 4 September 2008 respectively. 17 Upon reading Mr Sobey's statement regarding further affidavits and oral evidence, the Commissioner requested an urgent hearing. This took place on 5 September 2008, during the course of which the trial dates were vacated. Some time thereafter, it came to light that the subpoena served on Mr Basso did not include a last date for service and, as a result, the original subpoena to Mr Basso was set aside and a new subpoena issued to him. 18 The foregoing provides the factual context that prompted the present applications, which were heard on 18 September 2008. Mr Sobey failed to comply with the Tax List Judge's orders of 13 June 2008, even though the Tax List Judge made it clear that, in giving Mr Sobey until 25 July 2008, Mr Sobey was being given " one more chance". (Emphasis added. As at 25 July 2008, Mr Sobey's case "remained in disarray" and was "incapable of discharging the statutory onus" that lay on him. 3. As at 25 July 2008, Mr Sobey had not filed statements from a number of the potential witnesses named by him in his earlier witnesses list, and nor had he subpoenaed them. Further, Mr Sobey had given no explanation about this failure. 4. Having regard to earlier litigation involving Mr Sobey and the Mercorella scheme, it should be inferred that Mr Sobey made "a considered decision ... in these proceedings not to adduce evidence from the liquidator in accordance with affidavit material filed on behalf of the liquidator in proceedings to which he was a party, despite listing the [liquidator] on his preliminary list of witnesses in this proceeding". 5. Although Mr Sobey's witnesses list referred to "ASIC investigators" and his amended appeal statement made certain statements about ASIC's findings concerning the Mercorella scheme, Mr Sobey did not rely on any ASIC material. 6. In his outline of submissions filed on 2 September 2008, Mr Sobey "conceded that, at [the present] time, [his] affidavit is based upon incomplete documentation". These submissions added that Mr Sobey "[was] unable to say what amounts he invested with Mercorella and what amounts he received", although "[t]his position is likely to change now that Mercorella's records may be available". Mr Sobey made similar observations with respect to Mr Lipson's evidence. As noted, Mr Sobey indicated an intention to call additional evidence. Subsequently, Mr Sobey filed two further affidavits and provided a copy to the Commissioner of the subpoena to Mr Basso. 7. Accordingly, the Commissioner had prepared a case for trial "on the basis of the material filed by [Mr Sobey] in accordance with [the] orders of the court only to have the evidentiary basis of [his] case change completely on the eve of the trial". Mr Sobey's failure to comply with the Court's orders by filing and serving his complete case by 25 July 2008 caused the trial to be vacated. The Commissioner noted that Mr Sobey had "many months to obtain the [relevant] documents and file and serve any expert evidence arising there from, or indeed to subpoena directly from the Bank the relevant statements". Mr Sobey had not explained why he had delayed so long in seeking to subpoena documents from Mr Basso, noting that Mr Sobey's counsel had stated, on 5 September 2008, that he would be unable to proceed to adduce evidence in chief from Mr Basso on 9 September 2008 because he needed time to analyse the documents that Mr Basso produced. He had "never conceded that [he] will lose the case or that [his] evidence was insufficient". He submitted that the Commissioner "was not entitled to sit on his hands and do nothing in the circumstances ... where there is a genuine dispute on both fact and law". Mr Sobey repudiated the Commissioner's assertion that he "would not discharge his onus", referring to Mr Lipson's first two affidavits. 2. The manner in which the Commissioner made the objection decisions under appeal was contestable and alleged that he had been "denied natural justice" when leave to issue subpoenas to ASIC and Messrs Nicol and Davies was refused. 3. "[T]he precipitous action taken by the [Tax List Judge] in rejecting the subpoenas outright severely set back [Mr Sobey's] preparation for trial". 4. "[S]ome of the contents of the requests in [Mr Sobey's] subpoenas have now been supplied on the return of subpoenas issued by [the Commissioner] ... to ... Mr Davies and to ASIC". 5. The Commissioner had not complied with pre-trial orders since the Commissioner had sought the issue of the subpoenas to ASIC and Mr Davies returnable on 20 August 2008, which had led to the production of "at least two folders of new documentation being produced and provided to [Mr Sobey's] Counsel on ... 25 August 2008". It was, so Mr Sobey said, "disingenuous to suggest that [he] should file [his] contentions on 29 August 2008 when [the Commissioner] had just produced two folders of material which were clearly relevant". 6. The trial had been vacated "not by [Mr Sobey's] actions but by the plea made by [the Commissioner] that they have done nothing in preparation for the trial, but now might be prejudiced by any documents ... which might be produced by Basso on subpoena". Mr Sobey claimed that he was "still prepared for the trial to go ahead" "although faced at the last moment with the documents that [he] has been seeking for months". 7. Further, amongst other additional matters, the Commissioner did not supply the Order 52B documents to Mr Sobey's new solicitors "despite the fact that the [Commissioner's] solicitor knew that [Mr Sobey's] present solicitor did not have access to the previous solicitor's file". The Court is now concerned with what are commonly known as "costs thrown away". An order for costs thrown away is not infrequently made in circumstances such as the present, where an adjournment application succeeds, and the party seeking costs maintains a readiness to proceed on the day fixed for trial but for the conduct of the other party. The costs thrown away are such costs as have been reasonably incurred that relate to work done and wasted as a result of the successful adjournment application: see Andromeda Handelsaktieselskab v Holme (1924) 130 LT 329 at 330 and Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251 at 254. Generally, costs thrown away are costs that have been incurred once and will be incurred again for the purpose of the trial that is fixed a second time: Roger Quick and David Garnsworthy, Quick on Costs (Thomson Law Book Company, 2009) par [1.1230]. It is to be borne in mind that the likelihood or otherwise of a party being ultimately successful in the proceeding is not a relevant consideration on the question whether an order for costs thrown away should be made. 22 I accept that, as the Commissioner submitted, that the trial dates were vacated essentially because Mr Sobey had failed to have his case ready in time. The Court's orders of 13 June 2008 required Mr Sobey to file and serve any material on which he intended to rely by 25 July 2008. Mr Sobey did not file and serve his completed case by the due date. Mr Sobey sought to cast responsibility for his dilatoriness on the Commissioner. I reject this submission. The Commissioner was not required to meet a case that Mr Sobey did not make; and, if the Commissioner considered the case that Mr Sobey advanced could not discharge the onus that lay on him, then the Commissioner was entitled conduct himself accordingly. The procedures at the level of the making of the objection decisions are not relevant in these proceedings. 23 I reject Mr Sobey's characterisation of the conduct of the Tax List Judge in refusing to grant leave to issue subpoenas to ASIC and Messrs Nicol and Davies as "precipitous" and as delaying his preparation. It is evident that the Tax List Judge discussed these subpoenas with Mr Sobey's counsel at the second scheduling conference and indicated that Mr Sobey's solicitors should resubmit redrawn subpoenas, which would be reconsidered for a grant of leave. Months passed and Mr Sobey's solicitors did not resubmit redrawn subpoenas. Mr Sobey has given no adequate explanation for this failure. It is true that the Commissioner sought and obtained leave to issue subpoenas to the ASIC and Messrs Nicol and Davies in early August 2008, but this fact does not shift Mr Sobey's responsibility for obtaining documents relevant to his case to the Commissioner. 24 Furthermore, I accept that, as the Commissioner submitted, Mr Sobey gave no adequate explanation as to why he had delayed as long as he did in seeking to subpoena documents from Mr Basso, bearing in mind that Mr Basso had been named in Mr Sobey's original witnesses list filed on 30 April 2008. It is important to note that counsel for Mr Sobey stated on 5 September 2008 that he was unable to proceed with Mr Basso on 9 September 2008 because he had not had an adequate opportunity to analyse the documents that Mr Basso produced. 25 Finally, it was not the Commissioner's responsibility to supply Mr Sobey with a new set of O 52B documents when Mr Sobey changed solicitors. These documents were accessible as part of the Court file. Presumably too, copies had been provided to counsel for Mr Sobey (who had been involved in the proceeding virtually from its inception) before Mr Sobey changed solicitors on 24 July 2008. Mr Sobey failed to establish any relevant hardship on this account. 26 The adjournment was granted because Mr Sobey's case was not complete and his counsel was unable to proceed. Furthermore, if Mr Sobey were to be given the opportunity he sought to file further affidavits, the Commissioner was entitled to an opportunity to meet that case since it would apparently differ in material respects from the case advanced by Mr Sobey as at 25 July 2008 and shortly prior to trial. 27 In this circumstance, the Commissioner should have his costs thrown away by reason of the adjournment of the trial, including the hearings on 5 and 18 September 2008. The next question is whether these costs should be paid on an indemnity basis. The usual rule is that costs are payable on a party and party basis, unless the circumstances of the case warrant a departure from the normal course: see Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (" Colgate-Palmolive ") at 233 per Sheppard J; Re Wilcox: Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 at 152-53 per Black CJ and 156-58 per Cooper and Merkel JJ; and O 62 of the Rules. It is unnecessary to outline in detail the principles governing when a departure from the usual rule is justified: see, for example, Boyapati v Rockefeller Management Corporation (No 2) [2008] FCA 1375 (" Boyapati (No 2 )") and the authorities therein. As the Full Court said in Hamod v New South Wales [2002] FCA 424 ; (2002) 188 ALR 659 at 665 (per Gray J, with whom Carr and Goldberg JJ agreed), indemnity costs "serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs". 28 The question is whether the circumstances warrant an award of indemnity costs. At the second scheduling conference, the Tax List Judge made it abundantly clear that, in accordance with the time-table set, Mr Sobey was required to have his case ready for trial. This was a proceeding subject to the Tax List Directions dated 4 April 2008, which deal with "arrangements for the management of tax cases" "to promote the just and efficient determination of tax disputes in a timely manner". The Tax List Judge warned Mr Sobey's counsel that "I'll give you till the end of July, but it's drop dead [if you fail]". Mr Sobey had a sufficient opportunity to prepare his case and has conducted this litigation in wilful disregard of the Court's pre-trial orders and directions. For the reasons already stated, Mr Sobey's case was not complete prior to the trial date. There were affidavits filed late. The subpoena to Mr Basso was sought late, with no adequate explanation. Nor was the failure on Mr Sobey's part to seek leave at an early date to issue redrawn subpoenas to ASIC or Messrs Nicol and Davies adequately explained. Prior to trial, there were documents still said to require the analysis and attention of Mr Sobey's counsel. The circumstances of the case warrant an award of costs thrown away on an indemnity basis. 29 The Commissioner also seeks a departure from the general rule in O 62 r 3(3) of the Rules that an order for costs does not entitle a party to have a bill of costs taxed until the proceeding is concluded. There are good reasons for the rule, including avoiding multiple taxations and preventing one party from unfairly exhausting the funds of the other, where the outcome of the litigation is unknown. The Rules contemplate, however, that the Court may in an appropriate case grant leave to tax costs forthwith. 30 In Barrett Property Group Limited v Metricon Homes Pty Ltd (No 2) [2007] FCA 1823 (" Barrett "), Gilmour J discussed the circumstances in which departure from the general rule in Order 62 rule 3(3) may be justified: see Barrett at [23]-[24] and the authorities there discussed and cited. It is unnecessary to repeat his Honour's discussion here. Having regard to the relevant authorities, including Barrett , I would not grant leave to tax costs forthwith in this case, at least not now. I accept that Mr Sobey has led the Commissioner to incur costs over and above what he would have incurred had Mr Sobey conducted his case diligently. The issues in this case are not complex, however, and I would not expect the trial to be especially lengthy or complex. The parties ought to be ready for a trial, at the latest, by early next year. This ought not to be a case in which the Commissioner waits unduly long to recover any costs due on taxation. 31 In the circumstances as presently disclosed, I would not order costs to be paid forthwith. 32 Accordingly, I would order that Mr Sobey pay the Commissioner's costs thrown away by reason of the trial of the proceedings being adjourned, including the hearings on 5 and 18 September 2008. I would further order that these costs be paid on an indemnity basis. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny . | whether applicant should pay the respondent's costs thrown away by reason of the trial being adjourned and on an indemnity basis principles relevant to an award of costs applicant failed to file and serve his complete case in accordance with pre-trial orders and directions no adequate explanation applications granted time for taxation and payment of costs whether the applicant should pay the respondent's costs forthwith costs costs |
The appellant was not represented before me, though he was represented before the RRT and the Federal Magistrate. 2 The notice of appeal contains nine separate grounds of appeal. As will become apparent, a number of those grounds raise matters that were not the subject of any consideration on the part of the Federal Magistrate. 3 It is necessary to set out, albeit briefly, the background facts. The appellant is a Bangladeshi national. He arrived in Australia in April 2004 and applied for a protection visa shortly thereafter. On 1 July 2004, a delegate of the respondent Minister refused that application. On 12 July 2004 the appellant applied to the RRT for review of that decision. On 1 February 2005 the decision was affirmed. However, on 17 July 2006, the Federal Magistrates Court set aside that decision and remitted the matter to the RRT to be reconsidered. 4 The RRT held a further hearing on 18 September 2006. On 30 October 2006 it again affirmed the decision of the delegate, thereby denying the appellant a protection visa. It was that decision that was subsequently challenged before Scarlett FM. On his return to Bangladesh, a well known bandit made a series of calls demanding payment of a large sum of money. 6 The RRT gave detailed reasons for rejecting the appellant's application for a protection visa. It put forward a number of reasons for doubting his credibility. It accepted that he was a Buddhist monk, and that he had some association with the monastery in Dhaka which he had named. It also accepted that he had attended the conference in Japan to which he referred. However, it otherwise rejected the substance of his claims. 8 The RRT therefore did not accept that, if the appellant were to return to Bangladesh, there was a real chance that he would be persecuted by reason of his religion, membership of a particular social group, actual or imputed political opinion, or for any or all of those reasons cumulatively. 9 In his application for judicial review, the appellant first asserted jurisdictional error in very broad terms. However, he later filed an amended application which was confined to an attack upon one aspect of the RRT's decision, namely its failure to contact people at his monastery in order to confirm his claim that he had held a particular position. As previously indicated, before Scarlett FM, the appellant was represented by counsel who presented an argument strictly in accordance with the amended application. His Honour rejected that argument, pointing to authority which denied the existence of any general duty on the part of the RRT to use its powers of enquiry, and noting that, if there were exceptions to that rule, the circumstances of the present case were "neither exceptional nor rare". 10 Turning now to the notice of appeal before this Court, it should be noted that a number of the grounds contained therein speak of a failure on the part of the Federal Magistrate to make particular "findings". For example, ground 2 contends that his Honour should have found that by reason of the clearly distinguishable saffron robe that the appellant was required to wear, he would be persecuted for his religious belief. In the same vein, ground 3 contends that his Honour should have found that the appellant would be discriminated against, and persecuted, in Bangladesh because of the appellant's prominence within the Buddhist community. 11 One answer to each of these contentions is that the Federal Magistrate was not asked to consider any of these issues. The appellant was represented by competent counsel who decided to attack only one aspect of the RRT's decision. As a general principle, this Court, which is now exercising appellate jurisdiction, should not be asked to deal with a range of additional issues as if it were hearing the matter at first instance. 12 Nonetheless, the Minister has addressed each of the grounds of appeal, and I shall proceed upon the assumption that they are alive, before me, though they were not raised before the Federal Magistrate. Strictly speaking of course the appellant requires leave to rely upon such grounds. 13 Ground 2 appears to contend that the RRT failed to consider the appellant's fear of persecution as a member of the "particular social group" of Buddhist monks, in particular arising from the distinctive habit which he wore. 14 The Minister submits that the RRT accepted that the appellant was a Buddhist monk. He further submits that, at least by implication, the RRT assumed that as a Buddhist monk, he was a member of a particular social group. The RRT did not, however, accept that he had a well-founded fear of persecution as a result of his membership of that group. The Minister submits that no consideration of whether or not he wore a saffron robe could have influenced the outcome of the RRT's decision. 15 Ground 3 complains that the RRT failed to find that the appellant, by reason of the senior position he held in the monastery, would suffer discrimination and persecution. 16 The Minister submits that this ground invites merits review. There is, however, an even more fundamental difficulty. The RRT rejected the appellant's claim to have occupied the position that he claimed he held in the monastery. That was a finding based upon the appellant's credibility, or lack thereof. It was never open to judicial review. 17 Ground 4 asserts that the RRT failed to characterise the appellant as a member of a particular social group comprising religious activists "who are involved in the social and welfare activities of their community". 18 The Minister submits that there was no material before the RRT which clearly raised any such claim, or how (if at all) membership of that group would distinguish the appellant from Buddhist monks generally. Indeed, there are only two brief, passing, references in the material before the RRT to the social welfare activities of the appellant, and of Buddhist monks generally. Moreover, the RRT's broader findings regarding the freedom of Buddhists to operate in and around Dhaka (based upon country information) must have entailed rejection of the particular claim now articulated, belatedly and for the first time, on the appellant's behalf. 19 Ground 5 asserts that the RRT failed to comply with its obligations under s 425 of the Migration Act 1958 (Cth) by not giving the appellant an adequate opportunity to respond to independent evidence in the RRT's possession which suggested that it was possible for Buddhists to engage in religious activities in Bangladesh without being subjected to violence, or threats thereof. 20 The Minister submits that this issue was fully canvassed before the RRT. Indeed, the RRT heard from a witness called on behalf of the appellant to address this very question. Section 425 requires that an applicant be given an opportunity to give evidence and make arguments about "the issues arising in relation to the decision under review". See the discussion of s 425 in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 231 ALR 592 at [33] ---[35] and [45]---[49]. The section does not, however, require an opportunity to be given to respond to every item of particular evidence. That aspect of procedural fairness is, rather, dealt with by s 424A: see WAID v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 220 at [57] per French J. 21 Ground 6 contends that the RRT ought to have accepted the appellant as a credible witness, particularly since his evidence was supported by that of a particular witness. That witness had confirmed the appellant's claims of general mistreatment of Buddhists in Bangladesh. 22 The Minister submits that this ground simply invites merits review. 23 Ground 7 asserts that the RRT failed to consider all the materials readily available and/or accessible. The ground does not condescend to particulars. 24 The Minister submits that failure to take account of particular evidence, as opposed to a distinct claim would, even if established, not amount to an error going to jurisdiction. See generally Applicant WAEE v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 184 at [46] ; Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [74] ; and Paul v Minister for Immigration and Multicultural and Indigenous Affairs [2001] FCA 1196 ; (2001) 113 FCR 396 at [79] . Insofar as the ground seeks to agitate the same matters that were raised before Scarlett FM, the Minister submits that the RRT does not have a legally enforceable duty to make enquiries: see WAGJ v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCAFC 277 at [24] ---[25] citing Minister for Immigration and Multicultural Affairs v Anthonypillai [2001] FCA 274 ; (2001) 106 FCR 426 at [86] . 25 Grounds 8, 9 and 10 challenge findings of fact made by the RRT. 26 The Minister submits that these all invite merits review. Accordingly, had they been raised before Scarlett FM, his Honour would have rejected them. This Court, on appeal, should do no less. 27 Before me, the appellant appeared unrepresented. His submissions did not take any of the grounds of appeal, as set out in the notice of appeal, any further. In substance, he simply contended that the RRT ought to have accepted his evidence, and that the Federal Magistrate should have quashed its decision because it had wrongly disbelieved him. 28 In my view, the Minister's submissions should be accepted. Grounds 6, 8, 9 and 10 simply invite merits review. There is no substance to grounds 2, 3, 4 and 5. Ground 7 was dealt with correctly, and in accordance with well established authority, by Scarlett FM. 29 There being no appealable error, the appeal should be dismissed. The appellant must pay the first respondent's 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 whether any appealable error whether refugee review tribunal complied with its obligations under s 425 of the migration act 1958 (cth) whether tribunal under duty to conduct independent enquiries whether grounds of appeal involve merits review migration law |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs to refuse to grant a protection visa to the appellant. 2 The appellant is a citizen of the People's Republic of China ('PRC'). Before the Tribunal the appellant claimed to have a well-founded fear of persecution as a Falun Gong practitioner. Her claims included her company being issued many taxation fine notices, being arrested for teaching other people to practise Falun Dafa and being detained for two months. She claimed that on her release from detention she was placed under surveillance and sent to a re-education centre for three months. 3 The Tribunal invited the appellant to attend a hearing on 18 November 2004. That invitation was sent to the address nominated in her application. On 2 November 2004 the Tribunal received a change of address form from the appellant. On 4 November 2004 the Tribunal sent a further letter to the appellant at her new address advising of a new hearing date set for 26 November 2004. The appellant was advised that if she did not attend the hearing and a postponement was not granted, the Tribunal might make a decision on her application without further notice. No response was received and letters to the appellant were not returned to the Tribunal. She did not attend the hearing. 4 The Tribunal proceeded under s 426A of the Migration Act 1958 (Cth) ('Act') to make a decision in the absence of the appellant. The Tribunal was not satisfied on the information before it that the appellant was a Falun Gong practitioner and that she suffered persecution for her Falun Gong activities, nor that she left China for that reason. The Tribunal was not satisfied that the appellant could not or would not return to China because of fear of persecution due to Falun Gong activities in either China or Australia. The appellant did not specifically claim that she left China because of being persecuted for Falun Gong activities. The Tribunal was not satisfied of claims made by the appellant as they were untested assertions and were unclear and lacking in detail. The Tribunal was unsatisfied by the lack of detail in the appellant's claims and the fact that she failed to attend the hearing in order to clarify her claims. 5 On 18 January 2005 the appellant filed an application seeking judicial review of the Tribunal's decision in the Federal Magistrates Court. The appellant was seeking to have the Tribunal decision set aside. In her amended application dated 15 May 2005 and filed on 17 May 2005, the appellant restated the claims she had made to the Tribunal. 6 The Federal Magistrate found that the appellant's application raised no grounds for judicial review and that the Tribunal was entitled to reject the application if not satisfied of the facts claimed. The Tribunal had complied with s 425 of the Act which entitled it to proceed under s 426A. 9 When the matter was called on for hearing before this court this afternoon, there was no appearance on the part of the appellant. I can discern no error in the decision of the learned Magistrate. It was plainly correct. The appeal should be dismissed with costs fixed at $900. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | no point of principle migration |
The main claims made by the plaintiff Dartberg Pty Limited ('Dartberg') against Wealthcare related to investments made by Dartberg on the recommendation of Wealthcare in promissory notes issued by two companies Market Street Mezzanine Pty Ltd ('Market Street') and York Street Mezzanine Pty Ltd ('York Street'). Each of those companies was within the Westpoint Group of companies which collapsed. A convenient sketch of the background to the raising of monies by way of the promissory notes and the collapse of Westpoint is to be found in the judgment of Finkelstein J in Re York Street Mezzanine Pty Ltd (in liq) [2007] FCA 922 ; (2007) 162 FCR 358. The primary claim between Dartberg and Wealthcare was settled by a settlement agreement dated 23 June 2008 which provided for payment by Wealthcare of the sum of $350,000 inclusive of interest and costs to Dartberg. Wealthcare now seek damages against PIR in the amount of $350,000 plus costs incurred in defending the claim brought against Wealthcare by Dartberg. Wealthcare relies upon breaches of ss 52(1), 53(aa), 53(c) and 53(g) of the Trade Practices Act 1976 (Cth) ('TPA') and ss 9(1) and 12 (n) of the Fair Trading Act 1999 (Vic) ('FTA'), and to the extent to which contraventions occurred post 11 March 2002, on similar provisions in the Corporations Act 2001 (Cth) (' Corporations Act ') and Australian Securities and Investments Commission Act 2001 (Cth). Wealthcare also relies upon s 23B of the Wrongs Act 1958 (Vic) (' Wrongs Act '). It is not necessary to reproduce all those provisions in these reasons for judgment. The critical questions to be determined are whether the conduct complained of by Wealthcare was misleading and deceptive on the part of PIR, and whether PIR made false representations if s 53 of the TPA and s 12(n) of the FTA otherwise applied, and then whether the conduct or false representations caused the loss and damage alleged by Wealthcare. Mr Roberts was at all relevant times a financial planner and the principal of Wealthcare. (I interpolate that it was contended by PIR that Mr Roberts did not receive these PIR reports, but as explained later I find that such reports were received by Mr Roberts). In addition to receiving those PIR reports, Mr Roberts also received other information provided directly by Westpoint in the form of Information Memorandum relating to the York Street investment and the Market Street investment. In November 2001, Wealthcare determined to place the York Street Promissory Notes and the Market Street Promissory Notes (the 'Promissory Notes') on Wealthcare's notional approved product list and they remained on the approved products list thereafter. On 24 January 2002, Wealthcare wrote to Trevor and Joyce Pollard of Dartberg, enclosing amongst other things a document headed 'Proposed Investment Plan'. The Proposed Investment Plan contained a recommendation that $300,000 be invested in a fixed interest based Westpoint security. On 1 February 2002, Wealthcare received a letter from Mr Pollard enclosing a cheque for $300,000 for investment in York Street, an investment made on behalf of Dartberg. In late May 2002 Dartberg received a letter from York Street. The letter enclosed a copy of an Information Memorandum for Market Street and provided existing York Street noteholders with the opportunity of rolling over their existing York Street promissory notes into a new Westpoint project, Market Street, in return receiving a 2% redemption premium and an entitlement to continue to receive the existing interest of 12% per annum payable monthly. On or about 29 May 2002 Mr Trevor Pollard telephoned Wealthcare and spoke to Mr Roberts. He informed Mr Roberts that he had received this letter from York Street inviting him to rollover his York Street promissory note. Mr Roberts told him that the rollover was appropriate and that he should take the 2% redemption premium bonus. Dartberg subsequently redeemed the York Street note and received a promissory note from Market Street. In August 2002, on the recommendation of Wealthcare, Mr Pollard on behalf of Dartberg decided to invest an additional $300,000 in Market Street, bringing Dartberg's total investment to $600,000. On 27 October 2003 both Mr Roberts and Mr Pollard received letters from Westpoint referring to the ability to extend the period of the Market Street promissory notes to 30 September 2005. On 18 November 2003, Mr Mark Hepworth on behalf of Wealthcare spoke with Mr Pollard by telephone. Mr Hepworth advised Mr Pollard that he should agree to the extension of the term for the Market Street note because if he did so he would receive a 2% bonus payment amounting to $12,000 and that he would continue to receive the monthly interest payable until 30 September 2005. On 20 December 2005 York Street goes into liquidation. On 6 February 2006 Market Street goes into liquidation. Investors need to be satisfied that this offer meets all corporate governance and compliance criteria such as those required by the MIA. Investors will be advised to consult the Information Memorandum, and conduct their own enquiries, or receive professional advice. This report was not prepared to form part of any offer . We have received a copy of a valuation of the Scots Church Development, 2 York Street, Sydney undertaken by Colliers Jardine Consultancy and Valuation Pty Limited, and dated 31 December 2000. We have also received copies of the Architectural Plans submitted by Tonkin Zulaikha Greer/Jackson Teece Chesterman Willis/Chhada Siembieda for the Scots Church Design Excellence Competition August 2000 and of a Structural Due Diligence Report prepared for Westpoint by Van der Meer Bonser Consulting Engineers dated December 1999. PIR has received copies of the Guarantee and Indemnity of Westpoint Corporation Pty Ltd to York Street Mezzanine Pty Ltd, and the Loan Agreement and Fixed and Floating Charge between York Street Mezzanine Pty Ltd and Scots Church Development Ltd, all prepared by Blake Dawson Waldron Lawyers. We have also received a copy of the Mortgage and of a Deed of Extension of Guarantee between York Street Mezzanine Pty Ltd and Westpoint Corporation and its associated entities, prepared by Williams & Hughes, Barristers and Solicitors. 1215, dated 3/12/94. Established in 1989, PIR is Australia's leading 'independent' research group on property related investments. PIR is the major supplier of independent research to Investment Managers and Financial Advisers. Under the law all financial advisers are required to properly research the financial products they recommend. PIR has no vested interest in the success or otherwise of the Investment Offer. PIR does not provide personal securities recommendations. All investors are strongly advised to consult professional financial advisers whose role is to provide appropriate investment advice, taking into account investor's individual investment objectives, financial situations and particular needs. For more comprehensive information relating to investment offers, PIR research reports should be studied carefully. Hence, this investment offer is made through an Information memorandum not a prospectus. The Westpoint Group has chosen promissory notes as a means of obtaining second ranking finance because of the cost effectiveness compared with alternatives, such as second mortgages. The lower costs mean that higher returns can be offered to investors. However, investors need to be aware that PIR has not conducted a review of the systems and procedures of Market Street Mezzanine Pty Ltd or the borrower and the guarantors behind this offer. PIR is not in a position to advise investors that this offer meets satisfactory corporate governance and compliance criteria such as those required under the Managed Investment provisions. Investors were being advised to consult professional financial advisors. Turning then to the Information Memoranda. Each Information Memorandum contained important information and there were some material differences between the development schemes contemplated by the two Information Memoranda covering the two investments. There were differences in the finishing time of the construction of the projects, the number of apartments, the cost of the apartments and the amount of Mezzanine funding that was sought. However, each memorandum related to the same identical structure. The Information Memoranda contained their own statements that the promissory notes were exempt from compliance with relevant aspects of the corporations' legislation in very similar terms to the statements in the PIR reports. The funds raised will be allocated partly towards the purchase of the property as well as pre-construction development expenses which include consultants, marketing, advertising, selling and other project establishment costs. Promissory Notes are not securities as defined by the Corporations Act (Section 9 "Debentures") and therefore are not covered by the Corporations Act . Promissory Notes by nature are unsecured, however, the lending risk will be mitigated by issuing the Notes from a special purpose company which will have security over the project as noted in the financing structure below. It was submitted by Wealthcare that the PIR made absolute statements and representations which were false and misleading. They were submitted to be incorrect because the offering of the Promissory Notes was of an interest in a managed investment scheme and hence fell within the definition of 'securities' in s 92 of the Corporations Law and as such was subject to the registration and other requirements contained in the Corporations Law and the prospectus requirements set out in Pt 7.12 of the Corporations Law. As the registration requirements were not observed, the schemes were liable to be wound up. Accordingly, the investments were not of 'investment grade' quality. I should indicate that no separate argument was made that the investments were not of 'investment grade' quality, other than by reference to the question of the application of the Corporations Law. Therefore, the focus of the submissions of Wealthcare was upon the applicability of the Corporations Law and the statements to that effect. If the attack were independently by reference to the 'investment grade' quality of the offering, this being an opinion based upon information obtained by PIR, different legal considerations would apply to those presented by the parties in this proceeding. For the purposes of this proceeding, I will also assume that the investments in the Promissory Notes were subject to the requirements of managed investment schemes under the Corporations Law. There was considerable debate before me as to this question. In light of the view I have come to on other issues, it is unnecessary for me to come to a final view on this question. My own tentative view is that the correct contention is that the issue of the Promissory Notes did not form part of a managed investment scheme. The arguments not accepted by Simmonds J in Australian Securities & Investments Commission v Emu Brewery Mezzanine Ltd [2004] WASC 241 seem to have considerable force. It seems to me that all that is involved here is the issue of promissory notes by a corporation with particular credit worthy characteristics and with a particular financing structure, which included the provision of certain securities for the lending of monies to investors. Each investor was offered and accepted a promissory note. All that was offered and acquired was the entitlement to payment of interest and repayment of capital in accordance with the promissory note, and no more or less. This is not the acquiring of rights to benefits produced by any 'scheme'. As I have said, I do not find it necessary to go further into this matter --- it would involve an analysis of the decision in Emu Brewery Mezzanine WASC 241, and possibly, the decisions of Finkelstein J in Financial Industry Complaints Service Ltd v Deakin Financial Services Pty Ltd [2006] FCA 1805 ; (2006) 157 FCR 229 and Re York Street Mezzanine Pty Ltd (in liq) [2007] FCA 922 ; (2007) 162 FCR 358 , and the question of the extent to which I should follow those decisions even if I considered any of them to be error. The PIR reports specifically say that investors would be advised to consult the Information Memorandum and that PIR itself relied upon the information contained in the Information Memorandum. It would be apparent to any reader of the PIR reports and the Information Memoranda that the information about the structure of the investment comes directly from the Information Memoranda. Further, a disclaimer was included in the PIR reports. I accept that disclaimers may not be effective to absolve a maker of a statement from liability for misleading or deceptive conduct or liability under s 53 of the TPA: see eg Petera Pty Ltd v EAJ Pty Ltd [1985] FCA 277 ; (1985) 7 FCR 375. However, in this case there is not just the disclaimer. Contrary to the contention of Wealthcare, I do not regard the position as analogist to the attempted reliance upon the disclaimer in John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd 1993 ATPR 41-249. The context of all the statements in the PIR report referred to above indicated the limited basis of the information being put forward by PIR: see Campbell v Backoffice Investments Pty Ltd (2009) HCA 25 at [29] - [30] . It is important to analyse the conduct and statements of PIR as a whole, taking into account disclaimers and other circumstances showing the true character of the conduct and statements themselves: see eg Campbell (2009) HCA 25 at [130] and Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 ; (2004) 218 CLR 592. I do not accept that Wealthcare did expect, or could have expected, the representations concerning the Corporations Law to be something which would be ordinarily be a matter within the expertise of the financial researcher in the context of the PIR reports. Looking at the Information Memoranda, and the PIR reports themselves, the alleged misrepresentations concerning the Corporations Law are by their very nature no more than a restating of the information in the Information Memorandum. Looking at the subject matter of the representations (legal in character although not purporting to be legal advice), the content of the PIR reports as a whole (including the disclaimers) and the role of PIR in producing the reports and the role of Wealthcare, the conclusion is readily reached as to the character of the statements being made. The characterisation of the alleged misrepresentations is to be seen as merely passing on the information in the Information Memoranda, namely that the issue of the Promissory Notes was not covered by the Corporations Law, and the reader of the PIR should make enquiries and should be satisfied that the offer met all compliance criteria such as required by the Managed Investments Act or the Corporations Law. There has been no adoption of the alleged misrepresentations relating to the Corporations Law by PIR; on the contrary, PIR passes on the statements made in the Information Memoranda (specifically relying upon the Information Memoranda), and disclaims in a number of ways PIR's own adoption of it. It does not matter whether the alleged misrepresentations were statements of fact, law or opinion ---whatever they were, it is my view that the alleged misrepresentations had the effect, or likely effect, on Wealthcare of statements taken from or based upon the Information Memoranda: see eg Heydon v NRMA Ltd [2000] NSWCA 374 ; (2000) 51 NSWLR 1 , 148; Gardam v George Wills & Co Ltd (No 1) [1988] FCA 194 ; (1988) 82 ALR 415 , 427 (per French J) and Yorke v Lucas [1985] HCA 65 ; (1985) 158 CLR 661 , 666. The representation as to the investments being of an 'investment grade' quality may be in a different category, being an assessment or opinion of PIR based upon all the information provided in the Information Memoranda and its own expertise. As I have said, no separate attack was made on this opinion, other than by reference to the other alleged misrepresentations. If I am otherwise correct as to the characterisation of the misrepresentations, then the 'investment grade' quality statement is properly to be seen as the opinion of PIR based upon the Information Memoranda material, which PIR accepted as correct. It was not suggested that the statement as to 'investment grade' quality was not one honestly held, which if based upon the Information Memoranda, would itself involve no falsity or misleading or deceptive conduct. In light of the above, I conclude there is no misleading or deceptive conduct on the part of PIR, nor were the statements made false (or misleading) to make PIR liable under s 53. There was a debate before me as to whether Mr Roberts received the PIR reports. I am prepared to accept that Mr Roberts and Wealthcare did receive the PIR reports. Westpoint provided similar reports to various investment advisors, which probably included Wealthcare. It would have been in the interests of Mr Thomas of Westpoint to give to Mr Roberts the PIR reports. These would likely have been given to Mr Roberts along with the Information Memoranda, which as I have said, was referred to and relied upon in the PIR reports. I accept this probably occurred in about October 2001 after Mr Roberts met Mr Thomas at the Financial Planning Association Conference. However, I do not accept that Mr Roberts or anyone else at Wealthcare placed any reliance on the statements now alleged by Wealthcare to be false, misleading or deceptive. Based upon those parts of the PIR Market Street Report, I formed the opinion that it was permissible to raise funds for the purpose of the promissory note offering by way of information memorandum rather than prospectus and that the substance of the offer (And the associated fund raising document/information memorandum), did not have to meet the requirements mandated under the managed investment provisions of the Corporations Law. After considering the PIR report as a whole as well as the content of the York Street Information Memorandum and the KPMG document I approved the York Street promissory notes as appropriate products for Wealthcare to recommend to clients and orally informed Wealthcare's employees of that fact. However, I have come to the view that the alleged misrepresentations had no impact whatsoever on Mr Roberts' approach to the investments, and he would have made the recommendation to Mr Pollard irrespective of whether the alleged misrepresentations were included in the PIR reports or not. The alleged misrepresentations, and Mr Roberts' reliance on those representations concerning the Corporations Law must be the focus in this case. As such, an assessment of the evidence of Mr Roberts, particularly the evidence of his reliance on the alleged misrepresentations, needs to be made. I found Mr Roberts to be an unsatisfactory witness. He appeared in many instances to be evasive and lack candour. His evidence in cross-examination showed a lack of grasp of any understanding of the significance of a managed investment scheme. His answers under cross-examination also indicated a lack of understanding of the investments upon which he had presumably considered and advised upon. He re-constructed his evidence as he was questioned, and his evidence contained inconsistencies. For example, he gave inconsistent evidence about the number of Wealthcare clients that had invested in Market Street or York Street. Mr Roberts seemed to have little grasp of the differences in the various information documentation he said he received at the same time, and which did contain significant differences in relation to prior ranking debt, number of apartments and project equity. I gained the distinct impression that he had not read the PIR reports and the Information Memoranda carefully, or perhaps at all. He certainly made no enquires about the differences between the contemporaneous documents he received, which I would have expected him to have made as a financial adviser. This suggests that he did not read or rely upon the reports or understand their implications. When questioned on the use of the term prospectus or information memorandum, Mr Roberts showed that he had no real appreciation of the difference between the terms at the time of making the recommendations to Mr Pollard. Mr Roberts' answers in cross-examination undermined the accuracy of his evidence given in chief by affidavit. For instance, when asked whether he distinguished between a document as a prospectus and an information memorandum, Mr Roberts replied that he took it as a "misnomer". This demonstrated that he did not appreciate or attach any significance to whether there was a prospectus or not, although he did apparently understand the legal difference as a result of his application for a security dealer's licence. At the time of making the various recommendations to Mr Pollard, Mr Roberts seemed more concerned with receipt of his own commission upon the investments being made by Mr Pollard. Mr Roberts did not disclose to Mr Pollard (as he was obliged to do) the commissions which Mr Roberts received from Westpoint. He provided no explanation for this in his evidence before the Court. This reflects poorly on Mr Roberts and may indicate the main motivation in making various recommendations to Mr Pollard was the earning of his commission, and a disregard for the information provided to him in the PIR reports. It is also to be recalled that Mr Roberts initially denied giving Mr Pollard advice to rollover his investment in York Street to Market Street, to increase his investment in Market Street or to extend the term of the Market Street Promissory Notes. Mr Robert's denial was shown to be inconsistent with documentary material, and was only withdrawn by him in the face of this documentary material. Again, this reflects poorly on Mr Roberts. When one looks at the events surrounding the extension to the Market Street Promissory Note in November 2003, the evidence further supports the conclusion that reliance by Mr Roberts on the alleged representations did not occur. As a separate matter, this evidence indicates that Wealthcare in November 2003, irrespective of whatever occurred previously, did not rely at all, or attach any significance, to the alleged misrepresentations. If the Market Street Promissory Notes had not been extended, I find on the evidence that they would have expired on 31 January 2004 and would have been paid out. On this view, unless Wealthcare relied upon the alleged representations when Mr Hepworth advised Mr Pollard in November 2003 to extend the term of the Market Street Promissory Notes, Wealthcare cannot demonstrate that its claimed loss and damage was caused by the conduct of PIR. The evidence establishes that Wealthcare did not rely on the representations in the Market Street PIR report when making the recommendation in November 2003, even on the basis of the evidence of Mr Roberts. As I have said, the occurrence of these later events also indicated an approach taken by Mr Roberts to his earlier recommendations to Mr Pollard consistent with there being no reliance on the alleged misrepresentations in the PIR reports. Prior to November 2003, Mr Roberts had received, and apparently read, the Market Street Notes Prospectus and supplementary prospectuses. The supplementary prospectus dated 25 February 2003 expressly stated that Australian Securities Investment Commission ('ASIC') had taken the view that the securities being offered by a similar information memorandum were debentures, and were determining what further steps were necessary or appropriate to secure compliance with the Corporations Act . It stated that if ASIC's view were correct that the securities were debentures, and the offer did not comply with the relevant law, a range of possible outcomes may result, including the return of moneys raised under the offer or an order that investors be informed of the view and given the opportunity to withdraw from their investment. Apparently, Mr Roberts obtained feedback from Westpoint that they could continue to offer a promissory note and he gave evidence that he relied upon what the Westpoint representatives had told him. Mr Roberts' also gave evidence that he was told by Westpoint that they had correspondence from lawyers, and that he knew they had legal advice from their lawyers which gave him a basis for relying on what they told him. Mr Roberts' evidence was that after receiving the supplementary prospectus he knew there was a debate as to whether or not promissory notes had to comply with the requirements of the Corporations Act , the outcome of which would not be known until it was settled in court. Mr Roberts nevertheless was prepared to act upon the feedback from Westpoint, and endorse an investment in the offer of promissory notes. I accept that this evidence does not relate directly to the managed investment scheme issue. It does however indicate an approach taken by Mr Roberts, and one which indicates an endorsement for a product irrespective of a failure to comply with statutory requirements. At this time, Mr Roberts was relying on the advice of the Westpoint representatives. Wealthcare did not rely on the representations made in the PIR reports as to whether or not the Corporations Act applied to the Promissory Notes when making the recommendation to extend in November 2003. Returning then to the decision of Wealthcare to place the York Street and Market Street Promissory Notes on its notional approved product list and to make the various recommendations to Mr Pollard, Mr Roberts' evidence was that he relied on the alleged misrepresentations made in the PIR reports that the Promissory Notes were not required to comply with the Corporations Law requirements. It is my view that this evidence should not be accepted. In my view, even if Mr Roberts did read the PIR reports, he did not appreciate or attach any significance to the statements concerning the Corporations Law. I have come to the view that Mr Roberts' evidence was so unreliable and lacking in credibility that it does not provide a sufficient basis upon which Wealthcare can satisfy its burden of proof to prove reliance upon the alleged misrepresentations in the PIR reports. Therefore, I reach the conclusion that even if the alleged misrepresentations relied upon by Wealthcare were false, or PIR's conduct was misleading or deceptive, such were not a cause of the loss suffered by Wealthcare. The alleged misrepresentations played no part in any of the recommendations made by Wealthcare to Mr Pollard, from 2001 throughout to 2003. I come to this conclusion even accepting that the alleged representations (other than the presentation as to 'investment grade') are taken to be continuing throughout the period in which Wealthcare advised Mr Pollard. The above reasoning disposes of the proceedings in favour of PIR. I do not need to consider the effect of the terms of settlement and the principles in Unity Insurance Pty Ltd v Rocco Perzzano Pty Ltd [1998] HCA 38 ; (1998) 192 CLR 603. This question would only arise if PIR were otherwise liable to Wealthcare, and the requirements of Wealthcare in establishing its loss or damage needed to be considered. In coming to the view that Mr Roberts did not rely upon the alleged misrepresentations I am mindful of the comments made by the High Court in Campbell (2009) HCA 25 at [143] . The essential question is one of causation. It may be artificial to talk in terms of reliance in determining what would have occurred if the true position were known. Nevertheless causation and reliance are related concepts (see eg Heydon , Trade Practices Law (2008) vol 2 at [11.720]). In this proceeding, I have come to the conclusion that there was no causal connection between the alleged misrepresentations and the actions of Wealthcare, because there was no reliance in fact upon the alleged misrepresentations. Finally, I mention the operation of s 23B of the Wrongs Act relied upon by Wealthcare. Mr Pollard (who gave evidence on behalf of Wealthcare) did not say that he saw or relied upon the PIR Reports. Mr Roberts said he showed them to Mr Pollard. However, I am not satisfied on the balance of probabilities that Mr Pollard did see or rely upon the PIR reports. If he was shown them, Mr Pollard would have remembered that significant fact. I regard Mr Pollard as an honest and forthcoming witness. I do not accept Mr Roberts assertion that he showed Mr Pollard the reports. I have already indicated my assessment of the credibility of Mr Roberts. Therefore, Wealthcare has not established that PIR was directly liable to Dartberg because no reliance by Mr Pollard on the PIR reports has been proved. Wealthcare contended this would not matter, because Dartberg still suffered loss due to PIR's conduct, relying on the 'indirect causation' line of cases: see eg Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437 ; (1992) 37 FCR 526 and McCarthy v McIntyre [1999] FCA 784. It was contended that PIR's conduct was a cause of Dartberg's loss. There may be an issue as to the whether there is an inconsistency between the cases relied upon by Wealthcare and Digi Tech (Aust) Ltd v Brand [2004] NSWCA 58 at [147] - [160] , but this does not need further consideration. As Wealthcare did not rely on the alleged representations in the PIR report, no 'indirect causation' can arise. Put another way, it cannot be said that Wealthcare's reliance on the PIR reports was 'a cause' of Dartberg's investing because there was no reliance at all by Wealthcare to find any 'indirect causation'. The parties confer as to the appropriate order to make as to costs, and if no agreement can be reached, file and serve within 14 days any submissions as to costs. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | misleading or deceptive conduct, false or misleading representations, loss and damage, characterisation of representations, reliance on statements made, no causal connection between statements made and damage suffered . trade practices |
2 For convenience, in this judgment I shall continue to refer to the applicant in the substantive proceedings as "the applicant" notwithstanding that it is the respondent to the present notice of motion, and the respondents in the substantive proceedings as "the respondents". By order of Siopis J of 6 February 2007 the proceedings were transferred to the Brisbane Registry of the Court. 4 The applicant's claim arises out of one or more agreements between the applicant, in its capacity as trustee of the SDA Tarameo Unit Trust, and the respondents, for the purchase of four lots at the Hope Island residential development in Queensland, and alleged misrepresentations by the respondents as to the market value of those properties. The applicant alleges, inter alia , breach of s 52 Trade Practices Act 1974 (Cth) ("TP Act") by the first and second respondents, and seeks damages in the sum of $842,865.20 and an order that the relevant agreements be set aside. 5 I note that the first respondent also seeks declaratory relief against the applicant by way of cross-claim. 6 The first and second respondents filed a defence and cross-claim in these proceedings on 2 March 2007. No further progress was made on this file until 23 August 2007 when the first and second respondents filed this notice of motion seeking security for costs. 7 The notice of motion seeking security for costs came before me on 13 September 2007, however the matter was adjourned by consent in order to allow the respondents the opportunity to consider an undertaking offered by the applicant in settlement of the respondents' claim for security for costs, and supporting affidavit material served on the respondents that morning. When the matter returned before me on 8 October 2007 the parties informed me that the proposal of the applicant in settlement of the notice of motion for security for costs which was in the form of a Deed of Guarantee, had not been accepted by the respondents. (1A) Subsection (1) does not apply to a corporation that is an Aboriginal and Torres Strait Islander corporation. Note: Similar provision is made in relation to Aboriginal and Torres Strait Islander corporations under section 581-20 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 . (2) The costs of any proceeding before a court under this Act are to be borne by such party to the proceeding as the court, in its discretion, directs. (2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs. (3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given. (4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed. (5) This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the furnishing of security. The parties have not addressed the issue whether the content of the requirement to act judicially is different under s 56 to that under s 1335. In my view, it is not necessary for me to consider this issue separately. The only issue in contention is whether the Court should grant an order for security for costs in this case under either provision. 12 First, an affidavit sworn 22 August 2007 by Mr Michael Graham, solicitor, in which he deposes that he has been retained by McCullough Robertson, solicitors for the first and second respondents, to prepare an estimate as to future costs to be incurred, on a party and party basis, for the period up to and including the hearing of the substantive proceedings. Mr Graham is the principal of a legal costs firm "grahamcosts legal + forensic costs consultants". 14 The admissibility of Mr Graham's affidavit and the accuracy of his calculations are not in dispute. 15 Second, an affidavit sworn 23 August 2007 by Mr Russell Thirgood, partner at McCullough Robertson. In that affidavit Ms McDermott deposes that she caused the affidavits of Messrs Graham and Thirgood together with an unsealed copy of the notice of motion to be served on MacKinlays, the solicitors for the applicant, by prepaid express post sent on 28 August 2007, and a sealed copy of the notice of motion to be served on MacKinlays by pre-paid express post sent on 6 September 2007. 18 First, I gave leave for an affidavit sworn 13 September 2007 by Mr Julian Hosgood, solicitor at MacKinlays Solicitors, to be read in Court on 8 October 2007, subject to the original being filed by Mr Hosgood within two days of the hearing. I shall return to this objection later in the judgment. 20 Second, an affidavit sworn 5 October 2007 by Mr Alistair MacKinlay, principal of MacKinlays Solicitors, was filed in Court on 8 October 2007. The letter was annexed to the affidavit. • On 3 October 2007 Mr Hosgood sent McCullough Robertson under cover of an email a proposed Deed of Guarantee. That document was annexed to the affidavit. Although O 28 r 3 Federal Court Rules refers to matters the Court may take into account when considering an application for an order for security for costs under s 56 of the Federal Court Act, it is clear that the rule is not intended to be an exhaustive statement of the factors the Court may consider, nor does the rule limit the power of the Court under s 56 ( Bell 2 FCR at 2-3). That such applications should be brought promptly. That regard is to be had to the strength and bona fides of the applicant's case. 3. Whether the applicant's impecuniosity was caused by the respondent's conduct subject of the claim. 4. Whether the respondent's application for security is oppressive. 5. Whether there are any persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security. 6. Whether persons standing behind the company have offered any personal undertaking to be liable for the costs. 7. Is the party against whom security is sought in substance a plaintiff. Whether there are any particular discretionary matters peculiar to the circumstances of the case. The applicant pleads in its statement of claim that it did not complete the contracts because it was unable to raise the necessary funds. 2. The applicant has a paid up capital of $1.00. 3. The applicant has granted a fixed and floating charge over all of its assets to St George Bank Ltd to secure up to $6.56 million, and a fixed charge over a motor vehicle to BMW Australia Finance Ltd to secure in excess of $43,000. 4. The applicant owns no real property in Queensland, and although it is the registered proprietor of three real properties in Western Australia each of those properties is subject to a registered mortgage and two are subject to a registered caveat. 5. Property of which the applicant is the registered proprietor in Western Australia - the Canning Road Property - is held by the applicant on trust for the Success Development & Property Group Unit Trust. The applicant entered the relevant contracts the subject of its claim as trustee for a different trust, namely the SDA Tarameo Unit Trust. 6. The applicant is yet to meet a costs order made by Siopis J on 6 February 2007. 7. b) The applicant has not explained or identified the level of its indebtedness presently secured by each of the registered charges and mortgages identified by the respondent. c) The applicant has not explained the registered caveats over two of its real properties. 26 Submissions 1-6 were not disputed by the applicant. 27 In addition to this the respondents challenge the alleged value of property held by the applicant. I am informed by this document that on 15 April 2007, the total aggregate market value as complete of Canning Road Development was $4,775,000. In accordance with standard practice it is stated that this report is prepared for the addressee only and no liability for damages incurred by a third party using the whole or any part thereof will be accepted. This valuation has been prepared on specific instructions from Keith Amor for the purpose of establishing current market value. The report is not relied upon by any other person of for any other purpose. We accept no liability to third parties nor do we contemplate that this report will be relied upon by third parties. We invite other parties who may come into possession of this report to seek our written consent to them relying on this report. We reserve our right to withhold consent or to review the contents of this report in the event that our consent is sought. In summary, Mr Piggott submitted that in light of these issues, the probative value of the evidence as to value of the Canning Road Development was low and should not be admitted. The applicant clearly has substantial assets over liabilities and is in a position to pay an adverse costs order given that the respondents are seeking only $114,000. 2. The primary asset of value of the applicant, and from which it could satisfy a costs order, is the Canning Road Development which is held by the applicant on trust for the Success Development & Property Group Unit Trust. 3. The Trustee may give security for any such guarantee or indemnity by giving mortgages charges or other securities of any nature over any of the assets of the Trust or any part thereof. • As I also noted earlier, there is no dispute as to the reason for the failure of the applicant to complete the relevant contracts, the low paid-up capital of the applicant, the failure of the applicant to date to meet the costs order of Siopis J, the substantial securities given to financial services providers over both real and personal property of the applicant, the absence of real property in Queensland, and the fact that what seems to be the primary assets of the applicant are held by the applicant on trust for an entity which appears to have no interest in this litigation. • No evidence has been produced by the applicant as to the value of assets, if any, held by the applicant in its own right or on trust for any entity which has an interest in this litigation, including the SDA Tarameo Unit Trust. • Even assuming that the Canning Road Development would be available to satisfy an order for security for costs, at present, there is no satisfactory evidence before the Court as to the value of that property. In my view, to accept the evidence in the "Executive Summary Valuation" annexed to Mr Hosgood's affidavit would unfairly prejudice the respondents. I uphold the objection of Mr Piggott as to the admissibility of both para 4 and annexure JOH-01 of Mr Hosgood's affidavit. o Even if the "Executive Summary Valuation" was prepared by a person with specialised knowledge within the meaning of s 79 Evidence Act , the disclaimers in the document are such that not only is it clear that the document was not prepared with a view to it being relied on by the applicant in litigation, it appears that the author of the document specifically disqualified the document from such use. The Court has a general discretion to exclude evidence under s 135 Evidence Act where its probative value is substantially outweighed by the danger that it might be unfairly prejudicial to a party, or be misleading or confusing, or cause or result in undue waste of time. The fact that the "Executive Summary Valuation" is relied upon by the applicant as evidence, in circumstances where the person who prepared the report did not appear to appreciate that the document would be the subject of such use, in my view strongly militates in favour of its exclusion as evidence under s 135: cf Campbell J in United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2003] NSWSC 870 at [15] . o Finally, I note that the "Executive Summary Valuation" does not comply with the Guidelines for Expert Witnesses in Proceedings in the Federal Court of Australia issued 6 June 2007, or its predecessor the Guidelines for Expert Witnesses in Proceedings in the Federal Court of Australia issued 11 April 2007. While I note that the guidelines are not intended to address all aspects of an expert witness's duties, they are clearly intended to assist expert witnesses prepare reports which avoid the criticism that the expert lacks objectivity. In this case, it is clear that no consideration has been given by the person who prepared the document as to Guidelines, or their duty to the Court. The onus of persuading the court that an award of security for costs should be made lies on the party seeking the order: CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 at 284---285, Cherry v Read (unreported, Black CJ, Sackville and Finn JJ, 21 November 1996 at 8). 33 In my view the circumstances of this case are such that it is appropriate that an order for security for costs be made. In forming this view I note the findings I have already made, and a number of issues raised by Mr Hosgood in relation to the Deed of Guarantee proposed by the applicant by way of settlement of the respondents' notice of motion. As discussed at court, please provide us with the exact terms of the guarantee that your client is willing to provide with respect to costs. Once we have this confirmation from your client, we will take our client's instructions immediately. The letter clearly requests that the applicant provide the terms of the guarantee proposed by the applicant, and indicates that Mr Thirgood will then seek instructions from his client. • The four criteria listed in Mr Thirgood's letter are, at best, suggestions as to some terms which could make a proposed guarantee acceptable to the respondents. They are clearly not an exhaustive list of terms, inclusion of which in a guarantee would unambiguously satisfy the respondents. • Although the parties were continuing to negotiate the possibility of settlement of the claim for security for costs until the business day prior to the hearing of 8 October 2007, in my view this fact is not relevant to the exercise of my discretion concerning consideration of an order for security for costs. No reference is made in the document to the entity on whose behalf the applicant entered into agreements with the respondents - indeed, the document simply states that the applicant issued proceedings against the respondents in the Federal Court. 39 The document bears some characteristics of guarantee however in that, as is clear from Mr Hosgood's submissions, the proposal of the applicant was that assets of one Unit Trust be committed as security for the costs of the applicant as trustee of another Unit Trust. The submission of Mr Hosgood with respect to cl 12.1(d) of the Unit Trust Deed of the Success Development & Property Group Unit Trust supports the applicant's contention that the document is a guarantee. 40 However in my view, even assuming that the document is a guarantee as a matter of law, in the absence of supporting evidence or authority I am not prepared to accept that cl 12.1(d) empowers the applicant to either assume an obligation or give a guarantee --- binding the assets of the Success Development & Property Group Unit Trust --- of a substantial sum as security for the costs of the applicant in its capacity as trustee for another Unit Trust in litigation in which, prima facie , the beneficiaries of the Success Development & Property Group Unit Trust have no interest. Irrespective of any commonality of trusteeship, I am not persuaded that the broad terms of the power vested in the applicant by cl 12.1(d) permit the applicant to act in potential disregard of the interests of the beneficiaries of the Success Development & Property Group Unit Trust (cf, by analogy, Walker v Wimborne [1976] HCA 7 ; (1976) 137 CLR 1). Indeed although the proposed Deed of Guarantee, annexed to the affidavit of Mr MacKinlay, contains a statement that the applicant is "entitled to be indemnified out of the trust property of the SDPG Unit Trust for any liability which (sic) incurs (sic) behalf of the trust", it contains no reference to the applicant being entitled on behalf of the Success Development & Property Group Unit Trust to enter this transaction, and be indemnified out of that property for liabilities arising out of this transaction. 41 If the respondents sought to enforce payment of security for costs against the applicant, the respondents would have a claim against the applicant, which presumably would then claim a right of indemnity out of the trust assets of the Success Development & Property Group Unit Trust. This assumes, of course, that the applicant's liability was properly incurred in the affairs of the trust (cf comments of McPherson J in General Credits Ltd v Tawilla Pty Ltd (1984) 1 Qd R 388 at 390, followed by White J in Westpac Banking Corporation v Garrett [2004] SASC 265 at [27] ). As I have already discussed, it is uncertain in this case whether the liability of the applicant would be properly incurred on behalf of the Success Development & Property Group Unit Trust, such as to entitle the applicant to a right of indemnity. 42 In any event, in relation to this Deed of Guarantee, I am further disinclined to exercise my discretion in favour of the applicant where this Court has previously indicated that a personal guarantee given in satisfaction for security for costs is acceptable in only exceptional circumstances: Sunstate Orchards Pty Ltd v Citrus Queensland Pty Ltd [2006] FCAFC 93 , cf Jianshe Southern Pty Ltd v Get Motor Cycles Pty Ltd (formerly Turnbull Cooktown Pty Ltd) (No 3) [2007] FCA 1078 at [30] - [31] . The applicant has demonstrated no circumstances in this case justifying the acceptance of a personal guarantee as distinct from a cash payment or a bank guarantee. The applicant in these proceedings provide security for the costs of the first and second respondents of these proceedings up to the end of the first day of trial in the amount of $114,120.63, by way of payment into Court or unconditional bank guarantee in that sum or otherwise to the satisfaction of the District Registrar of the Queensland District Registry of the Court. 2. The proceedings, so far as it is brought by the applicant, be stayed until the applicant has complied with the order in para 1 or until further or other order of the Court. 3. Notwithstanding the order in para 2, if the applicant does not comply with the order in para 1 within three months of the date of these orders the claim of the applicant is dismissed with the applicant to pay the first and second respondents' costs of and incidental to the claim. 4. The costs of the first and second respondents of and incidental to the notice of motion filed on 23 August 2007 be costs of the first and second respondents in the proceeding. | security for costs s 1335 corporations act 2001 (cth) and s 56 federal court of australia act 1975 (cth) whether applicant could meet a costs order to pay the respondents' costs consideration of nature of assets and position of applicant relevance of "deed of guarantee" offered by applicant in an attempt to satisfy security for costs claim whether applicant empowered to give a guarantee committing assets of a unit trust with no apparent interest in this litigation relevance of settlement discussions to exercise of judicial discretion costs estimate not disputed evidence evidence as to valuation of properties valuation report clearly not prepared for use in court proceedings lack of evidence as to specialised knowledge of report's author non-compliance with the guidelines for expert witnesses in proceedings in the federal court of australia practice and procedure practice and procedure |
2 A fourth matter was sought to be raised by way of a Notice of Motion filed by the Fifth Respondent on 31 July 2008 seeking to set aside part of a Notice to Produce served by the Applicants upon the Fifth Respondent. Documents pursuant to that Notice to Produce were produced on 24 July 2008. When such documents as were produced were made available, neither the Court nor the Applicants were told that there were additional documents which, it was later said, also fell within the terms of one of the Subpoenas presently sought to be set aside by the Fifth Respondent and that those documents were being withheld. A notice to produce has the same coercive effect as a subpoena: Federal Court Rules , O 33 r 12; Seven Network Ltd v News Ltd (No 11) [2006] FCA 174 at [4] per Sackville J. The procedure to be followed when there is a " call " upon a notice to produce has been long-settled: Glass H (ed), Seminars on Evidence (1969) at 12---18. If documents which fall within a notice are not produced, it is incumbent upon those who have been served with such a notice to unequivocally identify those documents and the reason for their non-production. 3 All other outstanding Motions in the proceeding are to be heard on 11 August 2008. The First Respondent's Notice of Motion filed 31 July 2008 can also be heard on that date. The intent in resolving all outstanding interlocutory matters as quickly as possible is self-evidently to facilitate a final hearing at the earliest possible date. This proceeding has already taken far longer to resolve than is desirable -- or necessary, given the issues in dispute. It is hoped that on 11 August 2008 dates for the final hearing can be fixed for later this year. The First, Second and Fourth Respondents are to file and serve any Affidavit and submissions as to why an order for the payment of the Applicants' costs to date on an indemnity basis payable forthwith should not be made for any particular period from the commencement of this proceeding to date, by 5:00pm on 8 April 2008. 13. If the First, Second and Fourth Respondents do not file and serve an Affidavit and submissions in accordance with Order 12, the First, Second and Fourth Respondents are to pay the Applicants' costs to date on an indemnity basis with such payment to be made forthwith. By way of supplementary written submissions dated 1 August 2008, the Applicants indicated that they no longer pressed for an order that costs be paid " forthwith ". 6 A very broad overview of the conduct of the proceeding to date is as follows. 7 The Application and Statement of Claim were first filed on 5 October 2006. Thereafter, and without detailing each event, a Defence was filed on behalf of the First, Second and Fourth Respondents in February 2007. A Reply to that Defence was filed by the Applicants in April 2007. An Amended Defence was filed by those Respondents on 7 August 2007. An Amended Application and an Amended Statement of Claim were filed in October 2007. A Further Amended Defence was then filed by the First, Second and Fourth Respondents in April 2008. A Further Amended Application and a Further Amended Statement of Claim were subsequently filed in April 2008. 8 The proceeding has been the subject of numerous directions hearings dating from those before His Honour Justice Conti in 2006, those before His Honour Justice Gyles in 2007, and those conducted thereafter. 9 Declaratory and injunctive relief was finally entered against the First, Second and Fourth Respondents on 2 April 2008. 10 The discretion in respect to costs conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) unquestionably extends to a power to order that costs be paid on an indemnity basis. I will not refer to the various judicial formulations to date of the grounds on which it is proper to award costs on an indemnity basis. It suffices that I acknowledge that the circumstances must be "special", must take the case out of the "ordinary" category of case, and must involve behaviour associated with the conduct of the proceeding by the person sought to be made liable which is so unreasonable as to make it unjust that the other party should be limited in its recovery to party and party costs. 12 A review of the materials as filed discloses that the First, Second and Fourth Respondents initially put in issue all aspects of the Applicants' case. They thus disputed (for example) whether the films in issue were " cinematograph film [s]" and the subsistence of copyright in those films and ownership of copyright. These matters were the subject of some admissions on 7 August 2007, but it was only on 2 April 2008 that orders for declaratory and injunctive relief were made by consent. 13 Any order as to costs is not a precise science and inevitably involves matters of judgment and discretion. It is not possible with mathematical precision to isolate that point of time when matters which previously were put in issue should thereafter have been abandoned or admitted. And, even if an approximate time could be so isolated, there must be some flexibility to permit a party seeking to change its position time within which to reflect upon its position and obtain advice. A respondent is entitled to be given some time to assess whether an applicant can indeed make out a case. To adopt any other approach may be to discourage parties from properly reconsidering their position and instead persevering in a previously committed but unmeritorious approach. 14 In the present proceeding, having considered the submissions of the parties, it is not considered that an order should be made that the First, Second and Fourth Respondents pay the costs of the Applicants on an indemnity basis for the period up to 7 August 2007. Prior to that date, it is not considered that those Respondents engaged in any conduct sufficiently egregious to warrant an indemnity costs order. The Amended Defence filed on 7 August 2007 made some admissions -- for example, it " partly " admitted copyright infringement, but did not identify those works in respect to which that admission was made. 15 But it is considered that the First, Second and Fourth Respondents thereafter did continue to put in issue matters which properly should have been the subject of admissions made at an earlier point of time. It may be arguable that even prior to 7 August 2007 those Respondents properly should have more clearly focussed upon the admissions which it was appropriate to make. Although there is no mathematical certainty in fixing that point of time, it is considered that certainly as from 7 August 2007, those Respondents should pay costs on an indemnity basis up to and including 1 April 2008. A Defence was first filed on 22 February 2007. The course to be charted by those Respondents was thereafter considered and their Amended Defence was filed in August 2007. Even if not prior to 7 August 2007, from that date onwards it is not considered that there was any concerted effort on the part of the First, Second and Fourth Respondents to have such outstanding issues as they considered in need of resolution properly prepared for hearing. 16 No costs order should be made, as sought by the Applicants, that those Respondents pay costs on an indemnity basis for the entire period from 23 February 2007 to 20 January 2008. 18 It was on 2 April 2008 that the declaratory and injunctive relief was made. Other matters addressed on that day concerned issues as between the Applicants and the Fifth Respondent. The Applicants seek an order that the First, Second and Fourth Respondents should pay 1/3 of their costs of that day. Such an order is appropriate and should be made. 19 Prior to the revised position of the Applicants being communicated on 1 August 2008, that left outstanding the question as to whether any costs should be ordered to be paid forthwith. Notwithstanding that revised position, the principles relevant to the discretion to make an order that costs be paid forthwith nevertheless remain of relevance. 20 The power to make an order that costs be paid " forthwith " is that conferred by O 62 r 3(2) of the Federal Court Rules . (2) Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded. (3) An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order. 21 In Spotwire Pty Ltd v Visa International Service Association (No 2) [2004] FCA 571 Bennett J summarised the principles to be applied when considering an application that costs be paid forthwith. However, O 62 rule 3(3) contemplates that, in certain circumstances, the general principle can be varied, as a matter of the court's discretion. • The exercise of the discretion should only be exercised where the interests of justice in the particular case require a departure form the general practice. • The discretion should be exercised in favour or [sic] a party who establishes that the demands of justice require that there be a departure from what appears to be the general practice envisaged by the rule. • One consideration is the length of time that the proceedings will conclude, in the ordinary course of events. • Where costs are sought in respect of a successful strike out application, the fact that the unsuccessful party failed to remedy defects despite clear notice of those defects, may make appropriate immediate taxation and payment. • Costs incurred by reason of an ill-considered pleading may give rise to an exception to the principle that the costs await the final resolution of the issues between the parties. • In ordinary circumstances, it would be inappropriate that an unsuccessful party in an interlocutory proceeding be required to pay costs immediately, since that party might ultimately be entitled to an order for costs in the substantive proceeding. 22 The making of declaratory and injunctive orders on 2 April 2008 unquestionably brought that aspect of the claims for relief as against those Respondents to an end. Left to be resolved was a determination of damages. 23 Even though declaratory and injunctive relief has been granted already, it is not considered that an order would have been made that such costs as are to be paid should be paid forthwith. The conduct of the litigation to date has certainly not been characterised by any degree of expedition; but the hearing of the balance of the proceeding and the resolution of all outstanding issues, it is anticipated, can be accommodated at a comparatively early date: cf Australian Securities and Investments Commission v Mining Projects Group Ltd (No 3) [2008] FCA 952 at [24] per Gordon J; Smart Co Pty Ltd v Clipsal Australia Pty Ltd [2008] FCA 1008 at [43] per Lander J. In such circumstances it is not considered that there should be a departure from the general principle that costs should be payable when the rights of the parties -- including any liability in damages -- are finally determined. 24 In abandoning their application that costs should be paid " forthwith ", the Applicants in their written submissions, dated 1 August 2008, contend that the Court should " take into account the applicants' decision as a factor in determining the relevant periods for which costs should be made payable on an indemnity basis " . It is not at all self-evident that such a " trade-off " is appropriate. Those principles by reference to which an indemnity costs order may be made are necessarily different from those guiding the discretion when ordering that costs be payable forthwith. But, even if it were proper to merge those considerations, no different decision would have been reached in the present proceeding. 25 It is only at the conclusion of a proceeding that a view can finally be reached as to the conduct of the parties and the manner in which the litigation has been progressed. Adverse inferences and tentative views which may have seemed justified at an earlier point of time may well be answered when all of the evidence has been considered. 27 Simpsons Solicitors were retained by the Fifth Respondent, Mr Elias Armenis, in October 2007. Prior to that time, Mr Armenis retained Tzovaras Legal Solicitors. Jordan Djundja Lawyers act for the First, Second and Fourth Respondents. 28 A Notice of Motion dated 30 June 2008 has been filed on behalf of the First, Second and Fourth Respondents seeking to have the Subpoena addressed to Jordan Djundja Lawyers set aside in its entirety. All Documents that constitute, record, or evidence the identity of any person providing directions or instructions to Jordan Djundja Lawyers in respect of the conduct of the Proceeding. 7. All Documents that constitute, record, or evidence any communications between Jordan Djundja Lawyers on the one hand and Elias Armenis or any person purporting to act on behalf of Elias Armenis, including without limitation Tzovaras Legal and Simpsons Lawyers, on the other in respect of the Proceeding. 8. All Documents that refer or relate to the creation, or possible creation, of the affidavit of Jordan Kiriakidis sworn 22 April 2008, including without limitation any instructions or directions given by or to Simpsons Lawyers or any barrister in respect of the creation of the affidavit. All Documents that constitute, record, or evidence any communications between Simpsons Lawyers on the one hand and the PCA Respondents or any person purporting to act on behalf of any of them (including without limitation Jordan Djundja Lawyers, Tzovaras Legal or any other firm of solicitors or barrister), on the other, in respect of the Proceeding. 3. All Documents that refer or relate to the creation, or possible creation, of the affidavit of Jordan Kiriakidis sworn 22 April 2008, including without limitation any instructions or directions given by or to Simpsons Lawyers or any barrister in respect of the creation of that affidavit. 4. All Documents that constitute, record, or evidence payments made to Simpsons Lawyers or any other firm of solicitors or barrister, by any person in respect of work undertaken by Simpsons Lawyers, or any other firm or solicitors or barrister, in respect of the Proceeding. All Documents that constitute, record, or evidence any communications between Tzovaras Legal on the one hand and the PCA Respondents or any person purporting to act on behalf of any of them (including without limitation Jordan Djundja Lawyers, Simpsons Lawyers, or any other firm of solicitors or barrister), on the other, in respect of the Proceeding. 3. All Documents that constitute, record, or evidence payments made to Tzovaras Legal or any other firm of solicitors or barrister, by any person in respect of work undertaken by Tzovaras Legal, or any other firm of solicitors or barrister, in respect of the Proceeding including the Tzovaras Invoice. 33 The issues sought to be resolved by all Respondents can satisfactorily be addressed by considering these paragraphs. Each of these contentions should be separately addressed. 35 The Applicants contend that the Subpoenas do serve a legitimate forensic purpose. As an adjunct of an order that the First, Second and Fourth Respondents should pay the costs of the Applicants, the Applicants seek by way of a Notice of Motion dated 18 June 2008 a further order that those costs be paid by the Fifth Respondent. The basis for seeking such an order is that it is contended that the Fifth Respondent is the person who in substance is controlling the present litigation on behalf of all Respondents. The report of Ms Conoulty sets forth 11/2 pages of the assumptions made, including an assumption that the description of expenses set forth in an earlier Affidavit are correct. 37 Senior Counsel for the Fifth Respondent denies that any inference should be drawn that the Fifth Respondent is controlling the litigation and denies that the Affidavit dated 22 April 2008 is in substance a " collaborative " attempt to thwart such success as the Applicants may ultimately have in the proceeding. Senior Counsel further submits that relevant to a consideration as to whether the Subpoenas should be set aside is a further consideration, namely the inappropriateness of now making any order that the Fifth Respondent pay the costs of the Applicants. Whether or not any such order should be made, he contends, should be resolved at the conclusion of the proceeding and not as part of an order for costs made before findings are ultimately made as to the role in fact played by the Fifth Respondent. If such an order is not appropriate to be made now, Senior Counsel contends that there is no legitimate forensic purpose in now seeking the production of documents. They may become relevant later; but not now. 38 When considering whether or not a subpoena has been issued for a legitimate forensic purpose, it is sufficient if the material sought to be subpoenaed has some " apparent relevance to the issues in the principal proceedings " that is " adjectival ": Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 103 per Beaumont J. Relevance which is purely " speculative " will not suffice: Mandic v Phillis [2005] FCA 1279 at [36] , [2005] FCA 1279 ; 225 ALR 760. His Honour enumerated two questions to be asked (at ALR 103 of his reasons for judgment): (1) Does the material sought have an apparent relevance to the issues in the principal proceedings, that is, is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? This involves a consideration of the matter from the standpoint of [the issuing party]. (2) Is the subpoena seriously and unfairly burdensome or prejudicial? This is to look at the matter from the point of view of [the party subpoenaed]. [36] His Honour (at ALR 103) referred to the meaning of "apparent relevance" in the following terms: The test of adjectival relevance is satisfied if the material has apparent relevance. In my opinion, the documentation called for here could possibly throw light on the issues in the main case. In my opinion, adjectival relevance is established. In Kimberley Homes at 115---16, Hill J referred with approval to Beaumont J's test for relevance and emphasised that it was not necessary for the court to determine whether the documentation or material, the subject of the subpoena, would be admissible in any final hearing of the proceedings. Although it is not necessary for the material to meet the standards of relevance required of evidence adduced at trial, Hill J considered that it was appropriate to have regard to the issues in dispute, as they appeared in the pleadings. In Cosco Holdings Pty Ltd v Cmr for Taxation (1997) 37 ATR 432 , Spender J also considered Beaumont J's test of "adjectival relevance" and explained it (at 439) as follows: Notwithstanding the use of the word "possibly" in this paragraph, in my opinion, that word is not used in any speculative sense. I take his Honour's conclusion expressed in that paragraph as an acquiescence to the correctness of the submission that the material sought could reasonably be expected to throw light on some of the issues in the principal proceedings. It is not a question of looking at the documents to see if the documents might permit a case to be made. As is the case presently before the court, Spender J was there concerned with a submission that a request for documents (contained in a summons) amounted to merely a "fishing expedition". 39 It is not considered that any of the Subpoenas or any part of the Subpoenas should be set aside upon the basis that there is no legitimate forensic purpose. That forensic purpose is to pursue the question as to whether the Fifth Respondent is in substance the person behind the litigation and the person in control of the litigation. That is both an issue raised by the Particulars of Further Amended Statement of Claim and relevant to the Notice of Motion of the Applicants seeking that the Fifth Respondent pay such costs as have been ordered as against the First, Second and Fourth Respondents. Whether or not such an order will be made, and whether consideration should be given to making such an order (if at all) only at the conclusion of the proceeding, such questions provide no reason why the Subpoenas should be set aside now as having been issued for no legitimate forensic purpose. 40 The other bases upon which it is contended that the Subpoenas or particular parts of the Subpoenas should be set aside are also rejected. 41 In respect to the Subpoena to Jordan Djundja Lawyers, paragraphs [2], [7] and [8] are considered to be directed to the question as to who is the person controlling the litigation. So construed, the use in paragraph [8] of the phrase " without limitation " does not make the Subpoena oppressive. If there is a claim (for example) for privilege in respect to those documents or parts of those documents which otherwise fall within the ambit of those provisions, that claim may be advanced. 42 A like comment may be made in respect to paragraphs [2], [3] and [4] of the Subpoena directed to Simpsons Solicitors. Paragraph [3] of that Subpoena employs the language of documents " that refer or relate to " a particular document -- as does paragraph [8] of the Subpoena to Jordan Djundja Lawyers. Again, properly construed, it is not considered that those paragraphs are oppressive. The use of the phrase " relating to " in a subpoena does not necessarily mean that the subpoena has been drafted too widely or is otherwise oppressive: cf Lucas Industries Ltd v Hewitt (1978) 45 FLR 174 at 192 per Smithers J. Paragraph [3] of the Simpsons Solicitors Subpoena , when read in its entirety, is confined to the circumstances in which the Affidavit of Mr Kiriakidis of 22 April 2008 was sworn. The confined nature of the documents required to be produced in answer to paragraph [3] is not rendered oppressive by reason simply of the use of phrases such as " relating to " or " without limitation ". The use of those phrases is in a context where the person upon whom the Subpoena has been served is not required to form a view as to whether other documents " relate to " a particular subject-matter (cf Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 573 per Jordan CJ); the task is confined to locating those documents " relating to " a particular document. It all depends on the context in which the expression is used. For instance, it could hardly be said to be objectionable to require a person to produce all "invoices" relating to sales of a particular item to the defendant on a particular day. The use of the word "invoices" would restrict the potential width of the expression "relating to". Similarly, in American Express Warehousing Ltd v Doe [1967] 1 Lloyd's Rep 222, the Court of Appeal held that a requirement to produce the "contract slips" and "quote slips" relating to each of a number of insurances was not objectionable. A much more complicated set of circumstances in which use of the expression "related to" was held not to be objectionable appears in the decision of the Federal Court of Australia in Lucas Industries Ltd v Hewitt (1978) 45 FLR 174; 18 ALR 555. 44 It is not without relevance to note that no affidavit was filed in support of any contention that the documents sought to be produced by any of the Subpoenas could not readily be located and produced if required. The position advanced on behalf of the Respondents in seeking to have the Subpoenas set aside either in whole or in part sought refuge in the form in which those Subpoenas had been drafted -- as opposed to any difficulty in compliance. 45 It is also of relevance to note that the Subpoenas were not addressed to persons who may have no knowledge of the issues to be pursued in the proceeding; they were addressed to the very solicitors who act for (or previously acted for) one or other of the Respondents. 46 No claim for privilege was made in respect to those documents which merely recorded (for example) the fact of payments by the Fifth Respondent or documents which simply recorded trust account records of payments of legal fees by the Fifth Respondent or cost agreements. Such a concession was rightly made both by Counsel for the First, Second and Fourth Respondents and by Senior Counsel for the Fifth Respondent. See: Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (1994) 126 ALR 58 at 67---8 per Tamberlin J; Cook v Pasminco Ltd (No 2) [2000] FCA 1819 at [45] ---[48], [2000] FCA 1819 ; 107 FCR 44 at 52---3 per Lindgren J; Allen Allen & Hemsley v Deputy Commissioner of Taxation (NSW) [1989] FCA 125 ; (1989) 20 FCR 576 at 583---4 per Bowen CJ and Fisher J. 47 If there is to be a claim for confidentiality or legal professional privilege in respect to particular documents, such a claim should have been made at the same time as the hearing of the present Motions. But if there is to be any such claim, it should be made forthwith. 48 The Notice of Motion of the First, Second and Fourth Respondents dated 30 June 2008 and the Notice of Motion of the Fifth Respondent dated 1 July 2008 are dismissed. The making of those orders had previously been mooted over some period of time. Ultimately there was no opposition to those orders and they were made by consent. In issue was the adequacy of the discovery previously provided. 50 Notwithstanding the circumstances in which the orders were made, on 14 July 2008 the unusual course of permitting cross-examination was again raised with Counsel for the Applicants and, more relevantly, Counsel for Mr Kiriakidis. Reference was made to the observations of Menzies J in Mulley v Manifold [1959] HCA 23 ; (1959) 103 CLR 341. Counsel for Mr Kiriakidis requested, and was granted, a short adjournment to obtain further instructions in light of reference being made to the unusual course being pursued. The cross-examination thereafter continued without any submissions being advanced on his behalf. As events unfolded, it was probably the only effective means whereby the Applicants could have exposed what they believed were inadequacies in the existing discovery as provided particularly by the Fourth Respondent. As a result of the cross-examination, the Applicants were proved right. An order requiring a further affidavit to be filed in respect to particular documents, without knowledge of the manifest deficiencies in the existing discovery, may well have proved as ineffective as the discovery previously provided. 51 At least two observations need to be made. 52 First, some evidence given during cross-examination was that documents had been destroyed. Mr Kiriakidis explained his concern as to whether or not the business was illegal and that he did not want records being maintained in such circumstances. Whether or not there was a basis for those concerns was not an issue pursued by Counsel for the Fourth Respondent during his cross-examination. It is a matter, however, which it is expected will emerge as an issue to be resolved at the final hearing. 53 That evidence prompted a series of questions in cross-examination directed to identifying who else may have retained copies of the documents destroyed. Concern was raised as to whether such a course of cross-examination was permissible -- the concern was whether or not cross-examination should be confined to determining whether the person giving discovery had in his possession further documents not already discovered, or whether it could be extended to identifying those persons who may have had copies of such documents or those persons over whom the person required to give discovery had some element of control. 54 Initially, questions in cross-examination directed to identifying who else may have retained copies of the destroyed documents were rejected or (at the very least) discouraged -- but the issue was revisited when cross-examination resumed on 15 July 2008. The cross-examination continued without the issue being resolved. 55 The question as to whether such cross-examination was permissible need not thus now be resolved. But what should be resolved is whether any order can now be made requiring Mr Kiriakidis to disclose those persons to whom he gave copies of the documents otherwise destroyed or documents which were for some reason not destroyed pursuant to the instructions he had given. That rule would permit an order to be made requiring Mr Kiriakidis to file an affidavit setting forth what has become of a document which was once in his possession, custody or power where such a document was copied and forwarded to someone else, even if the copy or the original of the document that remained in his possession, custody or power was later destroyed. It may be compliance with such an order for Mr Kiriakidis to depose to the fact that a document came into his possession, was not copied, and was destroyed; if the document, however, was copied, such an order would require him to set forth " what has become " of that copy. Compliance, it is considered, would extend to setting forth the identity of the person or persons to whom a copy was sent. Mr Kiriakidis was reluctant to do so when being cross-examined. It would only frustrate the utility of r 8 if it were to be construed as only requiring a party to state that he had forwarded it to an unnamed person. In those circumstances where a party may be at his most uncooperative, r 8, if it were to be so confined, would be found to be most lacking in any real utility. For the purposes of the present application it has not been necessary to determine why such documents were not discovered or why such inquiries were not made. It has not been necessary for present purposes to inquire into the circumstances in which such discovery as has been provided was verified. The focus of the present application was simply to consider whether an order should be made to ensure that proper discovery is now given by the Fourth Respondent. 57 The manner in which the previous discovery obligations were discharged remains, however, a matter of grave concern. Whatever deficiencies may have occurred previously, the solicitors representing the Fourth Respondent should ensure that they are not repeated. 58 An order should be made for further discovery as against both the First and Fourth Respondents. It remains a matter for those advising Mr Kiriakidis to give such advice as is considered appropriate as to whether any claim for privilege may or should be made. 59 At the conclusion of the cross-examination on 15 July 2008 the parties were invited to draft orders identifying those documents in respect to which the parties considered that an order for further discovery should be made. Proposed orders were provided on 24 July 2008. It is considered that orders should be made substantially giving effect to that draft. It is also considered that an Affidavit should be filed by the Fourth Respondent in accordance with O 15 r 8 in respect to those documents identified in Schedule B to the orders to be made. 2. The Notice of Motion as filed by the First, Second and Fourth Respondents dated 30 June 2008 be dismissed. 3. The Notice of Motion as filed by the Fifth Respondent dated 1 July 2008 be dismissed. 4. 5. In respect to those documents identified in Schedule B to these orders, the Fourth Respondent is to file and serve an Affidavit stating whether any document or documents there identified have been in his possession, custody or power and, if it is not now in his possession, custody or power, when he parted with it and what has become of it. 6. Liberty is reserved to the First and Fourth Respondents to vary the form of Orders 4 and 5, any such application to be made on 11 August 2008. 7. Costs of and incidental to the hearing on 14 and 15 July 2008 be reserved. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | setting aside subpoenas legitimate forensic purpose oppressiveness " relating to " costs on an indemnity basis costs payable " forthwith " cross-examination on affidavit as to discovery order for discovery practice and procedure |
2 The first of those appeals has some curious aspects. It is therefore helpful to set out something of the background to the appeals before identifying the decisions now challenged. 3 The applicant has been employed in the Department of Defence since 1991, and since 1996 in the in-house information technology support organisation (now known as Science Corporation Information Systems) of the Defence Science Technology Organisation within the Department. He is at the level known as Science and Technology, Level 4 (the general equivalent of an APS 6 position). His duties have included, and include, all levels of UNIX systems support. 4 On 14 November 2001 the applicant claimed compensation under the Safety Rehabilitation and Compensation Act 1988 (Cth) (the SRC Act) due to pain which he was experiencing in both his forearms and wrists. On 11 December 2001, the respondent accepted liability for those symptoms in respect of the injury which it described as 'synovitis and tenosynovitis (bilateral)' under s 14 of the SRC Act. I shall call that injury 'the accepted injury'. 5 The determination at the time indicated that medical treatment claims resulting from the accepted injury up to 5 February 2002 would be paid and that incapacity for work from the accepted injury up to 14 November 2001 would be paid. An occupational therapist also arranged modifications to the applicant's work place and working systems. His symptoms nevertheless persisted during 2002 and he required ongoing medical supervision and treatment. 6 On 24 September 2002, the applicant was examined by Dr Awerbuch, a rheumatologist, at the request of the respondent. Dr Awerbuch reported to the respondent on 25 September 2002. Subsequently, on 10 October 2002 the respondent through a delegate informed the applicant that it intended to determine that compensation including medical expenses would not be payable in respect of the accepted injury on and from 7 November 2002. 7 That prompted the applicant's general practitioner, Dr Rositano, to take up the applicant's condition with the respondent. Dr Rositano had communicated with the respondent from time to time previously and had had his medical accounts paid. On 26 November 2002 Dr Rositano wrote a further letter to the respondent in which he joined issue with the views of Dr Awerbuch, and indicated that the accepted injury continued to be suffered by the applicant although he was coping with full-time modified duties and had improved significantly. This attitude by Comcare can only cause him more stress and potentially worsen his condition. On 4 December 2002, a delegate of the respondent decided that on and from 3 December 2002 the respondent was 'no longer liable to pay compensation for your claim under any provision of the Act'. The applicant was notified of that decision by letter of that date, including reasons for the decision. On 28 February 2003, the decision of 4 December 2002 was affirmed upon internal review. Reasons for that decision also were given. The reasons point out that the determination of 4 December 2002 amounted to a finding that the effects of the compensable condition (the accepted injury) had ceased and so there had ceased to be an entitlement to compensation on and from 3 December 2002. It also pointed out that the determination of 4 December 2002 did not revoke the initial determination of 11 December 2001 that the applicant had suffered the accepted injury. 9 I will call the decision of 4 December 2002 'the first decision'. 10 The applicant had the first decision reviewed by the Tribunal. He claimed in his application to the Tribunal that he continued to suffer from the accepted injury and that he was entitled to income maintenance payments as a result. He adduced evidence to the Tribunal of ongoing symptoms during 2003. He underwent a range of treatments during 2003. During that year, he told the Tribunal, his pain had radiated into his upper arms, his biceps and his shoulder regions. He nevertheless kept working, and managed to do so with the assistance of voice recognition software, and a modified keyboard and mouse. 11 The Tribunal set aside the first decision. The Tribunal itself appears to have had some difficulty in understanding what it was that the applicant wanted the Tribunal to do. He had given evidence of ongoing treatment, and therefore ongoing expenses, during 2003. He had given evidence of ongoing disability and symptoms during 2003. He had given evidence that those symptoms had extended from his lower arms to his upper arms and shoulders. He had led evidence of certain medical tests carried out during 2003 or 2004 to confirm an organic pathology for the symptoms in his upper arms. Nevertheless, the applicant before the Tribunal appears to have contended that the first decision was invalid because it purported to revoke the liability which had been accepted under s 14 of the Act in respect of the accepted injury otherwise than by the review process under s 62 of the Act. The Tribunal also understood the applicant to have argued before the Tribunal that the respondent could not have determined, in the first decision, that liability to pay compensation in respect of the accepted injury had ceased because it did not have a claim for compensation before it. That was not the basis of review which was specified in the application before the Tribunal. Nor is it consistent with the material the applicant submitted to the respondent following the respondent's letter of 10 December 2002, including the further report of Dr Rositano in which Dr Rositano asserted his intention to continue to treat the applicant as the applicant required and to have his accounts paid by the respondent. 13 That is the matter which gives rise to the first question of law said to flow from the Tribunal's decision in relation to the first determination. It is expressed as being whether the respondent has power under the provisions of the SRC Act, including but not limited to ss 14 and 16, to determine that it is not liable to pay compensation on and from 4 December 2002 in relation to the primary injury. 14 It is accepted by the respondent that it cannot deny future liability for compensation for an accepted condition or injury, in a way which could bar future claims for entitlements under the SRC Act in respect of that condition if those claims meet the requirements of the particular provisions for the entitlement. So much has been decided in Australian Postal Corporation v Oudyn (2003) 73 ALD 659 at 666-667 ( Oudyn ); Rosillo v Telstra Corporation Ltd (2003) 77 ALD 396; Re Pisani v Comcare [2004] AATA 441. The Tribunal also made that fact plain. It said it was clear that the first decision did not purport to revoke liability under s 14 of the Act in respect of the accepted injury. To the extent that it purported to deny any future liability for compensation for the accepted injury, the Tribunal said it could not do so. There was therefore, in my view, an issue which the respondent was required to address, namely whether ongoing incapacity payments for partial incapacity and ongoing medical expenses should be met. It decided not to do so. The applicant then had the opportunity of seeking review of that decision. He did so. As his application indicated, albeit perhaps omitting the claim for medical expenses by oversight, he sought a determination from the Tribunal that he continued to suffer from the accepted injury and continued to be entitled to income maintenance payments in respect of it. It was that issue which the Tribunal was required to address. 18 The terms in which the first decision was expressed were infelicitous. It could properly only have addressed any actual outstanding or ongoing claims for income maintenance payments or payments for medical expenses. Its terms suggest that the first decision purported to do more, namely finally to terminate any future entitlements under the SRC Act in respect of the accepted injury. It could not do that. The respondent accepts that. 19 Consequently, there is no issue between the parties on the first question of law. Nor was there any issue between them on the issue of principle before the Tribunal. The Tribunal noted that the first decision did not purport to revoke liability under s 14 of the SRC Act. It was then obliged to consider afresh, standing in the shoes of the initial decision-maker, whether the respondent had any outstanding liability for incapacity payments or for expenses in respect of the first injury. It determined that issue favourably to the applicant. In my judgment, it did not fall into any error of law in doing so. 20 The second question of law raised on the application concerns both the first decision and a later decision of the Tribunal. 21 On 2 September 2003, the applicant lodged a claim for compensation for permanent impairment of his upper limbs (the upper arm condition) pursuant to ss 24 and 27 of the SRC Act. That application was formally supported by a letter from his solicitors of 17 September 2003 and by a report of Dr Cullum of 10 September 2003. Dr Cullum first concluded that the applicant has a 10 per cent impairment of the whole person, having regard to his symptoms and medical investigations. The symptoms in respect of which that assessment was made included the applicant's symptoms of pain and disability in his lower arms as well as in his upper arms. Subsequently, by report of 22 September 2003 Dr Cullum clarified his assessment to 10 per cent impairment of the right upper limb and 10 per cent impairment of the left upper limb. He considered those impairments were permanent. He included with his report an ultrasound report carried out by Dr Simmons (referred to by the Tribunal) dated 19 September 2003 which included the diagnosis of mild tendinopathy of each arm of common flexor origin. It is plain, as counsel for the applicant acknowledged, that the claim for permanent impairment in respect of the upper limb condition based upon Dr Cullum's reports included the impairment attributable to symptoms in the upper arms of the applicant, as well as to those still attributable to the accepted injury. 22 On 19 March 2004 a delegate of the respondent determined that the applicant is not entitled to compensation for permanent impairment in respect of conditions described as 'synovitis, tenosynovitis, de Quervain's tendonitis, intersection tendonitis, carpal tunnel syndrome, epicondylitis or any other condition of the upper arm'. That decision was affirmed by internal review on 5 April 2004. 23 I shall call the decision of 19 March 2004 'the second decision'. 24 The Tribunal was also asked to review the second decision. Its decision of 11 March 2005 affirmed the second decision. 25 The second question of law on the application, said to arise from both the first decision, and the second decision is that the Tribunal failed to accord procedural fairness to the applicant in connection with its decision by finding that 'the upper arm symptoms could be due to the use of the "30 lb gripper" and self administered strengthening and stretching exercises of the arm'. 26 The Tribunal reached the view that, on the whole of the medical evidence, the applicant's accepted injury had resolved at the time of its determination. It did not indicate that the resolution was permanent, as it acknowledged that a return to excessive movement by the applicant might lead to the return of his symptoms from the accepted injury. It found that he is currently suffering from epicondylitis of the elbow and tendonitis of the wrist (not tenosynovitis or synovitis, i.e. not the accepted injury). It noted that the present symptoms being suffered by the applicant are 'minor abnormalities, with minor symptoms and physical signs, and minor ultrasound abnormalities'. 27 The Tribunal then addressed the aetiology of those conditions. It was unable to identify a work cause for them. There was no claim of a psychological cause for them. We note that the applicant is very "meticulous", and motivated to perform these exercises. We are satisfied on the evidence, that he has undertaken these treatments in good faith, and meticulously, in an endeavour to relieve his symptoms. Mr Cole conceded, in the course of his final address, that if the applicant has a condition of the upper limbs which is materially contributed to by treatment for the accepted condition, it is also therefore compensable. We are satisfied on the evidence that the upper limb condition the applicant suffers now, has been materially contributed to by the treatment undertaken in relation to his accepted condition. It noted the applicant is not impaired in undertaking his current modified work, and that his general practitioner is hopeful of further improvement with the current work restrictions. Consequently, it reached the view that on the whole of the medical evidence there is a likelihood of improvement in the applicant's condition, so his condition did not satisfy the permanent impairment status required by s 24. It may be accepted that the Tribunal was obliged to accord to the applicant procedural fairness: Drake v Minister for Immigration & Ethnic Affairs (1979) 46 FLR 409. But the issue as to the immediate cause of his ongoing symptoms was squarely before the Tribunal. There was a conflict of medical evidence as to whether there was any ongoing physical reason for the applicant's symptoms. Dr Awerbuch was of the view that there was not. There was evidence that the symptoms were not consistent with the accepted injury, including the common ground that they were more extensive than those the accepted injury itself could account for. The need to address the existence of a physical source for those more extensive and in essence different symptoms, and to ascribe it to the applicant's work, was a matter the applicant had to address. The final steps for the applicant then to establish was that the condition producing his symptoms was permanent and produced the level of disability which he claimed. Each of those steps was one the Tribunal had to address. In the course of the hearing, counsel for the parties indicated that the dispute before the Tribunal included whether the applicant suffered from any medical condition of his right and left arms materially related to his employment. 31 The diagnosis of epicondylitis had also been made by the medical witnesses called for the applicant. Its cause was a matter the applicant had to address. Dr Cullum's report of 10 September 2003 referred to signs and symptoms of epicondylitis, 'compounded by personality factors' which he said were 'related to his employment'. He did not explain how. There was no formal claim of any non-organic explanation for the symptoms. The applicant's evidence about his moderated work activities did not suggest a particular incident or a particular activity was the cause of his epicondylar symptoms. Dr Awerbuch's report of 18 December 2003 contained the suggestion that the use of the gripper may be its cause. The applicant was on notice about that. That matter was not the respondent's case; it claimed there was no ongoing physical injury. 32 The possibility of the gripper being the immediate cause of the applicant's epicondylitis was clearly raised during the hearing. The use of the gripper for strengthening exercises was noted by Dr Awerbuch in his report of 25 September 2002. During his evidence-in-chief on 18 June 2004, he said its use could lead to humeral epicondylitis. The Tribunal during his cross-examination raised the same issue. In the course of submissions on 31 August 2004, the Tribunal raised with counsel for the respondent the issue whether the use of the gripper might have lead to the present symptoms of the applicant, and result in the condition causing those symptoms being compensable because the use of the gripper may have been part of the reasonable treatment undertaken on the applicant's own medical advice. It said that was 'the way we are looking at it' at the time. That discussion took place before the submissions for the applicant. Part of the context for that exchange was the submission of the respondent that the applicant's symptoms were no longer a result of (and were not consistent with) the accepted injury, and there had been no other work-related injury to account for the applicant's symptoms. Counsel for the applicant was thereby given notice of a means by which a finding on the principal issue of the relationship between the epicondylar condition and the applicant's work might be made adversely to the respondent. 33 In those circumstances, in my view, the applicant was not denied procedural fairness. The existence of a physical cause for the epicondylar symptoms, and indeed for his symptoms generally, was in issue. The cause of the epicondylar symptoms was a matter relevant to their permanence. The material available before the hearing identified as one possible cause the use of the gripper. No other specific cause for those symptoms was positively put forward, except in the general conclusionary way expressed by Dr Cullum. In closing submissions, the applicant through his counsel, did not ask for a specific finding by the Tribunal about the cause of those symptoms, except by identifying the issue of whether all his symptoms were as a result of the accepted injury (or the injury which occurred on 8 November 2001). The specific findings of fact sought on behalf of the applicant did not refine the issue, except by noting the diagnosis of epicondylitis was first made in mid 2002 and confirmed by ultrasound testing in September 2003, and by referring to Dr Cullum's view that 'these injuries are work related'. That approach was adopted notwithstanding the Tribunal had only shortly beforehand said it was looking at whether the use of the gripper was the cause of the epicondylar symptoms. The focus of the applicant's submissions was, understandably, upon why the views of Dr Awerbuch that there was no real ongoing organic condition to support any of the symptoms should be rejected. 34 In fact, the Tribunal accepted the applicant's claim that his symptoms (including the epicondylar symptoms) are work related and so compensable. In the case of the conditions of epicondylitis and tendonitis, that was because they were attributable to treatment reasonably undertaken for the accepted injury. The result was that the applicant was found to be entitled to compensation under the SRC Act in respect of those conditions. The Tribunal's reasoning demonstrates the pathway by which it reached that conclusion. It was a pathway which was open to the Tribunal on the evidence, which was the subject of observation in medical evidence before the hearing, and which the Tribunal signalled in the course of submissions without demur from the applicant, and without any application by the applicant to expand the evidence to establish as more probable an alternative pathway to the conclusion. 35 Counsel for the applicant on this application urged that the pathway chosen by the Tribunal was, by reason of the decisions in Fletcher v Commissioner of Taxation (1988) 19 FCR 442 ( Fletcher ) and Goldie v Minister for Immigration and Multicultural Affairs (1999) 56 ALD 321 ( Goldie ), one it should not have taken without giving the applicant the opportunity to rebut that process of reasoning. In my view, neither of those cases stand in the way of the Tribunal's reasoning, or show that it failed to accord procedural fairness to the applicant. In Fletcher the Tribunal affirmed a decision of the Commissioner of Taxation adversely to that applicant on a basis which had not been adverted to at all in the course of or before the hearing. Here, the applicant's primary factual claim was sustained by the Tribunal, namely that there was a relationship between his work and his upper arm condition, and the process of reasoning to reach that view favourable to the applicant was one which the applicant should himself have foreseen, and when it was explicitly raised did not object to, nor seek to expand the evidence about. In Goldie , the Full Court upheld an appeal where the Tribunal had decided a matter adversely to the appellant on a ground which the appellant had not had notice of. As I have sought to point out, the means of reaching that conclusion was one the applicant had to address. 36 Haberfield v Department of Veterans Affairs as Delegate for Comcare [2002] FCA 1579 ; (2002) 121 FCR 233 ( Haberfield ) concerned an application by way of appeal from a decision of the Tribunal that Comcare was not liable to pay compensation to the applicant's wife for attendant care services under s 29 of the SRC Act. The Tribunal relied on evidence that emerged only in the course of the respondent's case. Sackville J concluded that there was no failure to accord procedural fairness to the applicant in the circumstances. His Honour at 246, [61] remarked that, once that evidence had emerged, the applicant through counsel could have sought to recall other medical witnesses, or call other evidence. As here, there was a gap of some days between the emergence of the particular evidence and the closing submissions, and no suggestion more time was needed to complete investigation. Here, as I have pointed out, the Tribunal signalled during final submissions its line of thinking on the topic. That did not provoke a contrary submission from the applicant, or a request for time to consider it. It is hard to conceive why, from the applicant's viewpoint, it might have done. The evidence was used as a vehicle to determine the issue to which it related favourably to the applicant. Nothing was put to suggest that a different pathway to the same conclusion on the issue might have altered the determination that the condition to which it related was permanent. It was only on that final step that the condition did not at that time result in permanent impairment (which was the subject of the second decision) that the applicant failed. 37 Finally, the applicant contends that the Tribunal erred in law by failing to comply with s 43(2B) of the AAT Act by not giving any or adequate reasons for preferring the evidence of Drs Rositano, Awerbuch and Simmons to that of Dr Cullum where there was dispute between them. The adoption of one medical expert's evidence over that of another without explanation may amount to such an error: see e.g. Vock v Repatriation Commission [2005] FCA 967. See also Australian Postal Corporation v Wallace (1996) 41 ALD 455. The submissions had a particular focus upon the final step in the Tribunal's reasons, namely whether the applicant had a permanent impairment of each of his arms so as to be entitled to a lump sum payment under s 24 of the SRC Act. Dr Cullum was the only medical witness whose evidence positively supported such a finding. 38 Some authorities considering the obligation on the Tribunal under s 43(2B) are discussed in Hill v Repatriation Commission (2004) 207 ALR 470 at 474-476, [18]-[28]. That decision was the subject of appeal, but not in relation to that aspect of the case: Repatriation Commission v Hill [2005] FCAFC 7 ; (2005) 142 FCR 88. In essence, the obligation under s 43(2B) is to have the Tribunal's process of reasoning adequately exposed to indicate how it has gone about its task and why it has reached its conclusion. Those affected by its decision may then see why the decision has been made. The public may see that its task has been performed appropriately. If there has been some reviewable error in its processes or in its reasoning, that error should be exposed. 39 The Tribunal's reasons for concluding that the applicant's condition has not resulted in permanent incapacity are brief. They are referred to in [29]-[30] above. 40 As is customary, the Tribunal's reasons record the nature and history of the applicant's claim, including the treatment and management history, and the medical views expressed from time to time in medical reports, as well as a summary of the evidence at the hearing. That material is addressed chronologically. The Tribunal then addressed the matters arising in the applications to review the first decision and the second decision, including the respective contentions of the parties. Finally, it recorded its decisions in relation to those issues, and gave reasons for them. 41 The Tribunal introduced its description of the medical evidence by indicating that all medical witnesses were objective and competent, but that it preferred the evidence of Dr Rositano (the applicant's general practitioner), Dr Simmons (a radiologist) and Dr Awerbuch (a rheumatologist called by the respondent) in areas of dispute. That general statement must however be qualified by a reading of its reasons. For example, the Tribunal preferred other evidence to that of Dr Awerbuch as to whether the applicant has any ongoing physical condition. 42 It noted that the applicant had the accepted injury. That was not contentious. It then referred to the fact (based upon various medical examinations) that the signs attributable to the accepted injury no longer were apparent, and that the chronic form of tenosynovitis which sometimes occurs had not been diagnosed by any medical examiner and Dr Cullum's suggestion that it might exist was not borne out by any typical signs apparent in such a case, including that such signs were not shown on the ultrasound tests. It therefore accepted that the accepted injury had 'resolved currently', although it could return. It then addressed the other abnormalities of which the applicant gave evidence. It accepted he had epicondylitis of the elbow and tendonitis of the wrist, based upon the medical examinations including ultrasound testing. There was no conflict of views between Dr Cullum and the other doctors called by the applicant on those findings, which the Tribunal described as 'minor abnormalities, with minor symptoms and physical signs'. It referred to the medical evidence as to when the clinical signs of those conditions became apparent, and why they may have occurred. The latter step, namely ascribing them to use of the gripper as Dr Awerbuch had suggested, was the only medical evidence explicitly on that point. As the Tribunal then found, those conditions are nevertheless compensable. The respondent does not now contest that. 43 The final step in the Tribunal's reasoning, namely whether there is permanent impairment from those conditions, is where the applicant's medical witnesses were not in accord. The Tribunal explained why it concluded that those conditions have not resulted in permanent impairment: it said the current symptoms are minor and are not stable, and that Dr Rositano is hopeful of further improvement. The Tribunal had earlier noted Dr Hill's view in his report of 10 June 2003 that the condition would not result in permanent incapacity. Dr Cullum's views were not accepted apparently because he considered the symptoms could not improve. The applicant gave evidence (noted by the Tribunal) that his condition is improving. His evidence was accepted, as the Tribunal regarded him as a competent and conscientious witness who did his best to describe accurately the history of his symptoms and treatments. He does not have a permanent impairment. It was not reflected in the views of Dr Cullum on this limited aspect. 44 In my view, a reading of the Tribunal's reasons indicates why it reached the conclusions it did. I am not persuaded that it failed to comply with s 43(2B) of the AAT Act. 45 The applicant has not made out any of the grounds of legal error for which he has contended. The application must therefore be dismissed. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | administrative appeals tribunal where applicant claimed entitlement to compensation for permanent impairment pursuant to ss 24 and 27 of the safety rehabilitation and compensation act 1988 whether tribunal failed to accord procedural fairness to the applicant administrative law |
Dr Wenkart became bankrupt when his estate was sequestrated by an order made on 28 October 1999. Mr Pantzer was appointed the trustee in bankruptcy. Dr Wenkart's bankruptcy was annulled by force of s 74(5) of the Bankruptcy Act 1966 (Cth) (the Act) on 15 March 2002. On that day Dr Wenkart's creditors accepted a proposal made to them by Dr Wenkart pursuant to s 73 of the Act. It will be necessary to refer below to some of the early history of this proceeding in more detail. However, I do not consider it necessary to set out the entire history of the matter. 3 Eight first instance interlocutory judgments were published in this proceeding before it was allocated to my docket in late 2004: Wenkart v Pantzer [2003] FCA 315 ; Wenkart v Pantzer [2003] FCA 364 ; Wenkart v Pantzer [2003] FCA 432 ; Wenkart v Pantzer [2003] FCA 456 ; Wenkart v Pantzer [2003] FCA 471 ; Wenkart v Pantzer (No 6) [2003] FCA 1210 ; Wenkart v Pantzer (No 2) [2003] FCA 1211 ; (2003) 132 FCR 273, being the name under which Wenkart v Pantzer (No 7) [2003] FCA 1211 has been reported, ( Wenkart v Pantzer (No 2) ) and Wenkart v Pantzer (No 3) . The Full Court dismissed appeals from three of these interlocutory judgments but allowed a cross appeal against the judgment in Wenkart v Pantzer [2003] FCA 456 which concerned the date upon which Dr Wenkart became aware of the amount of a claim for remuneration made by Mr Pantzer ( Wenkart v Pantzer [2003] FCAFC 210 ; (2003) 132 FCR 204). Ultimately these two appeals were heard together, with evidence in one proceeding being evidence in the other. This proceeding was heard immediately thereafter. 5 On 8 November 2005 I published judgment on the taxation appeals ( Wenkart v Pantzer (2005) 223 ALR 384 ("the taxation judgment at first instance")). I concluded that the appeals from the decisions of the taxing officer should be allowed on the basis that the bills of costs related at least in part to costs not recoverable under the Act. In each case I ordered that the certificate of taxation be set aside and the bill of costs the subject of the certificate be remitted to the taxing officer for taxation in accordance with the reasons for judgment of the Court. 6 In the taxation judgment at first instance at [22]-[27] I identified the issues raised by the taxation appeals. There is considerable overlap between the issues raised for consideration in these proceedings and the issues raised for determination in matter NSD 7051 of 2002. I have been obliged to reach a concluded view on some of those issues for the purpose of determining these proceedings. However, I am inclined to think that the remaining issues should be determined in the context of that matter. The parties will have an opportunity to place submissions before the Court on this question before final orders are made in these proceedings. That decision was reached in the light of my conclusion that the certificates of taxation the subject of the taxation appeals should be set aside for reasons unrelated to the remaining issues. The parties were subsequently advised that judgment in this proceeding would not be delivered until after the hearing and determination of the appeals instituted in respect of the taxation judgment at first instance because of the importance in this proceeding of the issues raised in those appeals. It seemed to me that, were the Full Court to allow the appeal from the taxation judgment at first instance and remit the appeal to me to be redetermined in the light of the reasons for judgment of the Full Court, it would be desirable for that redetermination to occur concurrently with the determination of this proceeding. 8 The appeals to the Full Court from the taxation judgment at first instance did succeed ( Pantzer v Wenkart [2006] FCAFC 140 ; (2006) 153 FCR 466). In each appeal the Full Court ordered that the appeal be allowed, the orders made by the primary judge be set aside "and in lieu thereof the appeal against the decision of the taxing officer ... be dismissed" . The Full Court additionally ordered in each appeal that Dr Wenkart pay Mr Pantzer's costs of the appeal to the Full Court and the costs of the appeal from the decision of the taxing officer. It is plain that the Full Court did not overlook the observation made by me in the taxation judgment at first instance at [27]; it is expressly referred to in the reasons for judgment of the Full Court at [27]. 9 On 24 October 2006 Dr Wenkart filed a notice of motion in the appellate jurisdiction of the Court seeking to have the orders of the Full Court in each case varied in the following ways: first, by deleting the words "and in lieu thereof the appeal against the decision of the taxing officer ... be dismissed" and replacing them with the words "and the matter otherwise be remitted to the Trial Judge for further consideration in accordance with these reasons" ; secondly, by amending the costs order so as to make clear that while Dr Wenkart was to pay Mr Pantzer's costs of the appeal to the Full Court, Mr Pantzer's costs of the appeal from the decision of the taxing officer were in the discretion of the trial judge. The filing of Dr Wenkart's notice of motion was presumably motivated, at least in part, by the fact that the orders of the Full Court did not merely allow the appeals from the taxation judgment at first instance; they dismissed the appeals from the decisions of the taxing officer notwithstanding that certain of the grounds of appeal against those decisions had not been determined either at first instance or by the Full Court. 10 On 13 March 2007 Dr Wenkart's motion was dismissed with costs by the Full Court ( Pantzer v Wenkart [2007] FCAFC 27). The Full Court indicated in its reasons for judgment that its earlier judgment should be understood to have implicitly rejected the grounds identified in notices of contention upon which Dr Wenkart contended that the taxation judgment at first instance should be affirmed. The trial judge ought to have held that there was no evidence before the Court which established that the work for which the taxation was performed was work performed in relation to the administration of the estate as an additional basis to reject the Appellant's claim. The trial judge ought to have held that the legal firm, Sally Nash & Co, was never retained by the Appellant in his capacity as Trustee of the Bankrupt Estate of the First Respondent as an additional basis to reject in its entirely the Appellant's claim in relation to costs and disbursements. The trial judge ought to have held that the operation of sub-section 167(1) of the Bankruptcy Act 1966 , in the circumstances, limits a bill of costs to a bill of costs which was provided by a person in relation to the administration of the Estate was an additional basis to reject the Appellant's claim. 12 The effect of the judgments of the Full Court is that Dr Wenkart's appeals from the two decisions of the taxing officer stand dismissed. Only this proceeding remains undetermined. The issue that I identified in the taxation judgment at first instance at [27] (see [6] above) is not now open to be determined in the context of the appeals from the decisions of the taxing officer. Having regard to my conclusions below this may be of limited, if any, practical significance. 13 I give consideration below to the significance of the reasons for judgment of the Full Court to my consideration of the present proceeding. As his Honour observed, the controversy in respect of which this proceeding was commenced concerned the amount of remuneration to which Mr Pantzer was entitled; whether he was obliged to call a meeting of creditors to consider a proposal under s 73 of the Act formulated by Dr Wenkart; and, if so, how, if at all, his entitlement to remuneration could or should be protected. The procedural steps taken were that on 15 February 2002 Dr Wenkart sent a letter and a number of attachments directly to the chambers of Beaumont J. The letter requested his Honour to order Mr Pantzer to convene a meeting of Dr Wenkart's creditors. His Honour directed that a new file be opened and, it seems, treated the documents received from Dr Wenkart as an initiating process. I interpolate that on 31 March 2004 Lindgren J directed that Dr Wenkart's letter and attachments be taken to be the application by which this proceeding was commenced, that it be taken to have been filed on 21 February 2002 and that, to the extent necessary, compliance with the Federal Court Rules be taken to have been dispensed with. 15 It is necessary to refer to a number of interlocutory orders made in this proceeding. Warren Pantzer as Trustee of the estate of Thomas Richard Wenkart may recover his remuneration, costs, charges and expenses to which he is lawfully entitled or may become lawfully entitled from Thomas Richard Wenkart and Thomas Richard Wenkart agrees to pay the same within 28 days of determination of the quantum of the same or at such other time as the parties may agree. Thomas Richard Wenkart forthwith charges the land and improvements in folio identifier G/33817 and known as 47 Union Street, Paddington in favour of Warren Pantzer to secure the amount in paragraph 1. Hapday Holdings Pty Ltd ACN 001 185 253 hereby postpones mortgage 3965299 over the land in paragraph 2 in favour of the interest of Warren Pantzer pursuant to the charge in paragraph 2. The orders and agreement in paragraphs 1, 2 and 3 are only to have effect if the bankruptcy of Thomas Richard Wenkart is annulled pursuant to s74 of the Bankruptcy Act on 15 March 2002. Thomas Richard Wenkart consents to Warren Pantzer lodging a Caveat over the property in paragraph 2 for the purpose of securing the charge in paragraph 2 and Warren Pantzer will upon payment of the remuneration, costs, charges and expenses in paragraph 1 provide a Withdrawal of Caveat forthwith. 17 On 31 October 2002 Mr Pantzer filed a notice of motion in this proceeding. Lindgren J later ordered that this notice of motion be taken to be a cross-claim seeking final relief and to the extent necessary compliance with the Federal Court Rules be taken to have been dispensed with. The Court make an order in aid of its order made 11 March 2002 by appointing Warren Pantzer as Trustee for Sale of folio identifier G/33817 known as 47 Union Street, Paddington, ('the property') pursuant to security granted on 11 March 2002 for the purpose of realising the property to enable payment to the First Respondent of items in paragraph 2 together with payment of any charge payable by the First Respondent pursuant to the Bankruptcy Realisation (Estate Charges) Act, 1997. That the Applicant give the First Respondent as Trustee for Sale vacant possession of the property. That a Writ of Possession of 47 Union Street, Paddington being folio identifier G/33817 issue 28 days after the date of this order. The Court sanctioned that arrangement in the form of an order made under the reservation reserved by the concluding words of s 74(6) --- 'reverts ... on such terms and subject to such conditions ... as the Court orders'. I interpolate that in Wenkart v Pantzer [2003] FCAFC 210 ; (2003) 132 FCR 204 published on 29 August 2003 the Full Court, on appeal from his Honour's order, noted at [8] that Division 2 of Part VIII of the Act (comprising ss 161B-167) deals generally with the remuneration and costs which may be charged against a bankrupt's estate. Moreover, lest there be any doubt about the matter, we wish to make it clear that these provisions have effect notwithstanding the annulment of the bankruptcy. It could hardly be supposed that a trustee's right to remuneration, the manner in which that remuneration is to be determined and the trustee's right to require a third party's bill of costs to be taxed is lost upon an annulment. In respect of services provided by any person with respect to the estate in bankruptcy of the applicant, whether those services were provided before or after annulment of the applicant's bankruptcy on 15 March 2002, the respondent by 22 October 2003 require such person to supply a Bill of Costs for such services pursuant to Section 167 of the Bankruptcy Act, 1966 (Cth) provided that this order does not extend to legal services provided by Cutler Hughes and Harris. The respondent notify the applicant in writing by 23 October 2003 of his claim for remuneration in respect of services provided after the annulment of the applicant's bankruptcy on 12 March 2002. I do not accept Dr Wenkart's submission that, notwithstanding the outcome of the appeals to the Full Court from the taxation judgment at first instance, I am free to refuse to give effect to the certificates of taxation. 24 As I noted in the taxation judgment at first instance at [10], the reason for the first of the orders made on 21 October 2003 not extending to legal services provided by the firm Cutler Hughes and Harris may be assumed to be that on 6 May 2003 the Court ruled that Mr Pantzer was lawfully entitled to be reimbursed for certain taxed costs of the firm Cutler Hughes and Harris ( Wenkart v Pantzer [2003] FCA 471). The second order may be assumed to reflect the fact that Mr Pantzer had already made claims for remuneration in respect of services provided before the annulment of Dr Wenkart's bankruptcy. It was, of course, not open to him, by engaging in correspondence with Dr Wenkart, to alter the effect of orders of this Court. It may be that he simply wished to place on record his understanding that the orders made on 21 October 2003 did not reach to claims for remuneration and disbursements for any period commencing thereafter. 27 The effect of the orders made by Lindgren J on 21 October 2003 is one of the issues that remains to be resolved in this proceeding. In the taxation judgment at first instance I considered this issue and at [83] concluded that, unless and until varied, the orders imposed a restriction on the remuneration and the costs, charges and expenses that Mr Pantzer was entitled to recover from Dr Wenkart in reliance on orders 1 and 2 of the consent orders made by Beaumont J on 11 March 2002. 28 It remains the case that no application has been made for the orders made by Lindgren J on 21 October 2003 to be set aside or varied. For this reason, an important issue that requires to be determined in this proceeding is whether the Full Court took a different view from me as to the effect of his Honour's orders, and the consent orders made by Beaumont J, when it allowed the appeals from the taxation judgment at first instance. If it did it would be appropriate for me now to defer to the Full Court's view. I return to the question in [44] below. 29 On 31 March 2004 Lindgren J directed Mr Pantzer, as cross-claimant, to file and serve points of claim outlining his claim for final relief including quantification and Dr Wenkart, as cross-respondent, to file and serve points in reply. That the Respondent comply with Section 170 of the Bankruptcy Act 1966 and give an accounting for all monies received and for all monies expended in the former bankruptcy estate of the Applicant within seven (7) days of being ordered to do so. Such other amounts as disclosed by reason of the Respondent's compliance with Section 170 of the Bankruptcy Act 1966 . In the events that happened each of the taxation appeals was initiated before that hearing eventuated and the final hearing effectively encompassed them as well. 33 After the publication of the taxation judgment at first instance and the judgment of the Full Court allowing the appeals therefrom, but before Dr Wenkart's application for special leave to appeal to the High Court was dismissed, a further notice of motion was filed by Dr Wenkart. The affidavit further referred to a letter dated 19 January 2007 by which Mr Pantzer advised Dr Wenkart that he had received invoices from his solicitor totalling $302,682.97 and that as no request for taxation had been made he requested payment of the invoices without delay. Objection was not taken that it was inappropriately filed in this proceeding. (2) Whether Mr Pantzer's legal costs after 21 October 2003 to the completion of the administration of Dr Wenkart's bankrupt estate are to be taxed on a solicitor/client basis? (3) Whether Mr Pantzer is lawfully entitled to recover from Dr Wenkart the sum of $20,000 owing pursuant to the Bankruptcy (Estate Charges) Act 1997 (Cth)? (4) Whether Mr Pantzer is required to give an accounting concerning the property and affairs of Dr Wenkart in compliance with s 170 of the Act and to pay to Dr Wenkart surplus moneys (if any) from the administration of his bankrupt estate? (5) What are the amounts, if any, to which Mr Pantzer has established that he is "lawfully entitled"? (6) Whether orders should be made to facilitate the enforcement, either immediately or deferred, in respect of the security provided by the consent orders made on 11 March 2002? I rejected that contention in the taxation judgment at first instance at [40]-[47]. The Full Court on the appeal from the taxation judgment at first instance accepted that Mr Pantzer was entitled to claim under the Act remuneration, costs, charges and expense referable to work reasonably and bona fide undertaken after the annulment of the bankruptcy for the purpose of administering the estate or performing any public duty imposed by the Act (at [43]). 37 It is no longer open to Dr Wenkart to argue in this Court that Mr Pantzer cannot claim any entitlement as the trustee of Dr Wenkart's bankrupt estate beyond 15 March 2002, the date of the annulment of Dr Wenkart's bankruptcy. 38 Dr Wenkart contended, in the alternative, that Lindgren J, by the orders made on 21 October 2003, required Mr Pantzer to make his claim for remuneration, costs, charges and expenses "once and for all". Consequently, he argued, the agreement to pay recorded in order 1 of the orders made by consent by Beaumont J on 11 March 2002 (see [15] above), and the concession noted by Lindgren J on 21 October 2003 (see [22] above), are limited to bills of costs and claims for remuneration properly made earlier than 21 October 2003 or pursuant to the order made on that day. 39 As mentioned above, I gave consideration in the taxation judgment at first instance to the issue of whether, and to what extent, the orders made by Lindgren J on 21 October 2003 limited the amount Mr Pantzer could claim as remuneration, costs, charges and expenses to which he is lawfully entitled within the meaning of the consent orders made on 11 March 2002. Order 2 required Mr Pantzer by 23 October 2003 to notify Dr Wenkart of his claim for remuneration in respect of work undertaken by him after the date of the annulment of Dr Wenkart's bankruptcy. It appears that as at 21 October 2003 there was no issue between the parties as to Mr Pantzer's claim for remuneration in respect of work undertaken by him on or before the date of the annulment of Dr Wenkart's bankruptcy. However, presumably because it was unnecessary for it to do so, the Full Court made no further reference to my views on this question or, indeed, to the orders made by Lindgren J on 21 October 2003. From Mr Pantzer's viewpoint, such a course was unavoidable, in a practical sense, if he was to maintain and realise his entitlements. It is true, in a sense, that the litigation was undertaken by Mr Pantzer for his benefit, as the primary judge observed. In the same sense, any litigation into which a trustee might be drawn concerning remuneration, disbursements and expenses is litigation for the trustee's benefit. But to characterise it this way does not necessarily answer the question whether the trustee (or former trustee) has been properly involved in the litigation as an incident of having acted as a trustee charged with the responsibility of administering the bankrupt's estate. In our view, the facts in the present case compel the conclusion that the remuneration, costs, charges and expenses incurred after the annulment of the bankruptcy were so incurred for the purpose of giving practical effect to the 11 March 2002 consent orders and, more generally, administering the estate. Consequently, Mr Pantzer was 'lawfully entitled' to them within the terms of the consent orders. It seems to me that the Full Court has made clear that a trustee, or former trustee, is entitled to recover remuneration, costs, charges and expenses under the Act wherever he or she "has been properly involved in the litigation as an incident of having acted as a trustee charged with the responsibility of administering the bankrupt's estate" . Their Honours also observed that the remuneration, costs, charges and expenses "incurred after the annulment of the bankruptcy" were incurred for the purpose of giving practical effect to the 11 March 2002 consent orders and, more generally, administering the estate with the consequence that Mr Pantzer was "lawfully entitled" to them within the meaning of the consent orders. 43 I therefore proceed on the basis that amounts claimed by Mr Pantzer as remuneration, costs, charges and expenses incurred by him for the purpose of giving practical effect to the 11 March 2002 consent orders and, more generally, administering Dr Wenkart's bankrupt estate are amounts to which Mr Pantzer is prima facie "lawfully entitled" within the meaning of order 1 of the consent orders made on 11 March 2002. I also proceed on the basis that, subject to any relevant impact of the orders made by Lindgren J on 21 October 2003, the agreement to pay reflected in order 1 of the 11 March 2002 consent orders, and therefore the agreement to charge reflected in order 2 of those orders, extends to those amounts. 44 I next turn to the issue of the proper construction of the orders made by Lindgren J on 21 October 2003. The reasons for judgment of the Full Court make plain that, as at 21 October 2003, the possibility existed of Mr Pantzer becoming "lawfully entitled" to amounts by way of remuneration, costs, charges an expenses in respect of services not yet provided --- notwithstanding that Dr Wenkart's bankruptcy had been annulled nineteen months earlier. Although Lindgren J may not have turned his mind to this possibility when he made the orders (see [79] below), nothing in the language of the orders suggests that they were intended to deprive Mr Pantzer of any amounts to which he might thereafter become lawfully entitled. Nonetheless, the orders were plainly intended to have some effect; they required Mr Pantzer to take certain steps and some significance must have been intended to attend any failure by him to take those steps. Having regard to the reasons for judgment of the Full Court, I conclude that the orders required Mr Pantzer to take those steps in relation to services that had, as at that date, been provided by any person in respect of the bankrupt estate of Dr Wenkart and in relation to his claim for remuneration as at that date (ie in respect of his present, but unclaimed, entitlements). Were it established that Mr Pantzer failed to comply with the orders in respect of any services that had been provided as at 21 October 2003, or in respect of a claim for remuneration for work undertaken as at that date, Mr Pantzer would not, I conclude, be entitled to recover any amount in respect of those services or that claim for remuneration in reliance on orders 1 and 2 of the consent orders made on 11 March 2002. This, I conclude, is the full extent of the ongoing significance of the orders made by Lindgren J on 21 October 2003 so far as Mr Pantzer's entitlements to remuneration, costs, charges and expenses are concerned. 47 In the taxation judgment at first instance I placed weight on the nature of certain costs orders against Dr Wenkart sought and obtained by Mr Pantzer in this Court. Order 62 r 4(1) of the Federal Court Rules provides that, subject to that Order, where under any order of the Court costs are to be paid to any person, that person is entitled to his costs to be taxed. Costs "to be taxed " in the context of O 62 r 4 means costs taxed in accordance with O 62 (O 62 r 1). Unless the order for costs provides otherwise that will ordinarily mean costs on a party/party basis. By contrast, costs recoverable under the Act are recoverable on a solicitor/client basis. In a bankruptcy proceeding the usual costs order is that the successful party's costs "be taxed and paid in accordance with the Act". Nonetheless, the Court has a wide discretion as to the appropriate costs orders to be made even in a bankruptcy proceeding ( Labocus Precious Metals Pty Ltd v Thomas [2007] FCA 1154 at [87] ). In a particular bankruptcy proceeding the Court might, for example, prove willing to allow a trustee his or her legal costs to be taxed under the Federal Court Rules on a party/party basis but not his or her costs paid in accordance with the Act. 48 The Full Court in Wenkart v Pantzer (No 2) , Beaumont J in Wenkart v Pantzer [2003] FCA 315 and Lindgren J in Wenkart v Pantzer (No 6) [2003] FCA 1210 and Wenkart v Pantzer (No 3) made costs orders against Dr Wenkart in apparent reliance on s 43 of the Federal Court of Australia Act 1976 (Cth) (Federal Court of Australia Act) and O 62 of the Federal Court Rules . Having regard to the observation of the Full Court in Wenkart v Pantzer [2003] FCAFC 210 ; (2003) 132 FCR 204 set out in [21] above, it seems plain that it was open to Mr Pantzer in each instance to seek an order that his costs be paid in accordance with the Act. Yet in none of these cases does it appear that Mr Pantzer sought an order that his costs be payable under the Act or otherwise treated as costs in Dr Wenkart's bankruptcy. 49 Nonetheless, I conclude that it would be inappropriate for me now to attach any significance to the form of the costs orders made in Mr Pantzer's favour. This is because, on appeal from the taxation judgment at first instance, the Full Court stated that it was irrelevant that the costs orders in question had been made under s 43 of the Federal Court of Australia Act and O 62 of the Federal Court Rules rather than under the Act. Their Honour's took the same view in respect of the costs order sought under O 69A, r 12(1) of the High Court Rules 2004 (Cth) then in force in respect of Dr Wenkart's discontinued application for special leave to appeal. 51 For this reason I conclude that Dr Wenkart is not entitled to the relief sought by him in the notice of motion filed on 14 February 2007 (see [33]-[34] above). Mr Pantzer also gave evidence that Lawler Partners was proposing to pay the amount of $20,000 for which Mr Pantzer remained liable under the Bankruptcy (Estate Charges) Act 1997 (Cth). This payment was to be made by 10 June 2005. The evidence discloses that 'Not a cent' of that amount was to come from Mr Pantzer. There was no contract, arrangement, or understanding between Lawler Partners and Mr Pantzer in relation to the repayment of that amount. Mr Pantzer recognised that the amount of $20,000 was 'technically payable' by him. He agreed that it was like a 'gift to him', that Lawler Partners was paying the $20,000. Furthermore, no promise has been made in relation to the repayment of that amount by Mr Pantzer. In the circumstances, having regard to the way in which Mr Pantzer puts his claim against Dr Wenkart, the Court should refuse Mr Pantzer to recover the amount of $20,000. He is not a partner or an employee of Lawler Partners but rather an "independent consultant". As the above written submissions reflect, Mr Pantzer gave evidence that Lawler Partners, rather than he personally, would make payment of the charge (and possibly interest thereon) in respect of Dr Wenkart's bankrupt estate payable under the Bankruptcy (Estate Charges) Act 1997 (Cth) by 10 June 2005. He acknowledged that there was no contract, arrangement or understanding between him and Lawler Partners in relation to that proposed payment. 55 In my view, the payment (or perhaps more accurately, the agreement to pay) by the firm within which Mr Pantzer works of the statutory charge payable by Mr Pantzer in respect of Dr Wenkart's bankrupt estate does not render the statutory charge (and the interest payable thereon) something other than "expenses occurred under the Bankruptcy (Estate Charges) Act 1997 " within the meaning of the ruling made by Beaumont J. 56 Lawler Partners may be assumed to have a proper interest in maintaining a good relationship with Insolvency and Trustee Services Australia (ITSA). It is immaterial for present purposes that, presumably to protect that relationship, the firm agreed to pay the statutory charge itself rather than wait for Dr Wenkart to pay the due amount to Mr Pantzer or require Mr Pantzer to pay it personally. As between Dr Wenkart and Mr Pantzer it is an amount payable by Dr Wenkart to Mr Pantzer. Nothing in the evidence suggests an arrangement between Mr Pantzer and Lawler Partners that would entitle Mr Pantzer to keep the amount for his personal benefit should it be paid to him by Dr Wenkart. When he receives from Dr Wenkart the amount due under the statute, Mr Pantzer, as he acknowledged, will be under an obligation to pay that amount to Lawler Partners --- assuming the firm earlier to have paid the statutory charge. The annexures to Mr Gorczyca's affidavit include numerous items of correspondence between legal representatives of Dr Wenkart and legal representatives of Mr Pantzer between 7 May 2002 and 29 September 2004. 59 On 15 October 2004 Mr Gorczyca swore a further affidavit to which he annexed a copy of a letter from Mr Pantzer's solicitor dated 7 October 2004 with which was enclosed "a listing of cash receipts and cash payments made during the period of the administration of the bankruptcy of Dr Wenkart" . On the same day Dr Wenkart swore an affidavit in which he described the listing of cash payments and cash receipts enclosed with the letter dated 7 October 2004 as "an accounting of receipts and payments made into and out of my former bankrupt estate" . 60 I conclude that the provision of this listing of cash payments and cash receipts constituted the furnishing by Mr Pantzer of information reasonably required by Dr Wenkart concerning his property and affairs within the meaning of s 170(2) of the Act. As I understand it, the ongoing dispute between Dr Wenkart and Mr Pantzer is as to the justification for many of the payments revealed by the listing. Those disputes will not be resolved by an order requiring Mr Pantzer to give an accounting. Rather where they raise issues of principle they have been, or will be, resolved by orders of the Court. To the extent that they do not involve issues of principle they can be, or have been, resolved by a taxing officer. The Full Court did not express any criticism of my observation in the taxation judgment at first instance at [35] that it will rarely, if ever, be appropriate for the Court to review a decision of a taxing officer on a line by line basis. It would be equally inappropriate for the Court to review a listing of cash payments and cash receipts on a line by line basis for the purpose of forming a view as to whether the underlying transactions were justified. Moreover this proceeding is not brought under either s 178 or s 179 of the Act. The Court is therefore not engaged in a review of any act, omission or decision of Mr Pantzer or conducting an enquiry into his conduct as trustee in relation to Dr Wenkart's bankruptcy. 61 For the above reasons, I am not presently satisfied that Dr Wenkart is entitled to an order that Mr Pantzer give an accounting concerning the property and affairs of Dr Wenkart. 62 The other orders sought by Dr Wenkart by the notice of motion dated 1 October 2004 assume that there are surplus moneys from the administration of Dr Wenkart's estate in bankruptcy held by Mr Pantzer. Having regard to the reasons for judgment of the Full Court on appeal from the taxation judgment at first instance, and the orders of the Full Court, it seems unlikely that this will prove to be the case. If I am wrong in this regard the parties will have an opportunity to draw the error to my attention. I accept the submission of Dr Wenkart that I ought not to make final orders in this matter before giving the parties the opportunity of considering these reasons for judgment. Importantly this claim was considered by the Full Court in Wenkart v Pantzer [2003] FCAFC 210 ; (2003) 132 FCR 204. At [15] their Honours noted that at a creditors' meeting on 15 March 2002, at which Dr Wenkart was present, a document was tendered which set out Mr Pantzer's claim for outstanding remuneration as at 15 March 2002 in the sum of $115,406.07. A resolution that his remuneration be approved in that sum was not carried and Mr Pantzer's representative said that "the Trustee would therefore claim 85% of the IPAA Guide to Hourly Rates pursuant to Section 162(4) and Reg 8.08 of the Bankruptcy Act " . The Full Court at [16] disagreed with the conclusion of the primary judge that Dr Wenkart was not thereby notified of the amount of Mr Pantzer's claim for remuneration within the meaning of reg 8.09(1) of the Bankruptcy Regulations 1996 . His Honour noted at [34.4] that there was no evidence that Mr Pantzer's claim was excessive and, indeed, an officer of ITSA who had inspected the relevant files had expressed the view that Mr Pantzer had not carried out work unnecessarily "taking all factors into account" . 68 I have already concluded above that Mr Pantzer is lawfully entitled to the amount of the charge payable under the Bankruptcy (Estate Charges) Act 1977 (Cth) (see [56] above). 69 In Wenkart v Pantzer [2003] FCA 471 Beaumont J ruled that Mr Pantzer is lawfully entitled to disbursements claimed by Cutler, Hughes and Harris. His Honour also noted that no appeal had been lodged from the decision of the taxing officer to issue a certificate of taxation on 17 February 2003 in respect of costs, including unpaid costs, in the total sum of $180,435.30. Mr Pantzer gave evidence that the amount of $163,477.54 remains owing by him to Cutler, Hughes and Harris in respect of these costs. I conclude that Mr Pantzer is lawfully entitled to this amount. 70 The invoice from the taxing officer in respect of the taxation of the costs of Cutler, Hughes and Harris was not tendered as foreshadowed in written submissions of Mr Pantzer. It appears that the amount of the invoice has not been paid. The trustee may make the requirement on the trustee's own initiative, or at the request of the bankrupt or a creditor. Having regard to the language of s 167(1) and reg 8.11(5) respectively, I conclude that in these circumstances "the person requesting the taxation" within the meaning of reg 8.11(5) was Dr Wenkart and those of his creditors on whose behalf Dr Wenkart's then solicitors were acting when they wrote the letter dated 24 April 2002. 74 There being no evidence that Mr Pantzer has paid the invoice from the taxing officer, I conclude that he is not lawfully entitled to the amount for which it was issued. Liability to pay the invoice rests on Dr Wenkart and those of his creditors who joined in the request that Cutler, Hughes and Harris tax their costs. 75 Following the making by Lindgren J of the orders of 21 October 2003 (see [22] above) Mr Pantzer requested that a claim for remuneration and certain bills of costs for services provided by others purportedly in relation to the administration of Dr Wenkart's estate be taxed. By a certificate dated 13 December 2004 the taxing officer certified that she had taxed and allowed the remuneration, disbursements and expenses claimed by Mr Pantzer for the period 15 March 2002 to 21 October 2003 in the amount of $169,955.54. The amount allowed for Mr Pantzer's remuneration was $83,219.82. Dr Wenkart's challenge to this certificate of taxation, and to a further certificate issued by the taxing officer on 12 January 2005, was dismissed by the Full Court (see [8]-[12] above). As I have observed above (see [23]), Dr Wenkart conceded that upon completion of taxation of the claims for costs and remuneration referred to in orders 1 and 2 of the orders made on 21 October 2003 the amounts taxed would be amounts to which Mr Pantzer is lawfully entitled. I conclude that Mr Pantzer is lawfully entitled to the sum of $83,219.82 for remuneration for the period 15 March 2002 to 21 October 2003. 76 Mr Pantzer is for the same reasons lawfully entitled to the additional amounts totalling $86,736.12 included in the certificate of taxation dated 13 December 2004 and the amount of $33,295.95 allowed by the certificate of taxation issued by the taxing officer on 12 January 2005. 77 For the above reasons I conclude that the total amount to which Mr Pantzer has established that he is lawfully entitled, within the meaning of order 1 of the consent orders made on 11 March 2002 is $484,824.59. Wenkart v Pantzer (No 3) is an interlocutory judgment in this proceeding in which Lindgren J dismissed Dr Wenkart's objection to the Court's jurisdiction to hear and determine the motions brought by the notice of motion filed by Mr Pantzer on 31 October 2002. 79 His Honour's reasons for judgment in Wenkart v Pantzer (No 3) at [41] suggest that his Honour proceeded on the basis that the amount of the remuneration to which Mr Pantzer was or might become "lawfully entitled" from Dr Wenkart within the meaning of order 1 of the consent orders made by Beaumont J on 11 March 2002 had by then been finally determined. It appears that the only issue now remaining to be decided (apart from the present jurisdictional question) is whether the Court should make the 'orders in aid' sought in Mr Pantzer's notice of motion filed on 31 October 2002. Those reasons for judgment reveal that the precise aggregate amount to which Mr Pantzer may become "lawfully entitled" within the meanings of order 1 of the consent orders of 11 March 2002 cannot be determined until "practical effect" has been given to the consent orders. This is because the Full Court has held that Mr Pantzer is entitled to remuneration as trustee in bankruptcy (ie profit remuneration in respect of his own time, not just to his proper legal and other costs) in respect of steps taken by him "for the purpose of giving practical effect to the 11 March 2002 consent orders" (see [43] above). See also Fine Real Estate Network Pty Ltd v Howell (unreported, Young J, Supreme Court of New South Wales, 4 December 1997). 82 I do not consider that I am free to accept that the principle invoked by the Court of Appeal in Widgery v Tepper has application in the circumstances of this case to invalidate the charge purportedly granted by Dr Wenkart over the Paddington property. The orders of 11 March 2002 were made by consent (see [15] above). While the proper construction of order 2 of those orders may be open to argument, there is no doubt that Dr Wenkart agreed to charge the Paddington property in favour of Mr Pantzer to secure the amount of remuneration, costs, charges and expenses to which Mr Pantzer was or might become lawfully entitled. He did so to facilitate the consideration by his creditors of a proposal under s 73 of the Act. Having taken the benefit of the agreement reflected in the consent orders, Dr Wenkart is not free now (a) to disown order 2 because of the Full Court's determination of the true extent of Mr Pantzer's lawful entitlements or (b) to suggest that the order cannot be given any practical effect. Having regard to the reasons for judgment of the Full Court, I conclude that the charge effected by order 2 encompasses all amounts to which, during the life of the charge, Mr Pantzer is or becomes lawfully entitled from Dr Wenkart. 83 In Wenkart v Pantzer (No 3) at [66] Lindgren J noted that Mr Pantzer's claim to enforce the charge referred to in order 2 of the consent orders made on 11 March 2002 is a claim to enforce proprietary rights springing out of a contract. In my opinion, the law providing for the enforcement of an equitable charge by the appointment of a trustee for sale is a law relating to procedure within s 79 of the Judiciary Act . This Court was created as a 'court of law and equity': FCA Act, s 5(2). It has power to appoint a trustee for sale of the Property. I reject this argument. Section 111 of the Conveyancing Act applies in the case of a mortgage or charge registered under the Real Property Act 1900 (NSW). No misapprehension on the part of Mr Pantzer, or his legal advisers, in this regard can change the character of order 2. Order 2 has not given rise to a charge registered under the Real Property Act . Mr Pantzer's rights under the consent orders are rights in personam against Dr Wenkart. 85 Dr Wenkart also placed reliance on Mr Pantzer's failure to serve the notice purportedly issued under s 111 on Hapday Holdings Pty Ltd, which holds a registered mortgage over the land the subject of the charge, or on the occupier of the premises on the land. For the reasons already given this reliance was misplaced. 86 Hapday Holdings is a party interested in Mr Pantzer's application by way of cross-claim for an order that he be appointed as trustee for sale of the Paddington property. It was not originally named as a cross-respondent to the cross-claim. However, on 21 January 2005 I ordered that Hapday Holdings be joined as a cross-respondent with effect from that day. Thereafter Hapday Holdings has participated in the hearing of the cross-claim and has had the opportunity to make submissions concerning Mr Pantzer's entitlement to the relief claimed by the cross-claim. 87 No prejudice to Hapday Holdings flowing from its late joinder as a party to the cross-claim has been identified. I do not regard the late joinder as a reason to deny Mr Pantzer the right to enforce the equitable charge given to him by Dr Wenkart. Nor do I regard the failure to give notice to the occupiers of the Paddington premises as an impediment to the way of enforcement of the charge. All necessary notices will be able to be given by any trustee for sale appointed by the Court. 88 Subject to my being satisfied that Mr Pantzer does not hold surplus moneys from the administration of Dr Wenkart's estate in bankruptcy in an amount that exceeds the amount to which he is "lawfully entitled" within the meaning of order 1 of the consent orders made on 11 March 2002, I conclude that the Court should make "orders in aid" of the kind sought by the cross-claim. The parties will be given an opportunity to make submissions on the terms of the order or orders appropriate to be made and as to whether the realisation of the charge should be deferred --- whether to allow Dr Wenkart to pay to Mr Pantzer the amount to which he is lawfully entitled, to allow the total amount to which Mr Pantzer is legally entitled to be further clarified or for any other reason. My present view, however, is that to reduce the risk of yet further litigation between the parties, an independent person, rather than Mr Pantzer, should be appointed as trustee for the sale of the Paddington property (see Guardian Mortgages Pty Ltd v Miller [2004] NSWSC 1236 at [122] ). 89 Having regard to the reasons for judgment of the Full Court on appeal from the taxation judgment at first instance, I accept that the remuneration, costs and expenses of the trustee for sale and the legal expenses of transferring the Paddington property to the purchaser should be paid from the proceeds of the sale of the property as amounts to which Mr Pantzer is "lawfully entitled" from Dr Wenkart. This is not an issue to which a simple answer can be given. In respect of any particular amount the issue of whether interest is payable, and if so, at what rate and over what period of time, will depend on considerations such as the basis of the entitlement and the period of time, if any, that Mr Pantzer has been out of pocket in respect of the amount. 92 The appropriate time for the determination of questions of interest will be after the resolution of other outstanding questions. It is therefore necessary to determine the significance of Mr Pantzer's failure to comply with s 162(5A), and in particular whether the Act discloses an intention that such non-compliance should disentitle a trustee from retaining the funds so withdrawn ( Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355). In my view, the Act does not disclose such an intention. Having regard to the nature of this proceeding, Mr Pantzer's failure to comply with s 162(5A) is, in my view, without present significance. I do not accept that Mr Pantzer made admissions of this character. Mr Pantzer gave evidence that an electronic cash book was maintained in respect of Dr Wenkart's bankruptcy although he did not personally make entries in it. In any event, s 173(1) of the Act creates an offence of strict liability. Mr Pantzer was not charged in this proceeding with failing to comply with s 173(1). It would therefore be inappropriate for any finding of a contravention of that subsection to be made. I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. | trustee remuneration and costs to which trustee lawfully entitled work undertaken post-annulment taxation of costs impact of consent orders enforcement of charge over property court ordered sale of property held: trustee to be awarded amount for remuneration, costs, charges and expenses to which legally entitled bankruptcy |
The Tribunal held that those conditions were war-caused and remitted the assessment of the respondent's (Mr Newson's) entitlement to the Commission. 2 The Commission's notice of appeal puts the question of law raised by the appeal as being whether the Tribunal misconstrued and misapplied cll 5(j) and 5(k) of the Statement of Principles No 82 of 2001, made pursuant to s 196B of the Veterans' Entitlements Act 1986 (Cth) ('the Act'), by failing to take into account the requirement in cl 4 of the Statement of Principles that the various factors set out in cl 5 of the Statement of Principles ' must be related to any relevant service rendered by the person '. 3 The grounds of appeal were put as being whether the Tribunal erred by interpreting and applying cll 5(j) and 5(k) of the Statement of Principles No 82 of 2001 as if it dealt with or included activity that the applicant performed during the 20-year period (up to 1967) and the 42-year period (up to 1999) respectively after he had ceased rendering eligible service. It is asserted that the Tribunal failed to take into account the requirement in cl 4 of the Statement of Principles that the factors listed in cl 5 ' must be related to any relevant service rendered by the person '. Apart from one minor error, which has been corrected, Mr Newson does not dispute these facts, nor the statements of the relevant legislation and the relevant statement of principles which follow. 5 Mr Newson enlisted in the Royal Australian Air Force ('RAAF') on 3 November 1942, and served as a ' trainee technical ' and then a ' fitter general ' on various RAAF bases until he was discharged on 6 January 1947. His RAAF service was ' eligible service ' for the purposes of the Act: see s 7(c). 6 After his discharge, Mr Newson worked as a carpenter/joiner for various building companies from 1947 until 1967. 7 In 1967, Mr Newson became an employee of the Sydney County Council (SCC), now known as Energy Australia. He worked there until 1989. He retired ' mainly ' because he had suffered a heart attack. 8 On 16 June 2005, Mr Newson claimed a disability pension under the Act in respect of conditions described in his claim form as ' heart problems ', ' hearing problems and ringing in ears ', ' cataracts ', ' knee problems (both) and right hip problem ' and ' back problems '. He also sought a review of the assessment of his pension rate. On 19 July 2006 the Board affirmed the delegate's decision. Mr Newson then applied to the Tribunal. 11 Before the Tribunal, Mr Newson withdrew his claim in respect of spondylosis. He also requested the Tribunal to remit the assessment of his claim to the Commission. 12 The review conducted by the Tribunal was therefore confined to the issues of whether Mr Newson's lumbar spondylosis, bilateral knee osteoarthrosis and right hip osteoarthrosis were war-caused. The present appeal concerns its findings in relation to bilateral knee osteoarthrosis and right hip osteoarthrosis. 14 The veteran may make a claim for a pension: s 14. The applicant is required to consider and determine claims for pension: ss 18 and 19 . 15 Section 120 of the Act prescribes the standard of proof to be applied when making determinations under the Act. The general provision is found in s 120(4) , which requires the applicant to determine matters other than those to which ss 120(1) and (2) apply ' to its reasonable satisfaction '. A different standard of proof is prescribed in ss 120(1) and (2) for claims arising out of operational service; those provisions do not apply to the present case, because Mr Newson did not render operational service. 16 Section 120(4) is affected by s 120B , which applies to any claims made after 1 June 1994. The Statement of Principles that is more beneficial to the veteran must be preferred. 20 In the present case, the Tribunal applied the Statement of Principles in force at the time of the original decision (Instrument No 82 of 2001) rather than the Statement of Principles in force at the time of its decision (Instrument No 32 of 2005) on the basis that the earlier statement of principles was more beneficial to Mr Newson (at paras [10], [59] and [62] of the Tribunal's Reasons). Subject to clause 6, at least one of the factors set out in clause 5 must be related to any relevant service rendered by the person. 24 The Tribunal first considered Mr Newson's right hip claim against the current Statement of Principles (Instrument No 32 of 2005). The factor in cl 5(i) required the veteran to have lifted at least 168,000 kilograms within ' any ten year period ' before the clinical onset of osteoarthrosis in the hip, and the clinical onset of osteoarthrosis in that hip to have occurred within the 25 years following that period. In our view, "any 10 year period" provides flexibility in cases where, for example, significant weights are only lifted towards the end of a veteran's service. The remaining weight may be lifted in the veteran's post-service work, as long as the service portion of the lifting is a material contribution to the required weight. Alternatively, if the heavy lifting occurs intermittently throughout a veteran's service, the 10 year calculations may start at any time during service which is most advantageous to the veteran, providing that the service portion of the lifting is a material contribution to the required weight. On this view, the clinical onset of the veteran's osteoarthrosis of the right hip would need to have occurred no later than 1980; that is, 1946 (the last full year of service) plus 9 years to make the 10 year period, plus an additional 25 years. This would be the most generous possible formula. We note that the bulk of the veteran's service lifting occurred between 1943 and 1945. As discussed above, we were reasonably satisfied that the clinical onset of Mr Newson's hip condition was in the mid 1980s. However, based on the above considerations, we are not reasonably satisfied that Mr Newson met all criteria for factor (5)(i) in Instrument No.32 of 2005, notably that the clinical onset of his condition was not within the 25 years following the period . However, the Tribunal reasoned to a different result. On that basis, we are reasonably satisfied that the clinical onset of his hip condition in the mid 1980s was within 25 years of the cessation of the activity i.e., heavy lifting in 1967. Further, we are reasonably satisfied that Mr Newton lifted weights of at least 35 kilograms, to a cumulative total of 168,000 kilograms, between 1943 and 1953. His heavy lifting did not cease until 1967, and the clinical onset of osteoarthrosis in the hip occurred within the 25 years immediately following such activity. • whether the clinical onset of osteoarthrosis had occurred within the 25 years immediately following 'such activity' --- the Tribunal held that it had, and that clinical onset had occurred in the mid 1980s. ' Mr Newson's period of eligible service commenced on 3 November 1942 and ended on 6 January 1947. The Commission submitted that the Tribunal made no reference to cl 4 in its reasons; it made no attempt to explain how Mr Newson's work as a carpenter/joiner during the two decades after his discharge were related to his eligible service, though it is clear that the Tribunal took that period of employment into account when making its findings. According to the Commission, the inference is irresistible --- the Tribunal overlooked cl 4, and erred in law by failing to take it into account. The Tribunal found that this agreement was consistent with an x-ray report that was tendered in evidence before it, and accepted that clinical onset was ' at least 1999 ' at [61]. He had continued in that activity from the time of his service, ceasing only on his retirement in 1989. The clinical onset of osteoarthrosis in 1999 has therefore occurred within the 25 years immediately following such activity. The Tribunal's reference to ' at least the two years before 1999 ' in [64] appears to be a typographical error --- the Tribunal presumably intended to say ' at least two years before 1999. • whether the clinical onset of osteoarthrosis had occurred within the 25 years immediately following ' such activity ' --- the Tribunal held that it had, and that clinical onset had occurred in 1999. ' Mr Newson's period of eligible service commenced on 3 November 1942 and ended on 6 January 1947. The Commission submits that the Tribunal made no reference to cl 4 in its reasons. It made no attempt to explain how Mr Newson's work as a carpenter/joiner for the two decades after his discharge, and his subsequent work for the Sydney County Council from 1967 to 1989 were related to his eligible service. Once again, it is clear that the Tribunal took the respondent's period of employment as a carpenter/joiner and as an SCC employee into account when making its findings. According to the Commission, once again, the inference is irresistible --- the Tribunal overlooked cl 4, and erred in law by failing to take it into account. 34 Before dealing with this, I would observe that there is an important difference between both factors which should be borne in mind. The factor in cl 5(j) requires the lifting of loads of at least 35kg while weight bearing to a cumulative total of 168,000 kg within any ten year period. In other words, the cumulative total may be reached within a shorter period, say five years, but achieving it within a longer period, say 12 years, would not be sufficient. On the other hand, the factor in cl 5(k) requires kneeling or squatting for at least one hour each day on more days than not for at least two years, which is the minimum period over which it may be satisfied. I would read that requirement as requiring two contiguous years. 35 As a matter of construction, the periods referred to in the factors in cll 5(j) ('within any 10 year period') and (k) ('for at least two years') must encompass at least part of a period of relevant service for the requirement of cl 4 of Instrument No 82 of 2001 to be met; otherwise there is no relationship between the injury/disease and the relevant service. Moreover, that part of the period of relevant service must contribute to the requirements of each factor, in the case of the factor in cl 5(j) to the total weight lifted over the period not greater than 10 years and, in the case of the factor in cl 5(k), to the kneeling or squatting time requirement in one of the two years. 36 I think the Tribunal recognised the need for this relationship in its reasons at [56] and [57]. While the Tribunal's observations there are directed to the factor in cl 5(i) of Instrument No 32 of 2005, there are no substantive differences between the relevant terms of the factor in cl 5(i) of Instrument No 32 of 2005 and the same terms of the factor in cl 5(j) of Instrument No 82 of 2001. 37 If one were to take the last five years of Mr Newson's relevant service (1946) as being the starting point, the last year in which the requirements of the factor in cl 5(j) of Instrument No 82 of 2001 (and the factor in cl 5(i) of Instrument No 32 of 2005) could be met would be 1955 (at the end of 10 years); and the last year in which the requirements of the factor in cl 5(k) of Instrument No 82 of 2001 (and the factor in cl 5(l) of Instrument No 32 of 2005) could be met would be 1947 (at the end of two years). 38 Where the Tribunal's process of reasoning appears to have fallen into error is in its construction of the factors in cll 5(j) and (k) of Instrument No 82 of 2001 as to when the period of 25 years, within which clinical onset must occur, first starts. Under the current Statement of Principles in Instrument No 32 of 2005, it is clear that in the case of the factors in cll 5(i) and (l), the period of 25 years first starts immediately following the 10 year or lesser period and the two year period respectively. The Tribunal was of the view that the start date under the factors in cll 5(j) and (k) of the previous Statement of Principles in Instrument No 82 of 2001 did not occur until physical activity of the generic kind referred to in the factors, 'heavy lifting', in the case of cl 5(j), and 'kneeling and squatting', in the case of cl 5(k), actually ceases even if that cessation does does not occur until years after the expiration of the 10 year or lesser period in the case of the factor in cl 5(j) and the expiration of the two-year period in the case of the factor in cl 5(k). Hence, the Tribunal's finding, that Mr Newson's 'heavy lifting' only ceased in 1967 led it to the conclusion that the 25 year period within which clinical onset must occur in the case of the right hip only then commenced; and the finding that Mr Newson's 'kneeling and squatting' only ceased in 1989 led it to the conclusion that the 25 year period within which clinical onset must occur in the case of both knees only then commenced. 39 In my opinion, this process of reasoning is predicated on an erroneous construction of the references to 'such physical activity' in both cll 5(j) and (k) of Instrument No 82 of 2001. It is not a reference to physical activity of that generic kind such as 'heavy lifting or 'kneeling and squatting'; the reference is to ' such physical activity' and, so understood, is a reference back to the physical activity meeting the anterior terms of the factors in cll 5(j) and (k). As indicated in [35] above, this in turn requires the relevant periods therein referred to -'within any 10 year period' and 'for at least two years' --- to encompass at least part of a period of relevant service so as to provide a relationship to meet the requirements of cl 4 that the factor must be related to any relevant service rendered by the person. Such physical activity ceases, at the latest, at the end of the 10 year period in the case of the factor in cl 5(j) of Instrument No 82 of 2001 and, in the case of the factor in cl 5(k) of that instrument, at the end of the two year period; in other words, in the case of the factor in cl 5(j) in 1955 and in the case of the factor in cl 5(k) in 1947. 40 So considered, there is no difference in result in the application of the factors in cll 5(j) and (k) of Instrument No 82 of 2001 from the result in the application of the factors in cll 5(i) and (l) of Instrument No 32 of 2005. In the facts of the present case, for Mr Newson to meet the factor in cl 5(j), clinical onset of osteoarthrosis of the right hip would have had to occur by 1980, and the Tribunal found that it only occurred in the mid 1980s; for Mr Newson to meet the factor in cl 5(k), clinical onset of osteoarthrosis of both knees would have had to occur by 1972, and the Tribunal found it only occurred in 1999. 41 The appeal must be allowed with costs. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. | veteran's affairs eligibility for receipt of pension appeal from decision of the administrative appeals tribunal that held that clinical onset of osteoarthrosis of the applicant's right hip and both knees had been war-caused veterans' entitlements act 1986 (cth) ss 120 , 120b whether the tribunal misconstrued and misapplied cll 5(j) and 5(k) of the statement of principles no 82 of 2001 commencement date of period by which clinical onset of osteoarthrosis must have occurred requirement in cl 4 of the statement of principles that the factors in cl 5 'must be related to any relevant service rendered by the person' veterans' entitlements act 1986 (cth) s 196b defence and war statutory interpretation |
2 The criteria relevant to this appeal is that, under Item 4007 of Schedule 4 and par 820.223 of Schedule 2 of the Migration Regulations 1994 (Cth) ("the Regulations "), the applicant at the time of decision must be a person who does not have a disease which requires him or her to receive health care during the period of proposed stay in Australia which would be likely to result in a significant cost to the Australian community: see par 4007(1)(c)(ii)(A). The Minister has power to waive this requirement if the applicant satisfies all other criteria for the grant of the relevant visa and the Minister is satisfied that the grant of the visa would be unlikely to result in undue cost or prejudice to the Australian community: see par 4007(2). If an applicant fails to meet the requirements of par 4007(1) and the Minister does not waive these requirements, then the applicant will not be able to obtain a visa pursuant to par 820.223 of Schedule 2 to the Regulations . Under reg 2.25A of the Regulations , when determining whether an applicant satisfies certain health criteria for the grant of a visa, the Minister must seek the opinion of a Medical Officer of the Commonwealth ("MOC") on whether, inter alia , the applicant satisfies the criteria contained in par 4007(1)(c). Under reg 2.25A(3) of the Regulations , the Minister must take the opinion of the MOC to be correct for the purpose of deciding whether a person meets the requirements of par 4007(1)(c). The relationship broke down permanently in 2003 as a consequence of domestic violence from her husband. Her application for a visa was subsequently refused by a delegate of the Minister on 10 October 2003 because the delegate concluded that the appellant did not satisfy the health criteria specified in par 4007(1) of Schedule 4 of the Regulations . The delegate based this conclusion on a report of an MOC that the appellant had been diagnosed as HIV positive, that she was receiving therapy, and that the cost of her health care would be approximately $250,000. In the view of the delegate, these matters demonstrated the appellant did not satisfy the health criteria in par 4007(1) due to the likelihood of "undue cost to the Australian community". 4 The medical evidence relevant to this case arises chiefly from reports of Dr Marcus Chen, the appellant's doctor at the Sydney Sexual Health Centre, and Dr Julie Phillips, the MOC consulted by the Minister. The appellant provided the Minister with a letter from Dr Chen dated 20 May 2002, which stated that she was "first diagnosed with HIV in December 2000", and after anti-retroviral medication now presents with "an undetectable viral load of <50 copies/ml and a CD4 count of 320 (20%)". 5 On 8 May 2003, Dr Phillips issued an "Opinion of a Medical Officer of the Commonwealth", which concluded that the appellant did not satisfy the health requirements in par 4007(1) of Schedule 4 of the Regulations . On 28 August 2003, Dr Chen issued a second report stating that the appellant had responded well to HIV medication and that "the viral load has remained undetectable and the CD4 count had increased to 620 by February 2003". This was said to be a "sustained and significant response over three years", and Dr Chen concluded that "the prognosis is good". In relation to the burden of her treatment on society, Dr Chen noted that the appellant had only required outpatient visits for routine blood tests, and had not required, and was unlikely to require for the foreseeable future, any inpatient management. Dr Chen also expressed the view that the appellant had several treatment options if the current combination of medications lost its potency. 6 On 8 October 2004 (which was after the date of the Tribunal's hearing but before it handed down its decision) Dr Chen provided another report stating that the appellant's "antiretroviral combination ... continues to suppress [her] HIV viral load to an undetectable level (less than 50 copies per ml) ... [and] her CD4 count was 680 when last checked in August 2004". Dr Chen concluded that the appellant's outlook was "very good, with little chance of AIDS developing within the foreseeable future". He stated she would require "3 monthly outpatient visits with routine blood tests, but inpatient management is unlikely to be necessary for some years". Dr Chen also pointed out that the appellant was always a regular attendee at his clinic and that her excellent adherence to treatment contributed to her above average response. 7 The appellant applied to the Tribunal for a review of the delegate's decision on 16 October 2003. 11 After a series of delays, the Tribunal hearing eventually took place on 10 September 2004, at which the appellant gave evidence. After the hearing, the Tribunal gave the appellant further time to provide another report from her treating doctor. This report was to include an up-to-date assessment of her health and was also to cover the availability of a particular anti-retroviral drug in her country of origin. This report was the report of Dr Chen of 8 October 2004 (referred to at [6] above), which was received by the Tribunal on 13 October 2004. 12 The Tribunal's decision was given on 15 April 2005. The Tribunal refused the application and stated that the appellant did not satisfy the requirements of par 4007(1)(c) of Schedule 4 of the Regulations . The Tribunal also decided that the health requirements contained in par 4007(1)(c) should not be waived pursuant to the power in par 4007(2). This in turn meant that the appellant did not satisfy par 820.223 of Schedule 2 of the Regulations , and could not be afforded a visa pursuant to that clause. The Tribunal therefore affirmed the decision under review. It is said that in order to be valid, the opinion must address satisfaction of the criteria in par 4007(1)(c) as at the date of the Minister's decision , and that the MOC's report relied on by the Tribunal in this case could not satisfy this requirement. The opinion must be the opinion of the Medical Officer "on a matter referred to in subreg (1) or (2)". The matter referred to in subreg 2.25A(1) is whether a person meets the requirements of the relevant paragraph of Schedule 4. The Minister is to take the opinion as correct for the purposes of deciding whether a person meets a requirement or satisfies a criterion. The opinion must address satisfaction of the requirements at the time of the Minister's decision . Accordingly, it is said, the Tribunal fell into jurisdictional error by relying on a report which was 23 months out of date, and which therefore did not address the satisfaction of the requirements in par 4007(1)(c) at the time of its decision. 14 At this point, I note that the respondent submits that the issue concerning the application of Seligman 85 FCR at 127 was not put to the Federal Magistrate, and therefore cannot be raised before this Court unless leave is granted: see NAJT v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 134 ; (2005) 147 FCR 51 at 56. To the extent that it is necessary, I grant leave to raise this new point on appeal, as I regard it as both cogent and of central relevance. The Minister was on notice that this ground was going to be advanced by the appellant, and consequently no undue prejudice arises. 15 Both the appellant and the Minister made further submissions on this appeal. I identify and address each of them in the substance of my reasons below. The section provides that if certain health (and other) criteria are satisfied, the Minister must grant the visa, and if they are not, the Minister must refuse it. 17 Criteria relevant to the decision of the Minister under s 65 of the Act are found in the Regulations . In particular, par 4007(1)(c) of Schedule 4 of the Regulations establishes as a criterion for grant of a visa that the provision of health care or community services relating to an applicant's disease or medical condition would not be likely to result in a significant cost to the Australian community, regardless of whether such care will actually be used. As noted above at [2], reg 2.25A(3) provides that the decision of an MOC regarding whether the requirements of par 4007(1) of Schedule 4 are satisfied must be taken "to be correct" for the purpose of the Minister's decision whether an applicant satisfies the criteria for the grant of a visa. 18 The determination of this appeal depends on an application of the test laid down by the Full Court in Seligman 85 FCR at 127, where it was stated that the Minister is required by reg 2.25A(3) to take the opinion of the MOC as correct, subject to a qualification that, inter alia , any such opinion must address whether the relevant requirements were satisfied at the time of the Minister's decision . In this case, it is clear that the relevant requirements are those contained in par 4007(1)(c) of Schedule 4 of the Regulations . It is also clear that the Tribunal's decision took the MOC's opinion as correct. The issue which arises for determination therefore is whether the Tribunal fell into jurisdictional error when it took as correct an opinion of an MOC which was given 23 months before the Tribunal made its decision, and which, as a result of this lapse in time, could not strictly be said to address whether the requirements in par 4007(1)(c) were satisfied at the time of the Tribunal's decision . 19 In practical terms, the requirement in Seligman 85 FCR at 127 that the MOC's opinion must address satisfaction of relevant requirements as at the time of the Minister's decision cannot be read literally. For example, where the Tribunal is reviewing the Minister's decision, it cannot be reasonably suggested that the Tribunal should be required to have an MOC's opinion as at the same date as its decision. Generally, the Tribunal will reserve its decision at the end of the hearing and it should be entitled to rely on an opinion which is current and reliable at the date of the hearing, and should not be required to seek or consider a fresh opinion bearing the same date as that on which it eventually hands down its decision. 20 However, in addressing this question, the Tribunal cannot generally disregard a substantial lapse in time between the issue of an MOC's report and the making of its decision. In some cases, for example, it may be that an MOC's opinion expressed many years before the Tribunal's decision, on its face, by reason of the lapse of time and other considerations, will necessitate further investigation as to that opinion's relevance, currency and reliability. Whether further investigation is required will depend on an assessment of all the circumstances of the case, including the amount of time that has elapsed between the issue of the MOC's report and the Tribunal's decision, any evidence of change (and, in particular, improvements) in the applicant's health, and the degree to which any other medical opinions demonstrate a lack of currency and reliability in the opinion of the MOC. 21 In my view, the circumstances in this case demonstrate that the Tribunal fell into jurisdictional error when it took the MOC's opinion as correct because, applying the Full Court's statement in Seligman 85 FCR at 127, that opinion could not be said to address whether the requirements in par 4007(1)(c) were satisfied at the time of the Tribunal's decision. Three considerations lead me to this conclusion. 22 First, the lapse in time in this case between the date of the MOC's opinion and the rendering of the Tribunal's decision was almost two years. Although such a delay may not be uncommon or excessive in many visa and judicial review applications, two years can be a long period in which an individual's health may improve or deteriorate significantly. Consideration of an outdated report could be unacceptable because the Tribunal, pursuant to its obligation under reg 2.25A(3), will act on a report which cannot be said to be a full and proper assessment of the applicant's health or the cost of treatment at the time the Tribunal's decision was made. In other words, the Tribunal, by consulting an out of date report, risks taking into account irrelevant considerations, namely, information and medical opinions which no longer apply to an applicant. In my view, these observations apply to the lapse in time between the issue of the MOC's report and the making of the Tribunal's decision in this case. 23 Secondly, in this case the evidence of improvement in the appellant's health over the 23 month period prior to the Tribunal's decision appears to have been significant. As Dr Chen observes, in the time since diagnosis, the appellant's viral load dropped from 750,000 copies per millilitre to an "undetectable" level, and her CD4 count rose from 230 to at least 680 cells per cubic millimetre. This improvement was described by Dr Chen as "remarkable". 24 Thirdly, there is substantial disagreement between the medical opinions of Dr Chen and the opinion of the MOC. Three reports from Dr Chen were placed before the Tribunal, with the last report being issued shortly after the hearing had taken place. The substance of the latter two opinions of Dr Chen is that the appellant was responding very well to treatment; that she would not require inpatient care for the foreseeable future; that her medication has remained unchanged and constant since initial diagnosis; that she has shown "excellent adherence to treatment"; and that her prognosis was generally very good. Counsel for the appellant observed, and it was not challenged, that the content of these reports was very different to (and, it can be added, significantly more optimistic than) the report of the MOC. Indeed, the references to hospitalisation and intermittent income support in the report of the MOC imply that significant inpatient management would be required for the appellant. This is a matter directly disputed in the reports of Dr Chen. Accordingly, although Dr Chen's reports (unlike the MOC's) do not include an estimate of the cost of the appellant's future treatment, the fact that his reports express different medical conclusions, pursuant to examinations of the appellant well after the date of the MOC's report and shortly before the date of the Tribunal's decision, casts doubt on the currency and reliability of the MOC's assessment of the appellant's medical condition and the cost of her treatment, and supports a conclusion that the MOC's report does not address the appellant's satisfaction or lack of satisfaction of par 4007(1)(c) at the time of the Tribunal's decision. 25 On the basis of these three considerations, I am of the view that the Tribunal fell into jurisdictional error by taking as correct a report of the MOC which, contrary to Seligman 85 FCR at 127, does not address the appellant's satisfaction of par 4007(1)(c) at the time of the Tribunal's decision . The Tribunal's recitation of Dr Chen's evidence is cursory, and no substantive analysis of his opinions is engaged in; at no stage does the Tribunal state that there are significant inconsistencies between the opinions of Dr Chen and the MOC, nor does it explore those inconsistencies; and it registers no concern that the report of the MOC on which it relies is almost two years old at the time of its decision. Moreover, even though the Tribunal states early in its reasons that the Full Court's decision in Seligman [1999] FCA 117 ; 85 FCR 115 is relevant to the appellant's case, there is no evidence on the face of its reasons that the Tribunal considered in any way the applicability of that authority's construction of reg 2.25A. 26 The appellant also submitted that the Tribunal fell into jurisdictional error by failing to seek an updated opinion from the MOC, and relies on Minister for Immigration and Multicultural and Indigenous Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at 351 to support this proposition. Given my finding above that the error in this case lies in the Tribunal's taking as correct an opinion of the MOC which, according to the Full Court's construction of reg 2.25A(3), should not have been taken as correct, it is not necessary to make a finding on the appellant's alternative submission. If it were necessary, however, I would observe that, in my view, a failure by the Tribunal to make further inquiries does not, per se and in the absence of a statutory directive to make further inquiries, constitute jurisdictional error: see Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12 at 21-22. Some extra element is needed to demonstrate that the decision of the Tribunal is affected by an erroneous interpretation or application of law. In this case, that element, and consequently the source of the Tribunal's error, is supplied by the circumstances I have discussed above. 27 The Minister made several submissions on the appeal which went beyond the scope of the issues discussed above. I shall deal with them briefly. First, the Minister submitted that the appellant conceded that the MOC's opinion of 8 May 2003 was correct. The Minister based this submission on the letter sent by the appellant's solicitor on 28 April 2004, quoted at [10] above. In my view, this is not correct. The letter of the solicitor can be taken, at most, as an acknowledgment that the appellant failed to meet certain objectively assessed health criteria. It cannot, on a fair reading, be taken as conceding that she would be a significant or undue cost to the Australian community, and that she therefore failed satisfy the criteria in par 4007(1) or could not attract a ministerial waiver under par 4007(2). 28 The Minister also submitted that no jurisdictional error should be found in the Tribunal's reasons because the Tribunal expressly offered to the appellant an opportunity to obtain a new medical opinion from a Review Medical Officer of the Commonwealth ("RMOC"), and the appellant declined this invitation. Although it is not clear for what purpose this proposition is advanced, in my view it is not an observation which affects whether the Tribunal satisfied its obligation under reg 2.25A. Rather, the fact that the Tribunal offered the appellant an opportunity to obtain an RMOC's opinion affects whether the Tribunal afforded her procedural fairness. Notwithstanding the terms of the Tribunal's letter referred to at [7] above, the appellant's election not to obtain a report from an RMOC is not an answer to her claims on this appeal because the primary obligation in this case is on the Minister or the Tribunal to obtain a report which would enable the making of a determination. Accordingly, even though the appellant waived her opportunity to acquire an RMOC's opinion, this is not sufficient to displace or render irrelevant a jurisdictional error in the reasons of the Tribunal, if one is found. In this case, for the reasons given above, I am satisfied that such an error exists. The conduct of the appellant is not of such a character as to alter or in any way affect this conclusion. 29 Finally, there was debate between the parties regarding the way in which the Tribunal considered whether the requirements contained in par 4007(1)(c) of the Regulations should be waived in the appellant's case. The Tribunal held that, given the MOC's opinion that treatment of the appellant would result in a " significant cost to the Australian community" for the purposes of par 4007(1)(c), any such costs would also be an " undue cost to the Australian community" for the purposes of par 4007(2), and therefore a waiver should not be granted. Given that I have already found at [21] and [25] that the Tribunal was in error in this case, it is not strictly necessary for me to make a finding on this point. However, for the sake of completeness I shall consider the issue of waiver under par 4007(2), and make the necessary findings. 30 The exercise of the power under par 4007(2) to waive the requirements of par 4007(1)(c) is distinct from the question whether the requirements of par 4007(1) have been satisfied. When exercising the power, the Minister must have regard to whether the grant of the visa would be unlikely to result in "undue" cost or prejudice to the Australian community. 31 The word "undue" demonstrates that the Minster must engage in a weighing of considerations. When doing so, it may be necessary or appropriate to look at the evidence as to the amount of costs that are likely to be incurred in an applicant's treatment, having regard to his or her medical condition at the date of the Minster's decision, and to the prognosis of the disease. 32 In the present case, the Tribunal in its reasons noted the fact that Dr Chen had provided medical opinions. It recited some of the content of those opinions, but did not engage in any assessment of their weight or relevance. In particular, it is not apparent that the Tribunal, when forming its conclusions at [59] on the issue of waiver under par 4007(2), took into account Dr Chen's opinions as matters to be considered and weighed against all the other circumstances when determining what is an "undue cost". The Tribunal particularises in some detail at [59] the matters to which it gave weight, and Dr Chen's medical assessments are conspicuously absent from these matters. It may be to Australia's benefit in moral or other terms to admit a person even though it could be anticipated that such a person will make some significant call upon health and community services. There may be circumstances of a "compelling" character, not included in the "compassionate" category that mandate such an outcome. But over and above the consideration of the likelihood that cost or prejudice will be "undue" there is the discretionary element of the ministerial waiver. And within that discretion compassionate circumstances or the more widely expressed "compelling circumstances" may properly have a part to play. However, there is considerable force in the view that, when the Tribunal came to apply the principles articulated in Bui [1999] FCA 118 ; 85 FCR 134 to the question of "undue cost" and its overriding discretion to waive the requirements of par 4007(1)(c), it failed to properly consider or give any weight to the opinions of Dr Chen. In my view, the opinions of Dr Chen that the appellant's medical condition was improving and that she would require only limited medical treatment in the foreseeable future are relevant considerations to an assessment of what constitutes "undue cost" for the purposes of par 4007(2). By failing to take into account these relevant considerations at [59] (indeed, as I have noted above, any attention given to the evidence of Dr Chen was fleeting at best), in my view the Tribunal was in error and its decision should be set aside on the basis that it failed to properly address this issue. The decision of the Federal Magistrate of 11 April 2007 should be set aside. The matter is remitted to the Tribunal to be determined according to law. The first respondent is to pay the appellant's costs of the proceedings before the Federal Magistrate and this appeal. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | opinion of medical officer of commonwealth given 23 months before decision by migration review tribunal opinion taken as correct by tribunal whether opinion addresses satisfaction of health criteria in par 4007(1)(c) of schedule 4 of migration regulations 1994 (cth) at time of the tribunal's decision. whether waiver of health criteria in par 4007(1)(c) of schedule 4 of migration regulations 1994 (cth) pursuant to power under par 4007(2) properly exercised. migration law migration law |
It provides primary health care services to Aboriginal and Torres Strait Islander people living in Alice Springs and the surrounding areas. It has been given the pseudonym 'C Inc' to assist in protecting the privacy of those of its patients who may be affected by these proceedings. 2 On 20 May 2008, the Australian Crime Commission ('ACC') served an amended Notice on C Inc under s 29(1) of the Australian Crime Commission Act 2002 (Cth) ('the ACC Act') requiring it to produce certain medical records and others documents held by it ('the medical records'). In summary, the medical records related to the presentations by both child and adult patients of C Inc for treatment that may have been associated with sexually transmitted illnesses ('STIs'), pregnancies and contraception, sexual and/or physical abuse. The sensitivity associated with the very personal nature of this information is obvious. The ACC claimed that it required the medical records as a part of its Special Intelligence Operation into Indigenous violence or child abuse in the Northern Territory. 3 C Inc originally commenced these proceedings on 9 May 2008 to challenge the original notice that was served by the ACC on 1 April 2008. When the amended Notice was served, C Inc applied to amend its application in these proceedings to challenge that amended Notice ('the Notice'). C Inc's challenge to the Notice is based upon a large number of grounds but essentially it claims that it was not reasonable in all the circumstances for Mr Anderson, the ACC Examiner, to issue the Notice. Ultimately the best interests of the child patients affected by the Notice has become the central issue. 4 Some days before C Inc commenced these proceedings, another Aboriginal controlled health organisation in the Northern Territory also commenced proceedings in this Court challenging a similar notice issued by the ACC. That applicant was given the pseudonym NTD8 . 5 Initially it was thought that these two sets of proceedings could proceed to hearing at the same time. However, it later became apparent that despite the close similarity between the two sets of proceedings, somewhat different factual and legal issues arose for consideration in each matter. As a result, I heard NTD8 's application about two weeks before I heard this application. I have already delivered my decision in NTD8 : see NTD8 v Australian Crime Commission (No 2) [2008] FCA 1551 (' NTD8 '). 6 I mention the NTD8 decision because some of the general factual background and all of the section describing the relevant provisions of the ACC Act set out in that decision, apply equally to this decision. Nonetheless, so that these two decisions can each stand alone, I propose to repeat that material in this decision. I will also add the relevant factual background that is unique to these proceedings and identify the issues that arise. 8 As a part of the Northern Territory Intervention, a package of four pieces of legislation was passed by the Commonwealth Parliament. It included the Families, Community Services and Indigenous Affairs and Other Legislation Amendment (Northern Territory Emergency Response and Other Measures) Act 2007 ('the FACSIA Act') and the Australian Crime Commission Amendment Act 2007, both of which made a number of amendments to the ACC Act. In general terms those amendments extended the ambit of the ACC's functions to include intelligence operations in relation to Indigenous violence or child abuse. I have set out a summary of those amendments in the Relevant Legislative Provisions section below. 9 In pursuit of its extended functions, on 5 February 2008, the Board of the ACC issued a Determination ('the Determination') entitled the Special Intelligence Operation Authorisation and Determination (Indigenous Violence or Child Abuse) 2008 ('the Special Intelligence Operation'). The purpose of the Special Intelligence Operation included the collection and analysis of criminal information and intelligence relating to federally relevant criminal activities in relation to Indigenous violence or child abuse or other federally relevant criminal activity. 10 Mr Jeffrey Philip Anderson is an Examiner appointed under s 46B(1) of the ACC Act. On 1 April 2008, in his role as an ACC Examiner and as a part of the Special Intelligence Operation, he issued the original notice to C Inc under s 29(1) of the ACC Act. 11 In response, on 9 May 2008, C Inc issued these proceedings under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) seeking to challenge Mr Anderson's decision to issue that original notice. That application was supported by affidavits by Ms Nardine Rosemary Collier, the solicitor for C Inc, and by Ms Stephanie Bell, the director of C Inc. In addition to these affidavits, C Inc relied upon two further affidavits at the hearing of this matter: one by Dr John Dominic Boffa and the other by Mr Henry Mizow. 12 On 20 May 2008, Mr Anderson issued the Notice. Indigenous Patients, under 16 years of age presenting due to, or with, sexually transmitted illnesses, pregnancies or seeking services relating to contraception and terminations of pregnancies. Indigenous children (who have not attained the age of 18 years of age) who have or are being treated due to sexual and/or physical abuse and details of any referrals to any Agency or Department of the Commonwealth or Northern Territory Governments in respect of such presentations. Indigenous domestic violence assaults or sexual assaults on Indigenous persons and details of any referrals to any Agency or Department of the Commonwealth or Northern Territory Governments in respect of such domestic violence assaults or sexual assaults. In addition, the documents should identify the person to whom any such Indigenous person presented on any occasion (if more than one) in the relevant period. The * indicates information that has been deleted to protect patient privacy. In this respect, these paragraphs are similar to the notice in NTD8 : see [2008] FCA 1551 at [12] . However, unlike in NTD8 , where eight teenage girls who had received contraceptive treatment were indirectly identified as the patients, these paragraphs do not identify (whether directly, or indirectly) any details of the child patients who may be affected by the notice. • Paragraph 1 applies to treatment for "sexually transmitted illnesses, pregnancies or ... services relating to contraception and terminations of pregnancies". This is similar to the notice in NTD8 , albeit it was limited to the latter aspect and that ultimately became the sole focus of those proceedings: see [2008] FCA 1551 at [12] and [14]. • Paragraph 2 applies to treatment for "sexual and/or physical abuse". In NTD8 , the applicant elected not to pursue its challenge to the similar part of the notice in those proceedings: see [2008] FCA 1551 at [14] . • Given that paragraph 2 specifically applies to children who have been treated for sexual and/or physical abuse, while it is not expressed to be so limited, I consider it can be inferred that paragraph 3 is solely directed to adult patients of C Inc because it refers to almost the same causes for the treatment i.e. sexual assaults or domestic violence assaults. I will therefore proceed to consider this matter on that assumption. Again, in NTD8 the applicant elected not to pursue its challenge to the similar part of the notice in those proceedings: see [2008] FCA 1551 at [14] . 15 In late May 2008, following receipt of the Notice, C Inc applied to amend its application in these proceedings so that it was directed to the Notice. C Inc further amended its application at the hearing on 14 July 2008. Under s 5(1)(a) of the Administrative Decisions (Judicial Review) Act 1977 ('the Act') - that a breach of the rules of natural justice occurred in that Mr Anderson did not provide C Inc with any opportunity to be heard or consider and respond to the material on which he made his decision to issue the notice. Under s 5(1)(h) of the Act - that was no evidence or other material to justify the making of the decision in that a generic unsourced statement of under reporting of Indigenous related child sexual abuse contained in the statement of facts and circumstances (under the heading 'child abuse' on page 9) of the second respondent is not a basis for assuming that the applicant had engaged or intended to engage in such conduct. • 3(c) - the best interests of the children concerned having regard to the possibility that the disclosure of their confidential medical information may discourage them from seeking advice and treatment in the future as deposed to by Dr Boffa. • 3(d) - the effect of the operation of s 12 of the ACC Act as deposed to in the affidavit of Dr Boffa. • 3(e) - the disclosure of their confidential medical information was likely to have adverse consequences for the primary health care of Aboriginal patients in Central Australia, as deposed to by Dr Boffa. • 3(f) - the adverse effect on young Aboriginal mothers seeking ante-natal care as deposed to in the affidavit of Dr Boffa. • 3(g) - the adverse effect on young people seeking treatment for sexually transmitted infections as deposed to in the affidavit of Dr Boffa. • 3(h) - whether young Aboriginal people under the age of 16 years were mature enough to consent to sexual intercourse as deposed to in the affidavit of Dr Boffa. • 3(i) - that the information sought could be obtained from another source as deposed to in the affidavit of Mr Mizow. For its part, the ACC's counsel submitted, among other things, that C Inc had neither complied with the time limit contained in s 57 of the ACC Act, nor sought an extension of time to bring these proceedings. Whether the time limit contained in s 57 of the ACC Act applies to these proceedings and, if so, whether C Inc is entitled to obtain an extension of time to bring these proceedings? In deciding to issue the Notice, was Mr Anderson required to take into account the best interests of the child patients of C Inc that would be affected by the Notice, as a primary consideration. If he was, did he do so? If he did not, how does that affect his decision? 3. In deciding to issue the Notice, was Mr Anderson required to have any evidence before him to indicate that C Inc or its employees was engaged in the under reporting of Indigenous related child sexual abuse. If so, did he have such evidence? If he did not, how does that affect his decision? In deciding to issue the Notice, was Mr Anderson required to take into account as a relevant consideration the impracticability of compliance with the Notice as deposed to in the affidavit of Ms Bell. If so, did he do so? If he did not, how does that affect his decision? 5. In deciding to issue the Notice, was Mr Anderson required to take into account as a relevant consideration that the information sought could be obtained from another source as deposed to in the affidavit of Mr Mizow. If he was, did he do so? If he did not, how does that affect his decision? 6. In deciding to issue the Notice, was Mr Anderson required to afford C Inc natural justice by providing it with an opportunity to be heard or consider and respond to the material on which he intended to make his decision? If so, did he do so? If he did not, how does that affect his decision? 7. Was Mr Anderson's exercise of the power to issue the Notice so unreasonable that no reasonable person could have so exercised the power in the circumstances? If he was, how does that affect his decision? 17 I propose to consider these issues in the order set out above. However, before doing so, I will set out a summary of the relevant provisions of the ACC Act. Prior to the ACC Act coming into effect in 2002, the ACC was known as the National Crime Authority (established under the National Crime Authority Act 1984 (Cth)). The ACC's functions are described in s 7A of the ACC Act, among other things, they include: collecting, correlating, analysing and disseminating criminal information and intelligence, and undertaking intelligence operations (when authorised by the Board of the ACC). 19 The expression "intelligence operation" is defined in s 4 of the ACC Act to mean: "the collection, correlation, analysis or dissemination of criminal information and intelligence relating to federally relevant criminal activity. " The expression "federally relevant criminal activity" is defined in s 4 to mean: "a relevant criminal activity, where the relevant crime is an offence against a law of the Commonwealth or of a Territory; or a relevant criminal activity, where the relevant crime is an offence against a law of a State; and has a federal aspect". 20 The Board of the ACC is authorised to determine that an intelligence operation or an investigation is a 'special operation' or 'investigation' (see ss 7C(2) and (3)). Much of the critical work of the Commission is carried out by examiners. Examiners are appointed by the Governor-General (see s 46B) and are given the powers, amongst other things, to conduct examinations for the purposes of a special ACC operation/investigation (see s 24A), to summons witnesses and take evidence (see s 28) and to obtain documents for that purpose (see s 29). 21 The notice that is at the heart of these proceedings was issued pursuant to s 29(1) of the ACC Act. (1A) Before issuing a notice under subsection (1), the examiner must be satisfied that it is reasonable in all the circumstances to do so. The examiner must also record in writing the reasons for the issue of the notice. 22 The Notice contained a notation under s 29A(1) of the ACC Act. Those amendments were enacted via by two pieces of legislation: the Families, Community Services and Indigenous Affairs and Other Legislation Amendment (Northern Territory Emergency Response and Other Measures) Act 2007 (Act number 128 of 2007) and the Australian Crime Commission Amendment Act 2007 (Cth) (Act number 168 of 2007). The new definitions applied to the following words or expressions: child, child abuse, Indigenous person, Indigenous violence or child abuse, relevant crime and serious violence. 'Child abuse' was defined to mean: "an offence relating to the abuse or neglect of a child (including a sexual offence) that is punishable by imprisonment for a period of three years or more". 'Serious violence' was likewise defined by a minimum penalty of three years. Most significantly, the expression 'relevant crime' replaced the expression 'serious and organised crime'. 'Relevant crime' was defined to mean: "serious and organised crime or Indigenous violence or child abuse. " The expression 'Indigenous violence or child abuse' was defined in to mean: "serious violence or child abuse committed by or against, or involving, an Indigenous person". Other definitional changes were made to extend the operation of the ACC Act to State agencies and staff. 25 The second piece of legislation, the Australian Crime Commission Amendment Act 2007 (Cth), made amendments to ss 28 and 29 of the ACC Act which are not particularly relevant to these proceedings. The ACC stated it neither opposed nor consented to an application for extension of time if one were sought. 27 Section 57 of the ACC Act provides that ss 11(1) to (5) inclusive of the Administrative Decisions (Judicial Review) Act 1977 (Cth) are omitted and replaced by a number of subsections that require, among other things, that "an application to the Federal Court for an order of review in respect of a matter arising under the ACC Act" must be lodged within five days (excluding days on which the Registry is closed) after the day on which the applicant becomes aware of the matter or within such further period as the court, in special circumstances allows. 28 According to the affidavit of Ms Collier, C Inc first became aware of the original notice on 2 April 2008 i.e. one day after it was issued. C Inc commenced its proceedings to challenge that original notice on 9 May 2008 --- more than a month outside the time limit set by s 57. On 20 May 2008, the ACC chose to withdraw that original notice and serve the Notice on C Inc. As a consequence, on 27 May 2008, Ms Collier filed an application and affidavit seeking leave to amend C Inc's application in these proceedings so it challenged the Notice. On the same day, at a directions hearing in these proceedings, I ordered that: "The applicant file and serve its amended application directed to the second notice issued by the respondent by 4.00pm on 28 May 2008. " The ACC did not oppose C Inc's application to amend. Given that 24 and 25 May 2008 were weekend days when the Registry was closed, C Inc's application for leave to amend the application in these proceedings to seek to challenge the Notice and the order giving leave to amend, both occurred within five days after the Notice was issued. 29 In these circumstances, by successfully applying to amend these existing proceedings to seek an order for review in respect of the Notice, I consider that C Inc had thereby lodged the required application with this Court within the five day period as required by s 57 of the ACC Act. I do not consider C Inc's earlier failure to comply with the s 57 time limit affects this conclusion because the proceedings so issued were not a nullity: see Duff v Freijah [1982] FCA 159 ; (1982) 43 ALR 479 at 483 per Northrop J. In my opinion, they could therefore be amended to become a valid application seeking review of the Notice, as they were. If I am wrong about this conclusion, I consider the circumstances outlined above amount to 'special circumstances' for the purposes of s 57 of the ACC Act and I would grant any necessary extension of time to C Inc to bring these proceedings. 30 For completeness, I note that the ACC raised a similar issue to this in NTD8 and I reached similar conclusions (see NTD8 at [13]). (2) Was Mr Anderson required to take into account the best interests of the children affected by the Notice, as a primary consideration? If he was, did he do so? If he did not, how does that affect his decision? Further, in paragraphs 3(d) to 3(h) of its amended application, C Inc claimed that Mr Anderson had failed to take into account a number of other relevant considerations, which related to the best interests of the children concerned, without using that expression or claiming that it should be considered as a primary consideration. Further, the claims in the remainder of paragraphs 3(c) to 3(h) were first included in the application when C Inc made its application to amend on 27 May 2008. The original application issued on 9 May 2008, did not include any grounds of relief and instead, referred to the accompanying affidavits of Ms Collier and Ms Bell. While the affidavit of Ms Bell affirmed 8 May 2008, set out a great deal of detail of the difficulties she considered C Inc would have in complying with the original notice, the only mention she made of the impact the original notice would have on the interests of its child patients was the following paragraph: "[C Inc] also believes that complying with the affidavit [sic notice] will have serious consequences on access to our services by young people and have a negative impact on their health and wellbeing. " No details were given of how these serious consequences might arise, what they were, how they might affect access to services, or a myriad of other matters. 34 Likewise, Ms Collier's affidavit sworn 8 May 2008, makes only a brief mention of this issue in the body of her affidavit as follows: "I also informed Mr Ladlay [an Officer of the ACC] that it was of great concern to [C Inc] that they were being asked to provide the name of their patients. In that letter, she gives as the second of two reasons C Inc had for its opposition to the Notice as: "Secondly, that compliance with the request to provide the names of patients will breach patient confidentiality; the effect of which will be that patients will simply stop using the services of [C Inc] for fear of being named, or investigated, and/or criminally prosecuted. " Ms Collier went on to indicate that C Inc could provide some information to the ACC but she made it clear that: "Our client will not however release names of patients unless ordered to do so by the court. " It will be noted that Ms Collier does not distinguish between child patients and adult patients. 36 It follows that by the time Mr Anderson decided to issue the Notice on 20 May 2008, the expression "the best interests of the children" had not appeared in any of C Inc's materials and C Inc had only given brief and very general details of its objections to the original notice in that regard. As well, Mr Anderson was not aware of the contents of Dr Boffa's affidavit. . To complete the picture, it is appropriate to set out a summary of the contents of Dr Boffa's affidavit. 37 Dr Boffa is a Public Health Medical Officer employed by C Inc. He has approximately 20 years experience as a medical officer working with Aboriginal patients in Central Australia. In that context, he has extensive experience in dealing with Aboriginal public health issues. In his affidavit, he opined, among other things, that strict confidentiality is critical to developing a "good trust relationship" with Aboriginal patients, especially with young Aboriginal people. He said that: "Lack of trust, secrecy and provision of private medical information to law enforcement agencies will be counter-productive to public health issues regarding Aboriginal children. " He said that without this 'trust relationship', young Aboriginal first-time mothers will not present early and often for ante-natal care and that will have an adverse effect on the health and survival rates of their babies. 38 In relation to treatment for STIs, he opined that: "In order to reduce the rate at which STIs are being transmitted, it is vital that young people feel comfortable to present for testing and treatment whenever they believe they may have put themselves at risk, as well as accept screening opportunities, particularly when they present to health services for another reason". He opined that if it were known that the medical records for such young people would be provided to the ACC, they would stop seeking such testing and treatment and that was likely to increase the prevalence of STIs and have other adverse consequences for their sexual health. 39 In NTD8, I concluded that the High Court's decision in Teoh required that in issuing the notice in that matter, Mr Anderson had to take into account the best interests of the children concerned as a primary consideration and that he had failed to do so: see NTD8 at [52]. I therefore set the decision aside under ss 5(1)(e) and 5 (2)(b) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) --- the latter section deals with a failure to take into account a relevant consideration. I will return to the appropriateness of this form of relief later in these reasons. First it is necessary to consider the High Court's decision in Teoh in some detail. 40 The decision in Teoh was based, in large part, upon the legitimate expectations that flowed from Australia's ratification of the Convention. " Their Honours then said: "That positive statement is an adequate foundation for a legitimate expectation, absent statutory or executive indications to the contrary, that administrative decision-makers will act in conformity with the Convention and treat the best interests of the children as 'a primary consideration'. It is not necessary that a person seeking to set up such a legitimate expectation should be aware of the Convention or should personally entertain the expectation; it is enough that the expectation is reasonable in the sense that there are adequate materials to support it. But, if a decision-maker proposes to make a decision inconsistent with a legitimate expectation, procedural fairness requires that the persons affected should be given notice and an adequate opportunity of presenting a case against the taking of such a course. So, here, if the delegate proposed to give a decision which did not accord with the principle that the best interests of the children were to be a primary consideration, procedural fairness called for the delegate to take the steps just indicated. "(at 291). 42 In his decision, Toohey J said: "It follows that while Australia's ratification of the Convention does not go so far as to incorporate it into domestic law, it does have consequences for agencies of the executive government of the Commonwealth. It results in an expectation that those making administrative decisions in actions concerning children will take into account as a primary consideration the best interests of the children and that, if they intend not to do so, they will give the persons affected an opportunity to argue against such a course. It may be said that such a view of ratification will have undue consequences for decision-makers. But it is important to bear in mind that we are not concerned with enforceable obligations, but with legitimate expectations, and that there can be no legitimate expectation if the actions of the legislature or the executive are inconsistent with such an expectation. " (at 302). 43 The other member of the majority in Teoh was Gaudron J. Her Honour agreed with Mason CJ and Deane J (at 304) and concluded: "There is a want of procedural fairness if there is no opportunity to be heard on matters in issue. And there is no opportunity to be heard if the person concerned neither knows nor is in a position to anticipate what the issues are. That is also the case if it is assumed that a particular matter is not in issue and the assumption is reasonable in the circumstances. In my view and for the reasons already given, it is reasonable to assume that, in a case such as the present, the best interests of the children would be taken into account as a primary consideration and as a matter of course. That being so, procedural fairness required that, if the delegate were considering proceeding on some other basis, she should inform Mr Teoh in that regard and give him an opportunity to persuade her otherwise. 45 The point made by Toohey J that: "... it is important to bear in mind that we are not concerned with enforceable obligations" is a reiteration of something his Honour said earlier in his decision as follows: "Ratification [of the Convention] of itself does not make the obligations enforceable in the courts; legislation, not executive act, is required. But the assumption of such an obligation may give rise to legitimate expectations in the minds of those who are affected by administrative decisions on which the obligation has some bearing. " (at 301). 46 Notwithstanding these observations, Toohey J at least raised the prospect that the obligation to meet the legitimate expectations may have required the decision-maker in Teoh to place herself in a better position to do so by making inquiries about their circumstances. Ultimately, his Honour decided to dispose of the matter on the basis of a failure to afford procedural fairness (at 303). 47 In their decision, Mason CJ and Deane J said something similar about enforceable obligations, as follows: "The fact that the provisions of the Convention do not form part of our law is a less than compelling reason --- legitimate expectations are not equated to rules or principles of law. " (at 291). 48 However, in the concluding paragraphs of their decision, Mason CJ and Deane J seemed to indicate that two consequences may flow from the decision maker's failure to take into account the best interests of the children as a primary consideration, where they said: "That view entails the conclusion that there was a want of procedural fairness. It may also entail, though this was not argued, a failure to apply a relevant principle in that the principle enshrined in Art 3.1 may possibly have a counterpart in the common law as it applies to cases where the welfare of a child is a matter relevant to the determination to be made. In other respects, we do not consider that there was any failure to take relevant matters into account. " (at 292). 49 The common law right postulated by Gaudron J in Teoh (at 304) could well have given rise to an enforceable obligation, but having speculated on the existence of that right, her Honour decided the matter on the basis that there had been a denial of procedural fairness: see [43] above. 50 If the matter were left there, it seems to me that there may have been two approaches open to the form of relief where it emerged that the decision maker had failed to take into account the best interests of the children as a primary consideration --- the first quite clear and the second more tentative: to set aside the decision for failing to afford procedural fairness, or to set aside the decision for failing to take into account a relevant consideration. Of course, the ultimate outcome is the same whichever approach is taken. 51 However, in Minister for Immigration and Multicultural Affairs, Re; Ex parte Lam [2003] HCA 6 ; (2003) 214 CLR 1 (' Lam') each of the judges of the High Court seemed to dispose of the latter approach by drawing a clear distinction between substantive and procedural rights, or substantive outcomes and procedural benefits: see Lam at [28] per Gleeson CJ; at [101] per McHugh and Gummow JJ; at [118] --- [119] per Hayne J and at [148] per Callinan J. 52 Neither counsel addressed this specific issue about the appropriate form of the relief in this matter, or in NTD8 . The Convention is not part of Australian domestic law. A matter which can be discerned on the proper construction of the Act as a whole to be relevant in the exercise of that discretion, does not achieve that quality because the same matter is stipulated in an international treaty, or is the subject of one or more of Australia's international obligations. Thus, if, for example the right of the child of an applicant to acquire Australian nationality were relevant to the exercise of the Minister's discretion, the regard which the Minister should have to that right would not materially change because a similar right is recognised by a treaty. 53 As I read this submission, while it raises the same general issue, it does not address the question: what is the appropriate form of relief if the expectation is not met? I have been unable to locate any other treatment of this specific issue in the submissions made by either counsel. 54 I took the latter approach (above) in NTD8 . However, having now considered the issue in some more depth and, in particular, the effect of Lam on Teoh , I consider the preferable approach, and the approach I propose to take in this matter, is the former approach. I emphasise that the ultimate outcome is the same i.e. the decision is set aside. 55 Before I leave the effect of Lam on Teoh , I should state my views on some other aspects that are relevant to the determination of this matter. First, notwithstanding the strong criticisms in Lam of certain aspects of the decision in Teoh, I consider it is clear that the Court in Lam did not go as far as over ruling the decision in Teoh : see Royal Women's Hospital v Medical Practitioners Board (2006) VSCA 85 at [79] per Maxwell P and the discussion in Duxbury A, The Impact and Significance of Teoh and Lam in Groves and Lee, Australian Administrative Law , Cambridge University Press 2007 at chapter 19, particularly pages 312 --- 315. That being so, I consider I am bound to follow Teoh. 57 Thirdly, if the effect of Lam is that an applicant is required to demonstrate unfairness in the procedure followed, not just an un-met expectation (see Lam at [34] per Gleeson CJ and at [111] per Hayne J and Untan v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 69 at [99] ), for the reasons I have given below, I consider the necessary level of unfairness has been demonstrated in this case. 58 So, in summary, relevant to this case, I consider the authorities discussed above show that the expectation that an administrative decision-maker will treat the best interests of children as a primary consideration, arises from a combination of Australia's ratification of the Convention; the fact that the decision in question concerns children; and the fact that the decision-maker has not given notice that he or she intends to do otherwise than meet that expectation. Then, if it emerges that the administrative decision-maker has not treated the best interests of the children as a primary consideration, he or she will have failed to afford procedural fairness and the decision will be set aside on that ground. 59 In this case the decision to issue the Notice clearly concerns children. By its terms, the Notice requires C Inc to disclose: "any personal particulars available including the name, date and place of birth, address and date of persons presenting for treatment or consultation", of any Aboriginal patient of C Inc under the age of 16 years who presented due to or with: "sexually transmitted illnesses, pregnancies or seeking services related to contraception and terminations of pregnancies", or any Aboriginal children under the age of 18 years : "who have or are being treated due to sexual and/or physical abuse" (emphasis added). 60 Furthermore, it is clear that Mr Anderson did not give notice to anyone, including the children concerned, or their parents or guardians, that he intended to make the decision without satisfying the expectation that the best interests of the children concerned would be treated as a primary consideration. In fact, the possibility that the children concerned (or their parents or guardians) could be given notice indirectly i.e. by C Inc, was deliberately foreclosed upon by Mr Anderson's decision to include a s 29A notation on the Notice. 61 In my view, it therefore follows from Teoh and the circumstances outlined above, that in making his decision to issue the Notice, Mr Anderson was required to satisfy the expectations to treat the best interests of the children concerned as a primary consideration. If it emerges from a consideration of the materials that he did not do so, his decision to issue the Notice should be set aside because he failed to afford procedural fairness. 62 Before turning to consider those materials, I should say something about a number of other matters that were raised in Teoh and that I consider have some bearing on the determination of this matter. 63 As appears in the quote from Mason CJ and Deane J above (at [41]), it does not matter that the person seeking to assert the expectation is not aware of the Convention, or does not personally have the expectation at the time, provided that, assessed objectively, the expectation reasonably arose in the circumstances: see also at 301 per Toohey J, cf McHugh J at 313 strongly dissenting and the discussion in Lam at [92] --- [96] per McHugh and Gummow JJ and Duxbury above at 309 - 310. Indeed, in Teoh , the significance of the Convention did not emerge at the trial and only surfaced as an issue at the hearing before the Full Court: see Teoh at 298 per Toohey J. For these reasons, I consider C Inc's failure to clearly express the expectation by reference to the Convention until the hearing of this matter is of little consequence (see [31] --- [35]). Of course, none of the child patients of C Inc could have previously held this expectation as they were not aware of Mr Anderson's decision, principally because of the s 29A notation he included in both the original notice and the Notice (see [13] and [22] above). To complete the circle, C Inc could not tell them about the existence of the Notice and therefore could not gain any better assessment of what their expectations may be. 64 In the concluding words of the relevant part of his decision, Toohey J said: "...that there can be no legitimate expectation if the actions of the legislature or the executive are inconsistent with such an expectation. " In my opinion, there are no statutory or executive indications to the contrary of the expectation arising in this matter. As in NTD8 (see at [25]), the ACC accepted that Mr Anderson was required to take into account the best interests of the children concerned as a consideration. This flowed from the purpose and objects of the ACC Act and, among other things, the Determination. Indeed, as the ACC pointed out in its outline of written submissions, the Minister's Second Reading Speech on the package of legislation, which included the amendments to the ACC Act, contained numerous statements to the effect that the object of the amending legislation was to ensure "the safety and wellbeing of children" and the "protection of children" from various scourges, including sexual abuse and domestic violence. Furthermore, the Minister noted in his Second Reading Speech that the amending legislation would allow Australia to implement its "obligations under Human Rights treaties". The Convention was presumably one of the treaties the Minister had in mind. Indeed, in my opinion, it would be a perverse outcome if the Determination and the Special Intelligence Operation conducted pursuant to it, both of which are ultimately aimed at protecting Aboriginal children, contained some legislative or executive indication that in the course of pursuing them, the officers of the ACC would not treat the best interests of those same Aboriginal children as a primary consideration. 65 In NTD8 , in addition to referring to Teoh , I referred to a number of decisions of this Court under the Migration Act 1958 (Cth) which discussed the application of the principle laid down in Teoh. Those Migration Act decisions (including Teoh which was also a decision made under the Migration Act 1958 (Cth)), all involved family groups of children of various sizes ranging from one child in Sebastian v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 31 ; and up to six children, in the case of Vaitaiki v Minister for Immigration and Ethnic Affairs (1998) 150 ALR 608 ; and seven children, in the case of Teoh . 66 Similarly, NTD8 involved a relatively small group, albeit not a family group, comprised of eight Aboriginal girls aged between 13 and 15 years, who had received contraceptive treatment and in relation to whom there was no suspicion of abuse or any consequential requirement for mandatory reporting. In my view, a critical factor in NTD8 and the Migration Act decisions I have mentioned, was that the administrative decision in each case involved a relatively small group of children, whether a family group, or the group of eight Aboriginal girls in NTD8 . Furthermore, the interests or expectations of each member of the groups concerned were affected in a similar kind of individual, direct and immediate way, as described by Mason J in Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 (' Kioa ') at 584. 67 While none of the members of the Court in Teoh expressly mentioned these considerations, it can be safely assumed that the majority did not see them as preventing the expectation reasonably arising in that case which involved seven children. However, in my view, these considerations beg the question whether, the principle laid down in Teoh applies to a larger more diverse group of children, such as arises in this case. Here, the group of child patients affected by Mr Anderson's decision to issue the Notice could number many more than the cases referred to above. Ms Bell said in her affidavit that: "[C Inc] sees approximately 6,500 current patients per year and 1,800 visitors. We provide over 47,000 episodes of care to our current patients and over 5,000 episodes of care to the visitors. " Furthermore, by its terms, the Notice applies to both sexes and the age range specified is from zero to under 18 years. On the other hand, paragraphs 1 and 2 of the Notice only require the production of the medical records for C Inc's patients who had received treatment arising from specific circumstances, namely: "sexually transmitted illnesses, pregnancies or seeking services relating to contraception and termination of pregnancies", and "sexual and/or physical abuse". 68 In the authorities on procedural fairness and the circumstances in which it is attracted, a clear distinction has been drawn between decisions affecting the rights, interests and expectations of a particular person or persons and those affecting the rights, interests and expectations of the public, or a section of the public, at large: see Haoucher v Minister for Immigration & Ethnic Affairs [1990] HCA 22 ; (1990) 169 CLR 648 at 652 per Deane J; Customs v Kawasaki Motors (No 1) [1991] FCA 519 ; (1991) 32 FCR 219 , Hill and Heerey JJ at 238 --- 241; Queensland Medical Laboratory v Blewett (1988) 84 ALR 615 at 637 per Gummow J and Botany Bay City Council v Minister of State for Transport and Regional Development (1996) 66 FCR 537 at 553 --- 554 per Lehane J. 69 In Kioa , discussing the circumstances in which the principles of natural justice were presumed to condition the exercise of a statutory power, Brennan J observed that it was not the kind of individual interest that is important, but the "manner in which it apt to be affected ... in determining whether the presumption is attracted" (at 619). His Honour went on to add that the presumption would be attracted: "if a power is apt to affect the interests of an individual in a way that is substantially different from the way in which it is apt to affect the interests of the public at large", or "which is apt to affect the interests of an individual alone or apt to affect his interests in a manner which is substantially different from the manner in which its exercise is apt to affect the interests of the public". 70 In this case, the manner in which the individual interests of the Aboriginal children in this group is to be affected, is determined by the terms of the Notice. Paragraphs 1 and 2 of the Notice require C Inc to disclose: "Any personal particulars available including the name, date and place of birth, address and date of persons presenting for treatment or consultation", of any Aboriginal patient of C Inc under the age of 16 years who presented due to or with: "Sexually transmitted illnesses, pregnancies or seeking services related to contraception and terminations of pregnancies", or any Aboriginal children under the age of 18 years: "Who have or are being treated due to sexual and/or physical abuse". 71 In short, the individual interests of each member of this group of Aboriginal children in the privacy and confidentiality of their medical records is to be overridden completely and the information disclosed to the ACC. Moreover, that is to be done in secrecy and without these children or their parents having any say in it. Given the very personal nature of the medical records sought, it is not difficult to foresee that the disclosure of information of this kind could cause acute embarrassment to the Aboriginal children concerned and may have implications for their relationships with other persons. I should add that the ACC's answer that they will be protected because this invasion of their interests is to be kept confidential does not, in my view, make it any more acceptable. After all, medical records in general, let alone those dealing with a person's sexual health or activities, are generally regarded as being among the most personal information about an individual: see Carolyn Doyle and Mirko Bagaric Privacy Law in Australia The Federation Press 2005 at pages 46 - 48. Viewed in this way, I consider the Notice affects the interests of each and every individual member of this group of Aboriginal children in a direct and immediate way. Conversely, even though this group may be large it does not, in my view, constitute a section of the public as described in the authorities referred to above, such that the decision does not attract procedural fairness. 72 The ACC relied upon a series of decisions of this, and other Courts, in the main dealing with the use of inquisitorial or coercive powers to submit that natural justice or procedural fairness does not apply to the exercise of what they submitted, is a similar power under s 29 of the ACC Act, including: May v Commissioner of Taxation [1999] FCA 287 ; (1999) 92 FCR 152 (a notice under section 261 of the Income Tax Assessment Act 1936 (Cth)); MM & Anor v ACC [2007] FCA 2026 (a decision made by an examiner under section 29 of the Australian Crime Commission Act 2002 (Cth) in relation to a taxation avoidance investigation); Structureco Inc v Registrar of Trademarks [2003] FCA 1290 ; [2003] 132 FCR 558 (involving section 202 of the Trademarks Act 1995 (Cth)); Woodroffe v Deputy Commissioner of Taxation (2000) 179 ALR 750 (a notice given under s 218 of the Income Tax Assessment Act 1936 (Cth)); Johns v ASC [1993] HCA 56 ; (1993) 178 CLR 408 at 430 --- 431 (exercise of a power under section 127(4)(b) of the Australian Securities Commission Act 1989 (Cth)); Riverside Nursing Care Pty ltd v Bishop [2000] FCA 1147 ; (2000) 100 FCR 519 (a duty imposed under section 67 of the Aged Care Act 1997 (Cth)). 73 In the alternative, the ACC submitted that if the rules of the natural justice or procedural fairness applied in the circumstances of this case, they did not give rise to the requirements that Mr Anderson had to give a notice and an opportunity to be heard before he issued the Notice under s 29 of the ACC Act. It relied upon Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 ; Public Service Board v Osmond [1986] HCA 7 ; (1986) 159 CLR 656 ; Haoucher v Minister for Immigration & Ethnic Affairs [1990] HCA 22 ; (1990) 169 CLR 648 ; and Saitta Pty Ltd v Commissioner of Taxation and Anor [2002] FCA 1105. 74 If these submissions are directed to paragraphs 1 and 2 of the Notice that concern children, I consider they should be rejected. If they are directed to paragraph 3 of the Notice, which I have assumed is solely directed to adult patients of C Inc, I have addressed that issue in [106] below. In relation to paragraphs 1 and 2, I consider these submissions should be rejected because the obligation to afford procedural fairness here arises from the peculiar combination of circumstances involving a group of children, Australia's ratification of the Convention, and the High Court's ruling in Teoh (see [58] above). Insofar as the Notice affects the child patients of C Inc, I therefore consider that Teoh sets out the relevant principles to be applied. 75 Then the question arises: Did Mr Anderson treat the best interests of these children as a primary consideration? Before examining the evidence in relation to this question, it is appropriate to reiterate some of the observations I made in NTD8 about how an administrative decision-maker would go about taking into account the best interests of children as a primary consideration. • It is not necessary for the decision-maker to expressly mention the expression 'best interests of the child' or 'primary consideration', provided that it appears from a fair consideration of the materials that he or she did in fact take them into account; and on that basis. • While the best interests of the children concerned have to be taken into account as a primary consideration that did not mean that other considerations have to be ignored. • Other considerations that were required by the circumstances of a particular case to be primary considerations could require equal, but not paramount, weight provided that those other primary considerations were not treated as inherently more significant than the best interests of the children as a primary consideration. • Moreover, those other primary considerations could be considered to be of such strength that they outweigh the best interests of the children concerned as a primary consideration. • The decision-maker is entitled to take into account the expectations of the Australian community as a primary consideration, provided he or she has considered the best interests of the children concerned as a primary consideration of equal, but not paramount, significance. 76 In relation to the last few observations above, I would add this. In my view, the role of other primary considerations is much more limited in this case than in the migration cases from which those observations were distilled. In those migration cases, the other primary consideration was the public interest, most commonly in either deporting or refusing to grant citizenship to a person considered to be of bad character. In all those cases, that public interest primary consideration, competed with the best interests of the children concerned as a primary consideration. However, in this case, the public interest being served by the ACC, including its pursuit of the Determination and the Special Intelligence Operation, is the protection of Aboriginal children, some of whom include the group of Aboriginal children affected by the Notice. The two primary considerations (if there are two), therefore overlap. In my view, there is therefore little, if any, room for competition between competing primary considerations in this case. 77 These observations address many of the submissions made by the ACC to the effect that the terms of the Determination meant that Mr Anderson was bound by it in considering the scope and purpose of the Special Intelligence Operation. I took this to mean that they would therefore override all other considerations, including the best interests of the children concerned. In my view, that submission must be rejected. The existence of some other primary consideration does not simply override the best interests of the children as a primary consideration. All the more so in this case where the most obvious other primary consideration ultimately serves the same purpose i.e. the best interests of Aboriginal children. Nonetheless, if Mr Anderson thought otherwise, provided that he considered the terms of the Determination and the scope and purpose of the Special Intelligence Operation as primary considerations of equal but not paramount weight to the best interests of the children concerned, he was quite entitled to conclude that those primary considerations ultimately outweighed the best interests of the children concerned as a primary consideration. But he must go through the exercise of assessing and balancing both. 78 On this aspect it is also instructive to note what happened in some of the authorities I have referred to above. In Teoh the decision-maker did mention in her decision that the children faced a "very difficult and bleak future". She then balanced that against the requirement of a Departmental policy and concluded that the policy prevailed. The defect identified by the Court was in treating the policy as a primary consideration not the children's best interests: see 292 per Mason CJ and Deane J. In Perez v Minister for Immigration & Multicultural Affairs [2002] FCA 450 Allsop J concluded that "nowhere did the delegate identify for himself [the children's best interests] or what they called for" (at [118]. In Wan v Minister for Immigration & Multicultural & Indigenous Affairs [2000] FCA 1822 the Tribunal did make some assessment of what the children's best interests were, however the Court found that it had failed to consider a number of significant matters (at [30]) and did not refer anywhere in it reasons to the best interests of the children as "a primary consideration" (at [31]). On the other hand, in Sebastian the Court found that the Tribunal had properly considered the best interests of the child concerned because it began with the assumption that those interests would be best served by her remaining with her parents (at [13]- [15]). 79 In NTD8, Mr Anderson frankly and specifically conceded, in cross-examination, that he had not taken the best interests of the children concerned into account as a primary consideration: see [37] of NTD8 . Because it was originally intended that these two matters be heard together, at the time I delivered my decision in NTD8, I gave some consideration to whether I could have regard to that evidence in deciding this matter. Before doing so, I asked the parties to make further written submissions on that issue. In its written submissions, the ACC objected to that course. Essentially, it submitted that since the two matters had proceeded as separate matters and the factual circumstances and issues that arose in the two matters were quite different, it was not in the interests of justice that I effectively re-open the hearing of this matter and allow the tender of that evidence as fresh evidence. I consider those submissions have merit and I have therefore decided that I should not have regard to the evidence Mr Anderson gave in the NTD8 matter in deciding this matter. 80 Turning then to the evidence of Mr Anderson in this matter. As I have noted elsewhere, Mr Anderson swore an affidavit in these proceedings in which he described the process he followed and the matters he took into account in making his decision. He annexed to his affidavit all the relevant documents albeit that parts of some were redacted because of public interest immunity concerns. In accordance with that subsection I recorded my reasons for the issue of the Notice in writing (the Reasons). However, so far as I can see, it does not in any way expressly or implicitly refer to the best interests of the Aboriginal children concerned here as a consideration, much less a primary consideration. 82 Under cross-examination, Mr Anderson described the briefings, referred to in the second dot point (paragraph 11 above). He said he had received briefings from the ACC's anthropologist, Ms Lloyd and from NIITF ('National Indigenous Violence and Child Abuse Intelligence Taskforce') staff, particularly Mr Ladlay, who had apprised him of the contents of the affidavits of Ms Bell and Ms Collier. I was concerned about what I learnt in relation to issues of consent, and what amounted to consent, and concerns in that regard. All of those matters are within the rubric of the general knowledge to which I referred in my previous answer. 83 Apart from mentioning the general issues of Aboriginal child abuse and consent, it will be noted that Mr Anderson did not suggest that his knowledge and experience, or the briefings he received from NIITF staff involved any assessment of the best interests of the Aboriginal children concerned here as a consideration, much less a primary consideration. • I was satisfied that it was reasonable in all the circumstances that the Notice be issued to the party to whom it is directed. • I was satisfied that it was reasonable in all the circumstances that the Notice be issued in the terms approved by me. • I was satisfied that this was an appropriate Notice for the inclusion of a notation pursuant to subsection 29A(1) of the Australian Crime Commission Act 2002 because if such a notation were not included it would reasonably be expected to prejudice the effectiveness of the operation or investigation and that a failure to do so might be contrary to the public interest. • I was satisfied that it was also appropriate that the notation pursuant to subsection 29A(1) of the Australian Crime Commission Act 2002 be in the terms approved by me. The final page of the legal submissions referred to in the first dot point of these written reasons, refers to C Inc's objections to the original notice issued by Mr Anderson and states: "C Inc also raised the issue that in complying with the Notice it would impact, (by disclosing client's details) on the relationship with clients and on their future attendance at the clinic. " This appears to be referring to the statements made by Ms Bell and Ms Collier (see [33] --- [35] above). If so, this statement is curious in that it does not distinguish between adult and child clients, whereas, Ms Bell (but not Ms Collier --- see [35] above), expressly did where she said: "Complying ... will have serious consequences on access to our services by young people and have a negative impact on their health and wellbeing". In my view, this suggests that neither the legal advisor nor Mr Anderson had turned his mind to the particular interests of the child clients of C Inc who may have been affected by the Notice. 86 Mr Anderson was asked in cross-examination about, what was described as, the public health consequences of complying with the Notice. MS GEARIN: It is not in his legal advice to you, is it? MR ANDERSON: No, he told me that. MS GEARIN: Yes. Well, that's what you say now? MR ANDERSON: No, he told me that. MS GEARIN: Did you make - - -? MR ANDERSON: - - - I say now --- I say now that he told me on 20 May that. MS GEARIN: So you had a conversation with him on 20 May, did you? MR ANDERSON: I did. MS GEARIN: Did you make a note of it? MR ANDERSON: I made a note of the fact that I'd had a conversation. I didn't make a note of the detail of the conversation. 87 Assuming that the public health consequences of complying with the Notice is meant to refer to C Inc's objections to the original notice, this part of the cross-examination of Mr Anderson also demonstrates, in my view, that he did not turn his mind to the particular interests of the child clients of C Inc who may be affected by the Notice. Indeed, the whole of Mr Anderson's cross-examination is significant for its lack of any mention of the question of the best interests of the Aboriginal children concerned here, or the Convention, or primary considerations. Of course, that is as much a reflection of the questions asked as the answers given. 88 At this juncture, I should note that the counsel for C Inc later submitted to me that I should disbelieve Mr Anderson on this and other evidence that he gave about what matters he was aware of and/or took into account in making his decision because "the contemporaneous documents at the time are inconsistent with it". This was later altered to a submission that while the contemporaneous records did not contradict Mr Anderson's evidence instead some of his evidence was not recorded in those contemporaneous records. I reject this submission. I do not consider that a failure by Mr Anderson to keep a record of every matter of which he was aware, or upon which he relied, in making his decision, is a ground for disbelieving him on his oath. From my observations of Mr Anderson when giving his evidence and from my review of the transcript of his evidence, I consider he gave his evidence in a careful manner and I could not detect any relevant contradictions in it. 89 I should add that there was no statutory obligation upon Mr Anderson to keep records of all the matters he was aware of or relied upon in making his decision. The only relevant statutory obligation in the ACC Act is that contained in s 29(1A) to record in writing the reasons for the issue of the Notice Mr Anderson's written reasons have already been referred to above. The identical provisions of s 28(1A) of the ACC Act have been held to be for the purposes of Parliamentary oversight and not for the purposes of judicial review: see Barnes v Boulton [2004] FCA 1219 ; (2004) 139 FCR 356 per Finn J. Nonetheless, Mr Anderson complied with the requirements of s 29(1A) and those reasons were subsequently discovered to C Inc in the course of these judicial review proceedings. However, I deliberately required the identity and certain particulars of children (and adults) as noted in the Notice. I was satisfied that it was critical in order to meet the objects of the ACC Act and Determination that I issue the Notice in the terms that I did. I issued the Notice after balancing the objects of the ACC Act and the Determination against the Applicant's objections as raised at that time and of which I was appraised. This matter was of serious concern to me and needed to be explored properly with the Applicant and persons/entities in the position of the Applicant. In this regard it is important to note that the information sought by the Notice included information concerning Indigenous children under the age of consent (under 16 years of age) presenting to the Applicant's medical clinic for sexual related treatment or consultation. That was the reason for the subsection 29A(1) notation, which I considered achieved those objectives. I did consider the alleged consequences of a " breach of patient confidentiality" and " adverse primary health consequences for clientele once that trust is breached ". [22] I took into account issues concerning the on-going health of the children and the need for children to continue to present to the Applicant's clinic and receive proper medical attention. Having regard to the ACC Act and the Determination concerning Indigenous violence and child abuse in all Indigenous communities, I was of the view that such information was required in order to meet the objective of the ACC Act and the Determination which in my view are concerned with the welfare and the best interests of the children. I was at the time I issued the Notice, and still am, of the firm belief that the documents sought by way of the Notice are relevant to the special peroration and are necessary for the ACC to give effect to that special operation. This appears to be a quotation from paragraph 3(c) of C Inc's application. Mr Anderson purports to dispose of that issue by relying upon the s 29A notation he inserted in the Notice. Significantly, having ruled out the possibility for any procedural fairness by giving notice, he does not proceed to assess what the best interests of C Inc's child clients may be in the circumstances. To the contrary, he seems to assume that he only needs to deal with the applicant's objections. Moreover, he certainly does not treat the best interests of those child clients as a primary consideration because he concludes with the statement: "I issued the Notice after balancing the objects of the ACC Act and the Determination against the applicant's objections as raised at that time and of which I was appraised. " Paragraph [22] is to similar effect. Although Mr Anderson does add at the end of that paragraph a general reference to "the welfare and the best interests of the children", the children he is referring to do not appear to be the same group as the children he refers to in the first few lines of that paragraph i.e. the child patients of C Inc. If this is so, this suggests to me that Mr Anderson seems to be preferring the best interests of Aboriginal children in general, to the best interests of the Aboriginal children affected by the notice. Whatever may be the case, there is no indication that Mr Anderson has assessed the best interests of the Aboriginal children who may be affected by the Notice, much less taken them into account as a primary consideration. Otherwise, these paragraphs of Mr Anderson's affidavit contain numerous references to the general issues of child abuse, its under-reporting, consent and domestic violence, but no indication that he has adverted to the critical primary consideration. • While he does mention the expression the 'best interests of the children' once, he does not appear to be referring to the Aboriginal children affected by the Notice. He does not mention the expression 'primary consideration' anywhere. • There is extensive reference to other considerations Mr Anderson considered to be of importance including the objects of the ACC Act, the objects of the Determination, the issue of under-reporting of sexual abuse at some medical clinics in the Northern Territory and the objectives of the Special Intelligence Operation. • Nowhere is there any indication Mr Anderson engaged in any process of weighing those other considerations against the consideration of the best interests of this particular group of Aboriginal children as a primary consideration. • Instead, Mr Anderson appears to have had regard to those other considerations as the only considerations in coming to his decision. It follows that he failed to afford them procedural fairness and his decision must be set aside, at least insofar as it affects them i.e. paragraphs 1 and 2 of the Notice. (3) Was Mr Anderson required to have any evidence before him to indicate that C Inc or its employees was engaged in the under reporting of Indigenous related child sexual abuse. If so, did he have such evidence? 95 This claim clearly relates to paragraph 2 of the Notice which seeks the medical records of Aboriginal children "who have or are being treated due to sexual and/or physical abuse". Because I have already concluded that paragraphs 1 and 2 of the Notice should be set aside for failure to afford procedural fairness, it is not necessary to consider this claim. (4) Was Mr Anderson required to take into account as a relevant consideration the impracticability of compliance with the Notice as deposed to in the affidavit of Ms Bell. If so, did he do so? The first respondent failed to take into account a relevant consideration, namely, as deposed to in the affidavit of Ms Bell sworn on 8 May 2008, that compliance will require the employment of an appropriate professional in an organisation that is community funded. A request for funding was refused. 97 This claim and the remainder of the claims below relate to the whole of the Notice. However, because I have already concluded that paragraphs 1 and 2 of the Notice should be set aside for failure to afford procedural fairness, I only need to consider the remainder of these claims insofar as they relate to paragraph 3 of the Notice, which I have assumed only affects the adult patients of C Inc: see [14] above. 98 At the outset it should be recalled that the affidavit of Ms Bell affirmed 8 May 2008 related to the original notice. Despite the fact that almost two months elapsed between the issue of the Notice and the hearing of this matter on 14 July 2008, no further affidavit material was filed or relied upon directed to this issue. There is therefore no evidence before me which describes any impracticability of complying with the Notice. 99 In Ms Bell's affidavit affirmed 8 May 2008, she deposed to what she described as the "enormity of the task" involved in searching for and gathering together the records necessary to comply with the original notice. She also deposed to the resources that she considered would need to be deployed and the time and costs associated with undertaking that task. 100 Mr Anderson said in his affidavit sworn 8 July 2008 that he was appraised of the contents of Ms Bell's affidavit before he issued the Notice. He said that in issuing the Notice, he took into account, among other things, the concerns expressed by Ms Bell about the impracticability of compliance with the original notice. • Whereas the original notice applied to all programs operated by C Inc, the Notice did not apply to any of C Inc's programs. • The time frame was reduced from 1 January 2006 to 1 April 2008 for all three paragraphs of the original notice; to, from 1 January 2007 to 31 December 2007, in relation to paragraphs 1 and 2 of the Notice; and to, from 1 January 2008 to 31 March 2008, in relation to paragraph 3 of the Notice. • The requirement in the original notice to produce medical records in relation to Indigenous children being treated due to neglect and failure to thrive was not included in the Notice. 101 Whether or not Mr Anderson was required as a matter of law to take into account as a relevant consideration the difficulties of compliance with the original notice identified in Ms Bell's affidavit, the fact is he did. Since there is no evidence to suggest that there are any similar difficulties in complying with the Notice, I consider this claim must fail. (5) Was Mr Anderson required to take into account as a relevant consideration that the information sought could be obtained from another source as deposed to in the affidavit of Mr Mizow. If so, did he do so? 103 Mr Mizow is the Corporate Services Manager of C Inc. He annexed to his affidavit a copy of the funding agreement between C Inc and the Commonwealth of Australia. He pointed to Clause 11 of that Agreement and claimed that it allowed the Commonwealth Department of Health and Aging to conduct an audit of C Inc in relation to the primary health care services it provided under the Agreement as prescribed in Schedule A to the Agreement. 104 The ACC submitted that Mr Anderson had a general discretionary power under s 29 of the ACC Act to obtain information and that power was only confined by the objects of the ACC Act and the Determination. It was not confined by the fact the information was available from some other source. I agree with that submission. If the power under s 29 was confined in the way suggested by C Inc, it would lead to the absurd situation where every time particular information was retained by more than one source, (which in the present day and age, is always likely to be the case), the ACC would be met with this objection. Then it would not be able to obtain the information from either source because each would be able to point to the other by way of objection. (6) In deciding to issue the Notice, did Mr Anderson fail to afford C Inc natural justice by failing to provide it with an opportunity to be heard or consider and respond to the material on which he made his decision? I rejected that submission insofar as it applied to paragraphs 1 and 2 of the Notice at [74] above. While I doubt whether the power Mr Anderson exercised under s 29 of the ACC Act in the circumstances of this case i.e. obtaining medical records in pursuit of a Special Intelligence Operation directed to child abuse and domestic violence, can be equated with the exercise of the inquisitorial and coercive powers considered in that series of decisions i.e. obtaining accounting and other information in pursuit of taxation investigations and the like, I do not consider I need to determine that issue in this case. That is so because whether he had to or not, I consider that in the peculiar circumstances that applied here, Mr Anderson effectively provided C Inc with the opportunity to be heard as described above. He did that by issuing the original notice and then obtaining from C Inc details of its concerns in the form of the original application and the affidavits from Ms Bell and Ms Collier. Insofar as they apply to the adult patients of C Inc, he gave evidence, which I accept, that he took these concerns into account before issuing the Notice. I therefore reject this claim. (7) Was Mr Anderson's exercise of the power to issue the Notice so unreasonable that no reasonable person could have so exercised the power in the circumstances? (a) without regard to the merits of the particular case in that no evidence was before him to indicate that the applicant or its employees was engaged in the under reporting of Indigenous related child sexual abuse. (b) without proper consideration of the matters deposed to in the affidavit of Stephanie Bell sworn 8 May 2008. (c) without making enquiry of the Applicant or any other persons, which if he had done so, would have brought to his attention the public health consequences as deposed to in the affidavit of Dr Boffa of 10 June 2008. (d) without making enquiry of the Applicant or any other persons, which if he had done so, would have brought to his attention the matters deposed to in the affidavit of Henry Mizow dated 10 July 2008, that the availability of the material sought in the Notice could readily [be] obtained by the first respondent by other means. 108 I have already rejected claims (b) and (d) under other headings above, as lacking in merit. The claims in (a) relate to paragraph 2 of the Notice and, in view, cannot therefore support an attack on paragraph 3 of the Notice. Likewise, the claims in (c) relate to paragraphs 1 and 2 and cannot support an attack on paragraph 3 of the Notice. It is self-evident that combining two unmeritorious claims under another heading does not make the combination any more meritorious. In any event, as Gleeson CJ and McHugh J observed in Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611: In order to satisfy the unreasonable test there must indeed by something more than mere divergence of opinion. There must be something overwhelming. In my opinion, there is nothing overwhelming in the matters pointed to by C Inc as constituting unreasonableness on the part of Mr Anderson. This claim must therefore be rejected. However, because the Notice is also directed to the medical records of adult patients of C Inc, and I do not consider there is any basis upon which to set aside that part of the Notice, I will hear the parties as to the form that my orders should take. I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves. | australian crime commission examiner issuing notice requiring production of medical records of aboriginal children requirement of teoh that the best interests of the children be a primary consideration whether proper consideration given by the examiner to the best interests of the children concerned in issuing the notice whether legitimate expectation affords substantive or procedural rights failure to afford procedural fairness and natural justice s 29 of australian crime commission act 2002 (cth) s 5 of administrative decisions (judicial review) act 1977(cth) administrative law |
The proceedings had been listed for hearing before Conti J on 4 September 2006 but that hearing was vacated. The history of the proceedings up to that date have been recounted by his Honour ( Readymix Holdings International Pte Ltd v Wieland Process Equipment Pty Ltd [2006] FCA 1297) and need not be now repeated. Other amendments are also sought. 4 Counsel for the Respondent quite properly conceded that there was no prejudice incurred by reason of the amendments and sought to resist the amendments solely on the ground that those facts relevant to the involvement of Mr Wieland had been known for some time. Any claim to relief as against Mr Wieland, it was said, should have been made at a far earlier point of time. No objection was taken to the other proposed amendments. 5 The reason for the joinder was said by the Applicants to have been occasioned by a concern which emerged after the commencement of the proceedings as to the financial ability of Wieland Process Equipment Pty Ltd to meet any judgment in the event the Applicants were successful. 6 Whatever be the reason for the joinder of Mr Wieland at this stage, it is considered that he should be joined as the Second Respondent. Especially in the absence of any prejudice to the Respondent occasioned by the proposed amendment, he is a person against whom relief can properly be claimed and it is clearly in the interests of the administration of justice that all issues be resolved in the one set of proceedings. The power to join an additional party is a power which calls for a " flexibility of approach " and a power which should be exercised to prevent injustice: cf News Ltd v Australian Rugby Football League Ltd [1996] FCA 1256 ; (1996) 64 FCR 410 (citing Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 at 55---6 per Lord Diplock). 7 Leave to amend is thus granted. The First Applicant is incorporated in Singapore. 9 One of the recognised circumstances in which security for costs may be ordered is where an applicant is resident overseas. Indeed, Order 28, r 3(1)(a) of the Federal Court Rules 1979 (Cth) recognises that that is one of the matters which may be taken into account when considering an application for security. 10 But, as that Rule makes apparent, the fact that an applicant is ordinarily resident outside Australia is but one matter which the Court may take into account when exercising the discretion and the fact of overseas residence is not in itself decisive as to the manner in which the discretion is to be exercised. This rule certainly gives a discretion to the court to make an order for security. However, it appears to me that it is a discretion to be exercised upon rational grounds and any party applying for security carries the onus of establishing a case showing that security should be granted. 12 Indeed, it may be accepted for present purposes that the practice of this Court and other Superior Courts has been to order such a party to provide security unless that party can point to other factors which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction: Logue v Hansen Technologies Ltd [2003] FCA 81 at [38] ---[40], [2003] FCA 81 ; 125 FCR 590 at 600---1 per Weinberg J; Ogawa v University of Melbourne [2004] FCA 491 at [23] ---[24] per Marshall J; Worldwide Australia LLC v Jacobsen Platinum Pty Ltd [2005] NSWSC 846 at [3] per Einstein J. 13 One such factor is the ability to register a judgment for costs in the overseas jurisdiction. In resisting the Motion for security, the Applicants contend that the ability to register a judgment overseas has the consequence that such a judgment " will be as effective ... as it would be in the case of a plaintiff who did not ordinarily reside " overseas: Barton v Minister for Foreign Affairs [1984] FCA 89 ; (1984) 2 FCR 463. That was also an application for security and the case was said to raise " an important question as to the ambit of the discretion of the court to make an order for security for the payment of costs in a case where the applicant is ordinarily resident outside Australia ". In that case the plaintiff was ordinarily resident in New Zealand. There is legislation in force in New Zealand which makes it possible to enforce (by registration in that country) a judgment of the Supreme Court of New South Wales. His Honour said that an order for costs against the plaintiffs in that case could be register without difficulty in New Zealand, although there might be some delay inconvenience and expense arising from registration of the judgment. With only minor reservations, a judgment for costs will be as effective against the plaintiffs here as it would be in the case of a plaintiff who did not ordinarily reside outside this State: see Re Percy and Kelly (etc) Co (1876) 2 Ch D 531 , per Jessel MR, at 531. This sum was apparently an estimate of the cost of registration and execution in New Zealand of a judgment for costs in the Supreme Court of New South Wales in favour of the defendants in the action before him. 14 A judgment of this Court may be registered in Singapore. That was the evidence of an advocate and solicitor of 19 years standing in the Supreme Court of Singapore, Mr Narayanan Sreenivasan. The Respondent did not put this in issue. That which the Respondent did submit was, again, the ability to enforce a judgment of this Court in Singapore was but another matter to be considered when exercising the discretion. 15 Security for costs, it should be noted, was previously ordered by Conti J in the present proceedings -- but that order was made by consent. 16 An application for security should also be made promptly: KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 196---8 per Beazley J; James v ANZ Banking Group Ltd (No 1) (1985) 9 FCR 442 at 446 per Toohey J. Counsel for the Applicants quite properly accepted that the passage of time as from May 2007 should not count against the Respondent for the purposes of the present Motion . 18 It is not considered that the period between September 2006 and May 2007 should disentitle the Respondent to an order for security. The vacation of the September 2006 hearing was attributable to the Respondent -- but that is yet a further consideration relevant to the exercise of the discretion. Also relevant to the exercise of the discretion is the fact that the Respondent has already been ordered to pay, and has paid, such costs as were thrown away by reason of the vacation of the September 2006 hearing. It is not considered appropriate to deny the Respondent the benefit of an order for security by reason of such past conduct as occasioned the vacation of the earlier hearing where it has already incurred the consequences of such conduct in the form of an adverse order for costs. 19 In all of the circumstances it is considered that an order for security should be made but that that order should be confined to the future costs to be incurred. Confining the order in that way effects an appropriate balance between the fact that, as at present, the Respondent has incurred costs without the benefit of any order for security, but should have the benefit of such an order for the future conduct of the proceedings. Notwithstanding the ability to register a judgment in Singapore, it is nevertheless considered of importance that the Respondent has available to it funds within Australia against which it can enforce any order for costs which may ultimately be made in its favour. Also of importance is the " great weight " which has long been given to the fact that the Applicants are resident outside Australia: Worldwide Australia LLC v Jacobsen Platinum Pty Ltd , supra , at [3] per Einstein J. Whether or not that factor should be given such " great weight " when there is the ability to register a judgment overseas may be left to one side; the fact of overseas residence remains a matter to which weight may be given. 20 Various estimates have been provided quantifying those costs, the estimates varying between $83,449.40 to $120,347.00. Included with those estimates are costs incurred in respect to both the Amended Application and the application for security. Those sums, it has been submitted, should not be included in any order. Excluding those costs, the Applicants quantify the future costs to be $72,549.40. The ability to register a judgment of this Court in Singapore has been taken into account, together with the further evidence of Mr Sreenivasan that the First Applicant has a paid up capital of SGD1,200,000. Nothing is known as to the financial position of the Second Applicant. 21 Estimates as to the totality of all costs from the outset and including future costs varied from $313,027.31 to $418,294.76. It may be accepted that an order for security could now be made extending to all costs, including costs incurred prior to the application for security being made: Bryan E Fencott & Associates v Eretta Pty Ltd (1987) 16 FCR 497 at 515 per French J. It may further be accepted that considerable costs have been incurred to date in the preparation of this case for hearing. Indeed, with few exceptions, it is understood that the entirety of the evidence of the Applicants and the Respondent has been filed or is ready for filing. The case has been set down for hearing for two weeks commencing on 21 July 2008. 22 Any order is discretionary but must be an exercise of discretion that takes into account the usual practice of the Court and the particular circumstances of the proceedings in which the order is sought. And there is no mathematical certainty as to the quantum. The quantification of an appropriate amount by way of security is " certainly not an exact science ": East Grace Corp v Xing (No 1) [2005] FCA 219 at [6] per French J. An order for security in the present proceedings for an appropriate amount provides the Respondent with some certainty that there is in Australia an available fund from which costs may be paid if ordered. 23 In the present proceedings, it is considered that security should be ordered in the sum of $85,000 and should be provided within 21 days. Leave be granted to file the Further Amended Application and Further Amended Statement of Claim , including liberty to join as the Second Respondent Stuart Mitchell Wieland. 2. The Applicants to provide security for costs in the sum of $85,000 within 21 days. 3. The costs of both Notices of Motion be reserved. 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. | joinder of additional respondent security for costs costs from the outset or future costs practice and procedure |
The winding-up order was made on the application of the Deputy Commissioner of Taxation. 2 I have evidence before me which satisfies me that the debt due to the Deputy Commissioner has been paid and that the Deputy Commissioner of Taxation is no longer a creditor of the company. 3 There is evidence before me in an affidavit of the liquidator, Mr Richard Campbell Brien, sworn 25 February 2008, that the company has a very substantial surplus of assets over liabilities, based upon the information available to the liquidator as to the realizable value of the company's assets. The liquidator estimates the value of the assets to be in the order of $2.6 million. He lists details of various liabilities, the main liability being directors' loan accounts totalling approximately $1.275 million. Even if the directors' loan accounts are taken into consideration, there would still be a surplus of assets over liabilities in the order of $900,000. 4 Mr Brien, in his affidavit of 25 February 2008, raised a number of issues going to the possible solvency of the company. Each one of those issues has been dealt with in an affidavit of Mr Khalil, sworn 27 March 2008. 5 Mr Khalil is the applicant for the order under s 482. He is a director and shareholder of the company in liquidation. 6 A number of the items raised by Mr Brien deal with the question of outstanding tax returns of a partnership of which the company was a partner. I have evidence that the tax returns have now been lodged. 7 There was also an issue as to certain unpaid partnership tax and to outstanding business activity statements. Mr Khalil's evidence satisfies me that the various outstanding matters to which Mr Brien referred, have now been dealt with. Significantly, I also have, as already mentioned, evidence before me from the Deputy Commissioner of Taxation stating that the Deputy Commissioner is no longer a creditor. This reinforces my view that all outstanding matters have been satisfactorily dealt with. 8 There was evidence that a debt was due to Suncorp Metway Limited but Mr Khalil's affidavit satisfies me that this debt has now been paid. I am also satisfied that various other creditors of the company have been paid in full by a partnership of Stead Properties Pty Limited and J & R & J Investments ("JRJ"). There is an issue arising out of these payments and I will refer to that below. 9 However, before turning to this, I should mention that one of the company's creditors is the National Australia Bank. It has extended overdraft accommodation to the company of approximately $82,000 but the facility has a total limit of $180,000. Accordingly, there is approximately $100,000 of unused credit on that facility, if it is restored. I have evidence before me from the National Australia Bank that the company was in default under the terms and conditions of the overdraft facility by reason of the appointment of a liquidator to the company. The NAB therefore became entitled to commence enforcement action against the company. 10 However, the NAB has indicated it is prepared to stay enforcement action and to allow the company to continue operating the overdraft facility, in accordance with the terms and conditions contained in its letter of offer. The effect of this is that subject to the Court making an order terminating the winding-up and subject also to the NAB receiving notification of the Court's orders by 4 April 2008 and no fresh event of default occurring in the meantime, the overdraft facility will be reinstated, in accordance with the terms on which it was granted. 11 The only other issue which arises is the question of the possibility of subrogation of the debts arising from payments made by Stead Properties and JRJ to which I referred above. I do not need to set out any further details of this. It is sufficient to say that I have evidence before me from Stead Properties confirming that it has no claim against Midwest in regard to payment of the trade creditors and sub-contractors relating to the relevant projects in respect of which the payments where made. 12 The last issue then is the question of the inter-company indebtedness. I have evidence from Mr Khalil in his capacity as a director of JRJ confirming that JRJ intends to forgive the indebtedness, provided of course that the order for termination of the winding-up is made under s 482. I also have evidence from the other director of JRJ, Ms Janette Khalil, who is Mr Khalil's mother, stating that she also agrees to JRJ waiving the inter-company indebtedness. 13 Mr Golledge who appeared for the company on the instructions of the liquidator, raised with me the status of the evidence on this question because it does not rise above a statement of intention to forgive or waive the debts. He points out that although on the evidence before me, the company is not insolvent on a balance sheet basis; nevertheless, if the loans were called up, the company may not be able to pay the debt as and when they fall due because the company would need to sell assets to meet the inter-company liability. 14 Mr Russell, who appears for MR Khalil, has told me that JRJ will enter into a deed of waiver and that this can be attended to within the next day or so. It seems to me in the circumstances that the appropriate course is to indicate that subject to my being satisfied about the execution of the deed of waiver and also about payment of the outstanding fees and expenses of the liquidator I will be prepared to make an order terminating the winding-up of the company. 15 I propose to stand the matter over to Thursday, 3 April 2008 at 9.30 am. If in the meantime, consent orders signed on behalf of the liquidator and Mr Khalil are forwarded to my chambers, I will be prepared to make the order terminating the winding-up in chambers. The date from which the winding-up is to be terminated should be the date on which the deed of waiver is signed. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | application for termination of winding up order applicant director of defendant company demonstrates balance-sheet solvency court willing to terminate the winding upon execution of deed of waiver of inter-company indebtedness corporations |
They first appeared in the United Kingdom in 1936 when they were sold both in a cellophane tube and in a box. Since that time, apart from an interruption resulting from World War II, they have steadily grown in popularity spreading across Europe, the United States and Asia. They appear to have arrived in Australia in about 1953. The applicant Mars Australia Pty Ltd ("Mars") has manufactured, distributed, marketed and sold Maltesers in Australia since 1989. The marketing of Maltesers is a serious business reflecting the very large revenues at stake in the bite-size confectionary market in this country. That marketing has, unsurprisingly, varied since its inception. They are, as was accepted by both parties in the present case, a famous product. The respondent ("Sweet Rewards") is an importer of confectionary products. Since about the middle of 2005, Sweet Rewards has distributed a chocolate covered malt ball product known as "Malt Balls". The Malt Balls product has been sold principally through Target and Kmart but also through a number of other discount stores. Mars says that it is aggrieved by both the red and orange jars and makes four claims about them: first, it alleges that their distribution is unlawful because, broadly speaking, the jars wrongly suggest a connexion between the Malt Balls product and the Maltesers product which does not exist; secondly , it contends that both jars represent to consumers that their contents are the same as Maltesers when, in fact, they are not; thirdly , it argues that the use on the jars of a label with floating chocolate balls, some of which are sliced through showing a yellow filling, misleadingly suggests to consumers much the same thing; finally , it complains that the jars infringe two registered trade marks owned by it. For the reasons which follow, each of Mars' allegations should be rejected and its application dismissed with costs. However, there was put in evidence a report prepared in 1995 from within the Mars group into the brand history of the Malteser. The author of this work, Ms Harford, freely admitted the report's limitations which related principally to the passage of time and the sheer number of markets in which the Malteser had prospered. Despite that, there is no reason to doubt the correctness of the basic point it makes. The Malteser was first marketed in the United Kingdom in November 1936 in a cellophane tube and also in a box. At the time it was marketed with a "unique selling point" being the words "the Dri-Drink" emblazoned on what appears to be a tea cup. What this meant, how it might have been said and who might have said it are all questions regrettably no longer susceptible to an answer. What is clear, however, is that Maltesers were rapidly successful. By 1941 annual sales in the United Kingdom exceeded 3,800 tons. The war, of course, transformed chocolate into a luxury item and the Malteser appears to have vanished, unsurprisingly, whilst that war was being waged. Following the war a marketing campaign was begun which centred on promoting the Malteser as a chocolate with a less fattening centre. It was during that period, in about 1953, that it first appears to have arrived in this country. By 1963, in a way which sounds provocative to the modern ear, the marketing of the Malteser began to be directed towards "weight conscious women" using the line "Chocolates? MALTESERS". Again, what this meant is now obscure. It may connote two weight conscious women discussing what one of them is eating; it may also suggest that one could easily be forgiven for mistaking Maltesers for ordinary chocolates. In any event, there is no need to resolve that question. A brief dalliance with a mint equivalent product known as the Minteser came to an end in 1964. At some point, the Australian production of Maltesers was taken over by the Cadbury Schweppes interests under a licence which persisted until 1989. Packaging of the kind referred to in the first paragraph of these reasons has been in the market since the middle of the 1990s. Sweet Rewards did not dispute this. However, this apparent consensus concealed a real dispute between the parties about what constituted that get-up. These competing descriptions of the Maltesers packaging are both correct statements about its visual features. The dispute as to the identification of the get-up is not, however, a disagreement about the differing ways in which packaging may be described. Rather, the identification of the get-up focuses attention on the need to ascertain those features of the packaging which, taken together, have a reputation in the public mind. It follows that examination of, and disputation about, the elements of the packaging are, by themselves, conceptually incapable of yielding answers to the questions which the identification of get-up necessarily invites. Those questions direct attention away from a sole emphasis on analysis of the packaging and, instead, towards an assessment of the attitude of the public mind to that packaging. The identification of a trade reputation and the discernment of the features of a product in which that reputation inheres may be proved in a number of ways. In Reckitt & Colman Products Ltd v Bordern Inc (1987) 10 IPR 21 Walton J received detailed evidence about the reputation and get-up of Jif lemon juice. That material consisted of evidence from brand specialists as well as evidence about the reactions of randomly selected shoppers to the brands in question. In this case the evidence about the reputation of Maltesers and the elements of the packaging in which that reputation was said to inhere was more indirect. It came principally from Mr West who gave evidence for Mars. Mr West is the general manager of Mars Snackfood Australia which is the division within Mars responsible for its business of manufacturing, distributing, marketing and selling snack foods in Australia. In this context, snack food means chocolate confectionary. Mr West has an extensive background in the marketing of such items. He gave evidence about the manner in which the Maltesers products have been marketed. However, this evidence was of little assistance in determining which elements of the Maltesers packaging were the ones that, in the public mind, had a reputation. Mr West did give evidence that the manner in which the Maltesers products were marketed was strictly controlled which suggests, at least, that Mars believes a reputation inheres in the packaging. He referred to a document generated within the Mars group which provided very precise guidelines on the use of the Maltesers brand. This document, entitled "Maltesers Guidelines", was prepared in consultation with Mars' advertising agencies, Brandhouse WTS, AMV BBDO, One Graphics and De Schutter. I would infer from its provenance that it was prepared by experts in the business of branding confectionaries. It referred to a concept of the Maltesers "brand flag". The guidelines identified the "main constituent element" of the brand flag as the logotype with its shadow --- that is, the word Maltesers apparently suspended in the air and proceeding cursively from the bottom left to the receding top right. The guidelines permitted the angle on which the logotype hung to vary slightly but did not permit any variation from the general structure. Mr West was cross-examined about the significance of these branding matters. He conceded that the "magic" was of no importance. --- Yes, so I would say chocolate confectionary, unlike sugar confectionary, most brands are defined by their product form or shape so, you know, if you think of --- if someone says M&Ms you know the shape of an M&M or if it's Maltesers the shape of the Malteser and so within this, you know, I think Maltesers has built the reputation of having the combination which is the brand name, the red packaging but also the product depiction and you could take the product out and put it in front of people and they all say that's a Malteser and then when they see it in the combination of the red and the product they depict it as Maltesers. (Emphasis added. Although the guidelines refer to the significance of the shadow to the logotype Mars did not advance that as part of the get-up and Mr West did not refer to it in his overview of the get-up. I find that no particular reputation inheres in the shadow. (b) The red background. This aspect of the get-up was accepted by both parties. (c) Floating chocolate balls, some of which are cut through. Again, this was not disputed between the parties. I reject the proposition advanced by Mars that the get-up included a red, white, brown and yellow colour scheme. Mr West gave no evidence to that effect and it was not said to be one of the five elements of the brand flag set out in the guidelines (although clearly the colour red was one of those elements). I reject also the idea that any reputation inhered in the shadow. In any event, neither party contended that it did. Mars put its case on the basis that the red jar incorporated the five features of the Maltesers get-up described at paragraph 10 of these reasons. Sweet Rewards disputed this. The resolution of this debate is pointless. In cases such as the present it is, of course, necessary to identify the features of the applicant's packaging in which a reputation is said to inhere for it is the existence of that reputation which the tort protects. So too, in the context of the corresponding claim under s 52 it is the reputation in those features which is the springboard for the argument that consumers are deceived by a particular imitation. Thus although the interests protected by the two actions are different both indispensably require the identification of features known to the public mind. The expression "get-up" is a convenient shorthand for that concept but can be apt to mislead if one loses sight of the necessary connexion between the get-up and reputation. For that reason the identification of a get-up by an applicant in a passing off action or a claim under s 52 is both coherent and necessary. That, however, cannot be said in the case of the respondent's packaging or labelling. No reputation need be established in any feature of the respondent's product in order to show that the applicant's goodwill is being misappropriated or that consumers are, thereby, being misled. The making of an allegation by an applicant that a respondent's product has a particular get-up, beyond and above it having particular features, serves no purpose. The situation in the present case illustrates the point. Both Mars' and Sweet Rewards' competing descriptions of the red jar are correct differing, as they do, only in matters of emphasis and degree. What metric then is to be applied to distinguish them? To answer that question one would need to know the reason it was being asked, an inquiry which, in the context of the applicant's get-up, readily permits of the answer "reputation". But in the case of a respondent's get-up there is no reason to be asking the question and hence no way of answering it either. Despite that, there is some support for the idea that the identification of a respondent's get-up might be a useful endeavour. This passage refers to what appears to be the competitor's get-up. It was referred to with approval by a Full Court of this Court in Vieright Pty Ltd v Myer Stores Ltd (1995) 31 IPR 361 at 371 per Beaumont, Branson and Lindgren JJ. However, I do not think that too much should be read into that for three reasons. First , it is apparent that in Reckitt Lord Oliver was only restating a test he had formulated two pages before at 17 IPR 7. That more detailed formulation of the test makes plain that the question is whether the defendant has made a representation to the public, not whether it has a get-up. Secondly , the Full Court in Vieright referred to both passages with approval: 31 IPR 361 at 369, 371. Thirdly , several other Full Courts have referred with approval to Lord Oliver's first formulation of the test which lacks the reference to the respondent's get-up: TGI Friday's Australia Pty Ltd v TGI Friday's Inc (1999) 45 IPR 43 at 50 [25] per Wilcox, Kiefel and Emmett JJ; Conagra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302 at 327 per Lockhart J, 355 per Gummow J and 361 per French J. In those circumstances, neither authority nor common sense require the identification of the Malt Balls get-up which, so it seems to me, is a sterile exercise the resolution of which will confer no benefit on anyone. Section 52 , by contrast, protects consumers from being misled or deceived. In a passing off case, the existence of conduct which damages the applicant's goodwill by wrongly suggesting a connexion between the respondent's wares and the applicant's will often also be misleading and deceptive. It is usual therefore in such cases for there to be an overlap between the passing off claim and the claim under s 52. This was so in the present case. Each of the representations relied upon by Mars as giving rise to passing off was also said to constitute misleading and deceptive conduct. Broadly speaking, the representations were to the effect that the red and orange jars conveyed a representation that the Malt Balls products were associated with Maltesers products or had the same source or origin. Other similar representations were alleged but there is no present need to set them out. The question then becomes whether either of the jars could suggest to an ordinary consumer of chocolate confectionary the existence of a connexion between the Malt Balls products and the Maltesers products (or Mars). I am of the clear view that they could not. The orange jar does not remotely resemble the Maltesers packaging or use all of the essential features of the Maltesers get-up. I do not think that the ordinary consumer of chocolate confectioneries could possibly mistake the orange jar for Maltesers. In my opinion, this claim by Mars is wholly unmeritorious. The situation with the Delfi red jar is more complex but the result is likewise clear. Because the principal component in the Maltesers get-up is the word "Maltesers", it is highly unlikely that any ordinary consumer of chocolate confectionary could mistake something which is not called a Malteser for a Malteser. In that sense, Mars is a victim of its own success. The fact that the Delfi jars carry the name "Malt Balls" and use slightly different visual features is sufficiently clear to distinguish them from the Maltesers products. Cases may well be imagined --- the present is not one --- where two product names might be deceptively similar because of the names used and the manner in which those names are presented. For example, the use of the fictional word "Mallesers" amongst visual features that are otherwise identical to those of the Maltesers products would be likely to confuse some people, even some ordinary consumers of chocolate confectionary, into thinking they were buying Maltesers. Similarly, the use of the word "Maltballs" in the script and style denoted in the Maltesers brand flag, and amongst visual features that are otherwise identical to those of the Maltesers products, might also be a source of confusion, And, of course, in that context, shape and form may have a part to play. But no ordinary person could think that the Malt Balls products in their current form misleadingly resemble the Maltesers products. Quite apart from that consideration, there are three other obstacles to Mars' claim. First , the word "Delfi" with a skier motif next to it is emblazoned on the label in print half the size of the words "Malt Balls" themselves --- a significant feature which finds no counterpart in the Maltesers get-up. Secondly , the red of the Maltesers products is quite different to the red of the red jar. Thirdly , whilst I accept that there is some limited similarity between the red jar and the Maltesers products in that both are festooned with floating chocolate balls, this condition is not sufficient to overcome the effect of the words "Malt Balls", the Delfi mark or the different red colouring. Mars argued that it should be found that Sweet Rewards intended to misappropriate the reputation of the Maltesers products. Intention, of course, is not part of the necessary elements of either passing off or s 52 of the Trade Practices Act 1974 (Cth). However, where a party intends to misappropriate another's goodwill the demonstration of that intention may well make it easier to draw an inference that the impugned conduct was misleading. Maltesers and Malt Balls are so different that I would not regard Sweet Rewards' intention as having any relevant impact on the issue. However, lest that conclusion prove erroneous, I should record that I reject Mars' argument that Sweet Rewards deliberately misappropriated the goodwill associated with the Maltesers products. To understand why that is so, it is necessary to say a little about the background to the Malt Balls product in Australia. Evidence was given on behalf of Sweet Rewards by Mr Dray, one of its directors and the owner of 50% of its share capital. Evidence was also given by Mr Tan who was the graphic artist engaged by Mr Dray to design the labels for the jars. Their evidence explained the background to, and the reasons for, the release of the Malt Balls product in Australia. Mr Dray gave the following evidence which I accept. In or around 2002, he worked for Petra Foods Ltd ("Petra") which is a significant producer of confectionary listed on the Singapore Stock Exchange. In September 2002 he became its commercial director in Singapore. A major part of his job was introducing and developing new markets for Petra's confectionary products. In particular, he was responsible for managing the branded confectionary export business. At the end of 2002, he decided to move back to Australia for family reasons. Shortly before he did so, however, he met with the chief executive officer of Petra, Mr John Chuang. At that time Petra did not distribute in Australia. Mr Dray suggested, and Mr Chuang agreed, that it would be beneficial for Petra to have a distributor in Australia and for Mr Dray to investigate the setting up of such a business. Sweet Rewards was set up in 2003 and began to trade in January 2004. Its owners and sole initial employees were Mr Dray and an acquaintance of his from the chocolate trade, Mr Stephen Anderson. From the beginning Sweet Rewards' business was the importation and distribution of products manufactured overseas by Petra. The products thus distributed included both products branded with Petra's own brands and products produced to be sold under the house brands of various retailers (such as Coles Farmland products). Sweet Rewards' initial focus was on seasonal products, that is, confectionary sold for occasions such as Valentine's Day, Easter, Christmas and so on. The reason for this was that lesser known chocolate products were more easily sold at these times for consumers generally tended to buy products well-known to them for their year round purchases of chocolate. Further, seasonal products required less marketing, had longer lead times and were therefore easier on Sweet Rewards' cash flow. By May 2005, Sweet Rewards was providing Petra products to major retailers such as Kmart, Coles, Franklins, Priceline and BI-LO, a number of smaller independent chains such as IGA, value for money shops such as Dimmeys and other smaller outlets and repackagers. Amongst the Petra products sold by Sweet Rewards were a range of products under the "Delfi" brand which was one of Petra's brands. That range included biscuits, chocolate-coated wafers, block chocolate, chocolate bars and, importantly, bite size chocolate products. The bite size chocolate products included malt balls, chocolate balls and sugar-coated chocolate lentils (which some people, including some ordinary consumers of chocolate confectionary, would recognise as being similar to smarties or M&Ms). These bite size chocolates were initially sold under the name "Choc a Block". Sweet Rewards, in fact, had applied for registration of that name as a trade mark. The Choc a Block range was blue and bore a product descriptor depending upon which bite size confectionary happened to be in the package. That is, there were Choc a Block choc balls, Choc a Block malt balls, Choc a Block wafer bites and Choc a Block "cha cha" (chocolate lentils). The packaging was designed in Singapore by Lynx Design. The chocolate products depicted on the packaging for the Choc a Block range are frequently 'cut through'. Mr Dray thought, and I accept, that such a 'cut through' gives a consumer an idea of what is inside the particular chocolate-coated product. Mr Dray dealt with Mr Tan at Lynx Design initially by sending an email. That email is no longer available. At the same time as the Choc a Block range was being developed, Sweet Rewards set about producing another range known as "Satellite" which was to be sold in discount stores. The Satellite range was coloured red apparently to differentiate it from the Choc a Block range. It included the same products as the Choc a Block range. The Satellite range was sold only once and only through BI-LO which purchased 2000 cartons of Satellite wafer bites and malt balls. Satellite products have not been available to consumers since 2007. Mr Tan finalised the packaging for the Satellite and Choc a Block ranges in December 2004. Subsequently, the Delfi brand was added to the Choc a Block range but not to the Satellite range. The apparent reason for its omission was the fact that the Satellite range was to be sold in the less reputable discount stores. I turn then to the creation by Sweet Rewards of the Delfi jar range which included both the orange and red jar Malt Balls products. Both Mr Dray and Mr Tan gave evidence about the events giving rise to the creation of this range which evidence, if accepted, would necessarily mean that Sweet Rewards could not have had the intention to misappropriate the reputation of Maltesers. Mars submitted that I should disbelieve both. For reasons I will shortly give I reject that submission and accept their evidence. I find that early in 2005 Sweet Rewards decided to create an alternative version of its chocolate coated bite sized product range to be marketed to large retailers for sale as a seasonal product range. It decided to sell the products in clear plastic jars which were readily available from Petra. At the time, no similar confectioneries were being provided in the grocery trade or in this "route" trade (that is, sales in places such as petrol stations). There were a number of advantages associated with clear plastic jars: first , Coles had previously bought products from Sweet Rewards in such jars so that it was known, in advance, that clear jars were acceptable to it; secondly , they reduced printing costs since there was no need for print on the clear portion; and finally , the consumer could more readily see the product which was being purchased. At the start of 2005 Sweet Rewards provided a miscellany of clear plastic jars to potential purchasers (that is, large retailers) which were provided to it by Petra. Sweet Rewards also asked whether the purchasers had their own home brand or whether they wanted a brand designed by Sweet Rewards. Any such brand could not, however, be too similar to the Choc a Block range. Kmart and Target both expressed interest. Kmart wanted malt malls, as well as wafer bites, choc balls and both milk chocolate and peanut cha chas; Target only wanted malt balls. Both wanted Sweet Rewards to develop a label and branding. Mr Dray then sent an email to the in-house design team at Petra resulting in a chain of emails which was in evidence. They will be forwarded thru asap. The Chic Choc logo? This about this in specifics. Thanks. So Cha Cha appears on the CAB range, and the Delefi range. If it were using the brands, it would be easy. What do you think? Then just the nutrition panel and other text. I just don't want ot pay loads of money for this. If you think this is better with Chris Tan then OK. Can you brief Chris Tan to do them. Easy job, can I see the first draft next Thursday? Do we need one label of two is the question? Subsequently they were sent to Kmart and Target for their approval. Target wished its malt balls product to be distinguished from Kmart's malt balls product. Accordingly, its label was changed to a bright orange colour. Additionally, in keeping with the seasonal nature of the product, Kmart wished to put a money box, apparently in the form of Santa Claus, on top of the jars. Apart from Target and Kmart, the Delfi Malt Balls range in jars was sold from mid-2005 to November 2006 to a number of retailers including Pantry Fresh, Spectrum, Renn Brokerage, Priceline, Eversweet and Dimmeys. Finally, it is to be noted that the Malt Balls jars have not been sold by Sweet Rewards since 8 November 2006. Mr Tan was brought from Singapore to give evidence about the creation of the red Malt Balls jar. I accept his evidence. It was apparent that English was not Mr Tan's first language. On many occasions it seemed that the full meaning of some of the questions being asked by the cross-examiner eluded him; but I draw no negative inferences from the obvious language difficulties which existed. He gave evidence that he obtained the red he used in the label by asking Mr Hong Chiang to provide him with the exact Delfi red colour. He was advised that Delfi red was a "process" or "CMYK" colour identified as 100M/100Y (which were technical measures of magenta and yellow). Mr Tan explained that he reduced that red by increasing the cyan element by 20%. The evidence did not make clear what the original red of 100M/100Y was. However, I do not think that anything in particular turns upon this. Mars submitted that I should reject the evidence of Mr Tan and Mr Dray about the creation of the red and orange jars for eight reasons. First , it was said that the design had been the subject of extensive discussion in the Sweet Rewards office. Whilst Mr Dray gave his account of these discussions, Mr Anderson pointedly was not called to give evidence even though he was involved at a close level in them. Furthermore, the person who had the day to day running of the production of the Delfi range at Sweet Rewards, Mr Alex Campanelli, was not called to give evidence either. If I were minded to draw an inference from the available material that the intention of Sweet Rewards was to misappropriate Mars' goodwill in its Maltesers product, then it is possible that a failure to call those gentlemen could more readily permit the drawing of that inference. However, I do not think that the inference should be drawn at all. In that circumstance I see no particular forensic relevance in the failure to call either witness. Secondly , it was suggested that if Sweet Rewards had really desired a "plain vanilla get-up", then there would have been no need to follow the Choc a Block design. In that context, I take "plain vanilla get-up" to mean packaging which does not pass off the product as a Maltesers product. The criticism then is that if Sweet Rewards' intention had been other than to misappropriate the Maltesers get-up there would have been no need to use the Choc a Block design. This argument is, so it seems to me, quite unsound. The use of such a packaging design does not reveal an intention on the part of Sweet Rewards to misappropriate the goodwill of Maltesers. Such an intention is inconsistent with the fact that the Choc a Block labels were blue and looked nothing like Maltesers. The initial instructions to "George" at Petra were to use the Choc a Block concept and "strong, colourful graphics". I am unable to discern in those instructions evidence of a desire to misappropriate the goodwill in Maltesers. To the contrary, the entire email exchange set out above is consistent with the idea that the red jar range was created as an additional seasonal product line for Sweet Rewards. Reduced to its essentials, Mars' argument involves two steps. The first is that the actual packaging decision made by Sweet Rewards --- to use the Choc a Block package design --- was an attempt to appropriate Mars' goodwill; the second, that a failure to use a "plain vanilla get-up" is evidence of the first step. But if "plain vanilla get-up" means packaging which does not pass off the product as a Maltesers product, the argument is hopelessly circular. Thirdly, it is said that the evidence given about the Delfi red logo was "simply incredible". Mr Dray was cross-examined about Delfi red. It will be recalled that the instructions to Petra and Mr Tan called for the use of Delfi red. The cross-examination of Mr Dray showed that he was not especially clear about the precise Delfi red colour. Be that as it may, his evidence was that he wished to use a red with which Petra would be content. I do not think that there was anything incredible about that evidence. The product being sold was, after all, a Delfi product and that was a brand which belonged to Petra. There is no doubt that in the witness box Mr Dray was equivocal in his evidence about what constituted Delfi red and I was initially unimpressed by this. However, upon reflection, there was no reason for him to be sure of the precise Delfi red colour since Delfi was Petra's brand. In that regard, it is to be noted that Mr Dray no longer worked directly for Petra, not all of Petra's products were distributed by Mr Dray's company in Australia and the Petra products which were available overseas came in a number of colours and brands. Mr Dray wished to distribute a red Delfi product for Petra. He asked for Delfi red. Fourthly , Mars submitted that I should draw an adverse inference from the failure of Sweet Rewards to call Mr Hong Chiang. As noted already, Mr Hong Chiang was the regional business manager at Petra. Mars submitted that it was apparent that the defence of Sweet Rewards to this proceeding was being conducted by Petra. This flowed from the identity of their solicitors, the commonality of their interests and the presence throughout the proceeding of a representative of Petra. I am prepared to infer that Petra had a significant interest in the outcome of the litigation and that, had it desired to do so, it could readily have facilitated the calling of Mr Hong Chiang. However, making that assumption in Mars' favour does not assist it since this is not a case where I would draw the inference that Petra and Sweet Rewards had decided to misappropriate the Maltesers' get-up. Fifthly , Mars submitted that evidence given by Mr Tan that he had darkened the initial Delfi red by the addition of 20% cyan to make the Delfi logo visible was a "furphy". I do not agree. I see nothing absurd about the suggested reasoning for darkening the label so as to bring out the Delfi logo. It is true that there were other Petra products where that had not been done but accepting that need not require the rejection of Mr Tan's evidence. Sixthly , Mars submitted that I should reject the whole of Mr Tan's evidence because the label on the red jars, as finally produced, does not conform to the instructions Mr Tan says he was given. Under cross-examination Mr Tan said that he was instructed by Mr Chuang to use a Delfi logo instead of the Choc a Block packaging. Mars submitted that to look at the Choc a Block packaging and the Malt Balls jars was to see, at once, that this had not occurred. If it were not for the fact that the brand "Delfi" appears on the Choc a Block packaging this argument would be quite empty. But for that, it would be easy to say that the words Choc a Block were deleted and the word "Delfi" substituted. However, Delfi appears on both packages and, hence, it is not strictly possible to say that Delfi has been used "instead" of Choc a Block. I do not read much into this. Mr Tan's English was not especially good and this point proceeds on a very precise meaning of the word "instead" which appreciation I am far from persuaded Mr Tan had. In any event, the Delfi brand occupies, by proportion, much more of the Malt Balls label than it does of the Choc a Block label. Its role on the two labels is not the same. It is, in a loose sense, possible to say that the Delfi brand has become the principal mark in the case of the Malt Balls product and, in that sense, to have been used "instead" of Choc a Block. Mars also argued that the same incongruity between Mr Tan's apparent instructions and the actual packaging was apparent from a comparison between the way in which the Malt Balls were spaced on the red and orange jars and the way in which they were spaced on the Choc a Block packaging. To my mind, there is no substance in this point. The spacing of the balls and their appearance are not materially different. I reject therefore the suggestion that Mr Tan should be disbelieved because the packaging does not reflect his instructions. Seventhly , Mars submitted that Sweet Rewards' decision to pursue the orange jar was similarly driven by a desire to misappropriate the Maltesers get-up. It will be recalled that Target had wanted its Malt Balls to be different to Kmart's and to that end a different label had been produced. Evidence was given about the production of that separate label. There were four variants. His evidence was that he chose it because the others were "hideous". Mars submitted that I should disbelieve this response and focus instead upon a concession made by Mr Dray that the orange label was closer to the Maltesers get-up. That response, however, clearly has to be understood in relation to his other responses which included that it was closer to the Maltesers packaging because it had red on it and was not blue. I accept Mr Dray's evidence that he chose the orange label because he thought the others were "hideous". Eighthly , Mars submitted that I should reject in its entirety the evidence of Mr Tan and Mr Dray so far as it dealt with the creation of the Malt Balls packaging. This was said to be appropriate because their affidavits were a reconstruction from an incomplete documentary record which was in material respects wrong. I have no doubt that Mr Tan was assisted in large part by his documentary records, but in the circumstances it would be surprising if it were otherwise. The same may be said of Mr Dray, but in his case my impression was that he had a much greater actual recollection than Mr Tan. Mars submitted that Mr Dray was an advocate for Sweet Rewards and that he had adjusted his evidence to suit his interests. My impression was that Mr Dray did seek to put his best foot forward. However, that does not come close to what Mars is bound to submit. The email exchange and the evidence of Mr Tan would require the submission not that Mr Dray was putting the best spin he could on his evidence (a plausible proposition) --- but rather that he had engaged in false email correspondence to set up the impression that he was not seeking to exploit the Maltesers get-up, that he had used the other persons in the email exchange to that end and, finally, that he had persuaded Mr Tan to the same course. These propositions are, so it seems to me, most unlikely. I therefore reject Mars' case on intention. However, as I have said, that case is, in any event, irrelevant for neither the Delfi red jar nor the orange jar conveyed the representations about source, association, sponsorship or approval alleged in paragraph 19 of the pleading. For convenience I will refer to this as the representation as to product equivalence. It was common ground that the product equivalence representation was not true if it was made. Clearly enough, the red and orange jars do not contain any express representation about product equivalence. There is no statement on the jars to the effect that "Malt Balls taste like Maltesers". The link between the appearance of the red and orange jars and the supposed product equivalence must, therefore, be founded upon some aspect of the reputation inhering in the Maltesers product. Sweet Rewards submitted, and I accept, that it must be implicit in Mars' case in this area that there is a deceptive similarity between the appearance of the Delfi jars and the Maltesers get-up. On this view of things, a consumer would think that Malt Balls taste like, or are made from the same ingredients as, Maltesers only because of the similarity between the two sets of packaging. This argument should be rejected. In light of the fact that the orange and red jars are not deceptively similar to the Maltesers get-up, the premise upon which the argument must rest is unsound. In the event that I am wrong in my conclusions about deceptive similarity, it is necessary to determine whether the packaging suggests that its contents are the same as or similar to Maltesers. There is a high degree of artificiality in seeking to answer this question. However, if one makes the assumption --- heroic in my opinion --- that the red and orange jars are deceptively similar to the Maltesers get-up then I would be prepared to conclude that the product equivalence representation was made. Mars contends that by including on the jars a depiction of floating brown balls including some depicted in cross-section showing a yellow filling in conjunction with the words "Malt Balls", Sweet Rewards has again represented the equivalence of Malt Balls to Maltesers. The basis for this was said to be the reputation of the Maltesers get-up together with the familiarity of consumers with the characteristics of Maltesers. Mars submitted that for many members of the public the only malt ball they have ever encountered is the Malteser. Thus the depiction of a malt ball necessarily connotes that the malt ball in question is a Malteser. This argument is unpersuasive. The most important aspect of the Maltesers get-up is not the floating brown balls with some cut through to reveal a yellow centre. Rather, as I have endeavoured to demonstrate, it is the word Maltesers and the associated brand flag. In any event, it is highly unlikely that the public would be misled by the floating balls since the words "Malt Balls" extinguish entirely whatever limited capacity for confusion the floating balls might have otherwise had. To know that one is eating a "Malt Ball" is to know that one is not eating a Malteser. Accordingly, the passing off and ss 52 and 53 claims should be dismissed. Because the second in the series is not in a specified colour it is taken to be registered for all colours: see s 70(3) of the Trade Marks Act 1995 (Cth). Mars contended that the use by Sweet Rewards of the red jar infringed this trade mark. However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion. It is necessary, therefore, for Mars to demonstrate that Sweet Rewards' use of the red jar label was use as a trade mark. This requires either that Mars show that the label was intended to be used to distinguish goods or services in the requisite sense or that it did in fact do so. So much flows from the text of s 17. Mr Dray's evidence was that the intention was to use the Delfi brand as the trade mark and that the words "Malt Balls" were intended to be descriptive only. I accept this evidence. It is consistent with the other titles in the Delfi jar range which, with the exception of "cha cha", are each descriptive. I accept that the non-descriptive term "cha cha" was used because the longer expression "chocolate-covered lentil" was too ungainly. It follows that the use of the Delfi mark was the use of a trade mark. The use of the balance or other parts of the label may qualify as trade mark use if, despite not being intended to be used as a trade mark, they were in fact so used. I do not think, however, that they were. The presence of the Delfi mark which clearly was use as a mark reduces the possibility in this case that the rest of the label was also being used as a mark. There may be cases where one label bears two marks. This, however, was not such a case. The consequence of that conclusion is that there was trade mark use by Sweet Rewards but that it was only the Delfi mark which constituted that use. On no view could it be said, nor was it said, that the Delfi mark was deceptively similar (or substantially identical) to the Maltesers marks. That is sufficient to dispose of the trade mark claim. These elements were said to be the same as the elements of the Maltesers get-up described at paragraph 10 of these reasons. Assuming, contrary to my conclusion, that each of the elements alleged was used as a trade mark, it is then necessary to decide whether that use was deceptively similar to the Mars trade marks. In this area it is impermissible to take into account any matter added to the respondent's mark or any differences in get-up. The marks must be understood in their entirety. Both parties placed reliance upon the reasons given by Lord Radcliffe in de Cordova v Vick Chemical Co (1951) 68 RPC 103 at 105-106. I will not set them out. Lord Radcliffe's reasons were examined by a Full Court of this Court in Crazy Ron's Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 61 IPR 212 at 231 [84]. For present purposes Crazy Ron's establishes a number of principles: The question of deceptive similarity is not to be judged by a side by side comparison. Instead what is involved is a comparison, on the one hand, of the impression based on recollection of an applicant's mark that persons of ordinary intelligence would have and the impression such persons would get from the respondent's mark (at 227 [73]). In that regard it is important to consider the "idea of the mark" (at 228 [74]). In assessing deceptive similarity, questions of aural impression may be important (at 228 [75]). In that context I regard the aural similarity between Malt Balls and Maltesers as negligible. The risk of deception must be tangible but it is enough if an ordinary person entertains a reasonable doubt (at 228 [76]). Allowance must be made for imperfect recollections in considering whether a mark so nearly resembles another mark that it is likely to cause confusion or deception (at 228-229 [77]-[78]). That principle extends even to marks which are not just invented words. If a registered trade mark includes words which can be regarded as an essential feature of the mark, another mark that incorporates those words may well infringe the registered trade mark (at 229-230 [79]). It is likewise established that, generally, reputation is irrelevant to the question of infringement. Despite the apparent breath of that proposition, however, it is also accepted that if a particular word or words has come to signify exclusively the goods of the proprietor of a mark (the mark including those words) then the use of that or those words by another would be an infringement. No doubt this involves some apparent departure from the general principle that reputation is irrelevant but it is sanctioned by authority: Crazy Ron's at 232 [88]-[89]. A corollary appears to be that in assessing the notion of a consumer's imperfect recollection of a mark, the fact that a mark is notoriously so ubiquitous and of such long standing that consumers generally must be taken to be familiar with it and its use in relation to particular goods or services is a relevant consideration: Crazy Ron's at 232-233 [90]. The application of these principles is, so it seems to me, relatively straightforward. The Maltesers marks are very famous. Consumers generally must be taken to be familiar with them. That is relevant to assessing a consumer's imperfect recollection of the mark. So viewed, a comparison between the impression held in the consumer's mind and the direct impression of Sweet Rewards' mark is one which, in this case at least, occurs in a context in which the chances of the average consumer having forgotten the Maltesers mark are vanishingly small. So too, an aural examination leads to the same result. "Maltesers" does not sound like "Malt Balls". In particular, the pronunciation is phonetically different: "mal-tesers" is syllabically distinct from "malt balls". I do not think that the colour red would cause confusion but even if there was such a risk such risk is clearly overcome by the effect of the other matters to which I have referred. The application should be dismissed with costs. Ms Armstrong had given evidence of certain discussions she had with various retailers about the distribution of the Delfi products. The purpose of that evidence was to show that the reputation of the Delfi range was limited. There is no doubt that the evidence is hearsay. Section 64(2) is, however, attended by a requirement that notice be given: see s 67. The requirements of such a notice are specified in the Evidence Regulations 1995 (Cth). It is common ground that these requirements were not complied with in this case. There is a power to relieve from the notice requirements: see s 67(4). The basis for the suggested exercise of that dispensing power was that the evidence was essentially incontrovertible. I do not see why this is so. There is nothing inherently accurate about a conversation with a retailer. Even more is this so when the possibility of reliability is considered through the prism of inaccuracy and error rather than the lens of dishonesty. Nor is this a case where the affidavit of Ms Armstrong itself provided the particulars contemplated in the notice. In the case of a number of the retailers only the first names were provided; in the case of others no names were provided at all. Addresses were not provided in many cases and neither was the occupation or job title of the person involved. Further, Ms Armstrong's affidavit was prepared some five months in advance of the hearing. I am unable therefore to discern why it would have caused undue delay or expense to require a short affidavit from each person. In that circumstance, I decline to relieve Mars from the obligation to issue the notices. The consequence is that the evidence is rejected. I certify that the preceding one hundred and three (103) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. | allegations of passing off, misleading conduct, false representations and infringement of trade marks whether ordinary consumer could be misled by respondent's product whether meaningful to speak of respondent's get-up intellectual property |
3 The reason for the applicant's proposed travel is that her mother passed away on 11 July 2003. She was a religious Hindu, as is the applicant's father. After the applicant was made bankrupt she obtained permission from the Official Trustee in Bankruptcy to leave Australia to travel to Singapore and India between 4 and 11 June 2005 with her father for the purpose of undertaking a Somshiva ceremony. 4 There is a further ceremony which the applicant's faith and her mother's faith require to be undertaken which is called a Pinda daan ceremony for her mother. This involves the undertaking of a number of rites in India and the visit to a number of holy places in India commencing on 21 March 2006 and finishing on 28 March 2006. This is to be followed by a week of specific rituals which is called a Sharada ceremony which will take place in a temple, finishing on 5 April 2006. 5 The applicant says that as the rites are being performed for a woman, it is the Hindu custom that the rites be performed by her husband, if alive, and her daughter. The applicant's father, the deceased's husband, lives with the applicant's brother in Singapore. The applicant's father is either 83 or 86 years old and is in poor health. The applicant says that as a devout Hindu he wishes to honour the applicant's mother's wishes and complete the Pinda daan ceremony for her. Although the applicant has a brother and a sister she asserts that they do not have the knowledge or the experience to undertake the relevant rituals and rites that the Hindu religion requires to be carried out for her mother. 6 Accordingly, on 8 March 2006 the applicant's solicitor wrote to the respondent requesting permission for her to travel to Singapore to meet with her father and then travel to India to participate in the Pinda daan ceremony. There was dialogue and correspondence between the applicant's solicitor's office and the respondent, the end result of which was that on 17 March 2006 the respondent refused the applicant's request to undertake the travel and to return her passport to her. 7 There is in evidence before me a letter from a priest familiar with the ceremony explaining the nature of the ceremony and when it is to be conducted. The reason for the particular urgency is that the determination of the time during which the Pinda daan ceremony is to be undertaken is determined by reference to astrological circumstances and they have indicated that the ceremony should start on, or shortly after, 21 March 2006 and that for astrological reasons there is no other period during which they can be undertaken prior to the termination of three years subsequent to the applicant's mother's death. 8 I have received in evidence an itinerary for the applicant prepared by Countrywide Travel showing a departure on Singapore Airlines from Melbourne at 50 minutes after midnight on Sunday night, 19 March 2006. The itinerary shows the applicant travelling to Singapore and then to Delhi and then returning from Delhi to Singapore and to Australia, arriving back in Melbourne on Monday, 10 April 2006. The applicant proposes to undertake the travel within India required for the purpose of the participation in the rituals by plane and bus. 9 Due to the urgency of the matter and the shortness of time within which this matter has come before me it has not been possible to examine in any great detail the nature and extent of the applicant's bankruptcy and the administration of her bankrupt estate. Apparently, at the date of the sequestration order her creditors totalled of the order of $433,689. The applicant had also been involved with another person who was involved in two property development companies which were also in liquidation. 10 The applicant presently works as a part-time cook and assistant in a business carried on by her daughter through a company called Ishwar Pty Ltd, trading as Essence of the East. According to the applicant that business is akin to a supermarket, an Indian supermarket, albeit apparently on a relatively small scale. The applicant says that she works as a part-time cook and helps her daughter. Her daughter is undertaking a psychology course at a university. The applicant's daughter is, as I understand it, a director of Ishwar Pty Ltd and her son is the company secretary. The daughter is aged 20, the son aged 19, and the applicant lives with the children. 11 The respondent raised a number of concerns about the administration of the bankrupt estate of the applicant. In particular, he referred to a sum of $193,000 which was apparently deposited in an account with the Bendigo Bank on 7 January 2004 and then, apparently, $192,000 was transferred out to the daughter on 12 January 2004. 12 The trustee is also concerned as to whether there has been full, adequate and complete disclosure by the applicant of all of her assets and liabilities and whether she has disclosed the true situation in relation to the management, administration and control of Ishwar Pty Ltd. The applicant asserted in cross-examination that she had disclosed to the respondent all her assets and liabilities and such information as was relevant in relation to Ishwar Pty Ltd. Due to the shortness of time and the inability of the respondent to obtain legal representation today those issues have not been fully investigated. They do not need to be investigated in any detail for the purpose of the application which is before me. 13 The principles which I should apply in this area, have been set out in Re Tyndall (1977) 17 ALR 182 and Re Hicks (1994) 217 ALR 195. I consider I should adopt the same principles. First, to ask, is the proposed visit genuine? I am satisfied on the material before me, having heard the applicant and observed her in the witness box, that the proposed visit is genuine in this sense, that she does wish to undertake the pilgrimage with her father for the purpose of carrying out the final rituals consequent upon the passing of her mother in July 2003. 14 Although the trustee is proposing a s 81 examination of the applicant, that proposal only emerged apparently either on 17 March 2006 or a day or so earlier. It is not suggested, and the respondent did not submit, that it was after the proposal to conduct the s 81 examination, that the proposal to make the visit occurred. In Re Tyndall (supra) Deane J made it clear that to an application under s 178 of the Act I am not sitting to identify error in a decision of the trustee, nor am I only empowered to interfere with the trustee's decision if I am of the view that the trustee has acted absurdly or unreasonably or in bad faith. 16 As I noted earlier, I am satisfied on the material before me that the proposed visit by the applicant is genuine. Although there may be other members of the family who could accompany her father for health reasons on the pilgrimage, the material discloses, and I am prepared to accept, that the applicant is the only one of her siblings who has either the interest, the ability or the understanding to participate in and propound the appropriate rituals. As I noted earlier, it is not suggested that the proposal for the visit came about as a result of any proposal by the respondent to undertake a s 81 examination. 17 The next question which I address is whether the applicant is likely to return to Australia as she has said she will. The applicant has lived in Australia for some considerable time. She lives with her children. She is participating in the business carried on her daughter. I consider that it is likely that she will return to Australia as she has said she would; she so asserted in the witness box, and on the material before me, I am prepared to believe her. 18 The respondent submitted that if I was considering allowing her to have her passport back and to travel outside Australia, that I should impose a surety on her as a condition of her leaving so that there can be a security for her return. Having reached the conclusion that I think she is likely to return to Australia, I do not consider that it is appropriate to order a surety. I would only consider imposing a surety if I had considerable doubt about the likelihood of her return. In any event, in the circumstances and time constraints which are before me, it is probably not possible for any such surety, certainly from her father, to be put in place. 19 I turn to the final issue which I consider I should address which is, will the visit hamper the administration of the estate by the respondent. The respondent has a number of questions which he considers have not been answered satisfactorily by the applicant, at the present time. I assume for present purposes that there are issues about the applicant's disclosure of her assets, liabilities and participation in Ishwar Pty Ltd with which the respondent is concerned. She has denied the proposition that she has not disclosed all her assets and liabilities, and that she has not disclosed the true situation in relation to Ishwar Pty Ltd. I assume, for present purposes, that those are live issues for the respondent, and that there are live issues as to the disposition of moneys from certain bank accounts prior to the sequestration order and in relation to the property development companies which are in liquidation. 20 It is open to the trustee to pursue those matters by further investigations and, in particular, a s 81 examination, but I am not satisfied that the administration of the estate which the respondent is continuing to undertake will be hampered by the visit proposed by the applicant. The visit will be for a period of three weeks and it is not suggested that any s 81 examination has to be undertaken during that period. Nor is it suggested that during that three week period the respondent will need to undertake investigations, either with or without the applicant, which will be hampered or interfered with in any way. 21 The material before me discloses that to date any request by the respondent to the applicant or to the applicant's solicitors has been the subject of response. The response made may in the trustee's mind be incomplete or inadequate, but it is not suggested that there has been any conscious evasion by the applicant in answering material. 22 On the basis of all those reasons, it seems to me that in the circumstances it is just and equitable that the applicant have the opportunity to travel to India for the purpose for which she has given evidence, leaving 50 minutes after midnight tomorrow night, Sunday, in the early hours of Monday morning, and returning on 10 April 2006. 23 I propose to make the following orders. Upon the applicant by her counsel, undertaking to the Court to use her passport, hereinafter referred to solely for the purpose of undertaking the travel identified in the itinerary, marked as exhibit "A" in this proceeding and to return to Melbourne on 10 April 2006 and to deliver up the said passport to the respondent within 48 hours of her arrival in Melbourne on 10 April 2006. (1) The respondent deliver up to the applicant forthwith her passport. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | refusal by trustee in bankruptcy to return passport and consent to bankrupt travelling overseas where bankrupt seeks to travel to participate in religious ceremony for her mother's death whether proposed visit genuine whether bankrupt is likely to return to australia as promised whether visit will hamper the administration of the estate. bankruptcy |
Lehman Australia argued that the order should apportion the liability for costs severally so that each corporate defendant would be ordered to pay one-third of the Councils' costs. Lehman Asia also asserted that since the Councils had not joined it as a defendant initially and it had applied to be joined, it was an intervenor, and that it should not be ordered to pay any costs at all or any significant costs. Lehman Bros argued that under r 2.13 of the Federal Court (Corporations) Rules 2000 , its liability was limited to any additional costs that were incurred by the Councils, until it was joined as a defendant at its own request on 16 July 2009. In addition, Lehman Bros seeks an order for its reasonable expenses in respect of a subpoena served on it by the Councils on 23 June 2009. The Councils argued that the subpoena sought documents that would have been discoverable had Lehman Bros been a party at the time of service. They argued that the expenses in respect of the subpoena should be characterised as an incident of Lehman Bros' later involvement as a defendant. That process was directed to challenging the validity and implementation of the resolution of Lehman Australia's creditors, made on 28 May 2009, that it execute a deed of company arrangement. As soon as the matter was called in court on 12 June 2009, counsel for Lehman Australia and the former administrators announced that a deed of company arrangement had been executed earlier that morning. The Councils sought an opportunity to reformulate their case to take account of that new development. Lehman Asia successfully sought to be joined as a defendant. In addition, on 12 June 2009, I also ordered that Lehman Bros have leave to be heard in the proceedings without becoming a party under r 2.13. Lehman Bros foreshadowed that it may apply later to become a party. Its counsel applied for that leave saying: "... at the moment we don't seek ... formally [to] be joined as a party". However, he also responded to a concern raised by the Councils that s 1335(2) of the Corporations Act 2001 (Cth) did not give the Court power to make orders for costs against a non-party, by saying that "no point will be taken about the cost issues" and accepted that subpoenas could be served on Lehman Bros' solicitors. On 23 June 2009, the Councils served a subpoena on Lehman Bros that sought a substantial range of documents described in 14 paragraphs. The subpoena was not called on during the proceedings. Lehman Bros did not produce any documents in answer to it. But now it claims to have incurred about $80,000 in costs and expenses in respect of the subpoena, including negotiating the refinement of its scope and embarking on steps to obtain or locate documents that may have had to be produced. A significant proportion of those costs and expenses was claimed in respect of work done after 10 July 2009. During the hearing of argument on 10 July 2009, Lehman Bros' senior counsel, in opposing the Councils' application for the hearing of separate questions (that led to the hearing before the Full Court), foreshadowed that within the next 24 to 48 hours he expected that it would seek to be joined as a defendant. He argued that the Councils' then claims were not sufficiently pleaded and required further amendment. He also foreshadowed that Lehman Bros, if joined, would file a cross-claim. Accordingly, on 10 July I ordered that the Councils file and serve further amended points of claim that clearly pleaded the issues that they wished to raise as separate questions and that would join Lehman Bros, if it sought to be a party. A slight delay occurred before I ordered by consent, on 16 July, that Lehman Bros be joined as a defendant. Lehman Bros argued that its later joinder on 16 July 2009 occurred in circumstances that should make it liable only for the Councils' costs incurred after 16 July 2009. It also relied on an affidavit of Philip Hoser, one of its solicitors, to seek an order for its costs and expenses in respect of the subpoena. IS EACH CORPORATE DEFENDANT ONLY LIABLE SEVERALLY FOR COSTS? Lehman Asia accepted that the discretion to order costs, even on the basis that it were an intervenor, was unconfined. But it argued that because it had sought its own joinder on 12 June 2009, its position was that of an intervenor and so it should be held liable for costs as a party. That argument is without substance. On 5 June, when the proceedings began, they were properly constituted as a vehicle to challenge the creditors' resolution that Lehman Australia execute a deed of company arrangement containing provisions to the effect of those held by the Full Court to be beyond the statutory powers of the creditors to include in such a deed: City of Swan v Lehman Brothers Australia Ltd [2009] FCAFC 130. Importantly, on 12 June 2009, the Councils obtained new causes of action in respect of the deed that had been executed on that day. Lehman Asia was an actual party to that deed as were, conformably with s 444B(2) and (5), Lehman Australia and its administrators. Thus, in any action to set aside the deed Lehman Asia, as a party to it, had to be a defendant. It was a proper and necessary party, as its offer to be joined on 12 June 2009 recognised. Lehman Asia was also the principal proponent of the deed during the earlier administration: City of Swan v Lehman Brothers Australia Ltd [2009] FCA 784 at [1] . It filed a defence and cross-claim. It sought relief by having the Court remove or vary the terms of the impugned clauses or order amendments so as to give effect to the intention of those creditors who had voted in favour of the resolution. In addition, it sought an order for rectification of the deed: City of Swan [2009] FCA 784 at [11] - [12] . Lehman Asia had not sought to be added as an intervenor on 12 June 2009. Nor was it content to rely on merely being heard under r 2.13(1) without being made a party. Neither position would have been appropriate. Lehman Asia was a party to the deed. And, Lehman Asia was an active, proper and necessary party to the proceedings that sought that the deed be terminated or declared void. It exercised its rights of participation in the proceedings as a party, including bringing a cross-claim. It had a significant interest in seeking to uphold the validity of the deed of company arrangement, or obtaining relief to similar effect, or to enforce the balance of the deed excluding any clauses found to be invalid. It should be liable for costs as a party. The Court's power to order costs in these proceedings is created by s 1335(2) of the Corporations Act . That result had been reached in decisions under the predecessor of s 1335(2) of the Corporations Law . These had held that the terms of the earlier s 1335(2) were mandatory in proceedings like the present that are "under this Act" and the section had displaced the broader powers under s 43(2) of the Federal Court of Australia Act : Australian Forest Managers Ltd (In Liq) v Bramley (1996) 65 FCR 13 at 20F-G, 22C-F, 23D-E per Lindgren J; see too Re Wridgemont Display Homes Pty Ltd [1992] FCA 604 ; (1992) 39 FCR 193 at 196-197 per Jenkinson J. Under s 1337S(1)(c), this Court's rule making powers under s 59 of the Federal Court of Australia Act were extended "without limitation, with respect to costs". Because of the width of the power in s 1337S(1)(c), the provisions of r 2.13 with respect to costs can thus extend to non parties, despite the wording of s 1335(2). Ordinarily, where defendants or respondents in the same interest all participate in the proceedings and fail, as a practical result (but not because of any rule of law or practice) they will be liable jointly and severally to an order that they pay the plaintiffs' costs: cf Probiotec Ltd v University of Melbourne [2008] FCAFC 5 ; (2008) 166 FCR 30 at 44-46 [53] - [61] per myself, Finn and Besanko JJ agreeing. In general, the purpose of an order for costs is to indemnify, at least partially, a successful party: Probiotec 166 FCR at 44 [51] and Cachia v Hanes [1994] HCA 14 ; (1994) 179 CLR 403 at 410-411 per Mason CJ, Brennan, Deane, Dawson and McHugh JJ. The consequence of ordering each of the corporate defendants to pay one-third or some other proportion of the Councils' costs severally, would be to put at risk the efficacy of the partial indemnity, were one or more of the defendants either incapable of paying its portion or recalcitrant. Despite their insolvencies, it is not suggested that the corporate defendants will not be able to meet any costs order. I am satisfied that it would not be appropriate or just to reduce their liabilities from being joint and several merely because they were the three unsuccessful active parties. They can seek contribution among themselves after one or more has paid the Councils. In principle, the Councils should be free to seek recovery of the full amount of any costs order against all of the corporate defendants, each of which took an active part in the proceedings. Each of them contributed to the costs being incurred, at least while a party (see below) in a way which, as between them and the plaintiffs was not readily distinguishable. Each of the corporate defendants was essentially in the same interest, adopting and reinforcing arguments the others put, even though there were some individual substantive (but as the matter proceeded, in the result, not substantial) differences between them (e.g. the different results sought in Lehman Asia's and Lehman Bros' cross-claims): see too Probiotec 166 FCR at 49 [73] per myself, at 52 [91] per Besanko J, and at 32 [1] per Finn J. Lehman Bros was not a necessary party to the proceedings. However, it obtained significant and express benefits from the impugned provisions in the deed of company arrangement. And, as its cross-claim showed, if it lost those benefits because the impugned provisions were found to be invalid, unlike Lehman Asia, Lehman Bros wanted the deed then to terminate and Lehman Australia to be wound up. Lehman Bros argued that its liability for costs before 16 July was governed by r 2.13(2) and that s 1335(2) prevented any wider order for costs being made against it before that date. Rule 2.13(2)(a) provides that the Court may direct that a person granted leave under r 2.13(1) to be heard, without becoming a party in a proceeding, if it considers that the attendance of that person has resulted in additional costs for any party that those costs should be borne by the person. Lehman Bros argued that the Councils had not incurred any additional costs because of its attendances prior to 16 July. I reject that argument. It is inconsistent with the substantive position put by Lehman Bros at the hearing on 10 July. Lehman Bros also argued that because it was not a party before 16 July, r 2.13(2) was the sole source of its liability for costs. I am of opinion that s 1335(2) gives the Court power to award costs against a party, including costs incurred by the successful party before the new party had been joined. The power to order costs in s 1335(2) is not confined, once the Court considers that a party to the proceedings should be ordered to bear them. Of course, the time and circumstances of a party's joinder will be relevant to the exercise of the discretion to order costs, particularly in respect of any period before that joinder: see Probiotec 166 FCR at 49 [72]. Here, Lehman Bros contemplated from its first appearance that it may wish to become a party. By 10 July 2009 that position had become substantially clearer. During the hearing on that day its counsel recognised the likelihood that Lehman Bros would become a party and argued in anticipation that it would put its own substantial case forward in the litigation. Of course, once it became one, Lehman Bros would assume the obligations of a party under the Federal Court (Corporations) Rules and the Federal Court Rules , including discovery. By this time, it was apparent that unless an order for an early trial of separate issues was made (a course resisted by Lehman Bros) these proceedings would be complex, lengthy and involve considerable discovery. The classes of documents sought in the subpoena broadly included documents that would have been discoverable by Lehman Bros. I have not considered whether the terms of the subpoena were appropriate in every respect. However, they reflected (whether or not, if challenged, they would be found too broad or imprecise) classes of documents that would be likely to be relevant for collection or consideration by Lehman Bros' lawyers for the purpose of discovery. Thus, much of what Mr Hoser's affidavit referred to was work that would have been required to be done in any event, even if no subpoena had been issued. In Charlick Trading Pty Ltd v Australian National Railways Commission (1997) 149 ALR 647 at 649-651 Mansfield J examined the scope of the discretion to make an order for payment of a third party's reasonable costs and expenses in complying with a subpoena under the predecessor of FCR O 27 r 11. The present rule also provides the Court with a similarly wide discretion to order a party that causes a subpoena for production to be issued to pay the subpoenaed person's reasonable costs and expenses of compliance. The subsequent joinder of that person as a party, however, may be relevant to the exercise of that power: Simpson v Monteith [2009] NSWSC 156 at [54] - [58] per Hoeben J. He noted that the obligation of the person subpoenaed to discover the same documents after becoming a party would normally make the costs of production of so much of the documents as were discoverable, the new party's costs in the proceedings. And, like here, in Simpson [2009] NSWSC 156 at [57] , the documents had not been required to be produced before the joinder. I am of opinion that the liability of Lehman Bros for costs must be decided under s 1335(2). This is because it became a party to the proceedings and the costs that are both payable to it and by it are costs of the proceedings within the meaning of s 1335(2). The history of Lehman Bros' involvement and the existence of each of r 2.13(2)(a) and FCR O 27 r 11 are relevant to the exercise of the power under s 1335(2). But by becoming a party, Lehman Bros changed its status and subjected itself to the provisions of s 1335(2). And, ordinarily, FCR O 6 r 11(3), provides where a party is added the date of commencement of proceedings so far as concerns that party, is the date of filing of the originating process joining that person. I am of opinion that neither FCR O 27 r 11 nor r 2.13(2)(a) should be construed as a code that excludes the wide discretion under s 1335(2) to make appropriate orders for costs in respect of a person to whom those rules would otherwise apply once the person has later become a party to the proceedings. First, s 1335(2) is a statutory provision, whereas the others are Rules of the Court. Secondly, the power under s 1335(2) to make a just and appropriate order for costs against a party, once that person has been joined, is not excluded expressly or by necessary implication. It would be possible for injustice to occur if the Court were obliged to allow a person to benefit from any delay in being joined as a party in order to take advantage of its then non-party status. For example, it could do this in order to apply under FCR O 27 r 11 for its expenses of answering a subpoena even though, if it became a party, it would be liable to discover the same documents. Or a person could delay seeking to be joined until very close to the hearing so as to take advantage of the limited liability for costs under r 2.13. In addition, the Court can join a party of its own initiative under r 2.13(4)(b). The existence of that power suggests that the Court can override a recalcitrant person's desire to avoid liability for costs for a time when it simply seeks to be heard under r 2.13(1) rather than immediately to assume the obligations of a party. The exercise of that power will depend on an assessment of its appropriateness having regard to the person's role in relation to the subject matter of the proceedings. Here, on and from 12 June Lehman Bros had a real and active role in the proceedings that went beyond a mere watching brief or an interested creditor. The formality of its position was refined over a period so that by 10 July 2009, it was asserting a likelihood that it would seek to become a party. While it could have remained in the position of a non party, had it chosen to do so, I am satisfied that by 10 July 2009 Lehman Bros was substantively, if not formally, in the position of an active party in the proceedings. Its decision to formalise its participation, by becoming a party, changed the form of its earlier participation but not much of its substance. That had been in the character of a party, despite its formal stance under r 2.13(1). The relief it later sought and the defence it pleaded went to the heart of the issues in the whole proceedings. But, these were consistent with the objectives it had pursued up to then in argument. The Councils should be entitled to their costs against Lehman Bros in respect of the work preparatory to its formal joinder, just as they would be entitled to seek recovery on a taxation of costs reasonably and properly incurred before any proceeding was commenced. I am satisfied that much, if not all, of the documents and work claimed by Lehman Bros in respect of the subpoena would have been incurred had discovery been ordered. Some of that cost would be likely to have been incurred in any event by 16 July 2009 had Lehman Bros been joined in anticipation of discovery and in preparation of its pleading of, and collection of evidence for, its defence and cross-claim. However, since discovery was not ordered, some of the work was undertaken prematurely and may not have been of immediate utility to Lehman Bros at the stage the proceedings had reached by 16 July 2009. I am not satisfied that it is appropriate to order a separate taxation of Lehman Bros' pre-joinder costs and expenses under O 27 r 11 or r 2.13(2)(a). Rather, I consider that justice can best be done by making a costs order against Lehman Bros for a proportion of the whole of the plaintiffs' costs. This will balance the consequences of any present unnecessary costs and expenses in respect of the subpoena and the gradual transformation of Lehman Bros' role from one under r 2.13 to that of a party, on the one hand, with its overall lack of success in the proceedings on the other. The substantive questions during the case management phase of the proceedings leading to Lehman Bros' joinder were largely concerned with the best means of arriving at a prompt resolution of what appeared to be a very complex case. This culminated in my reserving questions for the Full Court that lead to a decisive outcome. Lehman Bros was unsuccessful in its opposition to that process and in the result. It should bear a substantial share of the Councils' costs. In all of the circumstances, I am of opinion that justice will be done by requiring Lehman Bros to pay 75% of the Councils' costs of the whole proceedings jointly and severally with the other two corporate defendants who are liable for the whole of those 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 Rares. | corporations act 2001 (cth) s 1335 federal court (corporations) rules 2000 r 2.13 federal court rules o 27 r 11 interaction between s 1335(2) and r 2.13 power to determine costs under s 1335(2) against a party joined pursuant to r 2.13(4), including costs occasioned in consequence of leave to be heard pursuant to r 2.13(1) or in answering a subpoena under o 27 r 11 before the party is joined under r 2.13(4) unsuccessful defendants whether liable jointly and severally or severally corporations act 2001 (cth) s 1335(2) federal court (corporations) rules 2000 r 2.13 court's discretion to order costs award of costs against non-party who is later joined as a party principles governing award of costs against party joined as a defendant on its own application pursuant to r 2.13(4)(a) proceedings challenging a deed of company arrangement two creditors successfully applied at different times to be joined as defendants, pursuant to r 2.13(4)(a) one creditor as the proponent of the deed of company arrangement was a proper and necessary party, the other was parent of company subject to the deed with significant commercial interest both creditors actively participated as defendants and cross-claimants in the proceeding neither a mere intervenor deed found to be void corporations act 2001 (cth) s 1335 federal court (corporations) rules 2000 r 2.13 federal court rules o 27 r 11 court's discretion to order costs award of costs in favour or against person who is later joined as a party proceedings challenging validity of deed of company arrangement parent company of subsidiary subject to the deed of company arrangement granted leave to be heard pursuant to r 2.13(1), later served with subpoena for production before being joined, by consent, as a defendant subpoena never called upon documents subpoenaed likely to have been discoverable after defendant joined defendant took an active role in the proceedings, making substantive arguments at hearing and filing a defence and cross-claim orders made determining the proceedings based on answers to separate questions plaintiffs successful defendant seeks (1) costs and expenses incurred in respect of compliance with subpoena under o 27 r 11 and (2) assessment of costs its liability prior to being joined as party under r 2.13(2)(a) whether power to order all or some costs pursuant to s 1335(2) federal court rules o 27 r 11 costs and expenses of person subpoenaed who later joined as defendant costs costs costs costs subpoenas |
On 9 December 2005 he applied for a protection (class XA) visa. On 2 March 2006 a delegate of the first respondent, Minister for Immigration and Citizenship ('the Minister'), refused to grant the visa. The appellant applied to the Refugee Review Tribunal ('the RRT') on 31 March 2006 for a review of the delegate's decision. By decision signed on 19 June 2006 and handed down on 29 June 2006 the RRT affirmed the decision of the delegate not to grant a protection visa. 2 The appellant sought judicial review in the Federal Magistrates Court. On 16 February 2007 Emmett FM rejected the application ( SZJBW v Minister for Immigration and Citizenship [2007] FMCA 125). The present appeal was filed on 9 March 2007. 3 To succeed in the appeal the appellant must show that Emmett FM made a relevant error. In particular, he must show that her Honour was wrong to conclude that the RRT did not make a jurisdictional error in its decision. Otherwise, the RRT decision is protected from judicial review by s 474 of the Migration Act 1958 (Cth) ('the Act'). 4 The RRT set out in its decision a summary of the statute and case law that bore, in a general way, upon the assessment of a claim for a protection visa. No error has been suggested in this part of the decision. 5 The decision of the RRT records that some of the claims made by the appellant at the hearing before the RRT on 25 May 2006 had not been made in his application for protection and were at variance with the claims in the original application. The following day the RRT sent to the appellant's authorised recipient (see s 441G of the Act) a letter in accordance with s 424A. You stated that this is your major concern should you be returned to your country. You stated at the hearing that you were a Sunni leader. You also stated that you had been attacked on 12 or 13 occasions by Shias during 2005 and that you went into hiding from the beginning of 2005 until you came to Australia to avoid harm. As the Tribunal pointed out to you at the hearing these matters are omitted from both your application for review and your application for protection visa which you lodged 9 December 2005. You also stated at the hearing that there were false charges against you in your country arising from your role/what happened in the elections and that there were FIR police reports in relation to these false charges against you in existence in Pakistan which you became aware of 4 to 5 days after the elections which you agreed were held in Pakistan in September 2005. This is different from what is contained in your application for protection visa which states that members of your family have influence with the police and have threatened to put you in gaol "by putting some false cases through the police". He was asked to also provide any further documents he wished to rely upon by the same date. The RRT decision records that no response was made by the appellant to either of these invitations. He also states that he fears harm from family members and their friends and supporters because of his political opinion. He claims that there are false charges against him in his country arising from what happened in the elections and because he is a Sunni leader and he will be arrested if he returns to Pakistan. He claims that he could not/cannot get protection in his country from the harm that he fears. He claims that he will face further persecution because of his religion and his political opinion if he returns to his country. It found he had been untruthful. It found that he invented his claims to assist his application. It explained why it had come to those conclusions. It concluded that the appellant was not a person to whom Australia owes protection obligations. 10 It is not the function of the Federal Magistrates Court or this Court to make an assessment of the merits of claims for visas or to direct or suggest to the Minister who should be allowed to remain in Australia. The question for the learned Federal Magistrate was whether the RRT had committed a jurisdictional error, identification of which might require that the appellant's claims receive further attention. Her Honour concluded that no jurisdictional error had been shown. She gave detailed reasons for that conclusion. To succeed on the appeal it would be necessary for the appellant to show an error in her Honour's conclusions. The Honourable Federal Magistrates Court erred in interpreting the construction of s424A(3)(a) of the Migration Act 1958 ("the Act "). His Honour failed to determine that the purpose of s424A was not served at the event a consideration on s 424A(3)(a) was given. The Honourable Court also erred in law determining that the Refugee Review Tribunal ("the Tribunal") was in a breach of procedural fairness. His Honour failed to determine that the Tribunal made a finding contrary to the evidence before it. His Honour erred in determining that the Tribunal made the decision in bad faith. His Honour failed to understand that in absence of proper question asked by the Tribunal, the applicant was not in a position to provide any information to challenge the Tribunals conclusion that the applicant did not have any knowledge about Awami League and its structure and hence was not a credible witness. His Honour failed to deal with the construction of s 422B as per claimed by the applicant. Additional details will be provided later. 13 The appellant did not file any written submissions. When I asked him if there was any matter he wished to advance in support of his appeal he told me that he relied on the information he had already submitted. He agreed that was the material which was before the RRT. To my further enquiry he stated simply that his life, and that of his sister and other members of his family, were in danger if he returned to Pakistan. Mr Cleary, who appeared for the Minister, responded that such matters bore only upon the merits of the appellant's claims for a visa and not upon the question of jurisdictional error. In the circumstances of this case at least, that contention must be accepted. 14 I can see no substance in any of the grounds of appeal. Ground 4 does not raise a jurisdictional issue and must be put to one side. The grounds suggesting a breach of s 424A or of the requirement of procedural fairness have no support in the record. The bare allegations in the Notice of Appeal were not further developed by the appellant in writing or orally and cannot be accepted. Section 422B provides that certain provisions of the Act are 'an exhaustive statement of the requirements of the natural justice hearing rule'. No issue concerning its construction or application arises for consideration on this appeal. 15 As no error has been identified in the judgment of the learned Federal Magistrate and no jurisdictional error has been, in any event, shown in the decision of the RRT the appeal to this Court must be dismissed. It is appropriate to dismiss it with costs. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice BUCHANAN J. | no jurisdictional error identified migration |
2 In their respective submissions each side takes the position that he or she was substantially successful in the application. Mrs Muir claims success on the basis that the deed administrator was unable to establish that she was a party to the improper purpose that motivated her late husband to get rid of TEAC's assets. Yet, she failed in her attempt to keep from inspection all her documents that would otherwise be protected by legal professional privilege. For his part, the deed administrator contends that he was largely successful. His argument is that he won at least in a practical sense because he got his hands on most of the documents over which privilege had been claimed. 3 The parties' approach seems to be an example of the so-called Rashomon effect, after Akira Kurosawa's Rashomon (1950): see eg W D Roth and J D Mehta, "The Rashomon Effect: Combining Positivist and Interpretivist Approaches in the Analysis of Contested Events" (2002) 31 Sociological Methods & Research 131. That is, the parties are engaging in what sociologists describe as an interpretivist approach to an event (in this case litigation), in which they do not seek an objective truth but instead unravel the meaning of what has occurred through their version of the truth as shaped by their understanding and perception of the world. 4 Under our legal system a judge is required to adopt a positivist approach and search for a true explanation of an event, an explanation which can be tested by some scientific or intellectual standard. (I say nothing about the capacity of a judge to meet that standard). Applying the positivist standard, I am compelled to the conclusion that each party has had both a measure of success and a measure of failure. So it is only fair that each party should bear his and her own costs. 5 Accordingly, the costs order previously made will be recalled. In lieu thereof I will order that "The plaintiff's costs be paid by Gavin Muir Pty Ltd and Ashley Muir". I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | successful party positivist or interpretivist approach costs |
In that judgment Emmett FM dismissed the applicant's application for constitutional writ relief under rule 13.03A(c) of the Federal Magistrates Court Rules 2001 (Cth) because he failed to attend at the hearing that was set down on that date. Rule 13.03A(c) relevantly provides that: 'If a party to a proceeding is absent from a hearing... the Court may.... if the party absent is an applicant dismiss the application'. 2 At the outset of the hearing of this application a question arose as to whether this application was a course that was open to the applicant in the circumstances. It was submitted by the first respondent, the Minister, that the proper course would have been for the applicant to have applied to set aside Emmett FM's order under rule 16.05(2)(a) of the Federal Magistrates Court Rules 2001 (Cth). Indeed, the first respondent's submissions set out the fact that in January 2008 the solicitors for the first respondent invited the applicant to pursue that course, instead of pursuing this application. 3 The first respondent's submissions have considerable force. At least three judges of this Court have expressed doubt as to whether this Court can entertain an appeal from a decision to dismiss an application because of the non attendance of the applicant, at least in the first instance: see MZWXC v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 172 at [9] per Young J, MZWIK v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 185 at [3] and VOAQ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1505 at [10] per Sundberg J, and MZWFV v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 923 per North J. 4 These decisions largely rely upon a line of authority in the Full Court and, more recently, the Court of Appeal of the Victorian Supreme Court dating back to 1896: see Brown v Fraser (1896) 22 VLR 22 at 23 (holding an application to set aside a default judgment should not be made by way of appeal in the first instance), Crotty v Clarke (1896) 22 VLR 594 at 605 to 606 (holding an appeal does not lie from an order dismissing an action where one party does not appear) and Adams v Cronin Unreported Victorian Court of Appeal, 6 September 1996. 5 In the latter case, Winneke ACJ (with whom Phillips and Hayne JJ agreed) doubted whether the court could entertain an appeal from an order dismissing the appellant's claim because of her non attendance at the hearing. However, because the appellant was unrepresented, the court took a pragmatic approach, allowing her to file submissions to attempt to demonstrate that the dismissal order was incorrectly made and, having considered those submissions, proceeded to dismiss the appeal. 6 These decisions, with respect, do not appear to me to expressly state the principle that underlies the conclusion: that a court cannot entertain an appeal, at least in the first instance, where the judgment at issue involves a dismissal for non appearance, or a similar type of order. However, it seems to me that the principle stems, at least in part, from the following process of reasoning. 7 To succeed in an appeal under s 24 of the Federal Court of Australia Act 1976 (Cth) the appellant must establish that there was error on the part of the trial judge, or in this case the Federal Magistrate: see Knight v Beyond Properties Pty Ltd [2007] FCAFC 170 at [20] per French, Tamberlin and Rares JJ relying upon Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47 ; (2000) 203 CLR 194 at [12] to [14] per Gleeson CJ, Gaudron and Hayne JJ. 8 To establish error in a case where the decision appealed from involves a dismissal for non appearance, the appellant will, among other things, need to give an explanation for his or her non appearance (adopting the test in an application for reinstatement: see Applicant M67/2003 v Minister for Immigration and Multicultural Affairs [2006] FCA 76 per Kenny J at [13] and MZKAJ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1066 at [18] per North J). The appellant must do so to show that the order for dismissal should not have been made in all the circumstances. 9 To do that, the appellant will generally need to place some evidence before the Court. Whilst the Victorian Court of Appeal was willing to allow the unrepresented appellant in Adams v Cronin (supra) to give her explanation in written submissions, it would seem to me that such a course would only be followed in exceptional circumstances; because ordinarily a court exercising appellate jurisdiction is not considered a proper tribunal to receive evidence and decide disputed facts: see Australian Bank Employees' Union v Australia & New Zealand Banking Group Ltd (1990) 94 ALR 667 at 672 per Northrop J (Keely and Gray JJ agreeing). 10 This latter concern would appear to be what motivated the Full Court of this Court in NACJ v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 441 at [5] . In that case, the applicant was seeking leave to appeal from a decision of Lindgren J which dismissed his application for judicial review because he failed to appear at the hearing. At the initial hearing before the Full Court the applicant indicated that he had failed to attend because he had been ill. The Full Court thought that the appropriate course was for the applicant to make an application, by way of notice of motion, to a judge at first instance to have the orders of Lindgren J set aside. It then gave appropriate directions and the appeal was stood over to the call-over date. 11 It seems to me, with respect, that this course had the considerable advantage of allowing the applicant's explanation for his non-attendance to be placed before the court at first instance in the affidavit in support of his application to set aside the original dismissal order. The explanation could then have been tested by the respondents if they wished, and assessed by a single judge at first instance. I have some doubt whether this decision is directly binding upon me, mainly because this is not an appeal from a single judge from this Court, but rather an application for leave to appeal from a decision of the Federal Magistrates Court. Nonetheless, it is obviously highly persuasive as to how I should approach a similar situation. 12 Furthermore, in my view, this approach finds support from a consideration of how evidence of a person's explanation might otherwise get before this Court in these circumstances. The only provision that would allow this Court to entertain an application to adduce evidence on an appeal is s 27 of the Federal Court of Australia Act 1976 (Cth). That section, relevantly, provides that: 'In an appeal, the court has the power in its discretion to receive further evidence'. However, this course is highly unlikely to be open to an applicant for leave to appeal for the following reasons. 13 Ignoring, for present purposes, the fact that such an applicant would be unlikely to meet the strict test for the exercise of the power to allow further evidence under section 27 ie it is exercised rarely and in exceptional circumstances only: see Australian Bank Employees' Union (supra) at 672, the applicant does not get to the point where he or she can make an application under s 27 until he or she is in an appeal ie until an appeal exists. 1) [1981] HCA 20 ; (1981) 147 CLR 246 and numerous single judge decisions of this Court including NACA v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 659 at [15] per Hely J, MZWQH v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1491 at [26] per Kenny J, MZWXC (supra) at [7] per Young J, VOAQ v Minister for Immigration & Multicultural Affairs [2006] FCA 1165 per Rares J at [7] and MZXNC v Minister for Immigration and Citizenship [2007] FCA 664 per Tracey J at [5]. 16 It follows, in my view, that an applicant for leave to appeal cannot use this, the only available provision in the Federal Court of Australia Act 1976 (Cth), to place evidence of his or her explanation for non-attendance before this court. 17 It must therefore follow that it is neither sensible nor appropriate for a person whose application has been dismissed for non appearance before a Federal Magistrate to seek to attack that decision by applying for leave to appeal - without first applying to set aside the dismissal order - in this case under rule 16.05(2)(a) of the Federal Magistrates Court Rules 2001 . It is only by that course that the applicant can put before a court (appropriately the court that made the dismissal order), in proper evidentiary form, his or her explanation for failing to attend. Furthermore, unless an applicant applies under rule 16.05(2)(a) there is no other process readily available whereby he or she can place such explanation before this Court, should he or she then wish to appeal the decision of the Federal Magistrate to reject the application to set aside the dismissal order. Thus, where no application has first been made under rule 16.05(2)(a) , this Court will very likely be placed in the position where the applicant will ask it to receive the explanation in an informal way eg in submissions, and in a way that does not allow for it to be properly tested. 18 Indeed, that is exactly what occurred at the hearing of this matter where the applicant, who appeared in person and without any legal representation, told me from the Bar table that he had only been notified of the hearing on 27 November 2007, five days beforehand, and that his adviser was not available to attend on such short notice. That his explanation was sought to be put to me in this form, without elaboration or testing, underscores the problems inherent in the course the applicant has elected to take. 19 For these reasons, I conclude that the applicant's application for leave to appeal the order of Emmett FM, which dismissed his application because he failed to attend at the hearing on 27 November 2007, is misconceived and inappropriate in circumstances where he has not first made an application to set aside that decision under rule 16.05(2)(a) of the Federal Magistrates Court Rules 2001 . In the exercise of my discretion I therefore dismiss his application for leave to appeal. I order that the applicant pay the first respondent's costs fixed in the sum of $1200. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves. | objection to competency interlocutory orders purported appeal from judgment of federal magistrate dismissal of application due to failure to appear application refused. migration |
On 19 March 2008, for the reasons that appear below, I made the orders sought. 2 MBF is a public company limited by guarantee that was incorporated by registration on 29 October 1946 under the name Medical Benefits Fund of Australia Limited (it changed its name to its present name on 26 November 2003). 3 MBF has provided health insurance in Australia for over 60 years and is now Australia's second largest private health insurer. It is registered as a "not for profit" private health insurer under the Private Health Insurance Act 2007 (Cth) (PHI Act). The income from its health insurance business is exempt from income tax. 4 MBF currently provides health insurance under approximately 800,000 separate policies in respect of approximately 1.7 million individuals. Under MBF's constitution, which was approved on 8 February 2008, there are "Contributors" who, in general terms, are persons who contribute to the health fund registered in MBF's name, and, for certain purposes, the spouses of such persons. Under MBF's constitution, Contributors are able to apply to become members of MBF. Notwithstanding the large number of Contributors previously mentioned, only 195 of them are members of MBF. 6 Contributors who become members are classified as either "Medical Members" (if they are medical practitioners) or "Contributor Members" (if they are not). However, the rights of Medical Members and Contributor Members are, generally speaking, the same. It is convenient to refer to them all as "Members". Each Member is liable to contribute a maximum of 50 cents towards the liabilities of MBF on a winding up. 7 Of the 195 Members of MBF, 173 hold health insurance policies issued by MBF and the remaining 22 are spouses of policyholders. 8 The number of directors of MBF (Directors) must be not less than six nor more than 12 unless otherwise determined by "the Council in general meeting" (rule 9.1). The business of MBF is managed by the Directors (rule 10.1). 9 Rule 4 of MBF's constitution provides for there to be three "Governors" of MBF. They are to be selected by the Directors from among "eminent persons of clear independence from the Directors" (rule 4.3). 10 Subject to the approval of the Governors, the Directors are able to appoint "Appointed Contributor Representatives" from among the Members. The Appointed Contributor Representatives, together with the Board of Directors, constitute the "Council" of MBF. MBF's constitution limits the number of Councillors to between 75 and 100 inclusive. At present, there are 87 Councillors, comprising nine Directors and 78 Appointed Contributor Representatives. 11 Members have a right to receive notice of general meetings of MBF, and to attend and be heard at those meetings (rules 6.5, 8.2). However, Members do not have a right to vote at general meetings, except in relation to resolutions that would vary class rights (rules 8.2, 3.1 (2)). It is only members of the Council who have a right to vote at general meetings (rule 8.2). It is the Council that appoints the Directors (rule 5.11). 12 MBF's constitution limits MBF's ability to distribute profits or property to Members (rules 2.3, 19.1). Section 137-10 of the PHI Act also limits the ways in which MBF, as a not for profit insurer, is able to apply the assets of the fund that it operates for the purpose of its private health insurance business. 14 BUPA is a company limited by guarantee incorporated under the laws of England and Wales. It carries on a number of businesses, including a private health insurance business in the United Kingdom with over 3 million customers. BUPA Australia Health Pty Ltd provides health insurance for over 1 million Australians. It operates under the brand names "HBA" and "Mutual Community". BUPA Australia Pty Ltd (BUPA Australia) is the holding company of both BUPA Australia Holdings and BUPA Australia Health Pty Ltd. Pursuant to r 2.13(1) of the Federal Court (Corporations) Rules 2000 (Cth), the Court granted leave to BUPA Australia to be heard without becoming a party. 15 If the Scheme is approved and implemented, MBF will change from being a company limited by guarantee to being a company limited by shares, and will change its status to that of a "for profit" private health insurer under the PHI Act. BUPA Australia Holdings will subscribe for shares in MBF for a consideration of $2.41 billion. That amount will then be distributed in accordance with certain "Allocation Rules" that appear at Schedule 3 of the Information Memorandum. Company memberships, other than that of the BUPA member (see below), will be cancelled. The purpose of the Allocation Rules is to provide a basis for payment to Contributors according to the type and periods of their respective policies. 16 It should be noted that the Scheme is not the first proposal for demutualisation that the Directors of MBF have considered. In August 2007, the Board of Directors recommended that MBF pursue a scheme of arrangement which would have led to MBF issuing shares to Contributors and those shares being quoted on the Australian Stock Exchange (ASX). Prior to making that recommendation, the Board of Directors had considered and rejected a merger proposal advanced by BUPA. 17 At the annual general meeting of MBF on 9 November 2007, several resolutions were passed amending MBF's constitution to prepare for a scheme of arrangement to implement a proposal that would lead to the public listing of MBF on the ASX. On 9 November 2007, after the annual general meeting of MBF held on that day, MBF announced that 8 November 2007 would be the proposed cut-off date for participation in the share allocation. Although the nature of the proposed scheme subsequently changed, that cut-off date has been retained to prevent people subsequently becoming Contributors specifically for the purpose of reaping the benefit of the proposed Scheme to the corresponding disadvantage of those who were already Contributors. 18 On 27 November 2007, BUPA presented a revised merger proposal. The Board of Directors of MBF considered the relative merits of, on the one hand, continuing with the existing listing proposal and, on the other hand, recommending the new proposal. The Board of Directors decided to support the latter. 19 On 14 December 2007, MBF, BUPA Australia and another subsidiary of BUPA, BUPA Finance Plc (BUPA Finance), entered into a Merger Implementation Deed (MID). The Scheme now proposed by MBF is proposed pursuant to the MID. These are set out in cl 3.1 of the MID and are incorporated as part of the Scheme by cl 3.1(a) of the Scheme. (Pursuant to para 3.1(b) of the Scheme, the Scheme is also conditional on the MID not having been terminated as at 8:00am on the date on which the Court approves the Scheme). Under s 126-42 of the PHI Act, an insurer wishing to apply for such a change of status must lodge an application that includes a conversion scheme with the Private Health Insurance Administration Council (PHIAC) at least 90 days before the day on which the insurer proposes that it become registered as a for profit insurer. MBF lodged such a conversion scheme on 19 November 2007 and it was updated on 14 February 2008. 22 Because the Scheme involves the demutualisation of MBF, s 126-42(5) of the PHI Act imposes three conditions on PHIAC's approval of the conversion scheme. The first condition relates to the provision of information. The effect of (b) is that, in addition to this Court's consideration of whether to approve the Scheme under s 411(4)(b) of the Corporations Act , the Allocation Rules will be independently reviewed by PHIAC. 23 MBF has been informed by PHIAC that it intends to consider MBF's application on 9 May 2008. There are approximately 800,000 Eligible Contributors. The Scheme provides for a Review Committee to determine whether a policy is a Qualifying Policy in cases of dispute. 26 As noted earlier, the cut-off date of 8 November 2007 has been retained in order to avoid the unfairness to existing Contributors of having their entitlements diluted by virtue of people taking out insurance with MBF after the announcement that demutualisation was likely to proceed. 27 In January 2008, MBF took steps to inform Contributors whose policies were in arrears as at 8 November 2007 of their ability to participate in the Scheme by paying their arrears. 28 An important aspect of the Scheme is that because Eligible Contributors are not currently Members of MBF, a special mechanism has had to be devised in order to facilitate their participation in the Scheme. A trustee company (Trust Company Fiduciary Services Limited --- "Trustee") will, at the request of MBF, take up approximately 800,000 memberships in MBF, one for each Eligible Contributor. Although "membership" is not a defined term, I think it tolerably clear that it consists of the bundle of rights that a person has under MBF's constitution by reason of being a Member. The Trustee will hold the property constituting each membership (understood in that sense) on a separate trust for each Eligible Contributor. The trusts are provided for in a "MBF Contributors' Master Trust Deed" executed by MBF and the Trustee. 29 Under cll 3.1 and 3.2 of that deed, MBF is able to direct the Trustee to take up memberships for the Eligible Contributors. It was MBF's intention to give that direction to the Trustee shortly after the first court hearing, and before the despatch of the Information Memorandum. The terms of each trust will entitle the relevant Eligible Contributor to direct the Trustee to transfer the relevant membership to that Eligible Contributor. Amendments to MBF's constitution made on 8 November 2007 expressly provide for the admission of a company as a Contributor Member where the company holds any membership on trust for one or more policyholders (rule 3.5A). Rule 3.5A(2) provides expressly that for the avoidance of doubt, a company may hold more than one membership provided each membership is held on trust for a different policy holder. This provision will be relevant to the voting rights of the Trustee (see below). 31 Because MBF is a company limited by guarantee and does not have a share capital, the statutory majority required by s 411(4)(a)(ii)(B) of the Act, a majority of 75% of votes cast, does not apply in the case of the Scheme. Consequently, it is sufficient for the purposes of s 411(4)(a)(ii) that the Scheme is agreed to by a bare majority in number of the members present and voting (either in person or by proxy): see, for example, Re Credit Reference Association of Australia Ltd (unreported, Sup Ct of NSW, Santow J, 4 February 1998) and, more recently, Re Professional Golfers Association of Australia Ltd [2007] FCA 1571 and Professional Golfers' Association of Australia Ltd v New Golf Ltd (No 2) [2007] FCA 2072. This arises from the definition of "Part 5.1 body" (to which s 411 applies) in s 9 of the Corporations Act to mean, inter alia, "a company", and the definition in s 9 of "company" to mean a company registered under the Corporations Act (a company may be registered under the Corporations Act as a company limited by guarantee --- see s 112(1) of the Corporations Act ). 32 The meeting at which the resolution in favour of the proposed Scheme is to be considered is not a meeting of MBF but a meeting of its members. I agree. 33 Even if this were not so, order 10 that I made on 19 March 2008 was to the effect that at the Scheme meeting, the Trustee should be entitled to one vote for each membership held by it. 34 It is proposed that Company Members and Eligible Contributors (in the latter case, as attorneys for the Trustee) vote on the Scheme as a single class. In determining the appropriateness of voting in a single class or in multiple classes, the Court considers the question whether members' rights are not so dissimilar as to make it appropriate for them to consult together with a view to their common interests or whether dissimilarity in this respect calls for separate classes: see, for example, Re NRMA Ltd [2000] NSWSC 82 ; (2000) 33 ACSR 595 at 616-617. In my view the requirements for a single class are satisfied. The period of the obligations is from the date of the MID, 14 December 2007, to the earlier to occur of the termination of the MID and the "End Date", which is the date three months after the "target Implementation Date" of 16 June 2008 or such other date as MBF and BUPA Australia agree. I do not think that the duration of the no-talk and no-shop obligations creates an obstacle to approval of the Scheme. 36 Clause 12 of the MID provides for payment of a break fee. The amount of the break fee, $24.1 million, is exactly 1% of the consideration payable ($2.41 billion) pursuant to the Scheme. If the consideration payable were to be regarded as equivalent to "equity value", the break fee would not exceed the guideline ceiling accepted by the Takeovers Panel in its Guidance Note 7: Lock-up Devices at [7.17]. 37 The amount of the break fee is payable for cause, that is to say, it is not a naked no vote provision: see Re Bolnisi Gold NL (No 2) (2007) 25 ACLC 1867. 38 The Chairman of MBF, John Craig Conde, has given evidence concerning the negotiation of the MID and of the no-talk, no-shop and break fee provisions in particular. He has given evidence that he negotiated those provisions with Val Gooding, the Chief Executive Officer of BUPA. Mr Conde chaired a number of meetings of the Board of Directors of MBF at which the negotiations were discussed by the Board of Directors, and he was one of the officers of MBF who instructed Allens Arthur Robinson, MBF's solicitors, in relation to their negotiations with BUPA's solicitors, Freehills. 39 The proposal received by MBF from BUPA last November 2007 included provisions of the kind mentioned, although not in the form in which they appear in the MID as ultimately executed. In particular, BUPA's November 2007 proposal provided for payment of a break fee by MBF in a broader range of circumstances than those now appearing in cl 12.3 of the MID. 40 Mr Conde says that in his negotiations with BUPA and in instructing MBF's solicitors, his object was to obtain the best deal possible for MBF members (in the sense of people insured with MBF). He says that he regarded himself as negotiating with BUPA at arm's length. He further states that his assessment was that BUPA would not agree to commit itself to the Scheme without some provision in the nature of those now found in cll 11 and 12 of the MID. Mr Conde states that by the time the MID was executed, he was satisfied that there was no real chance of negotiating a significantly better result. 41 Mr Conde has expressed the opinion that it was in the interests of MBF members for MBF to enter into the MID including cll 11 and 12. 42 In my view, it can not be said, on the evidence, that the presence of the no-shop, no-talk and break fee provisions are likely to be coercive in relation to the voting at the Scheme meeting, and they should therefore not stand in the way of the making of an order for the convening of that meeting. 44 On the day on which the Scheme becomes effective, a subsidiary of BUPA ("BUPA Member") will apply to become a Contributor Member of MBF, and MBF will admit that subsidiary as a Contributor Member. 45 Within five business days of the date on which the Scheme becomes effective, MBF will, if it has not already done so, apply to the Australian Securities and Investments Commission (ASIC) to change its company type to a proprietary company limited by shares. 48 Within 10 business days after the Implementation Date, MBF will direct the trustee of the trust account to pay Participating Contributors their cash entitlements, calculated in accordance with the Allocation Rules. However, the total amount distributed at that time will be only $2.385 billion because MBF will retain $25 million, in order to make distributions to Contributors whom the Review Committee subsequently determines should have been included as Participating Contributors. Any part of the $25 million remaining at 31 December 2008 will be distributed to Participating Contributors in accordance with the Allocation Rules within 10 business days of that date. 49 I do not find it necessary to give a detailed account of the Allocation Rules which are set out in Schedule 3 of the Information Memorandum. A Participating Contributor's entitlement under the Allocation Rules depends on the kind of policy held, whether over time the policy has covered a single person or more than one person, the length of time for which the policy has been held as a "single" or "non-single" policy, and the policyholder's tenure as a Contributor. 50 The distribution of the sum of $2.41 billion among approximately 800,000 Participating Contributors will result in an average entitlement of approximately $3,000. 51 The Allocation Rules have been the subject of two separate expert reports, one by Mr Ian Burningham, who is the appointed actuary of MBF, and the other by Towers Perrin, an independent firm of consulting actuaries. In both reports, the opinion is expressed that the Allocation Rules are fair and reasonable. As noted at [22] above, the Allocation Rules will also be reviewed by PHIAC for the purpose of its satisfying itself that the financial benefits of the Scheme are not being distributed inequitably among MBF's policyholders and insureds: see s 126-42(5)(c) of the PHI Act. As noted earlier, the grant of PHIAC's approval is a condition precedent to the Scheme. 52 Under a deed poll to be executed by BUPA Australia Holdings and BUPA Finance (as guarantor), Company Members and the Trustee will be provided with direct rights against those entities in relation to the payment of the subscription price of $2.41 billion. Under para 5.3(d) of the MID, BUPA Australia is required to procure the execution of the deed poll before the Information Memorandum is despatched. The draft had been provided to ASIC. ASIC confirmed that it had had an opportunity to review the draft and did not propose to appear at the first court hearing. 54 The tax consequences of the Scheme for Participating Contributors are likely to depend upon the Commonwealth Parliament's passing amendments to the income tax legislation that were announced on 26 February 2008. The position is explained in s 7.2 of the Information Memorandum. Participating Contributors are also to be provided with a tax advice letter dated 28 February 2008 from Deloitte Touche Tohmatsu Ltd in Sch 9 to the Information Memorandum. These number some 226 persons --- less than 0.03% of Eligible Contributors. The explanation is almost certainly that MBF has been informed that those persons have died, but has not yet recorded the cancellation of the relevant policies (because, for example, a death certificate has not yet been received by MBF). I excused MBF from despatching the Information Memorandum to those 226 Eligible Contributors. 56 Inevitably, in a database of the size in question there is likely to be a portion of Eligible Contributors who have changed address without informing MBF of the change, or for whom MBF does not hold a current address for some other reason. In the past, MBF has experienced a "return to sender" rate of around 2% of policyholders when it has engaged in mail-outs. In order to confirm the correctness of the addresses it holds for Eligible Contributors, MBF has taken certain steps which are deposed to in the evidence before me. In light of those steps, it is expected that the "return to sender" rate will be lower than that of previous mail-outs. In addition, MBF will advertise in order to draw Eligible Contributors' attention to the despatch of the Information Memorandum and to their ability to obtain a copy if they do not receive one. 57 If the Scheme is approved and an Eligible Contributor cannot be located and paid his or her entitlement, the deed under which the Trustee is appointed requires the Trustee to use reasonable endeavours for one year from 31 December 2008 to locate the Eligible Contributor. After that time, the Trustee may deal with the entitlement in accordance with the unclaimed moneys legislation. 60 For the above reasons, I made the orders of 19 March 2008. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | scheme of arrangement demutualisation scheme company limited by guarantee private health fund policyholders scheme by which trustee to hold membership for policyholders and appoints each policyholder to vote on its behalf at scheme meeting conversion of company into company limited by shares. held : order made for convening of scheme meeting. corporations |
The applicant alleged that there had been breaches of contract and contraventions of provisions of the Trade Practices Act 1974 (Cth) ("Trade Practices Act") by the respondents causing loss and damage to it. The applicant claimed various forms of relief against the respondents. The proceeding be set down for trial on all issues on 2 June 2007 on an estimate of three weeks. 2. The Applicant's solicitors shall by 19 February 2007 serve on the Respondents' solicitors a draft index for the proposed Court book and each of those other solicitors shall send a list of documents to be included or excluded from the proposed Court book and shall consult with the Applicant's solicitors as to the contents of the Court book by 28 February 2007. 3. That the Applicant's solicitors shall serve the Respondents' solicitors and file for the use of the Judge by 14 March 2007 a paged and indexed Court book comprising the current pleadings and particulars and one copy only of each of the proposed exhibits. 4. That the Applicant's solicitors have available at the hearing a copy of the Court book for the exclusive use of witnesses during the examination. 5. That each party file and exchange by 16 April 2007 copies of any reports by expert witnesses to be called at trial. 6. That each party file and exchange with each other party by 4 May 2007 a list of the witnesses to be called at the hearing and a copy of the statement in the form of an outline of the evidence of each witness, with references where appropriate to the Court book. 7. Save with leave of the Court, or by consent of the parties, no party shall, except in cross-examination, adduce from any witness at the trial of the proceeding any evidence to which this order applies unless that party shall have filed and served an outline of evidence of the witness in accordance with this order. 8. That the costs of this application be reserved. There be judgment for the Applicant against the First Respondent, on that part of the Applicant's claim that the First Respondent has contravened s 51AD of Part IV of the Trade Practices Act 1974 . 2. There be judgment for the Applicant against the Second Respondent, and that part of the Applicant's claim that the Second Respondent has, pursuant to s 75B of the Trade Practices Act 1974 , been involved in a contravention of s 51AD of Part IVB of the Trade Practices Act 1974 . 3. The assessment of the amount of damages, or other relief, be deferred until further order. 4. An order that the Respondents pay the costs of this application. 5. Such further or other order or relief as may be required. 5 The applicant's notice of motion came on for mention before me on 13 March 2007. I fixed 28 March 2007 as the date for the hearing of the notice of motion and I made a number of directions relating to the material to be relied upon on the hearing of the notice of motion and the filing of outlines of submissions. On 13 March 2007, the respondents asserted that the applicant was in breach of the December orders. 6 I heard submissions on the applicant's notice of motion on 28 March 2007 and I reserved my decision. Again on that occasion the respondents asserted that the applicant had not complied with the December orders. The applicant asserted that the respondents had not made proper discovery. The application by the applicant by notice of motion dated 5 March 2007 be dismissed. 2. The applicant pay the respondents' costs of the application by notice of motion dated 5 March 2007. 8 Again on that occasion the respondents asserted that the applicant had not complied with the December orders. I indicated to the parties that if either party complained of a failure to comply with orders of the Court, then an appropriate application should be made on notice. Any other orders that the Court may deem fit in the circumstances. Ms Bartlett deposed to the fact that the applicant had not served on the respondents a draft index for the proposed Court book. The solicitor acting for the applicant swore an affidavit on 8 May 2007 and that affidavit was filed on the following day. The solicitor for the applicant deposed to the fact that the applicant asserted that the respondents had failed to discover any documents relating to the issue of the applicant's claim under the Franchising Code of Conduct and that such discovery was necessary before the applicant could prepare the Court book and Mr Stewart's witness statement. 11 The respondents' notice of motion dated 3 May 2007 came on for hearing before me on 9 May 2007. At the outset of the hearing, the applicant made an application orally for an order for particular discovery under O 15 r 8 of the Federal Court Rules . That application was stood over so as to enable the respondents' counsel to obtain instructions. I indicated that I would sit at short notice to hear the application if I considered that appropriate. I also indicated that I was disposed to stand over or adjourn the respondents' notice of motion and wait and see if the orders I proposed to make were complied with. I indicated that I would sit at short notice to hear that notice of motion if I considered that appropriate. The respondent's application by notice of motion dated 3 May 2007 be adjourned to a date to be fixed. The applicant's oral application for an affidavit to be filed by the respondents under order 15 rule 8 be adjourned to a date to be fixed. The costs of today be reserved. 5. There be liberty to apply. Mr Dirk Balthazaar, the applicant's accountant. She deposed to the fact that the applicant's purported draft court book index "simply reproduced ... each of the applicant's discovered documents, in the order in which they appear in the applicant's list of documents". She deposed to the fact that she organised conferences with a number of potential witnesses for the respondents in Melbourne on 14 May 2007 --- 18 May 2007 and briefed counsel to assist her. She deposed to the fact that she flew to Melbourne on 13 May 2007 and, that Mr Phillip Witheridge, a potential witness for the respondents, flew to Melbourne from Cooktown on 13 May 2007 and left Australia for China on a business trip on 15 May 2007. She deposed to the fact that the second respondent, Mr Graham Turnbull, arrived in Melbourne on the morning of 15 May 2007 and that he had flown from China "specifically for the purpose of providing his response to the outlines of evidence to be filed by the applicant". No outlines of evidence were received by the respondents from the applicant until 16 May 2007. As a result of the applicant's failure to comply with the orders of Justice Kenny and Justice Besanko, the respondents have suffered irremediable prejudice. Mr Phillip Witheridge has now flown to China on a business trip. It will not be possible for the respondents' legal representatives to confer with him until after the commencement of the trial. The respondents have insufficient time to obtain proper instructions in relation to the matters in the purported outlines of evidence from other factual witnesses which it wishes to call at trial, let alone the purported opinion evidence of Mr Balthazaar and Mr Colyvan. It also filed and served an outline of evidence of Mr Kevin Williams, who is a consultant engineer. Mr Williams states that he will prepare a full report of his examination of various motor cycles and vehicles. 15 Ms Bartlett swore a third affidavit on 21 May 2007. She deposed to the fact the respondents could not be ready for a trial commencing on 4 June 2007. The applicant file and serve any expert reports complying with the relevant practice direction by 4.00 pm on 1 June 2007. The respondents file and serve any expert reports in response by 4.00 pm on 29 June 2007. The respondents file and serve a list of the witnesses to be called at the hearing and a copy of a statement in the form of an outline of the evidence of each witness by 4.00 pm on 29 June 2007. No party call any expert evidence at trial which is not in a report filed and served under paragraphs 1 and 2 above without the leave of the Court. The trial date be vacated and a new trial date be fixed for the weeks commencing 16 July 2007 and 23 July 2007 and, if necessary, the week commencing 13 August 2007. I reserve my decision on orders 5 and 6 sought by the respondents. If the applicant does not comply with paragraph 1 the proceeding be dismissed as to the whole of the relief claimed by the applicant. 6. The applicant pay the respondents' costs incurred from 10 May to 22 May 2007 and the costs of the respondents' notice of motion dated 3 May 2007 and the costs of the hearing on 9 May 2007 and the costs of the hearing on 22 May 2007 and the costs occasioned by the adjournment on an indemnity basis. 19 These reasons deal with the respondents' application for orders 5 and 6. 20 Before dealing with those matters, I need to say something about the extent of the applicant's failure to comply with the December orders as amended on 9 May 2007 and then I need to say something about my reasons for adjourning the trial and not making an order for the stay or dismissal of the proceedings. 21 There is no dispute that the evidence to be given by Mr Kevin Williams is evidence to be given by an expert witness and that a report from Mr Williams had not been filed and exchanged by 16 April 2007 or, indeed, by 22 May 2007. The failure to comply in this respect was the principal reason I considered it appropriate to adjourn the commencement of the trial. 22 There is no dispute that the applicant had not filed and served on the respondents by 14 May 2007, a list of the witnesses to be called at the hearing and a copy of the statement in the form of an outline of the evidence of each witness with references where appropriate to the court book. Indeed, the applicant had not filed and served on the respondents a list of the witnesses to be called at the hearing as at 22 May 2007. The respondents contend that, in addition to the evidence of Mr Williams, some of the evidence contained in the outlines of evidence is expert evidence and should have been filed and served by 16 April 2007 and should be in a form which complies with the relevant practice direction. I am not able to resolve that issue at this stage. For the purposes of this application only, I will proceed on a basis favourable to the applicant and assume that the evidence referred to in the outlines is not expert evidence. 23 There is no dispute that the applicant's solicitors did not, by 19 February 2007, serve on the respondents' solicitors a draft index for the proposed court book. The respondents contend that the index which was subsequently put forward is simply a reproduction of the applicant's discovered documents in the order in which they appear in the applicant's list of documents. It is not possible for me to resolve that issue at this stage. Again, for the purposes of this application only, I will proceed on a basis favourable to the applicant and assume that a draft index has been delivered but that that was not done within the time fixed in the December orders. 24 The Court has the power to make an order that the proceeding be stayed or dismissed. In Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388, Wilcox and Gummow JJ considered the principles which should govern the discretion to dismiss a proceeding under O 10, r 7 of the Federal Court Rules . In my respectful opinion, their Honours' observations apply equally to the power in O 35A, r 3(1). As it is impossible to foresee all of the circumstances under which the rule might be sought to be used, it is undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised. We will not attempt to do so. But two situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases -- whatever the applicant's state of mind or resources -- in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. Even though the most recent non-compliance may be minor, the cumulative effect of an applicant's defaults may be such as to satisfy the judge that the applicant is either subjectively unwilling to co-operate or, for some reason, is unable to do so. Such a conclusion would not readily be reached; but, where it was, fairness to the respondent would normally require the summary dismissal of the proceeding. In the second of the two situations we postulate, a significant continuing default, it does not really matter whether there have been earlier omissions to comply with the Court's directions. Ex hypothesi the default is continuing and is imposing an unacceptable burden on the respondent. But the continuance of the non-compliance is of the essence of this situation. If, when the Court looks at the matter, the direction has already been complied with, the defaulting applicant may be ordered to pay any wasted costs; but it would be difficult to justify the dismissal of the proceeding solely because of that default. Whatever else might be said about the applicant's failure to comply with Court orders and its failure to put forward an affidavit explaining in a clear and simple fashion the reason or reasons for those failures, I do not think that it can be inferred that its non-compliance is such as to indicate an inability or unwillingness to cooperate with the Court and the other party or parties in having the matter ready for trial within an acceptable period. Nor do I think that this is a case in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondents. There has been non-compliance but I would not describe it as continuing, bearing in mind the outlines of evidence that have now been filed and the expert's report which will be filed. There has been delay and there has been some expense to the respondents, but I can make an order for costs in relation to that expense. In the end, I would not describe the applicant's conduct as amounting to "a significant continuing default". 27 In the circumstances, I considered it appropriate to decline to make orders staying or dismissing the proceedings and, instead, I adjourned the commencement of the trial for a relatively short period. 28 The respondents asked me to make a self-executing order in relation to the first order I made on 22 May 2007. In other words, they asked me to make an order that if the applicant does not comply with the first order then the proceedings do stand dismissed as to the whole of the relief claimed by the applicant. There is no doubt that I have the power to make such an order: O 35A, r 3(1)(c). I decline to do so. In Fisher v RAFCORP (WA) (1995) 57 FCR 1 at 19, the Full Court of this Court described such orders as unusual. I respectfully agree and I think that such orders should only be made in extreme cases. There may be many circumstances which arise subsequent to the making of such an order, which plainly call for a relaxation of a time limit fixed in the order and it would be unwise to place an obstacle in the way of a favourable exercise of the discretion. In my opinion, such an order should only be made when, in effect, all other efforts to ensure compliance have failed. The present is not such a case. 29 The respondents applied for the costs they incurred between 10 May and 22 May 2007, of the notice of motion dated 3 May 2007, of the hearings on 9 May 2007 and 22 May 2007 and of the adjournment of the trial on an indemnity basis. 30 In my opinion, the respondents are entitled to the costs of their notice of motion dated 3 May 2007. The applicant did not comply with the December orders as amended on 9 May 2007. They are also entitled to the costs of the hearings on 9 May and 22 May 2007 respectively because those hearings were primarily concerned with the variation of the December orders and the respondents' notice of motion. The respondents are also entitled to any costs occasioned by the adjournment of the trial. An adjournment of the trial was necessary because of the applicant's failure to comply with the orders of the Court and, in particular, the order as to the delivery of reports by expert witnesses. Finally, the respondents are entitled to any costs occasioned by the late delivery of statements. Clearly, those costs should be restricted to costs which have been wasted. 31 The Court's power to award costs is contained in s 43 of the Federal Court of Australia Act 1976 (Cth) and is a broad one. Order 62 of the Federal Court Rules deals with a number of matters relevant to an award of costs. 32 The ordinary rule is that costs are awarded on a party and party basis. From time to time, the Court has made an award of costs on a different basis. The authorities have identified various circumstances in which it may be appropriate to exercise the discretion to award costs on a different basis from a party and party basis. One such category is where there is evidence of particular misconduct by a party that causes loss of time to the Court and to the other parties. However, the authorities also make it clear that the categories of circumstances in which the Court may exercise its discretion to award costs on, for example, an indemnity basis are not closed. I refer to Colgate Palmolive v Cussons (1993) 118 ALR 248 at 254-257; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, unreported, 3 May 1991), Re Wilcox Ex Parte Venture Industries Pty Ltd (1996) 141 ALR 727 (" Re Wilcox "). The gap between party and party costs and indemnity costs may be increasing. However, while that may be a reason to review the scale rates, it is not in itself a reason to broaden the established criteria for awarding indemnity costs. As I understand it, that is a point made by Cooper and Merkel JJ in Re Wilcox (at 734). 33 I have carefully considered the circumstances in this case. Although the applicant's failure to comply with the Court orders cannot be described as minor and has led to the adjournment of the trial, I would not describe it as misconduct. In the circumstances, I decline to make a special order and costs will be payable on a party and party basis. 34 The final matter is that the respondents asked me to make an order that the costs be paid on or before a certain date. This means that the delay caused by the applicant's failures is a relatively short one. In the circumstances, I see no reason to depart from the general rule contained in O 62, r 3(3). I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | indemnity costs application by respondent for indemnity costs where applicant failed to comply with orders of court requiring applicant to file certain documents in preparation for trial where respondents brought notice of motion seeking orders in relation to applicant's non-compliance where commencement of trial adjourned where applicant's failure to file documents the principal reason for adjournment of trial circumstances in which court may vary ordinary rule as to costs whether applicant's conduct warrants special order as to costs. application for costs to be paid before conclusion of principal proceeding whether appropriate to depart from general rule in o 62, r 3(3). practice and procedure guillotine orders where respondents seek order pursuant to o 35a that proceedings be stayed or dismissed if applicant does not comply with another order of court whether such order appropriate in circumstances relevant principles. costs costs |
Her father had been granted a subclass 457 Temporary Business Entry visa. The appellant entered the New South Wales school system, progressed to Year 11 and then completed a Certificate III course. She later commenced a Diploma accounting course. Her older brother has been granted permanent residency in Australia. Like her parents the appellant had a subclass 457 temporary residence visa and like her parents that visa was to cease on 12 August 2007. On 8 May 2007 the appellant applied for a student visa but it was refused by a delegate of the Minister on 7 August 2007. The essential criterion against which her application for a student visa was to be judged, and which the delegate found was not demonstrated, was that she establish "exceptional reasons for the grant of a subclass 573 visa". She applied to the Migration Review Tribunal ("the MRT") on 10 August 2007 for a review of the delegate's decision. The appellant claimed before the MRT that her command of her mother language was inadequate, that she would have difficulty adapting to the Korean education system and she would lack the support of friends. She had, meanwhile, in February 2008 enrolled in a three year Bachelor of Applied Finance course at a university college run by Macquarie University as an international student although there was no evidence that she had earlier completed her Diploma of Accounting course. The decision of the MRT was handed down on 30 April 2008. The MRT assessed her claim to have exceptional reasons in the following way: The Tribunal does not accept that the applicant has established exceptional reasons for the grant of the subclass 573 visa. The Tribunal does not accept the applicant's submissions that the payment of tertiary fees constitutes a financial benefit which could be characterised as exceptional. The payment of fees is not unusual or out of the ordinary for international or Australian students studying for tertiary qualifications. The applicant came to Australia in 1999 and lived here with her parents during her school years. Her parents were temporary residents of Australia and have returned to South Korea where they own their home and run an export business. They have had the financial resources to support the applicant during her stay in Australia. Families who live in Australia on temporary visas must necessarily adapt to a change in their circumstances when they depart Australia and such changes would be anticipated by temporary visa holders at the time of grant. The Tribunal does not accept that adaption to the Korean culture and system for the applicant would be unusual or out of the ordinary in these circumstances. The applicant completed her NSW School Certificate in 2005 and one semester of Yr 11 of high school studies in 2006. She then completed a Certificate course in Information Technology in 2006. She applied for a subclass 573 student visa in May 2007 and her application was refused in August 2007 well before she started the Applied Finance course at Macquarie International on 25 February 2008. The Tribunal does not consider that the applicant would be prejudiced by withdrawal from her current studies at this early stage. She stated that it would be difficult to adapt to a different educational system in South Korea where she would not have the support of friends as she would have in Australia. She also stated that her Korean language skills were not comparable with other Korean students. The applicant appeared to have a good knowledge of conversational Korean which she demonstrated in her discussions with her advisor and mother during the hearing. Whilst her Korean may not be comparable with her contemporaries in South Korea she is conversant with the language. Further she has knowledge of English and the Tribunal would expect that having English as a second language could give her some educational advantages in South Korea. The Tribunal does not accept the anticipated difficulty in adapting to the education system in South Korea to be an exceptional reason for granting a student visa. With respect to her friends, the Tribunal does not accept that the impact of her moving to South Korea and not having face to face contact with friends is an exceptional reason to justify the grant of a visa. The Tribunal would expect that she would be able to maintain her friendships through letters, telephone, email and other computerised forms of communication. Further she would have the support and company of her parents who are living in South Korea. The applicant claims she has a good educational history however the Tribunal does not consider that she has achieved a high academic outcome whilst in Australia. Despite completing 2 years of primary school and all her high school years in Australia she did not complete Yr 12 or gain her Higher School Certificate. She appears to have had a good attendance record during her college studies at ITTT and Meridian however she has only provided evidence of the grant of her School Certificate in 2005 and a Certificate III in Information Technology at ITTT in July 2006. The applicant's English skills were fairly poor at hearing which was surprising since she has spent all her high school years in Australia. She had difficulty understanding the Tribunal and had to constantly seek advice in Korean from her advisor. The Tribunal accepts that the applicant's brother has obtained permanent residency but does not consider that this constitutes an exceptional reason for the grant of visa. On the present appeal no issue is taken with the approach of the MRT that "exceptional reasons" mean reasons that are unusual or out of the ordinary. That approach is in accordance with authority (see e.g. Hatcher v Cohn [2004] FCA 1548 ; (2004) 139 FCR 425 at [49] - [50] , Cohn v Hatcher [2005] FCAFC 199 ; (2005) 146 FCR 275 at [47] - [48] , [63]). A decision of the MRT is only reviewable judicially for jurisdictional error. Judicial review is not available to review the merits of decisions of the MRT or to substitute some different judgment about the factors which it assesses and the weight which it gives to them. On 16 May 2008 the appellant made an application to the Federal Magistrates Court of Australia ("the FMCA") for judicial review of the decision of the MRT. The Tribunal failed to ask itself the right question. (b) The Tribunal should have asked itself, in each case, whether the stated reason was an exceptional reason for the grant of a student visa. (c) The Tribunal also failed to ask itself whether the reasons put forward by the applicant were, considered cumulatively, exceptional reasons for granting a sub class 573 visa. The Tribunal took an irrelevant consideration into account. On 27 November 2008 the FMCA dismissed the application for judicial review ( Kim v Minister for Immigration & Anor [2008] FMCA 1577). It is from that decision that the present appeal has been brought. The Federal Magistrate examined the statutory context set by the Migration Act 1958 (Cth) ("the Act") and a number of authorities and concluded that there was no identifiable definition which operated to confine the discretion of a decision maker required to decide whether exceptional reasons had been established for the grant of a subclass 573 visa. The Federal Magistrate concluded that no jurisdictional error had occurred. He was not satisfied that the MRT had failed to take the appellant's evidence into account. In his view the criticisms which were made of the reasons of the MRT were "no more than attacks on the merits of an assessment which was made within the Tribunal's jurisdiction. " He also rejected the contention, illustrated by particular (c) to ground 2, set out above, that the MRT had failed to consider the cumulative or overall effect of the matters upon which the appellant had relied. He felt, accordingly, obliged to dismiss the application and did so on 27 November 2008. On 12 December 2008 the appellant filed her present appeal. There was only one ground of appeal which was stated, with particulars, as follows: His Honour erred in holding that the second respondent (the Tribunal) had addressed the case put forward by the appellant. (b) The Tribunal's response, to consider the difficulties of cultural re-adaption to Korea both generally and in the case of the appellant, did not address the appellant's contention. (c) His Honour erred in failing to find that the Tribunal had not considered the cumulative effect of the appellant's case for establishing exceptional reasons for the grant of a student visa. In his written submissions on the appeal Mr Karp of counsel who appeared for the appellant drew attention to the fact that the appellant's former solicitors had pointed out to the MRT that a Procedures Advice Manual used within the Department of Immigration and Citizenship suggested that the exceptional reasons criterion "may also be met if the applicant is the dependant of a departing temporary resident visa holder and has been successfully studying in Australia for at least one year and wished to complete their current course or undertake further studies". Ground 1 of the amended appeal reflects this policy statement. It was submitted that the MRT had not addressed "this confluence of circumstances" and that the Federal Magistrate was in error in concluding that the MRT had adequately considered the appellant's case in this respect. Ground 2 of the amended appeal is a development of the same theme. Mr Karp very fairly and properly characterised the judgment of the Federal Magistrate as a "carefully reasoned" one and accepted, as the Federal Magistrate had found, "that there is nothing in the scheme of the Migration Act or Regulations that confines consideration to what are 'exceptional reasons' ... to any given set of circumstances, either personal or extraneous to an applicant". I think it is plain that the MRT gave specific consideration to whether the appellant had established that there were exceptional reasons for the grant of the visa she sought. It stated that it did not accept that such reasons had been established. There is no basis to think that the discussion of individual aspects of her claims, which I set out earlier, indicates that they were not considered cumulatively, as well as individually. The Federal Magistrate observed that the MRT had not regarded any of the individual matters as being unusual or out of the ordinary. The Federal Magistrate appeared to think that the agglomeration of usual or ordinary circumstances was not likely to represent "exceptional reasons" taken together. Although it may be possible to conceive of cases where the contrary was true, probably by a very fine margin, I, like the Federal Magistrate, am not satisfied that it has been established that the MRT failed to appreciate, assess or weigh the appellant's circumstances cumulatively as well as individually. Nor am I persuaded that the Federal Magistrate, for his part, applied the wrong test to the assessment of whether, in this or in any other respect, the MRT had committed jurisdictional error. However unwelcome the decision of the MRT might be to the appellant and regardless of whether minds might differ about how the factors relied upon by the appellant might, in individual cases, be assessed the matters relied upon by the appellant and the assessment of her circumstances were matters for the judgment of the MRT. They are not matters for judgment by this Court and were not matters for judgment by the FMCA. The appellant was required to establish, to the satisfaction of the relevant decision maker, that there were exceptional circumstances for her to be granted a subclass 573 visa. She did not do so. She has now failed, notwithstanding the careful submissions on her behalf, to establish any jurisdictional error by the MRT or any error by the Federal Magistrate. Her appeal must be dismissed. It is appropriate to dismiss it 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 Buchanan. | student visa application need for exceptional reasons exceptional reasons mean reasons that are unusual or out of the ordinary whether consideration of individual reasons indicated that the reasons were not considered cumulatively. administrative law |
His original Application was filed on 6 October 2005. This was followed by an Amended Application filed 17 January 2006 and a Further Amended Application filed 16 March 2006. 2 Under s 235(3) of the Migration Act 1958 (Cth) ('the Act') it is an offence for an unlawful non-citizen to perform work in Australia whether for reward or otherwise. Section 235(4B) of the Act makes an offence against s 235(3) a strict liability offence and under s 235(5) the relevant penalty is a fine not exceeding $10,000. 3 The gravamen of the Applicant's case is that detainees within the detention centre have performed work either for reward or otherwise, that the Third and Fourth Respondents have aided and abetted the commission of offences by detainees within the centre who as unlawful non-citizens in Australia have performed such work and that the First and Second Respondents have, in effect, failed to do anything about the offences. In relation to the Fifth Respondent the Applicant's case is that the Fifth Respondent has failed to adequately investigate the apparent offences. 4 Section 235(6) of the Act provides for the making of regulations which will have the effect of taking 'work in prescribed circumstances' outside the proscription upon unlawful non ---citizens performing work in Australia. 5 By virtue of the Migration Amendment Regulations 2006 (No. 7 By a Notice of Motion filed 20 October 2005 the Fifth Respondent sought an order that the Applicant's claim against him be dismissed pursuant to Order 20 rule 2 of the Federal Court Rules on the basis that the Applicant's claim as against the Fifth Respondent disclosed no reasonable cause of action, was frivolous and was an abuse of the process of the Court. 8 In the Application filed 6 October 2005 the Applicant sought an order directed to the Fifth Respondent 'to acknowledge my complaint and conduct an inquiry with respect to my complaint dated 05/September/2005 and to submit a report to the court and to serve the copy of that report to me within three months'. By the Amended Application filed 17 January 2006 the Appellant substituted a new claim for relief against the Fifth Respondent. An order pursuant to s.39B of the Judiciary Act and in the nature of mandamus requiring the Fifth Respondent to consider according to law whether the applicant's allegations made on 9 September 2005 should be investigated. An order extending time pursuant to s 11 of the Administrative Decisions Judicial Review Act 1977 (" the ADJR Act ") to allow the applicant to seek review pursuant to s 5 of the ADJR Act as set out in the Further Amended Statement of Claim. With a re-numbering to eliminate the duplication in respect of 8, these particulars have been repeated in the ' PARTICULARS OF RELEVANT FACTS' in the Further (Amended) Statement of Claim filed 16 March 2006. 10 On 5 September 2005 the Applicant forwarded a facsimile to the Federal Police (Crime Department) in which he expressed his concern about 'a very ill practice' done by GSL (intended as a reference to the Third Respondent) and DNCA (intended as a reference to the Fourth Respondent). GSL and DNCA have employed lots of detainees to perform many jobs in detention including the kitchen work. For instance food preparation and serving, cleaning, librarian, hair cut, sports assistant, grass cutting, gardening or runner for visit or telephone, distributing of newspaper. These detainees have particular responsibilities of their jobs and they get paid weekly in phone cards or cigarettes. His mission is to do something about what he perceives to be a serious breach of the law by, most importantly, those who have been involved in or acquiescing in breaches of the law by detainees at the detention centre. That monitoring centre was responsible for recording all complaints received by the Australian Federal Police in New South Wales and making an assessment of what action should be taken in relation to each complaint. 14 On or about 6 September 2005 Federal Agent Fry provided Federal Agent Camille Sarah Chicheportiche with a copy of the Applicant's facsimile of 5 September 2005. 15 On 7 September 2005 Federal Agent Chicheportiche sent an email to Mr Hans Verschuur at the Department of Immigration and Multicultural and Indigenous Affairs in Canberra to which a copy of the Applicant's facsimile of 5 September 2005 was attached. Mr Verschuur was an officer of the Department in its Values and Conduct section. Mr Hussein alleges that detainees in detention centres throughout Australia are performing work and receiving a reward (in the form of phone cards and cigarettes). I understand this sort of allegation has previously been brought to the attention of DIMIA and it was decided that this was not in the nature or spirit of the legislation . It provides both an important outlet for willing participants and gives some recognition to those who choose to get involved. All basic services are expected to be maintained without the help of voluntary participants. The scheme has been put in place for the benefit of detainees not the contractors. My understanding is that it is quite popular. My complaint was against the local DIMIA officials, which includes DIMIA manager for Villawood Immigration Detention Centre and DIMIA's contractor GSL and DNCA. Since the primary function of the federal police is to investigate the crimes declared under Commonwealth law, I consider that it is the Federal police who should have investigated this matter. Due to the content of the letter it was decided that it would be more appropriate to be dealt with by the Department of Immigration Multicultural and Indigenous Affairs for any action they deemed necessary. Using the AFP case prioritisation model it was determined the most appropriate method to deal with your allegations was the referral of the correspondence to the Commonwealth Department responsible for Villawood Detention Centre. This department is the Department of Immigration, Multicultural and Indigenous Affairs (DIMIA). DIMIA have within their Department an area charged with investigating complaints against Departmental officers and they will conduct any inquiries deemed necessary. If criminal conduct is disclosed they will notify the AFP of their investigation and the results. This information will then be reviewed by the AFP on its merit . He also seeks relief under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('the ADJR Act'). 22 Whilst the Fifth Respondent undoubtedly has a very broad discretion in relation to the investigation of complaints of criminal activity there are situations in which mandamus will go to compel him to investigate matters. 23 Just as a Commissioner of Police has a duty to enforce the law, he or she also has a broad discretion as to the manner in which he or she chooses to fulfil the responsibilities of his or her office (per Emmett J in O'Malley v Keelty, Australian Federal Police Commissioner ('O'Malley') [2004] FCA 1688 at [6] ; per Kenny J in Hinchcliffe v Commissioner of Police of the Australian Federal Police ('Hinchcliffe') [2001] FCA 1747 at [33] --- [35] and per Lord Denning MR in Regina v Commissioner of Police of the Metropolis; Ex parte Blackburn ('Blackburn') [1968] 2 QB 118 at 136). 24 Where a member of the Australian Federal Police receives a complaint from a member of the public, the member of the Australian Federal Police would certainly discharge his or her duty to enforce the law if he or she gave due and proper consideration to the question of whether, and in what way, an initial enquiry into the complaint should be made, and then acted appropriately upon the view formed (per Emmett J in O'Malley at [6] and per Kenny J in Hinchcliffe at [37]). 25 The duty of the Fifth Respondent is to enforce the law. He or she must take steps to post police officers so that crimes may be detected and that honest citizens may go about their affairs in peace. But the Commissioner is not the servant of anyone save the law itself. Although the Commissioner is answerable to the law, there are nevertheless many fields in which the Commissioner will have a discretion with which the law will not interfere. It is for the Commissioner to decide in any particular case whether enquiries should be pursued. It must be for the Commissioner to decide on the disposition of the force and concentration of the resources available on any particular crime or area. No Court can or should give the Commissioner direction on such a matter (per Emmett J in O'Malley at [7], per Lord Denning MR in Blackburn at 136 and per Finn J in Rush v Commissioner of Police [2006] FCA 12 at [91] ). 26 Notwithstanding the width of the discretion available to the Commissioner of the Australian Federal Police, he may not adopt policy decisions which would result in him failing in his duty to enforce the law. As was pointed out in Blackburn , if a Commissioner of Police issued a directive to his officers that no person should be prosecuted for stealing goods of a value less than a certain amount, the Court could countermand such a policy and grant relief by way of mandamus to compel the Commissioner to do his duty (per Lord Denning MR in Blackburn at 136; per Kenny J in Hinchcliffe at [33] and per Emmett J in O'Malley at [8]). If the police fail in the duties, however ephemeral it may be to describe them, a citizen is entitled to assistance in ensuring that the police do their duty. For example, if there was evidence of a dishonest refusal to investigate on the part of an investigating officer, or if the evidence suggests that an honest police officer acting reasonably could not properly come to the view that the matter was not capable of investigation there may be, and I emphasise may be, a basis upon which the Court could interfere. However, the Minister may in limited circumstances 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 Australian Federal Police (see s 37(2)). 29 The functions of the Australian Federal Police and the powers of members of the Australian Federal Police are to be found in ss 8 and 9 of the AFP Act. In relation to the provision of police services it is also appropriate to note the definition of 'police services' in s 4 of the AFP Act. 30 Whether, in the present case, the Applicant's proceedings against the Fifth Respondent should be summarily dismissed may well depend upon whether or not by entrusting the investigation of the Applicant's allegations to the Department of Immigration and Multicultural and Indigenous Affairs, the Australian Federal Police was abdicating responsibility for the matter in an impermissible way. The Australian Federal Police has indicated that they have an expectation that the Department will respond to the Applicant's allegations by investigating same and reporting back, it being the belief of the Australian Federal Police that the material provided by the Department could then be reviewed on its merit. 31 The Applicant's concern is that prior to referring his allegations to the Department, the Department had publicly declared its support for the performance by detainees of work within the Villawood Detention Centre thereby presenting a closed mind on whether or not offences were relevantly being committed by detainees and those administering the centre. 32 Furthermore, it is arguable that the email of Federal Agent Chicheportiche to Mr Verschuur forwarding a copy of the Applicant's complaint of 5 September 2005 was so expressed as to invite inaction rather than an investigation on the Department's behalf. 33 The parties are in agreement that the Fifth Respondent's motion of 20 October 2005 should now be addressed by reference to the claims made against the Fifth Respondent in the Further Amended Application filed 16 March 2006 and the Further (Amended) Statement of Claim filed 16 March 2006. 34 The Fifth Respondent submits that the Applicant's claims against him are manifestly groundless (see per Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125 at 129). On the other hand, I do not think that the exercise of the jurisdiction [to set aside the initiating process] should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed. In relation to the mandamus claim the Fifth Respondent submits that his exercise of discretion in respect of the investigation of complaints is, in the circumstances, uncontrolled. In relation to the ADJR Act claims, the Fifth Respondent submits that the Applicant is not a person who is aggrieved by a relevant decision within the meaning of the ADJR Act and further that the Fifth Respondent has made no relevant 'decision to which this Act applies' within the meaning of the ADJR Act. 36 The Applicant meets the last-mentioned submission by referring to the fact that in the letter of the Australian Federal Police of 26 September 2005 reference is made to a determination as to the most appropriate method to deal with the Applicant's allegations and to the previous 'decision' of the AFP not to investigate the Applicant's allegations. In making the decision not to investigate the Applicant's claim the AFP has exercised its discretion in relation to deciding whether or not to investigate the Applicant's complaint. Similarly, in Australian National University v Lewins (1996) 68 FCR 87, it was held that the rejection by the University of a lecturer's application for promotion made in accordance with a Statement on Policy and Procedures on academic promotions published by the University was not a decision under a section of the Australian National University Act 1991 (Cth). 41 In Australian National University v Lewins Lehane J, with whom Kiefel J agreed, rejected a submission that the decision refusing promotion was made under a section of the Australian National University Act 1991 (Cth) which conferred a range of powers on the University, including power 'to employ staff'. It is clear, I think, that the general power to employ staff does not satisfy either limb of a test so expressed. Mere general authorisation is not sufficient to qualify a decision as one made under an enactment (per von Doussa, Drummond and Mansfield JJ at 139-40 and 144). The potential for massive disruption of the organisation's activities that would be the consequence of such a conclusion is manifest. Accordingly the claims made by the Applicant against the Fifth Respondent in paragraphs 4A, 4B, 4C and 4D of the Further Amended Application should be dismissed. 45 This leaves for consideration the question of whether or not the Applicant's claim for relief in the nature of mandamus against the Fifth Respondent should also be summarily dismissed. It is not beyond argument that referral of a complaint to a department whose conduct is indirectly called into question in circumstances where it could be said that the Fifth Respondent knew that the department had a closed mind on the issue might constitute an abdication of responsibility by the Fifth Respondent. In such circumstances the Applicant ought not to be deprived of his opportunity to make out a case for relief in the nature of mandamus at the trial of his case by the Court. This, of course is subject to the question of the Applicant's standing to claim relief against the Fifth Respondent. 46 It will be appreciated that the rules relating to standing are designed to ensure that applicants only litigate their own business. For an applicant to have standing demands a connection between the applicant's interests and the relief sought. As a general rule the Court will not recognise busybodies who interfere in things that do not concern them. There is no difference, in this respect, between the making of a declaration and the grant of an injunction. The assertion of public rights and the prevention of public wrongs by means of those remedies is the responsibility of the Attorney-General, who may proceed either ex officio or on the relation of a private individual. A private citizen who has no special interest is incapable of bringing proceedings for that purpose, unless, of course, he is a permitted by statute to do so. A person is not interested within the meaning of the rule, unless he is likely to gain some advantage, other than the satisfaction of righting a wrong, upholding a principle or winning a contest, if his action succeeds or to suffer some disadvantage, other than a sense of grievance or a debt for costs, if his action fails. A belief, however strongly felt, that the law generally, or a particular law, should be observed, or that conduct of a particular kind should be prevented, does not suffice to give its possessor locus standi. If that were not so, the rule requiring special interest would be meaningless. Any plaintiff who felt strongly enough to bring an action could maintain it. 53 In the light of the conclusions which have been reached, there should be no order as to costs in respect of the Fifth Respondent's notice of motion. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham . | application for summary dismissal of claims against the commissioner of the australian federal police in respect of the investigation of alleged breaches of the migration act by unlawful non-citizens who have performed work in australia migration |
Elbow River is a foreign corporation with no presence or assets in Australia. National Biofuels began these proceedings in November 2008 seeking declarations that, in effect, it was entitled to, and had validly, terminated an agreement made in September 2008 with the defendant, Elbow River concerning the importation into Australia from Canada of 3,500 metric tonnes of biodiesel fuel. National Biofuels claimed that it was a term of its agreement with Elbow River that the shipment of the fuel under a c.i.f. contract would occur in circumstances where the fuel was isolated under a blanket of nitrogen from the time of its sampling for testing by an independent surveyor prior to its loading for shipment to Australia and during the voyage here. Presumably, that was to prevent any possibility of contamination by extraneous substances including the contents of the fuel tanks, although there is no evidence of that purpose at the moment. The parties arranged that payment for the fuel would occur under a letter of credit established with HSBC Bank Australia Ltd. They contemplated that Elbow River would present documents to the bank to enable it to be paid by demonstrating the conformity of those documents with the terms of the letter of credit. Elbow River's defence and cross-claim expressly pleaded that a term in the letter of credit required the presentation of a certificate signed by an agent of the master of the vessel, on which the fuel was carried, to the effect that a nitrogen blanket would be applied and maintained for the duration of the voyage to the point of discharge. But it asserted that this requirement was not a term of the contracts between it and National Biofuels. As will appear, I am of opinion that the parties' cases are centred on whether that assertion is correct. I will now describe the pleaded cases. It pleaded an alternative claim that a contract had been made around 17 September 2008, partly orally and partly in writing. National Biofuels pleaded that this contract (in both versions) contained terms relating to the nitrogen blanket and the need for the cargo to be isolated from the time it had been sampled until it had been loaded. It pleaded that the fuel had not been isolated at any relevant time and had not been protected by a nitrogen blanket, in accordance with its alleged pleading. It asserted that the terms dealing with the isolation of the fuel and the nitrogen blanket were conditions of the contract, any breach of which entitled it to terminate and that, in the event, it did terminate because each of those terms had been breached. National Biofuels also pleaded that on about 5 November 2008, Elbow River presented documents to the bank seeking payment of USD4,263,000 under the letter of credit. It asserted that by representing to the bank that it was entitled to be paid, Elbow River had engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth) or s 42 of the Fair Trading Act 1987 (NSW). In addition, National Biofuels asserted that the breaches of the agreement caused it loss or damage and an amount of around AUD200,000 was claimed as damages. However, in an open offer made in correspondence and repeated by counsel in court, National Biofuels asserted that it is prepared to forego its claim in its entirety if the cross-claim to which I am about to come is not pursued. In addition, National Biofuels pleaded that around 4 November 2008 it received a copy of the asserted terms relied upon by Elbow River, which are at the heart of Elbow River's case but which National Biofuels said formed no part of the contractual arrangements. In its defence and cross-claim Elbow River denied that the agreement reached between the parties around 11 September 2008 contained terms requiring it to isolate the fuel or to provide a nitrogen blanket for it. It asserted that the terms were contained wholly in writing, in effect, following substantially Elbow River's standard form purchase and sale contract, together with certain incorporated terms from the Incoterms 2000 clauses for c.i.f. contracts. Thus, at this point in the defence, a substantial issue arose as to whether the contract was as alleged by National Biofuels or as alleged by Elbow River, albeit that it is common ground that the parties had some transaction relating to the sale of the fuel. In addition, Elbow River asserted that the terms relied on by National Biofuels, which are disputed, were mere warranties or innominate terms not amounting to conditions, breach of which gave rise to no entitlement to terminate. Next in its defence, Elbow River asserted that, having learnt of the possibility of inadequacies in the nitrogen blanket, Elbow River with National Biofuels' prior knowledge and consent, incurred expenses in procuring additional nitrogen to be supplied to the vessel and applied to the cargo during the course of the voyage. It asserted that this amounted to a waiver by National Biofuels of any right to terminate. Elbow River also asserted other acts of affirmation by National Biofuels which, if established, would deny its ability to terminate. There is no doubt that Elbow River's defence puts in issue any title for National Biofuels to seek relief based on its claim. Elbow River then pleaded its cross-claim. It repeated the contractual terms on which it had relied in its defence and set out a number of important terms on which it relied. Most significantly, in the cross-claim it pleaded that the contract had been made between the parties, as National Biofuels had alleged, on about 11 September 2008 but that on about 17 September 2008, in performance of the agreement, National Biofuels established a letter of credit with the bank. Elbow River then alleged in the cross-claim that the letter of credit conformed with the agreement, "save and except" that it included an additional requirement (acceptable to Elbow River) to the effect that a certificate signed by an agent or master of the vessel would be provided to the effect that a nitrogen blanket will be applied and maintained for the voyage to the point of discharge. In other words, Elbow River asserted that there was no term of its contract with National Biofuels that included any requirement for a nitrogen blanket. And for that reason, although Elbow River had accepted that it was a condition of it being paid under the letter of credit that it produce documents to the bank evidencing the provision of the nitrogen blanket, yet in some way Elbow River contended that it owed no contractual obligation to National Biofuels, in fact, to provide such a nitrogen blanket. Elbow River also pleaded in the cross-claim acts of waiver by National Biofuels. These included the incurring of further expenses by Elbow River to which I have referred, and a further conversation on about 17 October 2008 between officers of the companies, in which, according to the particulars, National Biofuels waived any additional requirement for the nitrogen blanket by saying that if the product conformed with the specifications, it would be accepted. Elbow River also relied on a further telephone conversation in early November 2008 in which it, again, asserted that National Biofuels had waived conformity with the requirement for the nitrogen blanket. Elbow River pleaded that on 8 November 2008 in reliance on the waivers, it presented documents to the bank for payment but the bank refused to honour the letter of credit for nonconformity with the requirement relating to the nitrogen blanket. Elbow River pleaded that it was at all material times ready and willing to perform the contract alleged by it but that by reason of National Biofuels' wrongful rejection of the cargo and its failure to pay the price, Elbow River accepted National Biofuels' repudiation and resold the cargo in Malaysia, suffering a loss of approximately USD1,900,000. Next, Elbow River pleaded that on 12 November 2008 National Biofuels instructed the bank that it would not accept any departure from the terms of the letter of credit, notwithstanding, so the pleading alleged, the waiver that had previously taken place. Elbow River alleged that that amounted to unconscionable conduct in contravention of s 51AA(1) of the Trade Practices Act and caused it to suffer loss and damage. The parties' positions as to quantum are substantially these. Elbow River said that in substance it is a defendant involuntarily brought to the jurisdiction and, being here, has been required not only to defend itself but, by reason of any issue and other estoppels that might arise were it not to do so, has been obliged to bring its cross-claim for damages in this jurisdiction. In those circumstances, it contends that it should not be required to provide security. Alternatively, to the extent that its claims add any extra issues, their cost can be assessed for the purposes of security at the sum of $10,000. There is no dispute between the parties as to that assessment. In addition, Elbow River made an open offer to provide $15,000 as security for that purpose, if National Biofuels did not seek any other sum. National Biofuels, seeks and the parties have agreed that if National Biofuels is successful is entitled to, security for what it says its costs of the proceedings would be. The parties have agreed for the purposes of this motion only that those costs would be taxed about 65% of the estimate of about $116,000 as the total estimate of solicitor/client costs made by National Biofuels' solicitor. First, s 56(1) provides that the Court or a judge may order an applicant in a proceeding in the Court, relevantly, to give security for the payment of costs that may be awarded against him or her. Secondly, O 28 r 3(1)(a) provides that when considering an application by a respondent for an order for security for costs under s 56 the Court may take into account, relevantly, that the applicant is ordinarily resident outside Australia. That is the basis upon which this present application has proceeded. There is no suggestion that Elbow River would be required to provide security for costs under provisions such as s 1335 of the Corporations Act 2001 (Cth). The gravamen of the position revealed on the pleadings is that Elbow River contends that the parties made a contract that did not require it to comply with, and so, relieved it of, the obligation to meet the terms of the letter of credit relating to the nitrogen blanket either from the time of the formation of the contract or by reason of a waiver. Thus, it will claim it is entitled to substantial damages. The parties debated the proper characterisation of their respective positions. Elbow River argued that because, in substance, its participation in the proceedings is defensive and responsive to a substantive claim made by National Biofuels, the power to order it to provide a substantive amount of security has not been enlivened. The word 'applicant' used in s 56 of the Act has for many years in various statutory analogues and under the Federal Court Act been accepted as referring to the party against whom security for costs is sought, whether in legal form a plaintiff or initially moving party in the proceedings or a defendant or respondent who brings a cross-action or cross-claim: see eg Buckley v Bennell Design and Constructions Pty Ltd (1974) 1 ACLR 301 at 306 per Street CJ. In my opinion, the authorities establish that where a foreign defendant counterclaims or cross-claims, it will be ordered to provide security for costs if, in substance, what it puts forward is not simply a defence to the claim, but a distinct claim in itself, provided that on an overall assessment by the Court it is just and fair that such an order be made. In Neck v Taylor [1893] 1 QB 560 at 562 Lord Esher MR identified the applicable principles (see also at 563 per Lindley LJ and per Lopes LJ). Those principles were applied by Street CJ in Buckley 1 ACLR at 307; see too Bev Wizz Group Pty Ltd v Transport Solutions Pty Ltd [2008] NSWSC 1399 at [12] - [18] where Brereton J summarised a number of the authorities. Where, however, the counterclaim is not in respect of a wholly distinct matter, but arises in respect of the same matter or transaction upon which the claim is founded, the Court will not, merely because the party counterclaiming is resident out of the jurisdiction, order security for costs; it will in that case consider whether the counterclaim is not in substance put forward as a defence to the claim, whatever form in point of strict law and pleading it may take, and, if so, what under all the circumstances will be just and fair as between the parties and will act accordingly. If he does avail himself of the remedies the jurisdiction provides in order to obtain affirmative relief or redress, he may be ordered to give security, although he becomes a defendant in the action. He held that the foreign plaintiff had assumed the position of a defending party principally because he was compelled to do so by the provisions of the legislation under which his goods would otherwise be condemned. He characterised that position as being one in which the foreign plaintiff had assumed the burden of commencing the proceedings in order to defeat the true moving party's claim, being that of the Collector of Customs to be entitled to condemn and forfeit the plaintiff's goods. As a matter of impression, in substance the real issue in the present proceedings involves Elbow River establishing positively that the terms of the letter of credit dealing with the nitrogen blanket, which were vital to its right to be paid in a commercially efficient way, reflected no part of the contract and National Biofuels' reliance on them as terms either was wrong or the terms were inessential. Next, Elbow River is seeking to establish its entitlement to a very substantial claim for damages. While National Biofuels also has a claim for damages and does seek some relief, in substance its position is defensive. It seeks to resist what, at the time the proceedings were brought and subsequently has eventuated, was anticipated to be Elbow River's substantive claim for damages for breach of contract. I am of opinion that the pleadings reveal that in reality the substance of the case and the substantial claim is that brought by Elbow River to recover damages for the breach of the version of the contract on which it relies. Moreover, it seems to me that the evidentiary burden, albeit in a formal sense, borne by each of the parties equally to establish the respective contracts on which they rely, is really created by Elbow River's positive denial that the terms of the letter of credit, requiring production of documentary proof to the bank that there was a nitrogen blanket, form part of any contract between the parties. In my opinion, that will be a heavy burden to discharge, having regard to the commercial arrangement the parties evidently have accepted on the pleadings. The substance of that arrangement arose out of dealings and conduct in negotiations between businessmen for the payment of a very large sum of money under a c.i.f. contract using a letter of credit. Prima facie, it would be odd that the letter of credit would contain an additional requirement, albeit one which Elbow River said was acceptable to it, that formed no part of the contract whatsoever concerning the way in which the goods were to be carried. Again, that prima facie view is simply a matter of impression based on my reading of the pleadings and the fact that this case arises because the bank, presumably justifiably, rejected the tender of the documents on which Elbow River's entitlement to be paid depended. For these reasons, I am of opinion the real plaintiff or moving party in these proceedings is Elbow River. That leaves the question of what order I should make for security. There is substance in Elbow River's contention that some additional costs will be incurred because of National Biofuels' claim. I recognise the reality that there are seriously competing factual and legal contentions open to both parties in the matter. But, security should be ordered for the costs that National Biofuels is likely to recover, were it to succeed defending in the proceedings in substance brought against it. I will reduce the amount of security for those costs to recognise that National Biofuels also has a substantive claim that, at present, it seeks to pursue in its own right. Although it may be an unsatisfactory yardstick, the evidence is that Elbow River contends that the additional issues it wishes to raise would add about $10,000 to National Biofuels' costs. I am of opinion that the amount of $116,000, agreed to be 65% of what National Biofuels would recover in costs if successful should be reduced by about that sum. That will take account of the fact that while National Biofuels' claim is principally defensive, it includes a relatively small claim for damages. I will order Elbow River to provide $105,000 by way of security for the costs of the proceedings. The parties should bring in short minutes to provide for the manner in which security will be provided and a further timetable to prepare the matter for hearing. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | security for costs defendant outside jurisdiction plaintiff's claim for declarations that it terminated contract for sale of goods and consequential damages defendant's cross-claim based on different contract for sale of same goods cross-claim sought large amount of damages for breach of contract plaintiff's claim for declarations responsive to defendant's possible damages claim that may have been brought in another jurisdiction whether defendant/cross-claimant is, in substance, the moving party practice and procedure |
The differences between them that were evidenced in the hearing subsist still. 2 As to the orders to be made, I should indicate that I intend to dismiss the Amended Application (which sought relief in respect of restraints of trade at common law) for the reason that, by virtue of s 4M of the Trade Practices Act 1976 (Cth), the law relating to restraint of trade at common law was, in the circumstances, not capable of operating concurrently with s 87(3) of the TP Act, which was invoked by the first, fourth, seventh and eighth respondents ("the respondents") in their cross-claim of 2007. My so doing does not imply that the applicants did not enjoy any measure of success in the proceedings. On the contrary. But for the provisions of s 4M which in turn attracted the remedial provisions of s 87(3), the applicants would have been entitled to the relief they sought. It was only the respondents invocation of s 87(3) --- and the respondents in the circumstances had the incentive to do so --- that resulted in a lesser success for the applicants. The respondents in turn seek an order that the applicants pay 75% of their costs of the proceedings. Both sides of this matter enjoyed a real measure of success but neither side was successful on its primary case. The reason for this is because I found, in the circumstances, that the restraints in question contravened s 45(2) of the TP Act. Though the respondents alone sought an order under s 87(3) of the Act to have the restraints varied --- the applicants positively opposed such an order --- the effect of my so ordering resulted in a lesser measure of success than either side of the litigation sought to secure. 5 It is well accepted that the general discretion conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) to award costs is absolute and unfettered but that it must be exercised judicially. In this sense "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or law. See generally Dal Pont, Laws of Costs , ch 8 (2003). 6 The present matter is not one in which it is appropriate in my view to attempt an issue by issue dissection of the proceedings. In the view I have taken of proceedings, it is best described as a composite one in which matters dealt with in the application infused the cross-claim and, importantly, the manner in which I considered the discretion under s 87(3) ought properly to be exercised. As I noted above, each party secured a measure of success albeit not the particular measure for which they held their respective hopes. Rather than attempting to apportion the costs of the application and cross-claim respectively, the appropriate course to take is to deal with the matter as a whole. So viewed, I consider the proper approach to take is to order that the respondents pay 50 per cent of the applicants' costs in the proceedings. This, doubtless, reflects a rough evaluation of the balance of the successes and failures actually experienced by the parties. But it fully reflects my own appreciation of the significance of the respective successes of the parties in the matter and, I would emphasise, of the consequences of the various forensic choices they made that contrived both the course of, and the shape of the issues in, the proceedings. Accordingly, I will order that (iii) the first, fourth, seventh and eighth respondents pay 50 per cent of the applicants' costs of the proceeding. 7 I have made no orders in respect of the restraints imposed in the Heads of Agreement dated 5 August 2005 notwithstanding that the respondents "draft orders" seeks that I do so. The reason I take this course is that such relief was not sought either in the application or in the cross-claim and so was not a matter in issue before me. No amendment of the pleadings was sought by any of the parties even after I had adverted to this situation. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | claim and cross-claim both sides enjoyed success but neither succeeded on its primary case. costs |
He arrived in Australia in March 2004 on a business visa. Shortly after his arrival the appellant applied for a protection visa, claiming he had a well-founded fear of persecution if required to return to Turkey. A delegate of the first respondent, the Minister, refused the application. The second respondent, the Refugee Review Tribunal, affirmed the delegate's decision. An application to the Federal Magistrates Court for review of the tribunal's decision was unsuccessful. The appellant now appeals from the orders of the Federal Magistrate. 2 The case the appellant put to the tribunal to establish his refugee status was as follows. His family, of Kurdish Alevi background and faith, is well-known for its support of left-wing causes. The appellant himself has a long history of left-wing activity, going back to his days at university in the early 1990s. There he was involved in several demonstrations protesting against discrimination by the Turkish authorities towards the Kurdish minority. He was arrested in 1993 following one such demonstration. He was imprisoned overnight and bashed by police. Later in 1993, 35 Alevi activists were killed and the police were suspected of being involved. The deaths led to protests in Istanbul in which the appellant was involved. He was arrested and detained for a day. During his detention he was bashed. 3 In 1995 a group of "fascists", who were known to work for the police, attacked several coffee houses in Gazi, an area known to be politically controlled by and sympathetic to revolutionary guerrillas. Several people were killed. There were protests against the killings in which the appellant participated. Twenty-one protesters were killed by the police. Many others were arrested, the appellant being one of them. He was released after being detained for two days and being beaten. 4 The appellant's brother was also actively involved in politics. In about 1994 his brother became involved in the TKP-ML (Turkiye Komunist Partisi/Marksist Leninist) and by 1997 had joined the Turkish Workers' and Peasants' Liberation Organisation (TIKKO), which is the militant wing of TKP-ML and an illegal Marxist-Leninist party. His brother became an organiser in TIKKO. He was murdered in April 1999, apparently by government agents. Following the murder, the appellant and the remainder of his family were kept under intense surveillance. As a result the appellant and another brother felt compelled to leave home. 5 In about February 1998 the appellant took up employment at a textile mill. On 6 December 1999 the appellant and several co-workers were sacked. All were activists seeking to establish a union or were sympathetic associates of the unionists. Thereafter the appellant went to live with relatives in Istanbul and later travelled to Cyprus where he lived before coming to Australia. 6 The appellant says he is fearful of returning to Turkey because he is likely to be arrested and mistreated as he has been in the past. He believes he might even be killed as was his brother. The appellant put his claim for refugee status on four bases. The first, which was set out in his application for a protection visa, was that he was a Kurdish Alevi. The second, which was also set out in his application, was that his family are known leftists and that he would have their political opinion imputed to him. The third was his connection with his late brother. The fourth was that he could be targeted by the authorities "as a leg-in, a means by which information could be gleaned about identity and operations of the [TIKKO]". 7 The fourth limb was developed in a written submission filed with the tribunal by the appellant's migration agent. That submission stated: "[F]rom the point of view of the Turkish authorities, an applicant with [the appellant's] profile may represent a future entry point who, if monitored effectively, may lead the authorities to other members of this highly secretive, armed revolutionary group. Therefore, from the authorities' point of view, the [appellant's] potential value in this regard would be negated if they were to move before he had led them to anything relating to this group. The [appellant] has indicated that although not a member of TIKKO, he does as a matter of fact have knowledge that the authorities would consider highly valuable intelligence concerning TIKKO members, information which presently the authorities may not realise he has. I submit that the chance of the authorities turning their attention to this [appellant] in the future is not remote, and nor is the prospect of torture being employed to extract actual or suspected information if the [appellant] was not forthcoming under interrogation. In particular it noted that the appellant claimed there was a "real chance at some point in the future that he was at risk of being interrogated because of his brother's connection with an illegal terrorist group. " It recorded the appellant's claim that "although TIKKO was an illegal organisation and the State could act legally against the [appellant] for suspicion of being involved in the group, they may also have wanted to use the [appellant] as a convenient 'entry point' into the illegal organisation and to obtain intelligence about the group. As such the chances of the authorities turning their attention to the [appellant] in the future was not remote and there was a risk that he could be tortured to reveal information. Importantly, the tribunal accepted that the appellant was from an active political family and that the appellant's brother, a member of TIKKO, had been killed by Turkish authorities. It acknowledged that as family members of a known terrorist the appellant and his family had been placed under surveillance and subjected to significant questioning and interrogation, especially after the brother's death. 10 On the other hand, the tribunal was concerned about the appellant's claim that he had left Turkey to reside in Cyprus to avoid ongoing interest by, and attention from, the Turkish authorities as a result of his link to his brother and his brother's activities. The tribunal observed that on the appellant's own evidence he was able to return to Turkey several times during that period which "would tend to indicate that he did not have any subjective fear of returning to Turkey at the time. " The tribunal also observed that the appellant was able to enter and leave Turkey through "legal checkpoints" and if the Turkish authorities "had any ongoing interest in him, particularly if he was suspected of any involvement at all in terrorist activities," he could have been apprehended on any of his return trips. 11 The tribunal reached the conclusion that neither the Turkish authorities nor any associated "shadowy" paramilitary group had any ongoing interest in the appellant while he was living in Cyprus or before his departure from Turkey to Australia either because of his family link to his brother or his brother's activities in TIKKO or any imputed involvement by the appellant in TIKKO. The tribunal went further and said that while it accepted that "some groups in [Turkish] society may not like leftists there [was] no evidence before [the tribunal] that would indicate that holding, or being imputed to hold, a leftist opinion would lead to any form of serious harm in Turkey. " Accordingly it found that if required to return to Turkey "there is no real chance that [the appellant] would face persecution because of his real and imputed political opinion as a leftist. But it did not accept that that discrimination "would constitute the type of serious harm" that amounts to persecution for the purposes of the Convention. 13 The appellant has two grounds of appeal. The first is that the tribunal failed to deal with an integer of his claim, namely that the authorities would want to obtain knowledge of TIKKO and with the knowledge the appellant possessed (or it was perceived he possessed) he would be targeted to provide that information. The second ground is that the tribunal failed to deal with another integer of his claim, namely his claimed fear of persecution based on his family's political profile as distinct from the appellant being a "family member of a person [his brother] known to be in a leftist militant group. In NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; (2004) 144 FCR 1 the Full Court explained (at 18-19) that the tribunal must consider claims unarticulated by the applicant but "raised 'squarely'" by the material available to the tribunal. There is no precise standard for determining when an issue is "raised squarely", but it is clear the tribunal is obliged to consider any claim that is apparent on the face of the material before it. 15 The contention that the tribunal failed to consider the risk to the appellant based on his family's political profile cannot be sustained. In its reasons the tribunal dealt extensively with the evidence concerning the political activities of the appellant's family, in particular the actions of his parents, brothers and sister. For example the tribunal mentioned the parents' action in the European Court of Human Rights, dismissing the claim that the Turkish authorities persecute people for bringing such actions and concluding that "there is no real chance he would be persecuted by the Turkish authorities because his family brought the action". Further the tribunal made several findings that would at least indirectly cover this integer of the claim. To begin with, the tribunal made a finding about the risk faced by people holding left-wing political opinions. It said that "there is no evidence before [the tribunal] that would indicate that holding, or being imputed to hold, a leftist opinion would lead to any form of serious harm in Turkey". It said of the appellant that the Turkish authorities did not have any ongoing interest in him "because of his family link to his brother and his brother's activities in TIKKO or any imputed involvement by the [appellant] in TIKKO. " Later the tribunal repeated its finding that the Turkish authorities had no interest in the appellant "because of his family link to his brother and his brother's activities in TIKKO or because he was a family member of a person known to be in [a] leftist militant group. It is, I think, clear that the tribunal's findings cover any claimed risk to the appellant by reason of his family's profile. 17 The position is more complicated when one considers the appellant's claim based on his knowledge of TIKKO. According to the magistrate this claim was not a separate integer. With respect, I disagree. It was put fairly and squarely as a separate ground for refugee status. And it is a separate ground. Moreover, I think that the tribunal itself treated the claim as a separate integer. In the course of its reasons the tribunal noted "that the [appellant's] claim was that there was a real chance at some point in the future that he was at risk of being interrogated because of his brother's connection with an illegal terrorist group. The adviser stated that the authorities would want to get knowledge of this clandestine group and family members could be targeted at any point to provide such information rather than because they were suspected of membership of this group. " Later the tribunal said that "it was claimed that although TIKKO was an illegal organisation and the State could act legally against the [appellant] for suspicion of being involved in the group, they may also have wanted to use the [appellant] as a convenient "entry point" into the illegal organisation and to obtain intelligence about the group. As such the chances of the authorities turning their attention to the [appellant] in the future was not remote and there was a risk that he could be tortured to reveal information. On this aspect I should refer to a passage from WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 75 ALD 630, 641, a decision of the Full Court. But that is an inference not too readily to be drawn where the reasons are otherwise comprehensive and the issue has at least been identified at some point. It may be that it is unnecessary to make a finding on a particular matter because it is subsumed in findings of greater generality or because there is a factual premise upon which the contention rests which has been rejected. Where, however, there is an issue raised by the evidence advanced on behalf of an applicant and contentions made by the applicant and that issue, if resolved one way, would be dispositive of the tribunal's review of the delegate's decision, a failure to deal with it in the published reasons may raise a strong inference that it has been overlooked. First, the tribunal's reasons are comprehensive and in those reasons the integer was clearly identified. Second, while it referred to the integer the tribunal did not expressly deal with it. Third, in my view it cannot be said that the integer was subsumed in the general findings made by the tribunal. Nor can it be said that there is a factual premise upon which the integer is based which has been rejected. 20 The point here is the authorities may well believe that the appellant had knowledge of TIKKO if for no other reason than because his brother was a member of that organisation. A finding that the appellant is not likely to come to the attention of the authorities because of his deceased brother's activities says nothing of the possibility that the Turkish authorities may wish to make use of the appellant's knowledge or presumed knowledge to further its fight against TIKKO. The issues that the tribunal was required to address to deal with this element of the claim were: (a) whether the Turkish authorities suspect, or might suspect, that the appellant has knowledge of the activities of TIKKO; (b) whether there is a real risk that the Turkish authorities may try and extract that information from the appellant; and (c) whether there is a real risk that the authorities might use persecutory methods to obtain that information. None of those issues were addressed. 21 Without wishing to trespass on the tribunal's turf, it is impossible to resist observing that given the increasing level of hostility between the Turkish authorities and Kurdish separatists, these are not idle questions. The problems faced by Kurds are being inflamed by the attempts to establish a Kurdish state in part of what is now Iraq. Turkey is amassing troops on the border of north Iraq where Kurdish separatists are believed to be hiding in the Kurdish-controlled zone of Iraqi Kurdistan. Just this month, the government has publicly declared its intention to pursue the separatists into Iraq and may take extreme measures to put down the separatists. The question for the tribunal is whether the appellant may be caught up in this struggle. 22 In my opinion the tribunal failed to carry out its assigned task. It follows that the appeal should be allowed and the tribunal's decision set aside. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | refugee review tribunal judicial review protection visa application failure to deal with an integer of claim migration |
He entered Australia on 22 June 1999. An application made thereafter for a Protection (Class XA) visa was unsuccessful. In March 2008 the Department of Immigration and Citizenship wrote to the now Appellant inviting him to make a further application for a protection visa. That subsequent application was rejected by a delegate of the Minister on 21 May 2008 and the Refugee Review Tribunal affirmed that decision by a decision signed on 26 August 2008. An application for review was filed with the Federal Magistrates Court of Australia in September 2008. The amended application was dismissed: SZMTJ v Minister for Immigration and Citizenship [2009] FMCA 18. The Notice of Appeal as filed in this Court on 12 February 2009 raises essentially the same grounds as were advanced before the Federal Magistrate. Although the Notice of Appeal does not expressly assert error on the part of the Federal Magistrate in the exercise of discretion, the written Outline of Submissions as filed by the Respondent Minister correctly addresses the question as to whether the discretionary withholding of relief has miscarried. The balance of the evidence before the Tribunal is of such weight that the Tribunal's adverse credibility finding against the applicant can stand even if the evidence of the earlier application for a protection visa and the exercise of the Minister's discretion were to be disregarded. It is not in the interests of the administration of justice for the applicant to be granted relief by way of certiorari and mandamus because of a mere technicality. Those reasons focussed on the weight of such other evidence as was before the Tribunal and an assessment that those findings " can stand " irrespective of the Tribunal's failure to comply with s 91R. Considerable reservation is expressed as to whether or not the Federal Magistrate has correctly identified the ambit of the discretion available to him and whether or not he has thereafter correctly applied the discretion to the facts before him. Section 91R(3) is a provision of considerable importance to the decision-making processes set forth in the Migration Act . It is a provision which mandates that certain conduct is to be disregarded. If it were otherwise, and the Court were required to inquire into the extent to which the failure by the Tribunal to comply with its statutory obligations to accord an applicant a fair hearing prejudiced the applicant, the imperative obligation imposed on the Tribunal might well be blunted. For example, the application for an administrative determination may be one which, irrespective of any question of procedural fairness or individual merits, the decision-maker was bound by the governing statute to refuse ( Mobil Oil Canada Ltd v Canada-Newfoundland Offshore Petroleum Board [1994] 1 SCR 202 at 228; Wade and Forsyth, Administrative Law , 7 th ed (1994) at 528). Or the prosecutor's complaint may be the refusal by the decision-maker of an opportunity to make submissions on a point of law which must clearly have been answered unfavourably to the prosecutor (See Stead v State Insurance Commission [1986] HCA 54 ; (1986) 161 CLR 141 at 145). Again, the decision under review may have no legal effect and no continuing legal consequences may flow from it. In such a situation, the reasoning in Ainsworth v Criminal Justice Commission [1992] HCA 10 ; ((1992) 175 CLR 564 at 580-581), where the remedy refused was certiorari, indicates that prohibition will not lie ( Abebe v The Commonwealth [1999] HCA 14 ; (1999) 197 CLR 510 at 553-554 [113] ). The concern is with observance of fair decision-making procedures rather than with the character of the decision which emerges from the observance of those procedures. Unless the limitation ordinarily implied on the statutory power is to be rewritten as denying jurisdictional error for "trivial" breaches of the requirements of procedural fairness, the bearing of the breach upon the ultimate decision should not itself determine whether prohibition under s 75(v) should go. The issue always is whether or not there has been a breach of the obligation to accord procedural fairness and, if so, there will have been jurisdictional error for the purposes of s 75(v). The written submissions as filed on behalf of the Respondent Minister did not " urge upon the Court a duty to inquire into each case the extent to which any failure may have prejudiced an applicant ". What was urged upon the Court was the appropriateness " to withhold relief in circumstances where there is a clear absence of any practical injustice or even inconvenience to an applicant resulting from any error in question ". Reliance was placed upon SZKGF v Minister for Immigration and Citizenship [2008] FCAFC 84 and SZIQB v Minister for Immigration and Citizenship [2008] FCAFC 20. It is unnecessary for present purposes to resolve whether the written submission accurately expresses the basis upon which any discretion should be exercised or whether the more difficult task is the application of any discretion to the facts. Reservation is also presently expressed as to whether the present case is in any way analogous to the facts before the Full Court in SZKGF . There the question was whether an incorrect postcode upon correspondence, which was in any event received, constituted jurisdictional error. The delay of over seven years in SZIQB , and the other conduct of the claimant in that case, also seem far removed from the present case. Reference may also be made to the observations of Middleton J in SZGBI v Minister for Immigration and Citizenship [2008] FCA 599 at [53] to [54] where His Honour indicated that relief may have been refused for a breach of s 441A of the Migration Act 1958 (Cth). The circumstances of the present proceeding are such that it is considered that a referral should be made pursuant to O 80 r 4 of the Federal Court Rules 1979 (Cth). The present proceeding is such a case. The expression, " the interests of justice ", as employed in Rule 4(1) is a " wide term ": Taylor v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 319 at [10] per French J. As His Honour there made clear, the decision to issue a referral is no indication by the Court of the strengths or weaknesses of a particular case. In the present proceeding it is considered that it is in " the interests of the administration of justice " that a referral be made. A person seeking refugee status in Australia who has established a breach of an important provision of the Migration Act 1958 is not to be lightly denied relief. The significance to be attached to a breach of s 91R(3) and the importance of that provision to the decision-making process need to be addressed. The proper basis upon which any such discretion should be exercised, and whether it is appropriate when exercising that discretion for the Federal Magistrate to himself embark upon an assessment of the weight of the evidence before the Refugee Review Tribunal, are both matters in respect to which the Court would be greatly assisted by hearing from a legal practitioner on the Pro Bono Panel. Although it may well be that the ground of appeal alleging bias on the part of the Tribunal is not a ground that is ultimately relied upon, it is not considered appropriate at this stage to confine the assistance that may be provided pursuant to O 80 r 5. The legal practitioner to whom this matter is referred may abandon some grounds or seek to raise grounds not presently identified. Such matters will be matters for the professional judgment of the legal practitioner concerned. For the purposes of O 80 r 4(2), it may be noted that the present Appellant has limited means and is presently detained at the Villawood Immigration Detention Centre. Pursuant to Order 80 rule 5, the referral be for the provision of assistance being representation generally in the conduct of the proceeding within the meaning of Rule 5(d). The Appellant to file and serve any Amended Notice of Appeal , together with an Outline of Submissions , on or before Wednesday 25 March 2009. The First Respondent to provide any further Outline of Submissions on or before midday on Friday 27 March 2009. Liberty to apply on two days' notice in writing. The proceeding be stood over for the hearing of the Appeal on Monday 30 March 2009 at 10.15 am. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | breach of s 91r(3) relief refused in the exercise of discretion order for referral to pro bono counsel interests of the administration of justice migration |
The application before the primary judge sought judicial review of a decision of the Refugee Review Tribunal ('the Tribunal') made on 23 May 2003 and handed down on 19 June 2003. The Tribunal had rejected her application for a protection visa. 2 The applicant filed her application for an extension of time on 14 July 2006, almost three years after the decision of the Tribunal was made. In the affidavit attached to the application, the applicant stated that her migration agent did not notify her of the decision and that she had only received a copy of the judgment on 10 July 2006. The applicant also stated in the affidavit that the migration agent did not properly handle her request for a business visa rather than a protection visa. 3 In oral evidence given at the hearing the applicant confirmed that at all relevant times it was her wish to obtain a business visa. She at no time wished to obtain a protection visa. The application which she had made for a protection visa was supported by statements of fact relating to her involvement with Falun Gong which were not true. She did not tell the Refugee Review Tribunal that those statements were untrue. She did not tell Beaumont J who heard and dealt with her application to review the Tribunal's decision. Despite this, she annexed to her affidavit a draft notice of appeal to a Full Court of this Court. The grounds appearing in that draft notice of appeal included allegations that the Tribunal had denied her procedural fairness by relying on information adverse to her without giving her an opportunity to comment on that information. Some, at least, of that information had been provided by her. 4 I find it extremely hard to understand how she could seriously assert as a ground of appeal that the Tribunal had relied on evidence which she now tells the Court was not true. The notice of appeal also contains grounds alleging that the Tribunal ignored some of the claims in the statement attached to her application which she now says were untrue. 5 When an applicant applies to the Court for leave to lodge a notice of appeal out of time it is necessary for the applicant to establish that the reasons for appealing out of time are special reasons. Applications for an extension of time are not granted unless there is a proper reason to do so. In circumstances such as the present, there can, in my opinion, be no proper reason for enlarging time. This is because, as I explained to the applicant, his Honour Beaumont J had found that the Tribunal had made no legal error when it determined that she was not entitled to a protection visa. Her evidence this afternoon establishes that not only was there no legal error, there was no factual error either, on the part of the Tribunal. It would be an act of futility for the applicant to pursue an appeal against a decision which affirmed a decision that she was not entitled to a protection visa in circumstances in which she asserts that she never wanted or sought such a visa. 6 Another factor that is brought into account when applications such as the present are made is whether an acceptable explanation for the delay has been provided. I do not accept that an adequate or acceptable explanation for the two and a half years delay has been provided to the Court. The applicant was present in Court when his Honour delivered reasons on 4 February 2004. She had the assistance of an interpreter. She would therefore have been aware that his Honour had refused her application for judicial review. Yet, in her affidavit, she lays the blame for her being unaware of the Court's decision on her former migration agent. That agent was not present in Court when his Honour's reasons were delivered. There was, therefore, no reason why the applicant would expect to be informed about the Court's reasons by the migration agent. 7 The application will therefore be dismissed with costs. | no point of principle migration |
They are the applicants in these proceedings. Both are companies incorporated in Papua New Guinea (PNG). MRSM is the trustee of the Star Mountain Landowner Trust. It holds an interest in the Ok Tedi copper and gold mine in the West Province of PNG in trust for local landowners. 2 At the end of 1999 MRSM won a tender to provide catering services for Ok Tedi Mines Limited (OTML) at the Ok Tedi mine. A landowner company, Fubilan, was set up to provide the services under the OTML Contract. It was a requirement of OTML that a successful landowner tenderer secure the management services of a company with an international reputation in catering of the kind required under the contract. 3 As a result on 6 January 2000 MRSM and Fubilan, together with a statutory corporation, Mineral Resources Development Company Ltd (MRDC) entered into a Management Agreement with two members of the Compass Group of companies. One was the first respondent Compass Group (Australia) Pty Ltd then, and until 9 May 2003, known as Eurest (Australia) Support Services Pty Ltd (Eurest (Australia)). Prior to 19 March 1999 it was known as SHRM (Australia) Support Services Ltd. It is a company incorporated in Australia. The other Compass Group company which was party to the agreement was the second Respondent, Eurest (South Pacific) Ltd (Eurest). It is a company incorporated in PNG. The two companies had been acquired by the Compass Group in November 1999. Under the Management Agreement, Eurest was the manager and Eurest (Australia) guaranteed its performance. The catering contract with OTML, referred to in these reasons as the OTML Contract, was signed by Fubilan on 11 January 2000. 4 The relationship between Fubilan and Eurest was difficult from the outset and continued to be difficult for the life of their agreement. Fubilan, and its consultant Mr William Fenwick, alleged wrongdoing of various kinds by Eurest in connection with the formation and implementation of the agreement. They alleged mismanagement by Eurest and that Eurest (Australia) had obtained and retained the benefit of rebates and discounts in purchasing goods in Australia and PNG for use in the provision of services under the OTML Contract. Fubilan endeavoured to set up its own supply chain with intermediary companies in which it and Mr Fenwick would hold interests. At the end of 2001 Fubilan attempted to terminate its relationship with Eurest and substitute another manager. However OTML's approval for the termination was necessary and was withheld. Ultimately, and despite the commencement of these proceedings in 2003, the catering contract was renewed in August 2005 on the basis of an ongoing management relationship between Fubilan and Eurest which continues to this day. 5 MRSM and Fubilan commenced these proceedings in 2003 against Eurest, Compass Group (Australia) Pty Ltd, Eurest and Compass Group Plc, the United Kingdom holding company. No less than 18 causes of action were raised. They relied, inter alia, upon the Trade Practices Act 1974 (Cth) (TPA), breaches of fiduciary obligations, negligence and breach of contract. The trial of the action occupied 22 hearing days but much of the evidence was documentary. The total number of documentary exhibits was 523. 6 For the reasons that follow, the applicants fail on all their causes of action. They will have to bear the costs of these proceedings that were ill-conceived and made little commercial sense. 2. It is situated at Mt Fubilan, roughly in the geographical centre of the island of New Guinea. A road links the mine site to a town called Tabubil, which is 12 kilometres south-east of the mine. Tabubil is linked by road to the town of Kiunga on the Fly River where there is a port facility for the transport of ore from the mine on barges. 8 The mine site lies within a special mining lease. There are four villages within the lease area. They are Bultem, Kavorobip, Finalbin and Atemkit (SML villages). Another six villages are located on land leased for purposes connected with the mine. They are Kumgit, Ankits, Niosikiui, Oktidetau, Wangbin and Migalsimbip (LMP villages). The SML villages together with two LMP villages, Wangbin and Migalsimbip are occupied by members of the Wopkaimin tribe. The tribe is subdivided into clans. The SML villages comprise the Aplamkrmin Clan. The two LMP villages comprise the Kamfaiwolmin clan. The remaining LMP villages belong to another tribe. 9 The ore deposit was discovered in 1968. Mining commenced in or about 1983. It is conducted under an agreement with the PNG government which is the subject of the Mining (Ok Tedi Agreement) Act 1976 . The mine is operated by OTML. Until 2002 BHP Ltd had a majority shareholding in OTML. Following protracted litigation involving landowners in connection with environmental damage to the Fly River, BHP entered into an agreement with the PNG government and relinquished its 52% shareholding in OTML in favour of a company newly formed as the trustee of the PNG Sustainable Development Trust (Aua 6-7). 10 The Mining (Ok Tedi Agreement) Act provided that OTML would employ Papua New Guineans in all of its activities under the agreement and in all ancillary and related activities except where the employment of non-nationals accorded with the approved training and localisation program or as otherwise approved by the State (cl 30.1). The company was required progressively to replace foreign technicians, operators, supervisors, clerical, semi-professional, professional, administrative and managerial staff employed with the approval of the State with PNG nationals in accordance with a training and localisation program. This requirement was subject to the qualification that if the training and localisation program were disrupted by circumstances or events which, in the company's view made it difficult or impossible for it to comply with its obligations or to operate profitably by reason of the program, the company could give notice to the State with alternative or revised plans to achieve the objects of training and localisation. If the State did not approve the variations the company was bound by its original obligation (cl 30.3). 11 On 11 January 1991 PNG made an agreement with the Ok Tedi landowners defined in the agreement as "the members of the landowning clans represented in the Star Mountains Local Government Council". It provided for the landowners to take up to 25% of the State's 20% interest in the Ok Tedi mining project (ie 5% of the total equity of the project) (cl 4.1). The acquisition was to be effected by agreement between the landowners, the State and OTML shareholders and by a shareholders agreement (cl 4.2). Royalties received from the Ok Tedi mine were to be paid to the Fly River Provincial Government. Thirty per cent was to be paid by the Provincial Government to the landowners (cl 5). Twenty five per cent was to go to SML villages and 5% to the villages of Wangbin and Migalsimbip (cl 5). The PNG Government also undertook to use its best endeavours to ensure that a program to encourage participation by landowners in businesses associated with the mine operation was implemented by OTML (cl 7). The preceding history was uncontentious and I accept that it was correct. It was established by the PNG Government to provide management services to landowner trustee companies in relation to assets which they held in mining and related projects. A number of MRDC officers were witnesses in these proceedings. From early 1996 to 1999 he served as alternate managing director to the then managing director, Dr Ila Temu. In May 1999 he became the managing director, a position he held until August 2001 when he left to begin working as a consultant. He is now PNG's Gas Project Coordinator attached to the Office of the Deputy Prime Minister. (ii) Michael Baitia, who began working for MRDC in 1997 as an assistant manager. He later became a commercial manager there. He is now the manager, corporate development (PNG) for Eurest. (iii) Ronald Kolalio, who was employed by MRDC as its treasurer/accountant from December 1999. His responsibilities at MRDC included looking after treasury functions for the nine landowner companies that MRDC managed. (iv) Melvin Yalapan, who was the company secretary for MRDC from 1997 to November 2002. (v) William Boas, who worked with MRDC in 1999 and became its commercial manager in August 2002. (vi) Francis Kaupa , who was appointed as the acting managing director of MRDC in October 2002 and who became managing director on 28 January 2005. The financing of their acquisition was done under an agreement by which they would forego the other half of the 5% equity offered by the State. This history appears from the recitals to a deed dated 29 April 1997 setting up the Star Mountains Landowners Trust. It was a purpose of the Trust that the trustee would hold the Ok Tedi landowners' shares on behalf of those landowners (cl 2). MRSM was the trustee of the Trust. MRSM officers generally referred to MRDC officers as Management. 14 The directors of MRSM included representatives of the clans making up the landowner group, a representative of MRDC and a representative of the Department of Mining. Daniel Atmeyok --- he was a director from 1997 until 2000. He is from Kumkit village. Kumar Aua, who represented the Department of Mining. He is now the PNG Ambassador to South Korea. William Boas , he was appointed initially as a representative of the Treasury Department. He continued as a director after he left Treasury in 1999 and began working with MRDC. He became Commercial Manager of MRDC in August 2002. Samson Buretam, who died on 1 February 2004. He was born in Kavorabip village. Bill Menim --- he was appointed as Chairman and remains in that office. He was born in Kavorabip village about 10 kilometres from Tabubil. He now lives in Finalbin village as he married a Finalbin woman. Dr Ila Temu , who was Managing Director of MRDC and was appointed to the MRSM board from 1997 to 1999. 15 Prior to PNG and the landowners agreeing that the latter would take up a 2.5% equity interest in OTML dividends received by the State in respect of its equity in OTML had been paid to the PNG Treasury Department. This practice continued even after the landowners had acquired their interest. There was about 3 million kina due to MRSM from the State by the year 2000. 16 After its establishment in 1998, the MRSM board began to consider ways in which it could use money received from its shareholding in OTML for the benefit of landowners. Samson Buretam suggested that MRSM become involved in the provision of catering services for OTML. Dr Ila Temu supported that idea which was endorsed by the MRSM board. It carried on business in Western Australia and in the Eastern States of Australia including Queensland. 18 Mr Les Fereday was Poons' Queensland operations manager in 1980. He was based in Brisbane. He became operations manager for the Eastern Division in 1982. At about that time Poons secured a contract to manage the provision of catering services for Bechtel in connection with construction work at the Ok Tedi mine. When the contract came up for renewal in 1985 it was put out to tender and a Singapore based company called Spinneys was the successful bidder. Mr Fereday was appointed as general manager for the Eastern Division of Poons in 1987. The catering contract came up for tender again in 1989. Poons tendered through its Perth office and won the contract back. 19 In September 1989 the P&O Group acquired Poons' operations. It retained the trading name of Poons so that the operations continued under that name for some time after the acquisition. Mr Fereday was appointed by the P&O Group as director/general manager of the Eastern Division of the operation. PNG was treated as part of the Eastern Division. The provision of catering services at Ok Tedi therefore fell within his area of responsibility. 20 Poons was catering for four camps at the time. One was at the mine on Mt Fubilan, two were in Tabubil and one was at the Ok Menga power station. The management comprised 11 or 12 expatriates predominantly from Australia. So too were the executive chefs. Most of the workforce were PNG nationals who provided unskilled or semiskilled labour. They were trained on the job to a level where they could supervise other nationals, subject to direction from chefs, catering managers and project managers. 21 The term of the Ok Tedi contract was four years to 1993. It was rolled over for two successive one year terms ending in 1995. In that year OTML called for tenders for a new catering contract. Poons retendered and won the contract against Niugini Catering and an Australian-based company, SHRM (Australia) Pty Ltd (SHRM). That company had operated under that name for some 30 years. However on 19 March 1999 it became Eurest (Australia) Support Services Pty Ltd. At some time in 1999 the Cooper Group acquired the Eurest companies. Much later, on 9 May 2003, Eurest (Australia) became Compass Group (Australia) Pty Ltd (Compass), the first respondent in these proceedings. In 1995 SHRM was providing catering services to remote sites in Australia. It also serviced the Bougainville copper mine and some universities and defence sites in PNG. 22 Poons' catering contract was to expire in October 1999. There was no requirement in it for any ownership involvement or joint venture with local landowners. However, Roger Higgins, OTML's executive manager, told Mr Fereday it would be something that OTML would look at for the future. Mr Fereday had already had experience between 1989 and 1995 in developing joint venture arrangements with landowner groups. In February or March 1999 Mr Fereday and Greg McGrath of Poons had some discussions with Dr Ila Temu about the possibility of a joint MRSM/Poons tender proposal. It audited a number of its service contracts, including the catering contract. The executive manager responsible for the audit of the catering contract was Mr Burt Uglinga. He had been with OTML since 1984. He became executive manager at Tabubil in 1996. He was responsible for occupational health and safety, hospital amenities (including catering), recreation and counselling. 24 Mr Bill Fenwick was appointed under Mr Uglinga's supervision to review the catering operations. The appointment was made through his private company, Morocco Holdings Pty Ltd (Morocco). Mr Fenwick who had worked as a chef had a long association with Poons having been employed as their head chef in 1972 at the Windarra Nickel Mine in Western Australia. He was appointed their project manager for the Ok Tedi mine site in 1983. At that time Poons were catering for 5,500 mandays each day in the OTML catering operations. In 1985 Mr Fenwick was made Poons business development manager for Western Australia. In 1987 when Poons had lost the Ok Tedi contract and it went out to tender, he returned to endeavour to regain the contract for the company and in 1989 was successful in doing so. After that he came back to Western Australia and started his own remote site catering business called Fenwick Catering, which he sold in 1990. He moved to Cairns and ran a number of small businesses. In 1994 he returned to Western Australia and became a catering consultant through his company Morocco. 25 In about 1995 Mr Fenwick was contacted by Mr Bob Pink, OTML's superintendent for town services, and asked to undertake a review of Poons' billings under its catering contract. He prepared a report of what he described as overcharging by Poons. Mr Uglinga was concerned about the overcharging. He was told by Mr John Grubb, OTML's managing director, he had authority to recommend how to deal with the contractor. He provided a copy of the Fenwick report to Poons. In late 1996 Mr Fereday met with Messrs Grubb and Uglinga at the OTML office in Tabubil. He then agreed to reduce monthly billing to 776,000 Kina and pay back OTML for overcharging at the rate of 80,000 Kina per month. 26 Mr Uglinga thought there was an opportunity for future landowner involvement in the catering contract. He discussed the possibility with Mr Martin Paining, the OTML executive manager responsible for community business development. He identified different landowner groups at the mine site and at Kiunga. In 1997 Mr Uglinga and Francis Tike, a business development manager from OTML met with him and representatives of Kiunga landowner groups to discuss a proposal under which the landowners would tender for the catering contract in relation to the Kiunga operations. This led to the incorporation of Kiunga Catering Services Ltd (KCS). 28 Mr Fenwick was engaged by OTML to monitor Poons' monthly billings to ensure that there were no additional charges. He said that he acted in that capacity for approximately 18 months until 1997. He referred to a written agreement between himself and OTML. That agreement however was made on 6 March 1997 and apparently pursuant to a letter of appointment dated 20 December 1996. Under the agreement Mr Fenwick's company, Morocco, was appointed by OTML to provide contract supervision services on all contracts then administered by OTML's Towns and Camps Administration Department. These included the catering services contract with Poons (PNG) Pty Ltd and the Kiunga catering and janitorial services contract with KCS. Discuss and resolve with the Contractor all anomalies and discrepancies. If unsuccessful in resolving such anomalies and discrepancies, refer to OTML for a decision. 29 While he was providing consulting services to OTML in 1997 Mr Fenwick contacted Mr Jeff Hayes of what was then known as SHRM in Brisbane about possible opportunities for SHRM because of the problems that OTML was having with Poons. Mr Hayes had long experience in the catering industry. He had worked for the P&O Group for one year in 1981, for SHRM for 16 years and for Compass for four years. He is presently managing director of Cater Care Services Pty Ltd which specialises in the provision of remote site catering. He wrote to Mr Fenwick on 24 April 1997 attaching price structures for catering services provided by SHRM at the Olympic Dam expansion project (OEP). Tenders for that contract were received from KCS and Poons and KCS was the successful tenderer. It started providing catering services to OTML Kiunga at the end of 1997. KCS was a 100% landowner owned operation but employed an expatriate as manager of its catering operations. Mr Uglinga began dealing with landowners from the Ok Tedi mine site in relation to the catering contract for that site. He spoke to their representatives including Henry Asekim, Samson Buretam and Bill Menim. 31 The evidence about the origins of MRSM's interest in providing catering services to OTML is a little mixed but the uncertainty is not material to the issues in this case. Mr Buretam suggested that MRSM consider it. The then managing director of MRDC, Dr Ila Temu, supported the idea. It was endorsed by the MRSM board. It was also supported by MRDC professional staff who were assisting MRSM in managing the landowner business. They were Michael Baitia, who was MRDC's corporate affairs manager and Melvin Yalapan the company secretary for both MRSM and MRDC. 32 Samson Buretam took the lead in seeking the catering contract. He drafted a letter which was signed by representatives of each of the villages in the Mt Fubilan area supporting a proposal that the MRSM directors negotiate with a view to taking up the contract for the provision of catering services at Tabubil. He was a highly respected village leader and Mr Menim trusted his recommendation. It emerged from the evidence of more than one witness that Mr Buretam was very influential among the landowners, that people deferred to him and that there was a reluctance to say anything critical of him. 33 In 1997 Mr Uglinga introduced Mr Buretam to Mr Fenwick. Mr Buretam suggested that, because of Mr Fenwick's knowledge of the OTML catering contract, MRSM should appoint him to assist in preparing a proposal for OTML. Mr Baitia made contact with Mr Fenwick who agreed to act as MRSM's consultant. Mr Baitia and Mr Fenwick and MRSM's commercial manager, Ashok Jain, worked on a presentation to put to the MRSM board. 34 On 8 July 1998 Mr Dasim Kel, senior accountant, business development with OTML, wrote to Mr Fenwick. He informed him that OTML wanted to bring its catering and janitorial contracts under one entity upon their expiry on 30 September 1999. At that time the catering contract was held by Poons and the janitorial contract by Camp Administration Pty Ltd (CA). Poons had been advised that if it wanted to secure the next contract it would have to have a local partner approved by OTML. CA and MRSM had been identified as two relevant local groups. So far five meetings have been convened between two groups, the latest being on the 29 th June 1998. At that meeting the two groups finally resolved that they would form a new company that is owned 50% each and this company would then bid for the Catering Services Company [sic] as a 100% local company. He asked Mr Fenwick to provide a detailed CV, the hourly charge out rate of his consultancy service, an indicative salary should he be asked to manage the catering contract and any other information he believed might assist to make his presentation to the board of OTML attractive. 35 Mr Fenwick said that he did not receive the letter of 8 July 1998 until probably a week or two after it was sent. He received it in Medang. He did not know who MRSM was at that time. He didn't know Dasim Kel. He did not want to work for OTML and the letter was of no interest to him. He therefore threw it in the bin. This evidence, which was given by him in cross-examination, contrasted with his witness statement in which he acknowledged receiving the letter from OTML and at about the same time receiving a telephone call from Michael Baitia. The letter was produced by Fubilan and MRSM in the present proceedings which suggested that Mr Fenwick must have retained it and given it to them as part of their discovery. When this was pointed out to him he conceded that he had. He then said that his wife had taken the letter out of the bin, ironed it and put it in a filing cabinet. The original of the letter showed no signs of having been screwed up and ironed. When this was put to Mr Fenwick and the letter shown to him, he claimed to have confirmed with his wife on the previous evening that what he said had occurred, had occurred. This aspect of his evidence was not worthy of belief. Indeed his story about the letter which does not seem to have had any bearing upon any real issue in the case was proffered carelessly and almost recklessly and, in that respect, typified other aspects of his responses in cross-examination which tended to be highly argumentative. Mr Fenwick was on a retainer, up to the time of the trial, of $10,000 per month to assist Fubilan and its solicitors in the preparation of this case. He was financially and emotionally involved in its successful prosecution. In any event his evidence appeared to be that his initial contact with MRSM was the result of a telephone call from Michael Baitia which led to a meeting with Mr Baitia and the directors of MRSM at Port Moresby. His reconstruction, in his evidence, of a dismissive reaction to the letter of 8 July 1998 may be explicable on the basis that it came from OTML and that he regarded OTML as in the enemy camp. It was done without the prior authority of the MRSM board. Bill Fenwick will prepare a complete business plan for actual takeover of catering services in September 1999 by (MRSM). . In planning, the consultant will always act in the best interest of MRSM to ensure that the proposal is complete within three (3) months. . Continually consult with MRSM board of Directors and OTML business development (Francis Tike) for all updates plans. The letter affirmed "this company's acceptance to provide MRSM with professional Consultancy services". The services were to include detailed provisions of a business plan and supporting data with a view to presenting a proposal for providing catering services to OTML. A draft copy would be prepared and presented for review at the next board meeting. The letter gave information about Morocco and major clients serviced by it, elements of the proposed business plan, the need for a mobilisation plan and a management plan. Providing the client offers sufficient notice of contract award there will be ample opportunity to source a local management team. This "strategy" had as its objective control by the company of its own business so that it would not be controlled or managed by an offshore company. Mr Fenwick asked for a monthly retainer of A$4,500 initially and a negotiated success fee in the amount of $25,000 payable on contract award. Future project management rates were to be negotiated. He sought reimbursement of approved travel and accommodation. His writing style as evidenced in that letter and in other documents was awkward and rhetorical and frequently involved inappropriate use of words. This is no gratuitous observation as his authorship of various communications made in the name of other persons was a material part of the history of the events which have led to these proceedings. 38 Mr Fenwick prepared documents for consideration by the board of MRSM at its meeting in September 1998. One was entitled "DRAFT PROPOSAL for MRSM "Business Planning"". Another was entitled "BUSINESS PLAN MRSM 1999-2003" comprising 15 pages of text followed by various charts and diagrams relating to income and expense analysis and the like. A third document was entitled "BUSINESS PLAN PRESENTATION". It also bore the subheading "Port Moresby 14/8/98". Mr Fenwick said that the latter document was presented at the September board meeting. In cross-examination he would not remember whether it was a document he used in Port Moresby or at Ok Tedi. Its content suggests it was his speaking notes prepared to commend himself to MRSM. In addition to citing his personal experience and background they referred to opportunities for expansion based on "exhaustive management training measures to facilitate the opportunities". 39 The "DRAFT PROPOSAL for MRSM "BUSINESS PLANNING"" recited that the directors of MRSM were "well capable people and appear expert in their engineering field" and that they had appointed Morocco "to help define their business and formalise a plan to stimulate future growth". The proposed methodology involved Morocco "directing MRSM through the processes of a Business Plan". The document referred to as the "Business Plan" bore the endorsement "Prepared by Morocco Holdings Pty Ltd (September 1998)". However it seems unlikely that it was prepared for the board meeting of 28 September 1998. Mr Fenwick was not sure when it was prepared or presented. 40 A meeting of the board of MRSM was held on 28 September 1998. Messrs Menim, Asekim, Daniel Atmeyok, Buretam and Temu were present along with Melvin Yalapan and Damien Ase. Francis Tike of OTML was present as was Mr Fenwick. The minutes recorded the Memorandum of Understanding of 10 July 1998 noting that it had been entered into without the approval of the full board. The board asked Mr Fenwick to present the draft business plan. He told them that his assumptions were based on real experience in catering contract activities with OTML. The board should approve his engagement so he could complete the business plan before December 1998 and present it to OTML leaving enough time for its consideration before the contract was awarded. MRDC Management and/or Mr Yalapan, explained to the board that under the current trust arrangement a new company had to be incorporated for the purpose of the catering contract. The company would be wholly owned by MRSM and its dividends put into the trust to be distributed to the beneficiary landowners. The name "Fubilan Catering Services" was discussed. That the Board formally engage the Consultant, Mr Bill Fenwick to prepare the proposal and plan for the OTML Catering Contract. 2. That a subsidiary company to be called Fubiland [sic] Catering Services be incorporated for purpose of running the OTML Catering Contract. The company will be 100% owned by MRSM. 3. That both the Chairman, Mr Menim, and Dr Temu execute the agreement to engage the Consultant, Mr Fenwick. 4. That the company pays the bills for the Consultant upon receipt of receipts which includes initial expenses incurred by the Consultant. Providing financial assistance or a guarantee to secure the catering contract. 2. Put into place a catering proposal to be submitted to OTML. The requirements for securing the contract were identified including a demonstrated ability by the proponent to efficiently provide the services to OTML. 42 On 26 October 1998 Dr Ila Temu, the managing director of MRDC and also an MRSM director, wrote to Mr Fenwick and informed him of the board's approval of his engagement for consultancy work. The new consultancy agreement superseded the MOU of 10 July 1998. The payment of the consultancy fee will start from September 1998 when you first started work for the Company and includes any costs and expenses incurred. Terms of Reference for the consultancy were attached. They recited the board's decision and required Morocco to prepare a detailed catering contract proposal for the Ok Tedi mine operation. It was to include proposals for financing arrangements, supply lines for food stuffs, the volume and value of stock to be available on site, cash flow forecasts and an indicative management structure. Mr Fenwick was also required to ensure that the catering contract proposal met and complied with OTML contract requirements. 43 The consultancy agreement required Morocco to perform work in accordance with the Terms of Reference to assist MRSM to secure the catering contract from OTML. The agreement was to commence as of September 1998 and would continue until December 1998 unless earlier terminated or extended by mutual agreement. Morocco was to be reimbursed for the costs incurred in performance of the agreement with a total estimated amount payable of A$4,500 per month. A success fee of A$25,000 would be payable if MRSM successfully secured the catering contract from OTML. It stated that MRSM would employ 80 staff and four senior managers and that the operation would be managed from Tabubil. 45 Mr Fenwick recited features of the existing catering arrangements for OTML no doubt based upon his own knowledge of those matters derived from his employment by OTML. He referred to the difference which he said was little between Lump Sum/Unit Rate then in use by OTML and the more commonly used Manday method of billing. The latter was gauged by an average daily camp occupancy over the month with set incremental rates inclusive of operational costs, product and profit. 46 Sales figures for 1997 and 1998 were set out with the words "Our sales figures are as follows". Projected figures for 1999 through to 2001 were included in his table. Mr Fenwick conceded in cross-examination that he had used information obtained in confidence as an OTML consultant to prepare the table. He conceded that indirectly it was. Greater emphasis would be given to training to support to [sic] ensure this achievement. Review purchasing procedures. There had been a history of failed local landowner companies and ventures which might cause OTML to take a negative view of MRSM-based management. He proposed a management team which would include a project manager who would be a person experienced in camps and catering and having field experience in PNG. He also contemplated an assistant project manager, a catering manager and an assistant catering manager. This can be outlined in detail when MRSM decide their preferred option. His strategy even at that stage appears to have been to bring in a major catering company as a management contractor and then to phase it out. In answer to that proposition in cross-examination he said "it had possibilities" . 48 The business plan appended financial forecasts and cash flow budgets. He projected sales of K8 million in 1998 with a gross profit of K2.4 million and a net profit of K1.2 million. For the following year he projected sales of K9 million, with a gross profit of K2.7 million and a net profit of K1.35 million. It may be noted that at this time on Mr Fereday's evidence Poons were making about K800,000. Mr Hayes met with Mr Fenwick in Brisbane in early or mid November 1998. Mr Fenwick asked him whether he was interested in exploring an arrangement with MRSM in relation to the pending tender. Mr Hayes and his company "were naturally interested in the project". After the meeting Mr Hayes sent a letter dated 25 November 1998 to the MRSM directors thanking them for their "... approach to discuss the possibility of working with MRSM for the provision of Catering and Janitorial Services at the Ok Tedi mine, Tabubil". He expressed SHRM's interest in developing partnership arrangements suitable to OTML and in keeping with stated OTML policies and directions. He referred to the experience of SHRM (South Pacific) in PNG for over 25 years and attached an outline of projects which it had undertaken over that period together with work currently in hand. SHRM (South Pacific) had recently obtained the catering contract in Port Moresby for the PNG Defence Forces. On 16 December 1998 Mr Greg McGrath, the manager of Poon (PNG) Catering and Services wrote to him confirming that P&O (PNG) was keenly interested in discussing with MRSM "possible management, or other mutually beneficial, arrangements associated with tendering for the next OTML catering contract" . He said that the MRDC board decision should pave the way for a formal proposal to be submitted to OTML management and that he was in the process of writing to OTML's managing director, Roger Higgins, advising him of MRSM's intention and MRDC's support. We intend to undertake this before the end of the month. You will be advised on the timing of MRSM presentation to OTML as you will be MRSM's advisor on the proposal. He referred to the MRSM board meeting of September 1998, the engagement of Mr Fenwick and his formal submission of the catering proposal on 14 December 1998. He referred to an MRDC board meeting held on 17 December 1998 which had considered the MRSM catering proposal and given its support to assist MRSM in seeking financing for the proposal. We intend to submit this proposal to you in Tabubil at the end of January 1999. 53 On 19 January 1999 Mr Fenwick wrote to Mr Baitia at MRDC enclosing "limited notes for the meeting at Tabubil". He emphasised the importance of the opening presentation in overcoming OTML resistance. At this time however the Ok Tedi landowners had threatened to shut down the mine. Poons' current charges for each category of service item. 2. The basis for Mr Fenwick's cost estimate for each of the items. Mr Baitia also sought cash flow forecasts for the remaining years of the mine life. 54 On 23 January Mr Higgins replied to Dr Temu's letter of 14 January. He referred to the threats of landowner closure in the following week. This closure was evidently related to a dispute between landowners and the national government. This has given me considerable concern, which I have expressed to the MRSM directors. It set out cash flow assumptions for the period January 1999 to December 1999 and cash flow budgets designated 1A, 1B, 2 and 3 for the period 1 January 1999 to 31 December 1999. The proposed budgets were based on different assumptions about the level of initial capital, stock purchases and catering plant and equipment. 56 On 25 January 1999 Ashok Jain, the manager-commercial of MRDC sent a memorandum to Dr Temu raising questions about the Fenwick proposal. These questions were referred to Mr Fenwick by fax on the same day. As Mr Jain saw it the economic viability of the proposal depended upon assumptions about sales volume, sales price and cost of food and raw material. There had been no supporting information provided. Mr Fenwick had assumed that sales would be made at a 220% profit margin. There was no information to confirm whether such a margin was typical and allowed for food wastage etc. No working capital had been considered. Normally it would be taken as three months' operating costs which would be K2 million. The assumed depreciation for tax purposes of 20% could be higher than what was permissible. Other cost items not considered included rent for the canteen, consumables, recruitment costs and the repairs and maintenance of plant and equipment. The management fee for the catering contract at K100,000 seemed low. There was no sensitivity analysis in the figures provided. There is no record of a response to that inquiry from Mr Baitia. 57 Mr Fenwick prepared some presentation notes for the meeting with OTML. These set out the history of MRSM, the function of MRDC and the relationship between the two companies. MRSM HAS THE NECESSARY FUNDS IMMEDIATELY AVAILABLE TO FINANCE THE CATERING CONTRACT. . MRDC IS COMMITTED TO ASSISTING MRSM IN PUTTING TOGETHER THE FINANCING FOR THIS CONTRACT. . THE STATE WILL ALSO PROVIDE THE NECESSARY GUARANTEE AS PROVIDED FOR UNDER THE OK TEDI MOA WITH THE LANDOWNERS. THESE EXPRESSIONS OF INTERESTS PROVIDE OPPORTUNITY FOR A FAVOURABLE MANAGEMENT GROUP. . He stated that supply management and purchasing options were available to MRSM and would be further discussed and agreed with the successful supplier. Food stock from the current caterer would be purchased at value (on site/in transit). All other capital items and vehicles would be negotiated. 58 On 11 February 1999 the MRSM board held a special meeting in Tabubil. Madiu Andrew presented Mr Fenwick's proposal. He said MRDC would not provide a financial guarantee to MRSM but was prepared to assist in sourcing funds for the contract if required. Mr Baitia explained the components of the proposal and told the board that the information used to formulate the business plan was based on the content of the current scope of works and billing method. He said financing was a critical factor and that OTML would want to be convinced that the company had the funds available to offer the assurances required initially to finance the contract. He pointed to the two cash flow scenarios covered in the proposal. He also advised the board that a management arrangement would be the best option for the company. The recollections of witnesses seemed to vary. It appears likely from the documentary record that it occurred between 11 February 1999 when the board of MRSM met at Tabubil and 16 February 1999 when Michael Baitia wrote to Mr Hayes of SHRM, a communication which will be referred to below. 60 Mr Baitia's evidence was that he and Mr Fenwick made a presentation to OTML representatives comprising Mr Higgins, the managing director, Paul Cox-Martin, the contract superintendent, and three executive managers, Burt Uglinga, Bill Blenkhorn and Martin Paining. Mr Higgins told them that OTML supported landowners and wanted to see them succeed but that MRSM did not have the financial resources or the management experience necessary to undertake the catering contract. It would need to appoint professional offshore management. During the four year term of the contract the landowners would be able to learn how to manage the catering contract properly so they would be in a position to tender for it in their own right when it was next reviewed. Mr Baitia and Mr Fenwick, with input from Ashok Jain, drafted a request for expressions of interest directed to professional offshore management operators identified by Mr Fenwick and Mr Baitia. They approached Sodexho, SHRM, Crocodile Catering and Poons. As such we advise that MRSM intend to enter into a Management Arrangement for the Ok Tedi Catering Contract which will be up for renewal before the end of this year. Attached herewith please find the Terms of Reference for provision of management arrangement for the Ok Tedi Catering Contract. Please submit a proposal with a management budget covering the Terms of Reference to us by the end of this week. For details on this matter please contact Mr Bill Fenwick on (675) 325 3855. It included the term "Supply to be tendered at a fixed price". Mr Baitia did not recall what he had meant by that. He said he had heard a little about the question of rebates at that time but not the mechanics or technicalities of it. That was a matter he regarded as Mr Fenwick's area. 62 The terms of reference in the attachment contemplated that the management agreement would cover project management, supply, training and performance bonuses. The project management component involved the provision and oversight of catering supervision, administration of contract obligations, client and contract liaison, provision of quality food and service, provision of monthly accounts and quarterly reports to the MRSM board and assurance for providing and sustaining the management team. Suppliers were to be nominated and supply to be tendered at a fixed price. He attached a summary entitled "Outline of Management Contract". He said that it should serve to outline items that would need to be considered. He said that SHRM (South Pacific) had specific experience in the kind of operation proposed and would work with MRSM to obtain maximum benefit for all parties concerned. He referred to current Australian operations of SHRM at Century Mine and at Roxby Downs. All of these included initiatives relevant to the OTML project. Compensation estimates would include reimbursable costs. One element of the reimbursable costs was said to be "Consumables and Supplies" although explanatory notes indicated that this comprised consumables, tools and supplies required to perform the work other than catering supplies. I find that the outline of the contract was related to the provision of management services and did not address arrangements for securing food for use in the catering services. 65 Mr Baitia received responses from all the management companies to whom he wrote although the response from Poons was so late it was effectively not considered. Crocodile Catering were unlikely to be in a position financially to properly manage the contract so they were not further considered. The only real prospects for the provision of management services were Sodexho and SHRM. 66 Mr Fenwick's evidence-in-chief suggested that he had had a meeting with Mr Hayes in Brisbane which post dated the OTML presentation and that he had had that meeting in or about November 1998. Mr Hayes said he had been contacted by Mr Fenwick in the second half of 1998. He recalled the meeting which preceded his letter of 25 November 1998 and Mr Fenwick saying that he had been advised by OTML that it was prepared to consider engaging a landowner company provided it was managed by an offshore manager. Mr Fenwick had mentioned the need for such a manager to train MRSM personnel and that such training would be an important task for an offshore manager. Training previously provided by Poons had not been adequate. Despite some conflict abut the dates of their meetings, I accept that Mr Fenwick did make known to Mr Hayes between November 1998 and the end of February 1999 that OTML would only engage the services of a landowner catering company if it were supported by offshore professional management. 67 On 5 March 1999 Mr Hayes wrote again to Mr Baitia outlining his understanding of a "Cost Reimbursable Contract Management Fee". He identified as priorities, "Transparency of transaction, Accuracy of reporting, Quality of performance assessment, Equality of gain share distribution and Accuracy of initial budget criteria". Payroll costs and ancillaries. . Food purchases and tendering. . Rebates negotiated and received. . Administration costs. . Legislative and legal costs. . Insurances. . Capital expenditure. This option, should not be ruled out, as it has been frequently stated by OTML that they are interested in retaining competitiveness. This being the case then the writer would find it difficult to justify the exorbitant cost of retaining off shore Project Management in favour of self management. OTML could not expect MRSM to subsidise Project Managers and at the same time retain equal competitiveness. The bottom line result could show the P/Managers to cost MRSM K40,000/K45,000 per month and for this the writer would question "is the cost prohibitive? " MRSM should take the opportunity to submit their own Management Team with the necessary professional support systems to perhaps encourage/display the Group's ability. He denied in cross-examination that the reference to "the necessary professional support systems" was a reference to himself. Contracting food prices in this manner affords MRSM the opportunity to forecast budgets and reduces the possibility of price hedging through rebating and re invoicing off shore. 69 Mr Baitia remembered receiving the letter from Mr Fenwick. He accepted that self-appointed management was an option considered by MRSM. He had not discussed with Mr Fenwick the proposition that contracting food prices at a fixed contract rate would reduce the possibility of price hedging through rebating and reinvoicing offshore. He could not recall whether the proposal that food supplies should be at a fixed contract rate was ever accepted by MRSM. 70 Mr Fenwick was cross-examined on his observations about the desirability of a fixed contract rate. By that he meant that the food to site should be "a fixed contract rate without a rebate and a net net situation, whereas the current goes through, you know, as I know it, current contractor was rebating and keeping a lot of the profits elsewhere". This characterisation was inconsistent with the terms of his letter. Mr Fenwick's role as advocate rather than witness of the truth in issues of importance in the case emerged early in his evidence. 71 On 8 March 1999 Dr Temu wrote to Mr Fenwick advising him formally of the resolutions of the MRSM board on 11 February and requesting him to undertake a profitability analysis on cash flows over the life of the mine. He also asked Mr Fenwick, when he had done that, to begin the review of any professional managers who had expressed interest in working with MRSM. SHRM have expressed interest whilst Sodexho/Eurest are yet to submit theirs. Poons Catering may respond to us by early next week. Underlying it was the hope that MRSM could be part of the contract for the life of the mine. 72 On 30 March 1999 Mr Baitia sent a fax to Mr Fenwick attaching a letter to Mr Fenwick of the same date from Dr Temu and documents received from Poons, although rather late in the piece. Dr Temu asked Mr Fenwick to undertake a comparative/assessment review of SHRM, Sodexho and Poons and to advise MRSM. His advice would form the basis of their final selection. He was accompanied by Marcus Gosling. He told the board that SHRM had experience in Papua New Guinea and that it regarded training as important and would implement appropriate programs. He did not say anything about the details of training or give any commitment about the outcome of training programs. During the presentation he handed out brochures which included an SHRM profile and played a corporate video. Following the video, according to Mr Baitia, Mr Hayes told the board that SHRM had the experience and the ability to manage the OTML contract and was committed to working with the landowners to achieve the landowners' objectives. He said that the involvement of SHRM would only be in a limited role as after the initial contract period of four years the landowners would be in a position to move forward without professional offshore management. SHRM was serious about working back-to-back with the landowners and this would provide a real opportunity for it to get back into PNG on a large scale. With the closure of the Bougainville site, SHRM's largest contract in PNG had been terminated. According to Mr Baitia, Mr Hayes said that SHRM had trained PNG people to management level and were committed to ongoing training in management beyond the level of chef and relating to administration, accounts and site management. He pointed out the difference between the attitude of Poons who did not train nationals and that of SHRM. Mr Hayes said that SHRM's training programs had supported the Lae Technical College which they relied upon to train their caterers and also to provide a source of employees with some training and experience. Mr Gosling also spoke of his experience in the management of catering on remote sites and the level of experience he could bring to the operation. Mr Baitia said that at the end of the meeting he thanked Mr Hayes for his presentation. 74 Mr Fenwick's recollection of the same presentation was that Mr Hayes provided a profile of SHRM and a document entitled "SHRM Profile". During his presentation he had spoken about the necessity for training. Mr Hayes also asserted that for 20 years Poons had done nothing in relation to training. 75 Samson Buretam who was at the meeting had met Mr Hayes previously. They had been introduced by Mr Fenwick at Tabubil. At the time Mr Hayes was at Tabubil to discuss options for OTML with Mr Fenwick and Teraupo Apoki of OTML if OTML were not able to resolve the problems they were having with Poons. Mr Buretam recalled Mr Hayes' presentation to the MRSM board taking place at the Ninth Floor of Pacific Place in Port Moresby in the MRDC boardroom. He confirmed that Mr Hayes said that SHRM would provide an effective management service and training for PNG nationals above chef to management level. They would have an open book approach and the board would have access to the accounts. Madiu Andrew recalled the presentation as being "focussed on transparency and honesty". He believed that Mr Hayes and Mr Gosling were trustworthy and felt that the directors were excited by their presentation. 76 Following Mr Hayes' presentation he and his associate left the room and the board then agreed to go ahead and engage SHRM. Messrs Baitia and Fenwick were asked to open negotiations with SHRM with a view to developing a tender proposal. 77 The documentary records show that on 7 April 1999 Mr Hayes wrote to Mr Baitia enclosing what he called "a proposal for the mobilization of the OKTEDI contract". The stated intention was to more specifically define the processes involved, SHRM's perception of the priority and suggest some timeframes for implementation. The document was to assist with initial discussions and to develop the basis of a firm plan to manage and monitor progress. He said he looked forward to meeting Mr Baitia in the near future. The letter, although signed by Mr Hayes as general manager of SHRM (South Pacific), was on a Eurest (Australia) letterhead. (X 21) In cross-examination Mr Hayes accepted the description of the document as a program of work to be done to get to the point of submitting a tender. Among the papers placed before it was a letter dated 15 April 1999 from Mr Fenwick attaching his assessment of SHRM, Poons and Sodexho as potential project managers for the catering services contract with OTML. He described SHRM as having a very professional approach. The Eurest group had recently purchased SHRM and this would "put them amongst the world leaders in remote Site Catering and Services". Mr Hayes was "an extremely astute individual with excellent credentials ...". He referred to SHRM's existing work for the defence forces in PNG and at PNG universities and colleges. They had offered a far more competitive price than Poons with a further opportunity to restructure and negotiate. 79 Directors present at the meeting on 30 April 1999 were Messrs Menim, Aua, Henry Asekim, Daniel Atmeyok, Buretam and Temu. Michael Baitia and Damien Ase were also in attendance. Mr Baitia led the presentation on the OTML catering contract management proposals. He told the board that it needed to make a decision then and appoint the catering manager of its choice before the current contract between OTML and Poons expired. He pointed to the need for MRSM to enter into a memorandum of understanding with the management company to put tender documents together and value the assets. Supply lines would have to be established and a mobilisation process begun. Its share of the dividend payment received from OTML represented income of K2,273,684. There was discussion about the imposition of 25% income tax and the desirability of having OTML pay the dividends directly to MRSM and not through the Department of Treasury and Planning. 80 The board resolved, in light of its decision to engage SHRM to provide management services for the OTML Contract, Mr Fenwick's service as a consultant should come to an end. Mr Baitia in cross-examination could not recall whether that resolution was acted on. As appears from the documentary record, Mr Fenwick was offered a new consultancy with MRSM just over six weeks later, on 18 June 1999. Mr Baitia accepted in cross-examination that the reappointment of Mr Fenwick was done essentially to safeguard MRSM's interests in the preparation of tender documentation by SHRM. 81 Following the board meeting Madiu Andrew kept in contact with Mr Higgins of OTML. He spoke to Mr Higgins to keep him informed of MRSM's interest in the catering contract when dealing with him in relation to other issues. He also lobbied the executive manager, Robyn Moyna to support the proposal with Mr Higgins. Mr Higgins told him that he supported the proposal for landowner involvement in the catering contract and took comfort from SHRM's involvement as it dealt with his concerns about ensuring a consistent quality of service to OTML employees. 82 On 10 May 1999 Mr Andrew, on behalf of MRDC, wrote to Mr Hayes informing him that the MRSM board had considered the SHRM/Eurest proposal and had directed that it be discussed in more detail as a necessary step before finalising a Management Agreement. Tender documents were expected at the end of May. It was important that before the tender was put out by OTML discussions proceed with SHRM to firm up details of a management agreement. In a fax dated 14 May 1999 Mr Hayes informed Mr Baitia that he was booked to arrive in Port Moresby on 24 May 1999 and depart on 28 May 1999 and would be able to meet with him during that time. 83 Mr Hayes met with Mr Yalapan and others on 25 May 1999. This resulted in a letter to SHRM/Eurest dated 3 June 1999 in which Mr Yalapan, who signed himself as acting managing director, offered terms of a management agreement between MRSM and SHRM/Eurest. In the meantime on 1 June 1999, Mr Baitia obtained a copy of the OTML tender document. It comprised information to tenderers, tender requirements, the form of tender and the contract documents including general and special conditions, compensation, scope of work, specifications and OTML's standard supplementary conditions. The deadline for tenders was 5pm on Monday, 5 July 1999. Part 1 of the information to tenderers under the heading "Localisation and Local Business Development" stated that, consistent with the requirements of the Ok Tedi agreement, OTML had a policy of giving preference to competitive bids from PNG businesses and individuals, particularly those businesses and individuals originating from the Preferred Area which was defined as the Kiunga and Telefomin sub provinces of Western Province. Foreign companies and companies outside the Preferred Area were strongly advised to consider operating in joint venture or similar suitable arrangements with a local business group. Clause 10.2 of Pt 2 of the tender information stated that OTML would not be bound to accept the lowest or any tender. The statement of preference to tenderers who originated from the Preferred Area was repeated. 84 In his letter of 3 June 1999 to SHRM/Eurest, Mr Yalapan put MRSM's offer. Its essential elements were that SHRM/Eurest would manage the catering services contract on behalf of MRSM and would prepare a proposal for the tender to OTML as MRSM's catering contract manager. The tender proposal would be subject to MRSM's prior approval and formally submitted by MRSM. A draft MOU would be prepared to formalise the arrangement and would be superseded by a management agreement between the parties to be entered into in July 1999. MRSM would cooperate with SHRM/Eurest in providing its financial commitment to the contract and other necessary information to facilitate the tender proposal. Messrs Gosling and Hayes attended from SHRM/Eurest, Messrs Moore, Fereday and McGrath from Poons and two representatives from Crocodile Catering. Mr Baitia attended from MRSM. OTML was represented by Messrs. Cox-Martin, Ani, Musio and Artekain. His consultancy services were set out in his letter of 16 June 1999. They included ensuring that SHRM/Eurest provided a quality tender document, preparing budgets from the bid document, negotiating the most attractive financial arrangement for the group in association with SHRM/Eurest and outlining and discussing strategies for reducing operational expense. He also offered to ensure that the training program provided would meet OTML's expectations. He offered to scrutinise the Management Team Proposal and Localisation Schedule. He offered professional advice in relation to the nomination of food supply agents and the putting in place of period contracts. He proposed a fee of A$5,500 per month for a total period of two months and reimbursement of travel, accommodation and meals expenses, together with a vehicle for his use in Brisbane. 87 Mr Andrew responded to Mr Fenwick's letter on 18 June 1999. He invited him to provide his services for two weeks to safeguard MRSM's interest in the preparation and documentation of the tender proposal. The scope of his services was as set out in Mr Fenwick's letter. Mr Andrew also required that the existing fee of A$4,500 be maintained on the basis that a change to A$5,500 would require a board resolution. On the same day he sent a letter to Mr Gosling, the general manager of SHRM/Eurest, advising that Mr Fenwick would be in Brisbane on Wednesday, 21 June "to team up and work the proposal with you". Notice No 3 stated that preference for employment of catering staff under the new contract had to be given to PNG nationals employees of the current catering contractor. Notice No 4 extended the tender closing date by seven days from 5 July 1999 to 13 July 1999. 89 On 25 June 1999 Mr Baitia sent a draft Memorandum of Agreement between MRDC and SHRM/Eurest to solicitors, Fiocco Posman and Kua for their comment. The draft was copied to Messrs Hayes and Fenwick and to SHRM's solicitor, Mr Lewin at Holding Redlich in Brisbane. On 6 July 1999 Mr Hayes wrote to Mr Baitia pointing out that the OTML contract would require undertakings and assurances from the contractor including a requirement that the Memorandum of Understanding between SHRM and MRSM be executed before lodgment of the tender. 90 On 7 July 1999 Mr Hayes of SHRM signed a letter to Mr Yalapan who was still acting managing director of MRSM. The letter, which was subsequently included in the MRSM/SHRM tender, set out the relationship between those two parties. It recited SHRM's understanding that MRSM intended to incorporate a wholly owned subsidiary to carry out the catering services and that the subsidiary would be party to the contract with OTML should the tender be successful. Additionally the subsidiary would be the other party to a management agreement with SHRM. The obligations of SHRM set out in the letter included preparation of the tender in accordance with the requirements of OTML and the delivery of the first draft of that tender to MRSM by 8 July 1999. MRSM was to lodge the tender by 13 July 1999. The company tendering would be MRSM (or its subsidiary). (ii) the amount of the management fee will be increased annually during the term of the Contract with OTML by an amount to be agreed ... and absent agreement by the same percentage as the fees payable to MRSM (or its subsidiary) by OTML under the Contract increase. There would also be a 50/50 profit split between MRSM and SHRM to cover items not noted in the tender documents with OTML and later agreed to be carried out. 91 MRSM or its subsidiary agreed to provide all financing for the project estimated to be approximately K3 million, including purchase of stock, security deposit, salaries and other mobilisation costs for staff, cost of food for approximately 30 to 60 days and equipment purchases or lease costs. SHRM nominated Messrs Hayes and Gosling as its representatives for the purposes of the tender and the Management Agreement. MRSM nominated Melvin Yalapan and in his absence Michael Baitia. Neither party has authority to bind the other by any representation, declaration or admission, or to make any contract or commitment on the other's behalf, or to pledge the other's credit. It attached a Memorandum of Understanding for a joint venture between Poons (PNG) Ltd and Western Catering said to represent many "Preferred Area" businesses, groups and individuals. Poons proposed to continue with training and localisation programs commenced under its existing contract. Mr Fereday said that in 1997 Poons began an apprentice training school at Tabubil for employees on the OTML contract and in 1998 introduced management training for PNG nationals who were employees. The management training was done with a program called "Frontline Management". It was coordinated out of Poons' Brisbane office. Mr Fereday recalled that in 1999 two of Poons' employees Lucas Togemas and Jacob Moro were flown to Brisbane to take part in the course. Members present were Messrs. Menim, Henry Asekim, Daniel Atmeyok, Samson Buretam, Mr Kumar Aua, William Boas and Melvin Yalapan as an alternate to Madiu Andrew. Mr Baitia and Damien Ase were again in attendance. Mr Fenwick was also in attendance by invitation. According to Mr Yalapan, Mr Fenwick did not have very much to say. The proceedings were conducted in pidgin. 94 Mr Yalapan thanked the board for the confidence it had in the Management for putting the arrangement together with Mr Fenwick for the OTML catering contract. Mr Baitia then presented the tender documentation including the MOU signed between the company and SHRM/Eurest. He explained some of the background and the fact that there would be no immediate cost to MRSM. He then called upon Mr Fenwick to explain financial aspects. 95 Mr Fenwick told the board he had been working with SHRM/Eurest in Brisbane for the previous two weeks. The management fee that had been negotiated was against an assured profit margin of K1.2 million per year. It would be A$18,500 per month, amounting to A$225,000 per year. It was a fixed fee and only adjustable in accordance with CPI increases in Australia. Mr Fenwick agreed in cross-examination that that was the "key negotiation" with SHRM/Eurest. Mr Aua asked whether SHRM/Eurest had any experience with the catering business in PNG. Mr Fenwick told the board that SHRM/Eurest was an international company with an annual turnover of A$8 billion. It was already involved in the Bougainville copper mine and operated the catering contract for universities in PNG and the PNG defence force. 96 The board was advised that training was included as an important component of the contract but would be at a cost to the company. The training requirement had to be assessed for three to six months before Management could put a firm training program to the board for approval. The management company SHRM/Eurest had put a lot of emphasis on training and this was said to be well documented in the tender documents. 97 The board passed a number of resolutions. The first approved and endorsed the Memorandum of Understanding between MRSM and SHRM/Eurest and its execution by Mr Yalapan. The tender document was accepted and approved and approval given for the company to formally tender for the OTML catering contract. MRDC was authorised to negotiate the terms of a management agreement with SHRM/Eurest and to submit it to the board for approval. 98 The executive summary in the tender document identified as critical issues training and development, localisation of the workforce, quality operating performance and financial considerations. Under the heading "Management Agreement with MRSM" it was said that Eurest would operate the OTML contract under its management agreement with MRSM and that "Full operating and contractual autonomy will rest with Eurest". Arrangements with MRSM would be through an independent board. Compass Group enjoys a leading position in the world foodservice market, employing in excess of 170,000 staff in over 49 countries. Annual turnover for financial year 1997 was [sterling]3,703.0 million ($AUD10,391 million) with net assets of [sterling]1,385.2 million ($AUD3,886.9 million). All courses were said to be based directly or indirectly on the Australian National Training Authority. Further details regarding Eurest's proposed Training and Localisation plans are included in Attachment 4. This program will comprise of both on-site training and further training opportunities within PNG and in Australia. It included what were referred to as "Localisation Price Adjustments". These were adjustments to be made to certain monthly lump sum payments following localisation of expatriate positions within the contractor's on-site organisation. These evidently reflected a reduction in the rates payable to particular staff upon the replacement of expatriates with locals. They were a guide to anticipated localisation dates which included July 2000 for a Training Chef Instructor, December 2000, July 2001 and July 2002 for successive Chef Instructors and July 2003 for a Catering Manager. 102 A Training and Localisation Plan was set out over some four pages. A work skills analysis of all employees, the structuring of training courses and schedules and the implementation of concerted training for immediate lift in standards was the objective for the first year. The introduction of advanced training with an emphasis on supervisory and leadership training was contemplated for year two, and management training for year three. A training and localisation flow chart was included. A local employment strategy with nine elements occupied some 22 pages. 103 Key expatriate project personnel were identified. Barry McKinlay, Project Manager. 2. Noel Morrison, Catering Manager. 3. Stephen Ehlers, Executive Chef Instructor. 4. Phillip Hart, Training and Quality Assurance Officer. 5. Chris Dale, Chef Instructor. 6. Armand Watters, Chef Instructor. There was no localisation plan in respect of the project manager's position. On or about 17 August 1999 it also prepared a comparison of the tenders received. The highest figure was that of Crocodile at K114,902,416, MRSM came in next at K59,293,890. Poons offered the lowest figure of K54,481,829. The shadow bid estimate was K60,534,346. 105 On 23 August 1999 OTML wrote to Mr Andrew at MRSM. The letter was headed "Request for Tender Clarification No 1". It requested pricing for items 3.1 and 3.3 in Schedule 3-1 of the tender document based on varied sample menus which were attached. It also requested that MRSM give an onsite presentation of the tender sometime in the week commencing 6 September 1999. Somewhat belatedly, on 31 August 1999, Mr Baitia faxed a copy of the letter and attachments to Mr Hayes and also to Mr Fenwick. Mr Hayes responded to Mr Baitia the following day asking whether OTML would accept email or direct fax of the response documents before closing time on 3 September. Time being short, he sent his response to the Request for Tender Clarification direct to OTML on 3 September. It was addressed to Mr Paul Cox-Martin, the Superintendent Contracts Administration. Mr Hayes pointed out that the proposed menus from OTML reflected a general reduction in the quality and variety of foods which had been proposed in the tender. He accepted that the variations would warrant a reduction in price. He adjusted the tender schedules accordingly. Representatives of OTML's Contract Administration and Towns Departments and its Superintendent for Health and Safety attended, as did Mr Hayes, Mr Baitia and Mr Damien Ase, a corporate lawyer employed by MRDC. Mr Ase recorded, in a memorandum dated 17 September 1999, that Messrs Baitia and Hayes explained the relationship between MRSM and SHRM/Eurest. OTML representatives questioned how OTML would be involved in the arrangement between MRSM and SHRM/Eurest. They were told that it would have access to the group's accounts and the operation would be transparent so that OTML could see how it was managed. The OTML Business Development Section would be involved in reviewing the agreements between the two parties. Mr Hayes said that training was an important part of the arrangement and would include overall training for the catering contract and the training of local participants. Whether there will be alternative menu's and what effect this will have on the price and profitability? They were advised by Mr Hayes that there substantial changes have already been made to the pricing. This included the Catering Services business of Poons. According to Mr Fereday's evidence which was not in contention on this point, the catering business was effectively put out to tender. Ultimately two serious contenders emerged, one of which was a joint venture between Eurest and the Spotless group of companies. 108 In September 1999 it appeared that SHRM/Eurest had become the preferred bidder for the acquisition of Poons' business. Mr Hayes received an inquiry from Mr Cox-Martin of OTML about the acquisition on 17 September 1999 to which he gave an immediate reply by a handwritten return fax. On 20 September 1999 he wrote to Mr Cox-Martin confirming that Eurest had been selected as the exclusive preferred bidder. The businesses to be acquired included the domestic food services business in Australia and PNG covering business and industry, education, leisure and remote site food services. He said that he anticipated the agreement would be signed by the end of September 1999, with completion by the end of October 1999. At this stage, we believe OTML should make the relevant decisions based on commercial and local issues. We however are available to discuss with OTML, any specific concerns they have in order to ensure the most effective service is delivered. Mr Baitia had not been involved in the process of revising the schedules but he was aware of it. He accepted in cross-examination that he had no complaint with OTML's request for a variation of the tender schedules based on reduced menus. He was sent a copy of Mr Hayes' letter to Mr Cox-Martin of 24 September 1999. 110 On 1 October 1999 Mr Copdevila, managing director of SHRM/Eurest, wrote to Mr Higgins confirming that SHRM/Eurest was the successful bidder for the Poons' business, which he referred to as P&O Catering & Services. The letter was copied to Mr Baitia. 111 Before the Christmas break in 1999 Mr Hayes met Mr Baitia at the MRDC office in Port Moresby and told him that SHRM/Eurest had taken over Poons so that he had two bids, one from Poons and the other from MRSM. According to Mr Baitia, Mr Hayes told him that he now had to work out who he was going to represent. He was asked whether he raised any complaint with Mr Hayes or anyone about SHRM/Eurest saying to OTML that it should choose between the MRSM/SHRM bid and the Poons' bid. He advised that the OTML management had met on the previous day to decide on the award of the contract and that it looked certain that MRSM would be awarded the contract to be managed by SHRM/Eurest. It was therefore necessary to put in place financing and legal arrangements pursuant to the MRSM board decision of 12 July. He proposed the incorporation of a subsidiary of MRSM to be called Fubilan Catering Services but raised the possibility that because of MRSM's tax exemption under the MRSM Trust, it would be preferable for MRSM to trade under the registered business name Fubilan Catering Services. He referred to the need for K400,000 for a security bond and to meet costs relating to mobilisation and other costs for management of the contract. The current contract was being rolled over to November to give the new contractor time for mobilisation and to put other necessary arrangements in place. Under the proposed arrangement, MRSM and other landowner companies including that for Ramu and Kutubu project will buy shares in Logistics Network Limited which will supply everything from food to chemicals and other necessary equipment for mining operations in PNG. This is another opportunity to diversify investment from the Trust Funds which will result in another dividend payment for MRSM. Mr Ase asked that MRDC management provide guidance and advice. He said that the merging of the catering business of Poons (PNG) Ltd and SHRM (South Pacific) Pty Ltd provided an opportunity to ensure the best possible outcome for all the parties, OTML, the caterers and the interested landowner groups. Each of the proposals is superior to the other in certain respects, and is inferior in other respects. OTML would obviously like to obtain the best contract possible in terms of economic value as well as relationships. This should now be achievable from the present positions, with little further effort. Rather than proceed with competing proposals from a single industry source, we would like to amalgamate the proposals as soon as possible with a view to an immediate award. We also note that we must yet finalise the contractual standard menu and the applicable meal prices. The prices also need to be reviewed and finalised in the light of the likely effects of import duties and credits which may arise from third party sales. A few days after receiving the letter Mr Fereday, who was still based in Brisbane, went to see Mr Hayes and gave him an electronic copy of the spreadsheet supporting the Poons' tender. Mr Hayes in turn provided him with a copy of the schedules for the Eurest tender which Mr Fereday used to make a simple comparison of the respective rates back at his office. 115 Mr Menim, on behalf of MRSM, replied to Mr Higgins on 4 October 1999. We would rather have this meeting without his presence, therefore we strongly request that an alternate person to replace him for Poons. He said that while there had been a merger between SHRM/Eurest and Poons, MRSM did not believe that this would substantially affect the tender proposal. We do not see any need for Poons (PNG) Limited's involvement. Accordingly, I do not intend to copy this letter to them. 117 Mr Cox-Martin replied to Mr Baitia's letter to Mr Higgins immediately. Unfortunately we would be unable at this stage to award the contract on the basis of your tender as you suggest. Whilst your tender is attractive in many aspects, in some areas it is incomplete and in certain respects not competitive. However through the recent merger, your proposed catering manager now has taken over the competing bid originating from Poons (PNG). This of course provides the opportunity to amalgamate the bids, and to put in place a contract which gives the best outcome for all parties. It is envisaged that the proposed Cairns meeting will accomplish this. Two days earlier, on 4 October 1999, Mr Cox-Martin had sent a fax to Mr Hayes pointing out that the contractual standard menu and its pricing remained to be finalised. He told Mr Hayes that the preferred menu standard was somewhere between that offered by Poons and that offered by SHRM/Eurest. His letter was a reply to Mr Menim's letter of 4 October 1999. He said that OTML had called the meeting and reserved the right to decide who should attend. Neither the MRSM nor the Poons' tender had been accepted at that time. I trust that we will receive your cooperation in concluding this matter. Mr Baitia then sent a fax to Mr Hayes attaching Mr Higgins response. He sought clarity on the status of the Poons' acquisition and whether it was a sale or a merger. He asked who would represent SHRM/Eurest at the meeting and who would represent Poons. He said that the final form of agreement would be determined on receipt of the OTML agenda and a meeting to be held in Cairns. He received a fax on the same day from Gerhard Poelzl, the managing director of Poons. Poelzl expressed "strong concern" about what seemed to him to be unnecessary pressures on OTML from MRSM and MRDC. He expected all parties to meet in accordance with OTML's request. 119 Paul Cox-Martin sent an agenda for the Cairns meeting to Mr Baitia on 6 October. The first item related to the identity of the merged catering arrangements. OTML also prepared points of discussion for the meeting in a spreadsheet form. 120 The meeting between OTML, MRDC, MRSM and SHRM/Eurest took place at Cairns on 9 October 1999 at the Cairns International Hotel. OTML was represented by Mr Cox-Martin and Terupo Apoki. MRSM and the future Fubilan were represented by Messrs. Aua, Baitia, Menim and Yalapan. Mr Fenwick was in attendance at Mr Baitia's invitation. Mr Baitia said he wanted Mr Fenwick present so that he could assist in dealing with the agenda and responding to OTML. He described Mr Fenwick's relationship to him and the board of Fubilan Catering as that of a "trusted consultant". Also attending on behalf of SHRM were Mr Hayes, Mr Gosling and Mr Greg McGrath from Poons. Mr Fereday was not in attendance. Mr Poelzl from Poons' Perth office had instructed him not to attend because of landowner opposition to his involvement. 121 Mr Cox-Martin told the meeting that OTML wanted new contract rates to be provided picking up the best from the previous MRSM and Poons' tenders. He said that OTML had not accepted either of the MRSM or Poons' tenders. He made an overhead presentation setting out aspects of the SHRM/Eurest and Poons' tenders. Mr Menim had meeting notes which had been prepared for him by the press office at MRDC. According to those notes he appealed to OTML management to award the contract as soon as possible when satisfied that all contractual requirements had been met. He said that MRSM did not wish to tamper with its proposal and proposed management structure. Our managers SHRM/Eurest will discuss these with you. And in this regard, may I state that we have every confidence in them and are prepared to work with SHRM/Eurest. He said that OTML had organised it to align the proposals from MRDC/MRSM, Poons and SHRM/Eurest. Mr Hayes had reaffirmed SHRM/Eurest's commitment to MRSM under the terms of the tender document and would manage that contract on behalf of MRSM. SHRM/Eurest would use the Poons' tender document to extract necessary technical information to complement the MRSM tender and any other information required by OTML. He said that the matter had been discussed with Greg McGrath of Poons and agreements had been reached on technical matters. MRDC/MRSM would need to identify financing requirements to facilitate Fubilan that would be managed by SRHM/Eurest. 123 On 15 October 1999 Mr Hayes wrote to Mr Cox-Martin presenting what he called a "unified proposal to incorporate the Poon and MRSM tenders under the single entity of MRSM/Eurest". He confirmed that Fubilan would be the vehicle for the contract and would be 100% owned by MRSM. Impact of 3 rd party sales. 2. Revised menus and theme nights. 3. Duty allowance of 26%. 4. Rates for Kiunga Catering Services. 5. Review pricing for Functions and Inflight Catering. 6. Revised warehouse pricing. Mr Baitia mixed up the dates of the Cairns meeting in his evidence-in-chief thinking it was in January 2000. He said that he had met Mr Hayes at the Airways Hotel in Port Moresby to discuss the work he had done to bring the two bids together. Mr Hayes told him that he had done the numbers and in order to bring the two bids together they needed to reduce the return to MRSM/Fubilan. Mr Baitia's evidence-in-chief was that he told Mr Hayes that MRSM/Fubilan had moved forward on the basis of an assured return of K1.2 million per annum. He was not authorised to agree to any reduction in that return. According to Mr Baitia their meeting continued late into the night until they could both sign off on a document containing the outline of issues which they had agreed. In a supplementary statement which corrected some of the evidence in his primary statement, he said that following the October meeting he and Mr Fenwick on one side and Mr Hayes on the other had worked together on the renegotiation of the tender rates. The work was done largely by Mr Hayes and Mr Fenwick. He was involved to some extent working up the terms of the Management Agreement. In the event, Mr Hayes submitted to OTML recalculated schedules of prices for the tender under a covering letter dated 15 October 1999. His letter was copied to Messrs Baitia, Fereday and Poelzl. No complaint was made by MRSM at that time concerning the reworked tender rates. Relevant officers of MRDC and MRSM (including Mr Fenwick as MRSM's consultant) were aware of the reworking of the prices and did not dispute it. 125 Mr Fereday had no further involvement with the handling of the OTML Catering Contract after the instruction from Mr Poelzl that he not attend the October 1999 meeting. He took a negotiated severance package from Poons at the time of its acquisition by Eurest. He was employed by Eurest for the last three months of 1999 and provided consultancy services during January 2000. He sought information from SHRM/Eurest about a number of matters related to that exercise on 26 October. On 3 November he rendered a final account to MRDC for A$25,000. The account was sent to Mr Baitia with a covering letter congratulating him on the award of the catering services contract. However some two months were to elapse before a contract was signed between Fubilan and OTML. The delay was caused in large part by the time taken to settle the terms of the Management Agreement between Fubilan and Eurest. He said OTML's requirement that the agreement provide for Eurest to be employed by Fubilan for the duration of the contract and that it could not be terminated by either party without the agreement of OTML. In a letter to Mr Cox-Martin, copied to Mr Baitia, Mr Hayes advised that Mr Poelzl had been appointed Chief Operating Officer, Remote Sites for Australia and PNG for Eurest. Eurest's representative in Port Moresby for remote site business would continue to be Greg McGrath, supported by his existing logistics and administration team. Mr Steve Ehlers was appointed Transition Manager to be based on site. Mr Hayes expressed his confidence that a final draft of the Management Agreement would be available by Monday, 29 November 1999. Mr Baitia faxed Mr Hayes the same day advising that the MRSM board would have to endorse the agreement before it could be executed. MRSM directors were in Sydney at a conference on PNG mining and petroleum. He proposed that OTML award the contract on 1 December 1999 and that the Management Agreement be signed off in the week beginning 6 December but backdated to 1 December 1999. 129 Mr Fenwick suffered an angina attack on 24 November 1999 and was flown to Perth where he remained after undergoing an angiogram and related procedures. 130 In a letter dated 13 December 1999 to Mr Baitia, Mr Hayes said that because of the renegotiation of the rates at the meeting in Cairns with OTML, MRSM and Eurest, the profit expectation from the contract would need to be reduced. That was a result of the reduction in menu requirements, reduction in the duty rate to 26% and price variables between the Eurest and Poons' tenders. The attached schedule indicates the basis of the reduction calculation from K1.2 million per annum to K941,000.00 per annum. 131 Although Mr Fenwick said in his witness statement that he had no further involvement in the tender process until January 2000, it appears that he forwarded a document to Mr Baitia in December 1999 entitled "MRSM Catering Contract Cash Flow Assumptions for the Period October 1999 to December 2007". This document contained projected profit and loss and other figures for that period. It contained some alternative scenarios. It was later used by Mr Armstrong of Eurest as the initial budget document for the purposes of the Management Agreement. 132 On 22 December 1999 Holding Redlich sent a fax to Messrs Baitia and Yalapan with comments on the draft Management Agreement. Mr Fenwick's handwritten notes appeared at the bottom of a copy of the fax which was in evidence. They asserted, inter alia, that Eurest was aware that MRSM had an equity interest in a supply providing company. Mr Fenwick accepted in cross-examination however that MRSM had no such equity at that time. He said that he envisaged setting up a supply company in which MRSM would have an equity and which would take over supply for the OTML contract. His plan "was well and truly" current before the Management Agreement was signed. He claimed to have spoken to Mr Hayes about the proposal notwithstanding that it was not an element of the tender accepted by OTML. 133 Mr Cox-Martin became impatient about the delays in concluding the Management Agreement. On 24 December 1999 he wrote to Mr Hayes requiring that it be finalised before the catering contract was awarded. He asked for confirmation that it would be in place by 30 December 1999. In the event the Management Agreement was signed on 6 January 2000. On the following day Mr Higgins sent a letter to Mr Baitia advising that the OTML Catering Services Contract was awarded to Fubilan to provide catering services to OTML's operations at Tabubil and Kiunga in the Western Province. Its term was to be four years commencing 1 February 2000. A formal agreement was to be executed in the format included in the tender invitation documents. The OTML representative for the contract was the OTML Superintendent Towns and Camps, Mr Terupo Apoki. Mr Fenwick was in Tabubil for the signing of the Management Agreement although in his evidence he could not recall being there. He did not read the Management Agreement in its final form. It was put to him that he had formed the view that the best way forward for his company (Morocco) and for his clients was to sign off on the Management Agreement with Eurest and then find a basis for terminating Eurest's appointment and presenting OTML with a fait accompli so that MRSM and Fubilan would hold the OTML Contract alone. He denied that but in the events that followed, it was a plan that developed even if not fully formed at the time that the Management Agreement was signed. 134 Mr Hayes recalled a discussion in early January 2000 with Mr Fenwick about the staffing of the proposed OTML Contract. Mr Fenwick asked him to confirm that no staff previously employed by Poons would be used on the contract. Mr Hayes could not give such an undertaking indefinitely but said that, during the initial operation, no Poons' staff would be employed in the day to day operations of the contract in PNG. He had appointed a previous Eurest manager, Mr Steve Ehlers as Transition Manager to operate the Management Agreement. However, he said, it was apparent that after Mr Poelzl, a former Poons' manager, was appointed Chief Operating Officer, Poons' staff would be involved with the contract management. 135 After the Management Agreement was signed Mr Hayes ceased to have any further involvement with its operation. That job was taken over by the Perth office of Eurest under the management of Mr Poelzl. Mr Hayes said that before the completion and signing of the Management Agreement he had no employment relationship or representative relationship with any company of the Compass Group other than the local PNG or Australian companies. He was appointed Vice President Asia Pacific Region of the Compass Group in or about June 2000. The latter company is from now on in these reasons referred to as Eurest. Incentive Fee means an amount that is equal to 50% of any net profit before tax in excess of K1,200,000 per annum to Fubilan Catering Services achieved from the Operations (not including the sale of any surplus assets) after payment of the Management Fee and is payable in accordance with clause 11. The "Operations" were defined in cl 1.1 to mean all the undertakings, activities and operations engaged by Fubilan in carrying out, performing or providing the Services under the contract with OTML. It was to be responsible for and supervise the activities of Fubilan which were listed and included the custody, maintenance, operation and protection of the assets of Fubilan and the employment, training and localisation of executive, management, technical, operational and other staff. The latter was to be at the discretion of the Manager and OTML to be exercised by agreement between them in accordance with the OTML Contract (cl 4.2(a)(i) and (ii)). Eurest was also to be responsible for the acquiring by Fubilan of goods, materials, supplies, machinery and equipment and services in accordance with the parameters of approved programs and budgets (cl 4.2)(iii)). This was subject to exceptions for emergency action (cl 5.2(a)(ii)). The Manager was required to submit proposals for a Corporate Manual for approval and adoption by Fubilan, covering the board's requirements as to accounts, procedures and instructions for the maintenance of projections and records (cl 5.3). 139 The Manager was to keep the accounts and records required by the Corporate Manual (cl 5.6) . It was to furnish on request to the Fubilan board and to MRSM unaudited monthly accounts and monthly progress reports summarising the services performed or provided by Fubilan (cl 5.7). Interim quarterly accounts were to be lodged within 40 business days after the close of each quarter. Audited annual financial statements were also to be provided (cl 5.7). A credit current bank account was to be opened and maintained by the Manager on behalf of and in the name of Fubilan and money received by the Manager pursuant to the Management Agreement and the Contract paid into it (cl 5.11). 140 The Manager was authorised to engage subcontractors on behalf of Fubilan on an arms-length basis and on the best commercial terms obtainable "to carry out or perform any but not all of the Services". The subcontracts were required to be in writing and their terms notified to the board of Fubilan (cl 5.13(a)). This provision was to apply to "Sub-Contracts exceeding K20,000 in value with suppliers of foodstuffs, consumables or other goods or services required for carrying out the Operations" (cl 5.13(b)). 141 There were restrictions upon the powers of the Manager (cl 6). It was required to give prior notice to the Fubilan board of the dismissal of any of its key senior employees (cl 6.1(a)(ii)). It could not make loans of Fubilan's funds without prior board approval (cl 6.1(a)(iv)) nor could it do anything that would or would be likely to allow Fubilan to breach its constitution or be inconsistent with the OTML Contract (cl 6.1(a)(vi)). 142 Clause 8 dealt with the preparation of programs and budgets. It required consultation and cooperation with the Fubilan board. The Manager was to prepare and submit to the Fubilan board and MRSM before 1 November and 1 May each year a proposed program and budget for the following four quarters (cl 8.1(b)). Its content was specified and included details of proposed expenditure on the performance of each type of service (cl 8.2(a)). Approval by the Fubilan board of a program and budget would authorise and oblige the Manager to carry out operations and to incur company expenses accordingly (cl 8.3(b)). By the last day of each month the Manager was to submit to Fubilan, MRSM and MRDC a current cash estimate of company expenses expected to be incurred or otherwise falling due during the next expenditure period commencing on the first day of the next month. This estimate was referred to in the Management Agreement as a "Call Notice". The Call Notice was required to set out the proportion of company expenses to be contributed by MRSM or MRDC by way of contributions to share capital in relation only to MRSM or loans in relation to either of them and the proportion of company expenses to be funded by third party borrowings or from cash on hand (cl 8.5(b)). Upon receipt of a Call Notice MRSM and MRDC were bound to make the relevant contribution specified in the Notice (cl 8.5(c)). 143 Clause 10 dealt with the role and powers and functions of the board of Fubilan. One of its powers and functions was to give directions to the Manager in relation to the performance of Fubilan's duties under the OTML Contract provided that such directions were not inconsistent with nor imposed any greater obligations on the Manager than its obligations under the Management Agreement (cl 10.2(a)(ii)). Fubilan's obligation to pay a monthly management fee was set out in cl 11.1. The Manager was also entitled to an incentive fee after each calendar semester (cl 11.2). 146 Clause 18.1 provided for termination of the Management Agreement automatically on certain external events including termination of the OTML Contract by OTML and Fubilan. Under cl 18.3 if either the Manager or Fubilan were to default in the performance of a terminal condition of the Management Agreement and failed to remedy the default (if capable of being remedied) 60 days after being required to do so in writing, the management arrangements could be terminated at the option of the party not in default without prejudice to any other remedies (cl 18.3). There were some standard clauses requiring each party to do all things necessary, desirable or convenient to give effect to the provisions of the agreement (cl 20.2) and a confidentiality provision (cl 21.1). No payment would be made to Fubilan until that request had been met. The amount of the performance security specified in cl 2 of s 3 was K400,000. 149 Clause 5.5 provided that the terms and conditions of the OTML Contract so far as applicable would be included as terms and conditions of any subcontract and were not to be varied or departed from without the prior written approval of OTML. Any request to approve a subcontractor had to be submitted to OTML (cl 5.5). The Contractor and the Manager shall enter into a contract for the provision of such services by the Manager (the "Management Contract"), and the terms of the Management Contract shall be those of the pro forma at Schedule 2-11. 6.2 The Contractor shall not terminate the Management Contract without reasonable cause and shall in any case obtain the prior written agreement of OTML before such termination. Reasonable cause shall be the causes described at Clause 16 of the Management Contract. 6.3 The Contractor shall not vary the terms of the Management Contract, neither shall the Contractor issue any instruction varying the duties and responsibilities of the Manager without the prior written agreement of OTML. In the event that the monthly lump sum prices at Item 2.1, Schedule 3-1, are adjusted pursuant to clause 4 above, the amounts entered at Schedule 3-4 shall be adjusted in the same proportion in which monthly lump sum prices at Item 2.1, Schedule 3-1 are adjusted. A further four "volumes" of documents accompanied the contract, but did not form part of it. Volume 4 contained in Schedule 2-10 a "Training and Localisation Plan" and in Schedule 2-11 the "Form of the Management Contract". The Training and Localisation Plan was that proposed by Eurest in its tender. The Plan stated that Eurest had based its planning on the assumption that the Training and Localisation Plan would commence from stage 1 on the awarding of the contract. This would require a concentrated "start-up period" especially with training before further progress towards Localisation and Business Development could be undertaken. Eurest proposed to utilise training consultants who had first hand experience in PNG (Lihir) with proven results. It was the company's intention to create structured, accredited training that would enable all employees, ranging from front line operational staff to senior supervisors, to improve their skill levels. It was also proposed that an in-house local training coordinator be appointed to ensure that training was a continuous program. Career development for employees would include training programs relating to general work skills, kitchen attending, literacy and numeracy, train-the-trainer, supervisory leadership, supervisory quality assurance, first aid, basic office administration, keyboarding skills, customer service skills and a la carte table service. Under the heading "Employment Opportunities" it was said Eurest would undertake a program focussing on, inter alia, supervisor/management development. There was a three year training plan. Year 3 under the heading "Management Training" involved train-the-trainer elements, supervisory skills/leadership and advanced training. Mr Greg McGrath who had been working for Poons up to the time of its acquisition by Eurest decided to take a payout rather than accept a position with Eurest that would have required him to work in Australia. However he agreed to work for Eurest for an initial transition period of three months or so. Mr Ehlers was supposed to report to Mr McGrath, but in fact communicated directly with Mr Hayes. Mr McGrath completed his commitment to remain with Eurest at the end of March 2000 and Mr Ken Younger became general manager in his place. 154 Mr Baitia was responsible for organising the funding requirements of MRSM. MRSM was to provide Fubilan with K3 million as start up capital, part of which would be used to establish the K400,000 performance security required under cl 4 of the General Conditions of Contract. A budget estimate had been made as part of the tender preparation between Mr Baitia and Mr Fenwick. However, as Mr Baitia saw it, the start up capital was to be paid into Fubilan's account after preparation by Eurest of the budget required under the Management Agreement. 155 Mr Baitia made a number of requests of Eurest's site management and PNG manager for a budget for board approval so that payment of the K3 million start up capital could be made. MRDC was acting as the manager for MRSM and held the necessary funds on trust for the landowners with strict requirements on their release particularly funds of the magnitude required under the OTML Contract. He did not receive the budget from Eurest during the start up phase. As time went by it became obvious that unless some capital was paid into Fubilan, it would be in default under the OTML Contract and at risk of losing it. Ultimately, the start up capital was paid across without the benefit of a budget from Eurest. This occurred in about September 2000. Eurest's position was that it operated off Fubilan's cash flow budget as the initial budget under the Management Agreement. 156 The initial capital requirement was referred to in an Operations Report for February 2000 which was prepared by Eurest in mid April 2000. The report stated that funding had been insufficient to meet operational requirements. Eurest financed the operation during the period in order that contractual obligations could be met. It did not intend to continue that funding. To meet contractual and ongoing operational expenses Fubilan needed an injection of K3 million. K2,600,000 due from Fubilan to Eurest on 14 March had not been paid because of lack of funds. Eurest stated its intention to charge for overdue accounts interest at the rate of 5% over the prime lending rate in PNG. The report included a draft profit and loss statement for the period 1 February 2000 to 25 February 2000 which showed a gross profit of K683,264.35. 157 An invoice from Poons for food stock and equipment on hand at the Poons' warehouse and the messes and Poons' offices as at 31 January 2000 totalled K2,014,365.80. In addition, there was a break down for four containers of food in transit totalling K600,699.29. The total for both invoices was K2,615,065.09. 158 Messrs Baitia, Fenwick, Poelzl and Younger, who was Eurest's general manager for PNG, met on 7 February 2000. Mr Younger wrote to Mr Baitia on 16 February 2000 about the meeting. He responded to issues which had been raised by Mr Baitia. He said that Eurest would provide backup invoices for goods purchased in country and overseas. He attached a document showing total values for stock and equipment. He said that Eurest had established suppliers in both PNG and Australia and an order criteria for financial assessments and quality to meet the contractual requirement and value for money. It would purchase in country whenever possible and when commercially advantageous. He pointed out that there was a cash requirement for K4,068,060 less stock holdings for the Golf Club of K28,237. Eurest needed weekly cash and sought confirmation of the availability of funds. Mr Younger also pointed out that all employees were employed by Fubilan. The payroll would be in its name. He attached a cash flow matrix to show cash flow for wages. 159 On 17 February 2000 Mr Kolalio advised Fubilan and Eurest that MRDC had transferred K818,500.00 to Fubilan. K400,000 had gone into an imprest account and K418,500 into the main account. On 18 February 2000 he sent Mr Fenwick copies of a schedule of cash flow requirements received from Eurest on 17 February and his letter authorising a transfer of funds. Mr Fenwick contended in cross-examination that Fubilan had not received advice from Eurest about its cash flow requirements. He claimed that his information from MRDC was that it did not want to pay money to Eurest because cash flow payments and budgets had not been presented. The documentary evidence is inconsistent with Mr Fenwick's claim in evidence-in-chief to have been told by Mr Baitia that he had not received cash flows. In any event it was not a matter of which Mr Fenwick had direct knowledge. I accept that Eurest had provided its cash flow requirements. 160 On 22 February 2000 Unni Meetinay, Assistant Project Manager with Eurest, sent a fax to Mr Kolalio advising that out of the transferred amount of K818,500, K400,000 had been allocated to the imprest account and K418,500 to the main account of Fubilan. Payments to be made or which had already been made on the funds at that time totalled K563,912.95. That amount was already well in excess of the imprest account. The requirement of additional funding for the imprest account was urgent. The sum of K563,912.95 included a figure of K353,750.10 for the purchase of motor vehicles and K120,485.59 being duty to be paid on containers. The duty figure appears to have related to nine containers of goods which had arrived at the wharf. Mr Kolalio wrote back pointing out that the initial transfer of K818,500 was based on a cash flow budget supplied by Eurest. He required details of additional costs for which funds could be made available. 161 On 15 February 2000 Mr Reg Armstrong was appointed as commercial manager Eurest. He had previously worked as a consultant to P&O Catering Services (PNG) but had had no part in the negotiations leading up to the Management Agreement. He was asked by Mr Poelzl to oversee administrative and financial support for the operation of the Management Agreement. He spent a few days reading the agreement. On 29 February 2000 he went to the Ok Tedi mine to observe the catering operation. He carried out checks of the administrative and financial requirements of the operation including banking facilities, cheque book use, ordering procedures and payroll. He had to "iron out the initial operational matters" that he identified or which were reported to him by Fubilan or OTML. 162 On 1 March 2000 Mr Armstrong met with Messrs Fenwick, Baitia and Kolalio representing MRDC at the MRDC offices in Port Moresby. At that time there was no operating board of directors for Fubilan. Mr Baitia told Mr Armstrong that MRDC's involvement in the Management Agreement would not be on a day to day basis. It was agreed that until the Fubilan board was established Eurest would report on a monthly basis to MRDC. Mr Kolalio was to arrange a bank guarantee for K400,000 through MRDC. The document upon which Mr Armstrong relied initially in 2000 as a budget was the cash flow budget prepared by Mr Fenwick. The payment had been due on 1 February 2000 but Eurest had agreed to delay payment until 14 March 2000 without charging any interest. On 15 March 2000 Mr Younger wrote to Mr Kolalio seeking MRDC's acknowledgement of the situation. Payments for the first month, which totalled K1,365,000, had been withheld by OTML because of Fubilan's failure to lodge the performance security of K400,000 required under the OTML Contract. This had resulted in "very serious cash flow problems for Fubilan Catering Services". Mr Younger wrote again to MRDC on 23 March 2000 and pointed out that Eurest had still not been paid in respect of assets acquired for the Catering Services Contract as part of the process of taking over from Poons. 164 On 28 March 2000 Mr Kolalio sent OTML a bank guarantee in an amount of K400,000 in satisfaction of the performance security requirement. That was acknowledged on 1 April 2000 by OTML which said it would release K400,000 which had been withheld from the amounts payable to Fubilan under the Contract as performance security. 165 Mr Boas acknowledged in cross examination that there were cash flow problems affecting Fubilan's capacity to finance the OTML Contract for the first eight months of its operation. He agreed that this was essentially because the PNG government had not distributed the OTML dividend to MRSM. He accepted also that Eurest financed the Contract during this period. On 28 March however MRSM deposited K600,000 into Fubilan's main account. 166 The cash problem resulting from the failure of the PNG government to remit OTML dividends to MRSM was highlighted by a facsimile dated 17 April 2000 from Janet Sios, Manager-Accounts for MRSM to Mr Aua, then Secretary for Mining. It showed an amount of K4,015,722 owing to MRSM inclusive of lost interest calculated at K546,175. Mr Baitia met Mr Wanjik, Acting Director of the Mining Division of the Department of Mining on 27 April 2000. MRSM's concern about delay in the remitter of dividend payments was raised. Mr Baitia proposed that if there were no funds immediately available to government out of dividends already received, then OTML should be advised to deduct the equivalent of the withheld dividends from the State's share of the next dividend plus interest at the prevailing commercial rate and that future dividends equivalent to 2.5% be paid directly to MRSM by OTML. Mr Fenwick did not have a clear recollection of the letter. He presumed that he responded to it. Mr Boas could not recall why Mr Fenwick was offered a consultancy at that time. In any event Mr Fenwick was engaged by MRSM and adopted the business name PNG Group Consultancy. This appears from a letter which Mr Baitia sent on 15 May 2000 to Mr Poelzl at Eurest. The letter was written in Mr Fenwick's style. He agreed in cross examination that it sounded like his language and I infer that he drafted it. In the letter Mr Baitia told Mr Poelzl that Fubilan would be appointed "PNG Group Consultancy (Bill Fenwick) effective on the 25 th May 2000 as [Fubilan's] Authorized Contractors Representatives. While accepting that there had been an "initial cash flow crisis" and while appreciating Eurest's leniency on the matter there have been "joint complications". These were then listed. It is expected that confidentiality be paramount in all FCS business matters and we are remiss to advise that this is not the case at present. This hope drafted by Mr Fenwick and expressed through Mr Baitia proved not to be well founded. 170 Mr Poelzl replied to the Baitia letter on 19 May 2000 with copies to Messrs Younger and Armstrong. Finance. MRDC had produced documents to Eurest in July 1999 showing funds of K3,026,264 available to FCS for the operation of the new contract. Eurest understood on this basis that FCS would easily meet its financial obligations for contract commencement. As at 19 May 2000 Fubilan had supplied only about K1.9 million from the supposedly available funding. The cash flow situation demanded MRDC and Fubilan provide the outstanding K2 million as soon as possible. 2. Interest charges. Mr Poelzl attached correspondence which he said clearly indicated Eurest's intention to charge Fubilan an interest charge and MRDC's acceptance of that charge. 3. Early payments from OTML. At Eurest's initiative in March 2000 Messrs Armstrong, Younger and Poelzl had raised the issue of early payment with OTML. OTML refused the request because the performance security had not been lodged. A further aggressive pursuit of the matter by Eurest may have undermined Fubilan's reputation with OTML. 4. Confidentiality. 5. Vehicle hire. It was Fubilan's responsibility to fund or provide vehicles on site. Eurest had agreed to lease two vehicles to Fubilan at a cost of K100 per week. 6. Contract representation. Eurest's legal advice was that Mr Fenwick's appointment appeared inconsistent with the terms and conditions of the Management Agreement. Eurest's management responsibility included liaising with OTML. It was necessarily to be carried out by an officer of Eurest. Eurest could anticipate a breach of the terms of the Management Agreement or the OTML Contract in the event that arrangements were made on its behalf by Mr Fenwick which were inconsistent with its obligations. This was a submission relating to employees of Eurest. One of the positions it referred to in the list and accompanying job descriptions was that of Project Manager at Tabubil. There were a number of other management positions at Tabubil mentioned including that of Catering Manager. It would make an interim payment of K800,000 on an invoice from Fubilan on about the 15 th day of each month. The balance would be the subject of an invoice at the end of the month. In each case invoices would be paid within 14 days. From August 2000 the payments would revert to the OTML Contract terms. 173 Eurest prepared an operations report covering the period February through to June 2000 inclusive. It is likely that the report was prepared towards the end of July. The report identified lack of funding as an outstanding issue for Fubilan. Although the company operated on a continuing "positive basis" that had only been achieved with the non-payment for goods received from Eurest, Eurest was no longer able to continue to fund the operation. There was an exposure of K321,000 for unpaid duty which was brought to the attention of the handover team and documented in previous reports. Although Eurest was paying aged debtors as per normal accounting procedure, the sum of K2.6 million from its mobilisation/purchases had not been paid. Eurest required that account to be cleared by 1 August 2000. Nevertheless it stated that it was pleased with the results up to date taking into consideration other capital costs. This was said in the letter to be consistent with cl 7 of the General Conditions of the OTML Contract tender document. A copy of the letter was sent to Mr Younger at Eurest. 175 On 5 June 2000, Mr Fenwick, under a new letterhead "PNG Group Consultancy Ltd", wrote to Mr Poelzl and signed his own name over the designation "FCS Contractors [sic] Representative". He complained that visits to the site before mobilisation to determine stock and equipment levels and values had provided varying results. Nine containers of food which had arrived mid February had not been disclosed. The value of the containers was in excess of K1 million and applicable duty. During the same visit he and Fubilan representatives were advised that the site vehicles were mostly unserviceable and unsafe to use therefore replacement was considered essential. He asserted also that correspondence from Eurest did not give it the right to levy unauthorised interest charges against Fubilan. MRDC had never agreed to such a payment. You are advised that PNG GROUP CONSULTANCY LTD will be acting as the Appointed Representative for FCS effective 26/5/00. He reiterated however that the interface had to be in accordance with the Management Agreement. 176 The appointment of Mr Fenwick as Contractor's Representative for the purposes of liaising with OTML was also discussed at a meeting held on 20 June 2000 at Tabubil between representatives of OTML, Eurest and MRDC. OTML accepted the appointment but Eurest was not particularly pleased. Eurest regarded itself as the representative in the context of the OTML Contract. It relied a lot upon his advice. According to a board minute prepared by Ronald Kolalio on 23 June 2000, OTML expressed concern at a meeting at Tabubil on 20 June 2000, that the quality of food had declined, the quantity was at times insufficient and that meals at two mine site messes had run out during serving. Eurest had undertaken to rectify the problem immediately. A second complaint related to frequent changes of on-site managers with lack of effective supervision being blamed for the declining quality and quantity of food. Again Eurest agreed that it would address the problem immediately. Mr Kolalio said that a list of preferred directors had been submitted to the MRDC legal division. 179 Because of financial constraints affecting MRSM the acquisition of assets from Poons at the beginning of the OTML Contract was under funded, as noted by Mr Kolalio, by K2 million. These costs had been carried by Eurest for the previous five months and Eurest had charged Fubilan interest. The MRSM board resolved that MRSM obtain commercial finance to extinguish the debt. Nothing had been done to secure the funds at that date. That inaction was attributed by Mr Kolalio to the hope that OTML dividend payments would arrive which could be used to reduce the debt. Mr Fenwick was asked to secure the necessary finance. 180 The first meeting of the MRSM board for 2000 was held on 27 July 2000 at Tabubil. Among the board papers were MRSM quarterly accounts ending 31 March 2000 and 30 June 2000. No dividend income had been received. A report on the OTML Contract indicated that dividends for MRSM which had been declared by OTML in September 1999 had not been paid over by the government. Letters had been written to the Department of Treasury and the Department of Mineral Resources. The MRSM account with Bank of PNG did not have funds. An amount of K4 million including interest was due. The report also noted that although the OTML Contract had been in place since 1 February 2000, MRSM was yet to inject the additional K2 million to complete the acquisition "of the contract from Eurest". This was a reference to the acquisition of stock and equipment used by Poons under the previous catering contract. It was recommended in the report that the chairman of MRSM write to the Minister for Mining about the outstanding dividend payments of K4 million. It was also recommended that the board confirm Mr Fenwick's appointment as Contractor's Representative and that the management approach other banks for loan finance. 181 Messrs Menim, Buretam, Atmeyok and Baitia were present as board members. MRSM officers presented the accounts on behalf of the management. Mr Baitia reported on the OTML Contract. He introduced Messrs Younger and Kroeger from Eurest. Mr Younger presented an Operations Report on behalf of Eurest. He reported that Fubilan had gained acceptance as the contractor in the past five months. He referred to the localisation requirement for senior expatriate positions under the contracts. He said that an expatriate chef supervisor would be replaced on 1 August by a PNG national who would be promoted to that position. In fact, on 1 August 2000 Lucas Togemas was promoted to chef supervisor. He had successfully completed a management course in Australia to qualify him for this position. Three apprentices had completed six weeks training in Cairns. Reports from instructors highlighted their quality. The company would increase the number of apprentices by four in September and would assist OTML with the placement of ten trainees. Mr Mike Kroeger would be the new on site Project Manager. Mr Younger referred to complaints from OTML about the quantity and quality of food. He said the menus had been changed and positive feedback had been received. He asked the board if it was getting funding because as of 1 August there would be no more funding from Eurest. Discussion followed about the repayment of the loan to Eurest and Mr Baitia spoke of the ANZ loan and pending inquiries with other banks. 182 Mr Younger stated that within the Management Agreement Eurest had outlined the Corporate Manual to allow monthly reports on cash flow. The manual had to be ratified before the Fubilan board was created. It would allow the board to understand how the company operated. Mr Baitia thanked Mr Younger for presenting a commendable report. He expressed his thanks to Eurest for its patience in relation to the repayment of the loan. 183 The MRSM board resolved that a shareholders' meeting of Fubilan be held to appoint a board for Fubilan and that the recommended membership of the board be four landowners, the Managing Director of MRDC and Mr Fenwick. That meeting was convened on the same day. Those present were Mr Menim as representative of MRSM and Mr Baitia as representative of MRDC. They resolved that Messrs Buretam, Nokim, Yekim, Musolok, Itulam and Fenwick be appointed. 184 On 17 August 2000, MRSM having raised loan finance from the ANZ Bank, transferred K2 million into Eurest's account. It was still the case however that MRSM faced cash flow problems. It now had loan commitments to the bank and the OTML dividends had not been released to it by the State. 185 On 30 August 2000, Fubilan paid the sum of K3,451,063.03 to Eurest. Operational matters were discussed at those meetings. From his point of view the operation of the Management Agreement generally went to plan during that period. Eurest prepared an operations report for Fubilan for September 2000. The report referred to the appointment of Mr Togemas as Chef Supervisor. It also reported that apprentices had been increased by four, with one female and three males all from the "Preferred Area" having been recruited. 187 On 2 October 2000, the first meeting of the newly constituted Fubilan board took place. Mr Yalapan prepared the minutes. There was no criticism by the board of the standard of reporting or the conduct of Eurest. The operations report for September 2000 was presented and accepted as tabled. It was also resolved that Management should work on a budget for presentation to the board. 188 Under the heading "Appointment of Mr Bill Fenwick" the minutes of the meeting record Mr Fenwick's advice to the board that Fubilan was not being publicised by Eurest as the contractor under the OTML Contract. He proposed that in the next twelve months a manager be appointed to manage Fubilan. He said the appointment would require 100% of the manager's time. He was invited to present his terms for possible engagement. He told them that his budget for twelve months would be A$60,000 plus the cost of an economy air ticket, accommodation and other onsite expenses. The board accepted his proposal in principle "... to investigate on behalf of FCS Company for 12 months at AUD60,000". It was also resolved that Mr Fenwick's fees, costs of accommodation and direct costs be accepted and paid for by the company and that he write a management proposal for review and acceptance by the board. Mr Yalapan, in his evidence, said they wanted Mr Fenwick "to keep an eye on Eurest". 189 The board adjourned to 3 October 2000 and on the second day of that meeting Mr Boas advised that management had met with Eurest at 8 am that day over the budget which Eurest had presented. He suggested that the board meet again in two weeks time. He and Mr Fenwick and a Eurest officer would meet in Port Moresby to follow up the flow chart of the company and other technical issues to be discussed. 190 The board meeting was adjourned again to 16 October 2000 when Ms Janet Sios led the MRDC management team in explaining the terms of a Loan Agreement made with Fubilan. The minutes recorded that the company had operated under the management of Eurest for the previous seven months without a board being established to direct its affairs. In the absence of the board MRDC had assisted Mr Fenwick in managing the company. It was important that the operations and financial affairs of the company now be audited to ensure that the board was informed of those matters for the past month. It was resolved that the board review the engagement of an external auditor at its next meeting. 191 The financial report for August 2000 showed total income of K11,856,603 against a budgeted income of K9,558,988. The profit after tax was K1,313,552. The board resolved to take note of the report and approve it after auditing. The board also recommended that Mr Fenwick undertake the responsibility for signing all Fubilan cheques with Eurest. 192 Under the heading "Terms and Conditions of Mr Bill Fenwick's engagement" the minutes recorded that the delay in formalising the Fubilan board had provided Eurest with "open and uncontrolled activity". "remain flexible with regard to services". 193 Mr Fenwick sent a memo to Mr Kolalio on 9 October 2000 pointing to "a number of issues that need attention". They were promoting their own brand. Many people would be unaware that there had been a change in ownership. He also referred to the need to inform OTML of the new Fubilan board appointments. 194 Mr Younger met with Ms Sios on 15 October 2000. He pointed out that certain accruals provided under normal accounting principles to protect Fubilan against future charges could be written back if so desired. These represented K407,864.32. 195 On 17 October 2000 Ms Sios wrote to Mr Younger referring to a board meeting of Fubilan "duly convened at the MRDC Board Room yesterday". There is no record of such a meeting and it seems that some of the matters to which she referred emerged from the meeting of 2 October 2000. She told him that Messrs Fenwick and Buretam were to be signatories for all Fubilan bank accounts and that all cheques were to be signed by one of them and countersigned by one of the current signatories. She advised that the Eurest cash flow budget, as presented together with the September 2000 financial statements had been reviewed by the board and accepted with some changes and additions deemed necessary to accommodate necessary board expenses. An updated version was enclosed "for your adoption and implementation". The board had resolved to institute semi-annual internal audits of its operations to be performed by MRDC with full costs being reimbursed. An internal audit team from MRDC would commence work on 19 October 2000. External audits would be subject to the normal process of tendering and board approval. 196 Mr Kroeger recalled seeing the Sios letter, a copy of which was sent to him and to Mr Fenwick. He said that Eurest did not agree to the proposal that Messrs Fenwick and Buretam be signatories to all Fubilan bank accounts. At that time Fubilan was operating under a loan from MRSM. Cheques had to be signed quickly. Neither Mr Fenwick nor Mr Buretam were on site at Tabubil very often. Mr Kroeger accepted that the budget referred to in the letter of 17 October 2000 was the first budget produced in the life of the Contract and had been prepared by Mr Younger who also prepared the initial budget during the start up of the Contract. 197 Mr Fenwick wrote to Mr Kroeger on 24 October 2000 listing what he referred to as outstanding issues which had to be addressed with some urgency. I am aware that Eurest management have on many occasions endeavoured to stimulate/encourage these issues and I therefore hope that this letter will serve to provide authority on the matter. Suppliers should be told to direct invoices to Fubilan. Uniforms for the OTML Contract should be standardised and display the Fubilan logo. Decals with the current Fubilan logo should be ordered as soon as possible and affixed to vehicles. Mr Kroeger said, in evidence which I accept, that when he took up his role on site in April 2000 the staff were already wearing uniforms bearing the Fubilan name. Some wore shirts of different colours and this was changed to a standard colour. It had taken a few weeks to get the decals printed and fixed to vehicles. Originally they were hand painted. As to the heading of invoices that happened slowly. He thought it was happening before 24 October 2000. Fubilan did not have any arrangements itself with suppliers in PNG. 198 On 3 November 2000 a meeting took place between Mr Fenwick, Mr Kolalio and Ms Patricia Hobart from MRDC and Messrs Younger, Armstrong and Kerr representing Eurest. Prior to this meeting during September and October 2000, according to Mr Fenwick, he and Mr Kolalio had gone to the site at Tabubil to review Eurest invoices and identify any overcharging. A number of concerns were raised at the meeting about Eurest's accounting practices. Entanglement of Eurest activities in managing the Fubilan contract and other non-Fubilan activities carried on by Eurest. Mr Fenwick had stated that Eurest had utilised Fubilan's bank account for non-Fubilan business transactions. There was also a continuing use of Fubilan administration in support of other Eurest ventures. The need for Eurest to revisit invoicing procedures and discontinue the use of Poons PNG, P&O Services and SHRM invoices. 3. Salary advances to staff which must cease. 4. New uniforms should be ordered with Fubilan logo without the Eurest emblem. All stationery should be headed "Fubilan Catering Services" and Fubilan decals should be ordered and affixed to vehicles. 5. Payment of duties on P&O handover stocks. Fubilan had been asked to pay K320,000 by Barry Moore. The claim should be rejected as OTML only billed P&O for the duty component applicable to January 2000. Eurest had no entitlement to claim other than for that amount. 6. Mr Mike Kroeger having been appointed Manager of the Contract for Eurest, Barry Moore should be removed from Tabubil immediately. Fubilan would not reimburse his salary. Mr Moore's house would be utilised by Fubilan for its office requirements. The tone of his letter differed from that of the minutes. He said that the supply of food for the OTML Contract was to be directed through FCS Supply Co "... an entity capable of supplying quality product, competitive pricing and timely freight forwarding arrangements". He said that "Further discussions will ensure a smooth transition and interface". In cross-examination Mr Fenwick accepted that there was no FCS Supply Co. This seems to have been a reference to a non-existent entity which in his view should have existed. It was put to Mr Fenwick that what he was trying to do from the very outset was to take over the supply of food for the OTML Contract. He agreed that he was trying to do that and said that he was doing it for Fubilan. Ultimately, as it turned out, he proposed the use of companies in which he himself would have had a 20% equity. We recognise the internal difficulties experienced by both parties during Mobilisation and would hope that this audit will extinguish these problems. In order to retain a calm understanding by the Board our approach will be on a constructive note. Please be aware that the findings presented today were indicative only and not complete, we should be in a position to complete the audit report by the 21/11/00. At this time we will be in Port Moresby and should look forward to a meeting with you. He had not been consulted by Mr Fenwick before the letter was sent to Eurest. 200 Mr Armstrong told Mr Poelzl of the concerns raised by Mr Fenwick. Mr Poelzl directed him to instruct the accounting firm Deloittes to carry out a review of the financial matters which were of concern to Fubilan. Mr Armstrong said that he and Mr Younger saw Deloittes in Port Moresby and instructed them to carry out a comprehensive review of the Eurest operations. It was submitted to Mr Andrew, Ms Sios and Mr Baitia. Mr Kolalio said that he had carried out the audit with the assistance of Mr Fenwick. Its object was to provide the Fubilan board with an independent update of the operations and financial position of the company. He wanted to verify whether balances presented in the financial statements were fairly stated and reliable and to ensure that the operations of the company were in accordance with the contracts and agreements between the different parties. 202 A number of points emerged from the report. Many employees viewed the operations of the company as continuing under the former caterers Poons. Most food and other supplies were acquired from overseas, mainly Australia. Purchases of stock for Fubilan passed from the supplier to Eurest (Australia) which then billed Eurest which in turn billed Fubilan. Fubilan stood to lose money on the costs involved in this multiple handling. Mr Kolalio also referred to imbalances in the reconciliation of bank accounts. There were imbalances in debtor records and in stock records. Supervision of the site accountant, Mr Fred Nana, by a senior person was lacking. This was evidenced by the imbalances and the unreliable state of the financial statements. He pointed out in the report that during the meeting with Eurest in Port Moresby a point had been made that there should be adequate supervision from managers in Port Moresby given that none of the site managers were accountants. 203 Messrs Kolalio and Fenwick recommended that Star Business Consultants, an accounting firm based in Tabubil, complete the process which they had started. They anticipated that at the conclusion of the audit Fubilan would recoup hundreds of thousands of Kina from Eurest. Their report referred to the probability that Fubilan had been paying for goods and services acquired in connection with Eurest's other business activities. Payments taken out of the Fubilan account for the relevant period for services obtained by Eurest or other businesses controlled by Eurest and having nothing to do with Fubilan were said to amount, at that stage, to K350,000. 204 There had been an agreement with Eurest that all third party sales were to be invoiced with a 20% mark up. However Eurest had been selling stock to different parties at differing mark up rates. Mostly they were lower than the 20% rate. Mr Kolalio acknowledged that there was contention about the contractual support for that mark up as it was not set out in any of the agreements. 205 In dealing with stock purchases, Mr Kolalio pointed out that they netted K10 million per year. Because of the transit of stock through different parties, Fubilan as final recipient bore a greater cost. He recommended that a separate supply line be considered. Additionally, the rebates, if any, on the volume of goods purchased will be to the benefit of FCS, whereas these are currently enjoyed by Eurest. He also referred to the meeting with Eurest and the appointment of Star Business Consultants to complete the audit for a period of two weeks at a cost of K12,000. 206 Mr Buretam said that after Mr Kolalio pointed out the problems with the administration of the OTML Contract, it changed his attitude to Eurest's managers. He did not have the same level of trust that he had had in Mr Hayes and was concerned whether Eurest would look to landowner interests. 207 The board of MRSM met on 16 November 2000. Mr Yalapan advised that the government had presented a cheque of K3.211 million to MRSM. K211,000 was deposited into the MRSM account and K3 million placed in an interest bearing deposit. The Management sought approval to use K2 million out of the K3 million held by MRSM to pay off the ANZ loan. A meeting of the board of Fubilan took place on the same day immediately following the MRSM board meeting. Mr Fenwick recommended that the board approve the purchases of two new vehicles to support Fubilan. That recommendation was adopted. He reported that Eurest had committed its accountant, John Kerr, in company with an independent auditor from Deloittes to investigate Fubilan's claims. He set out a list of the matters which had emerged from the Kolalio report. He said that it was apparent that there was little if any support provided by the Eurest mobilisation team to institute correct accounting procedures. The findings were "far greater" than originally expected. It was necessary therefore to appoint a local accountant to verify the data and endeavour to reconcile the accounts. He described the accounts as in "an abominable mess". Hotel and travel arrangements had been made for the chairman, Mr Kolalio and himself. They proposed to visit a variety of major supply houses in Australia. He had secured appointments with a number of companies including John Lewis Food Service (JLFS) in Brisbane. The actual time frame necessary for overseas product will be a minimum of six (6) weeks to the point of delivery. Local product can be ordered, shipped and transported to Tabubil two (2) weeks in normal circumstances. The Tabubil warehouse could handle greater stock levels. The market could be captured without increasing account staff levels. It has been commercially acceptable in the past that P&O and Eurest have fought to retain the supply chain. However I believe that FCS are now in a position to capture this most valuable value added business. Through this venture we can achieve in excess of K500,000 whilst at the same time retaining one hundred (100%) per cent of this value and not having to split the gains with Eurest. This can be achieved by registering a separate company, which would be outside the Management Agreement. As agreed with Eurest they were to return a margin of K1.2 million in year one (1), this target now appears achievable therefore we need to be prepared for the 50/50 which is geared once this target is achieved. 210 It was put to Mr Kolalio in cross-examination that some parts of his report were written or suggested by Mr Fenwick. This was based on the kind of language that was used. Mr Kolalio said that he had written the passages that were put to him. Notwithstanding that, I accept that it is very likely that Mr Fenwick had some input particularly into those aspects of the report relating to the desirability of Fubilan setting up its own supply arrangements. 211 Following his visit to Australia with Mr Buretam to talk with potential suppliers, Mr Fenwick wrote, on 1 December 2000, to Mr Mark Stansfield of JLFS at Cairns. He advised that Mr Buretam had given approval for negotiations with JLFS as the possible preferred supplier to the Ok Tedi project. He suggested that Mr Stansfield visit Ok Tedi on 14 December 2000. He proposed an agreement under which supply would be provided at the current rate for 12 months with a single discount rebate of 25% off invoice and no other rebate advantage to Fubilan. This would be based on provision of supply out of Australia. Mr Fenwick acknowledged that this was not part of the Fubilan business plan. He followed up with a fax dated 4 December 2000 to Mr Stansfield attaching a Eurest price list with a covering note "Please find following Confidential rices for supply to Ok Tedi". Mr Fenwick said in cross-examination that he used the word "confidential" so that Mr Stansfield "... didn't pass them around in the trade in the industry...". He accepted in cross examination that the document was prepared in late November or early December. He acknowledged that the Fubilan bank account had been used to make payments for Eurest's other operations in the Tabubil area. The regular use of the account in this way ceased in April 2000 and reimbursement of all but minor amounts was completed soon after that date. The practice went in two directions with Eurest's operations account being used to make payments to Fubilan employees and then receiving reimbursement. The importance of keeping bank accounts properly segregated had been stressed to local management and accounting staff. The Port Moresby finance manager would supervise the Fubilan accountant and accounts and would make regular supervisory visits to the site. Some incorrect charges were acknowledged and others claimed were rejected. As to interest charges raised, it was pointed out that Eurest had given Fubilan additional credit and, after 14 March 2000, had notified Fubilan that an interest charge would be applicable on outstanding debt. A senior Fubilan representative had agreed to the interest charge in writing. As to mark ups, he noted that the percentage mark up on the computer system in the warehouse showed contractual requirements and the third party mark up. There were fixed contracted sale prices for a number of "smoko items". The use of Fubilan invoices and letterheads had been implemented. Stationery bearing the Fubilan logo was being brought in. New uniforms had been ordered. Salary advances were being paid from the Eurest bank account. It was reiterated in a memorandum dated 7 December 2000 from Mr John Kerr, Eurest's financial manager, to Mr T Thomas of Star Business Consultants that salary advances to staff on site had already been paid from the Eurest bank account. Mr Barry Moore had left the site. Mr Armstrong said in cross-examination that the information contained in the final summary of his memorandum derived from a report by Deloittes which had been commissioned by Eurest. 213 Mr Armstrong was referred in cross examination to a document given to him by Mr Fenwick and entitled "Fubilan Catering Services Special Audit" The document contained a list headed "Amounts Requiring Adjustments and Payments". It included figures for rebates on offshore and onshore purchases of K589,694 and K540,695 said to represent 10% and 8% respectively of those purchases. The document was not received in evidence as to the truth of its contents. Mr Armstrong did not know the source of the figures for the alleged rebates. In fact he said he did not discuss rebates with Mr Fenwick until after February 2001 but sometime before May 2001. 214 A meeting was arranged between Messrs Armstrong, Younger and Kerr from Eurest and Messrs Fenwick and Kolalio from Fubilan for 12 December 2000. Prior to the meeting Mr Fenwick prepared a document entitled "General Notes and comments". This document was not made available to the Eurest representatives. It appears to have been a rehearsal of a position he wished to put at the meeting. It referred to the revelation of "a myriad of unacceptable practises which were not to the commercial benefit of FCS and at the same time provided a cloud of doubt in respect to the transparency of accounts both on-site and in Port Moresby" [sic]. It contained a statement of desire to settle current and outstanding matters acceptable to both parties and provided "... a solid platform for the future site operations". Mr Fenwick set out 16 points to form the basis of resolution of disputes between Eurest and Fubilan. This will [be] effective as of 1/2/2001. Details will be provided for the placement of orders. Phone/fax contacts. Limay is Yamil spelt backwards. It was Mr Fenwick's intention to establish companies using these names as the end line suppliers to Fubilan of foodstuffs acquired from other suppliers in Australia and PNG respectively. He proposed to take a 20% equity in each of them for himself through Morocco. In my opinion, this self interest was a significant factor in his desire to get Eurest out of the business of acquiring and supplying food for the OTML Contract. It would be necessary to register two companies. Yamil would deal with Australian supply out of Brisbane and would have as its shareholders Fubilan as to 40%, Karma Foods as to 40% and Mr Fenwick's company, Morocco, as to 20%. Karma Foods was then supplying to the Ok Tedi store in Lihir and other major customers from a supply centre in Townsville. If Fubilan were to proceed with its appointment as a supplier Karma would relocate to Brisbane to ensure supply requirements were met. Limay was to deal with PNG supply out of Lae. Its proposed shareholdings were the same as for Yamil. 216 On 12 December 2000 Messrs Armstrong, Younger and Kerr from Eurest met with Messrs Fenwick and Kolalio. Mr Kerr prepared minutes of the meeting which he sent to Mr Kroeger and to Mr Fenwick. The minutes recorded discussion of "... the report prepared by Eurest" which was a reference to Mr Armstrong's internal memorandum. The figures mentioned in that memorandum were reproduced in the minutes. They recorded that Eurest would refund Fubilan K59,735.47 under the heading "Financial" and that there would be adjustments for incorrect charges amounting to K109,774.65. Under the heading "Contractual Disputes" the minutes recorded that the Star Business Consultants' report commissioned by Fubilan had only been received the day before and a copy left with Eurest for its response. Messrs Armstrong and Fenwick agreed on the need for a resolution. Mr Armstrong said they should aim for resolution by 31 January 2001. 217 The minutes made no reference to rebates. Both are landowner Companies. FCS to talk to site to coordinate the changes. It was put to him in cross-examination that he had lied to Messrs Younger and Armstrong as to the proposed ownership arrangements. He claimed that they both knew the position of those companies. In my opinion he did not disclose this matter. He claimed that the matter had been discussed with MRDC. He said he was either to get a 20% equity or MRDC would pay him $15,000 per month by way of a consultancy fee. To the extent that the minutes suggested that Yamil and Limay were already in existence, they were incorrect. Yamil was incorporated by Mr Fenwick in Australia on 22 January 2001. Limay was subsequently incorporated in Papua New Guinea. It recited that Mr Reynolds had expressed a desire to create, manage and operate a wholesale foodstuff supply business to the Ok Tedi mine under a subcontract to Fubilan. A similar shareholding would be allocated for MBF Supply Co. MBF Supply and Wulip appear to have been alternative early designations for what later became Yamil and Limay. 220 Clause 5 of the Memorandum of Understanding provided that, for the life of any subcontract agreements, Mr Reynolds personally (not in his capacity as a director or shareholder of the companies) was to receive 4% of gross revenue of both the national company and the foreign company as a management/consultancy fee in allowing them to utilise the benefits of agreements, associations and developments of contracts within PNG by Mr Reynolds. In cl 8 Fubilan and/or its directors would give a personal guarantee that any subcontract agreement would remain in full force and effect for a minimum of 10 years. 221 Mr Fenwick was asked in cross-examination whether he had prepared the Memorandum of Understanding with Messrs Reynolds and Buretam. He said he had not. He didn't know who had prepared it. He accepted that the reference to MBF Supply Co and Wulip were references to the entities Yamil and Limay, which he envisaged as the supply companies to Fubilan. He could not explain the proposed personal commission of 4% of gross revenue to be paid to Mr Reynolds by both the national company and the foreign company. He said that Fubilan agreed to all the transactions and his advice was that the company needed a supply company to operate on their behalf. It would enable them to retain the rebates and expand their business in PNG using the supply company. In my opinion it is more likely than not that Mr Fenwick either prepared this document or was involved in, or directed, its preparation. 222 Mr Menim was cross examined about the Memorandum of Understanding. He was asked whether he had been told of it by Mr Buretam. He said that Mr Buretam had engaged with "these two companies" to supply the food. He took that to the Fubilan board and they made the decision. He was, however, unaware that Fubilan had only a 40% interest and that 40% would be held by Mr Reynolds and 20% by Mr Fenwick. Nor was he aware that Mr Reynolds would get 4% of gross revenue as a fee. He did not know whether Messrs Buretam and Fenwick wanted to substitute a new supplier for Eurest. Mr Menim's evidence was taken through an interpreter and it was not always clear that he understood the questions put to him. I infer however from his answers that he was unaware of the detail of the agreement between Messrs Buretam, Reynolds and Fenwick and in particular that he was unaware of Mr Fenwick's interest and the limit on Fubilan's interests under the new arrangements. 223 Mr Yalapan had seen the document before. He was not certain who had prepared it. He could not recall when he saw it. He did not think that the board had given prior approval to it. His recollection was that the board had resolved that the shares in the supplier companies would be held by Fubilan. In the fax he proposed terms for all overseas supply to Tabubil sites. He proposed a 4 x 2 year term of supply commencing in January 2001. This could be renewed after an 8 year term by both parties. He proposed a rebate of 10% of purchases paid by cheque 30 days after settlement of each account. Fubilan would confirm details of payment requirements and payment authorisation to Yamil. Congratulations and we look forward to a long & rewarding association. 225 It was put to Mr Fenwick that by giving the handwritten instruction on the Memorandum of Understanding he was committing Fubilan to the transaction. He said he did appreciate that. He thought it was a good deal. He did it without taking the proposal to OTML notwithstanding that he knew that OTML's consent was required before another contractor could be engaged. In my opinion this reflected his determination to take food supply out of the hands of Eurest and ultimately to route it through intermediary companies in which he would have a 20% interest. He proposed guidelines. He proposed that future expansion of Fubilan's business be under the guidance of "... the appointed Business Manager and MRDC with the Boards [sic] approval". The "appointed Business Manager" he had in mind was himself. He listed seven numbered current business opportunities for Fubilan which included the establishment of Yamil as Fubilan's Australian supply company and of Limay as its PNG supply company. 227 The business plan contained a schedule for 2001. Under the heading " FEBRUARY 2001 " the first item mentioned was Yamil. It was proposed that the company be registered and established as an invoice centre for supply from JLFS. The rebate offered by JLFS was described as substantial. Mr Fenwick noted that "rebating has always been strongly denied by Eurest and previously P&O". In relation to Limay he named as Associate Consultant, Mr Malcolm Reynolds of Karma Foods. Karma offered the ability to "conjunct the Lihir supply with Ok Tedi requirements to facilitate the best buying capabilities in PNG through the volume and creditability" [sic]. He referred to rebate opportunities and again stated in bold lettering "Rebating has always been denied by Eurest and P&O likewise". Mr Fenwick agreed in cross examination that the issue of rebating had been on his mind for a long time and that he had been discussing it with Mr Armstrong. In the business plan Mr Fenwick observed that because Yamil was an Australian company, Fubilan could use it to access Aus Trade export market development grants. 228 On a separate page, headed "Morocco Holdings Pty Ltd CONSULTANCY/BUSINESS PARTICIPATION", Mr Fenwick proposed that Morocco provide skills to ensure contractual obligations were adhered to by Eurest, to expand and market Fubilan's business and knowledge and to provide maximum profitability at Ok Tedi. He requested a three year consultancy term, a monthly fee of A$7,500, monthly accommodation and travel allowances of A$2,000 each and a 20% equity in the new business. The latter, he said in cross-examination, had already been agreed under the Memorandum of Understanding signed with Messrs Buretam and Reynolds. Another table followed showing shareholdings for Yamil and Limay. The shareholders in each case were to be Fubilan, Karma Foods and Morocco. This was headnoted with the observation that "Equity is a choice to relieve the burden of high Consultancy Fees". That is to say his equity in those companies would reduce the level of consultancy fees he would otherwise be charging. He proposed a management structure for the new ventures. He would be the business consultant for Fubilan, a Mr Herman would be the supply manager consultant for Yamil, Mr Malcolm Reynolds the export manager for Limay and a Mr A Fogarty the procedures and quality assurance consultant for the combined companies. The business income anticipated from the new ventures included K347,000 per annum from Yamil and K292,800 per annum from Limay. 229 The business plan contained a list of claimed savings and adjustments "captured through audit". These were offered as an overview of the adjustments "necessary and agreed by Eurest" which had been accepted by Fubilan. It was put to Mr Fenwick that the proposed 20% equity in Yamil and Limay constituted a very valuable asset to him. Work out the difference. They got a good deal. In the meantime Yamil was incorporated on Mr Fenwick's instructions on 22 January 2001. Its address was shown as his home address in Carine. Initially he was its only director and shareholder. The Star Business Consultant's report was provided to him at about the same time. He considered both reports and concluded that there were various areas in which their findings coincided. In some other respects they differed. He had some discussions with Mr Fenwick about them. They agreed that the way forward would be for the two of them to work up a compromise under which various items from each report would be taken into account to reach a dollar figure which would be the amount which Eurest would repay or credit Fubilan to resolve the issues in dispute at that time. They agreed to meet in Perth with a view to finalising the details of the proposed financial resolution. 231 On 2 February 2001 Mr Fenwick and Mr Armstrong met by arrangement at Coco's Restaurant in South Perth. Mr Armstrong had a good working relationship with Mr Fenwick. He had met him in the 1980s when they were both working for Poons. The lunch meeting began at 12.30pm and went until late in the afternoon. During that time they worked out a financial compromise in order to resolve the concerns that Fubilan had identified. Mr Armstrong agreed that Eurest would pay Fubilan K85,750 in full settlement of the various claims that Fubilan had identified to that point in time. According to Mr Fenwick, he told Mr Armstrong that rebates on food purchases by Eurest which had not been passed on to Fubilan was an issue to be resolved. He said that he also raised the question of supply arrangements being made by Fubilan direct. According to Mr Fenwick's evidence, Mr Armstrong said he didn't know anything about rebates. That was Mr Poelzl's responsibility. In evidence, however, Mr Armstrong said that Mr Fenwick did not mention anything to him about rebates. Strangely it was put to Mr Armstrong in cross-examination that he did not discuss rebates with Mr Fenwick until May 2001. This was inconsistent with the evidence adduced in-chief from Mr Fenwick by the applicants. Mr Armstrong said that it was not until after February 2001 that they discussed rebates. In cross-examination about the meeting at Coco's, Mr Fenwick emphatically reaffirmed that he had raised the issue of rebates at that meeting. Mr Fenwick's evidence was characterised by emphatic answers which I took as expressive of his argumentative style rather an indication of any carefully considered recollection of the truth. I accept Mr Armstrong's account of what occurred and that rebates were not discussed at the meeting at Coco's. Specifically it was not agreed that they be left as an issue to be resolved. Mr Fenwick of course was well aware of industry practice and, in my opinion, aware that the Compass Group would have been receiving rebates in respect of its purchasing of food stuffs for the OTML Contract. 232 Mr Fenwick said in evidence that he told Mr Armstrong that Fubilan was negotiating with JLFS and with Limay to handle supply directly in both Australia and PNG. This was despite the Memorandum of Understanding signed with JLFS by himself and Mr Buretam. Mr Armstrong recalled him saying that Fubilan would want to carry out the purchasing of products itself and not have this done by Eurest. He told Mr Fenwick that he would discuss that issue with Mr Poelzl. Its specified commencement was "January 2001". The expiry was "January 2004". The agreement required that prices specified for each product in a Product List excluding meat, fruit and vegetables would be fixed on the date of the agreement and on each anniversary for the following 12 month period. Meat, fruit and vegetables were to be supplied at "best available market price and quality". A rebate of 10% of the value of all purchases would be paid by JLFS within 14 days of full payment of any invoice in accordance with the "Trading Terms" set out in the agreement. 234 On 19 January 2001 Mr Fenwick visited the Eurest office and explained the proposed new purchasing procedures to Michael Kroeger and Karl Reisenbauer. Mr Reisenbauer prepared a file note of that meeting and of subsequent discussions into February 2001. He reproduced, in his notes, a diagram which Mr Fenwick drew on a whiteboard showing the proposed functions of Yamil and Limay. He said Mr Fenwick declared that he had no involvement in Yamil. He had used his own money to set up the company in Australia as Fubilan would not have been able to do it as a foreign company. It had since been handed over to Fubilan and was a subsidiary of Fubilan, as was Limay. Mr Fenwick said in cross-examination that he could not remember whether he had told Messrs Kroeger and Reisenbauer that he had no involvement in Yamil beyond arranging for its incorporation. He accepted that if he had said that, it would have been a lie. 235 There is no reason to suppose that this record of the meeting would have been fabricated by Mr Reisenbauer. It was internally consistent. Mr Fenwick might have considered that the question of his equity in Yamil and Limay was a matter between him and Fubilan and of no concern to Eurest. In my opinion however the more likely explanation is that he was keen to shield his personal interest in the arrangement from external scrutiny which might have led to suggestions being made to MRSM and/or Fubilan that it was not in their interests to have such an arrangement. I find he did make the statement attributed to him in the file note and he knew it was untrue when he made it. It was untrue as to his involvement in Yamil. It was also untrue to the extent that it stated, without qualification, that Yamil and Limay were subsidiaries of Fubilan. 236 Mr Fenwick sought immediate implementation of the new arrangements. He asked for orders to be placed with Limay forthwith and for Eurest to ensure that any containers already in place for existing orders were handed over to Limay. There was discussion about the cancellation of orders already made by Eurest and of Karma Foods contacting suppliers to take over the orders and place new purchase orders. Mr Fenwick told Messrs Kroeger and Reisenbauer that he thought it should be alright and that since Eurest had agreed to the arrangements already they might as well go ahead with them. 237 Fubilan told Eurest of the new relationship with JLFS. On 19 January 2001 Mr Kroeger sent a fax to Mr Perianus at OTML telling him that he had been instructed by Fubilan to inform OTML that as of 1 February 2001 all orders for food products both local and overseas for the OTML Contract would be placed and expedited through Yamil. Mr Jansma, the Acting Superintendent of Contracts Administration for OTML, responded to Mr Kroeger on 24 January 2001 saying that Fubilan's instruction was not accepted by OTML. A copy of his letter was sent to Mr Fenwick by Mr Younger. Mr Fenwick said he did not see it until 1 February 2001 in Tabubil. It may be noted that Yamil was not incorporated until 22 January. 238 The Fubilan board met on 24 January 2001. Mr Fenwick presented his business plan including the proposal to expand the business of Fubilan into the area of food supply. He advised the board that he had incorporated Yamil in Australia at his own expense. The board endorsed his business plan "subject to perusal of cash flow and financial information". It directed the secretary to proceed with the incorporation of Limay in PNG. It resolved to reimburse Mr Fenwick's expenses incurred in the incorporation of Yamil. The meeting also discussed Mr Fenwick's remuneration in his absence. The chairman proposed that his remuneration be increased to A$5,000 per month. The board resolved that Management (ie MRDC) inform the board of the current basis of Mr Fenwick's remuneration and that the issue of an increase in his package be adjourned to the next meeting. There was brief discussion of Mr Fenwick's proposed equity in Yamil and Limay. It was resolved that the issue of equity participation in Yamil and Limay be formally noted and that Management inform the board about the implications of the different shareholdings in the company and their bearing on the status of the companies in Australia and PNG. 239 On 26 January 2001 Mr Younger wrote to OTML providing the information requested in Mr Jansma's letter of 24 January 2001. He said that Fubilan had informed Eurest that Yamil was a 100% owned subsidiary of Fubilan and that JLFS of Australia had been contracted to supply all goods for the OTML Contract. We will however monitor both price and quality to ensure that contractual and budgetary requirements are met and maintained. Mr Buretam was to take the letter to a meeting with OTML. Mr Fenwick's drafting style can be seen in the text of the letter not least in the use of the first person in what was obviously a reference to himself and not to Mr Buretam. The letter indicates the extent to which Mr Buretam was under Mr Fenwick's influence at the time. He could not have signed it with any real understanding of its detail. The cost of this registration (A$1,094.50) was borne by myself through my registered accountant (Gardiner Pope) in Western Australia. Understandably you will be well aware that Business Registration requires the nomination of Directors. My nomination was provided to facilitate the process until the Board had elected their chosen bodies. Hence the reason for exploring the possibilities of other benefits including the supply-line. As a Board we have been very mindful of the derelict management procedures offered by Eurest last year and have shown due consideration and patience during a very embarrassing time. Our investment in the provision of Catering Services to OTML leaves little change from K4 million, a sizeable investment on PNG standards. Therefore we believe that as a responsible Board the members have a mandate to operate FCS at a maximum return for Kina invested, this has not been the case. The least of which is the subject of this Board's concern, Rebating. 241 According to a file note made by Mr Reisenbauer and dated 5 February 2001, Mr Fenwick came to the Eurest office that morning and said he had heard that OTML was waiting on a letter from Eurest. Mr Kroeger rang Mr Jansma in his presence. Mr Kroeger then explained to Mr Fenwick that Mr Jansma had asked, in a meeting with Mr Buretam, for a letter from the board of Fubilan outlining new purchasing procedures and supply lines. Mr Buretam happened to be in the office at the time of this conversation and acknowledged that he was asked for a letter. He had not previously mentioned anything about a letter. Mr Fenwick then said he would draw one up. Mr Buretam asked him if he could have it ready in 20 minutes for a meeting that he was about to have with OTML. Mr Fenwick subsequently told Mr Reisenbauer that he would not be getting a copy of the letter. An argument ensued. Mr Reisenbauer later apologised. Mr Fenwick said that he had no intention of terminating Eurest, all he had been trying to do was to get "the purchasing". Mr Reisenbauer told Mr Fenwick that he thought they were both working for the benefit of the same company, namely Fubilan, and that he could not understand his attitude and why there should be animosity. These matters and associated communications with Mr Fenwick were recorded in file notes made by Mr Reisenbauer for 8, 9 and 10 February 2001. 242 On 7 February 2001 Mr Armstrong received a letter from Mr Kolalio referring to double charging by Eurest in respect of certain stock which Fubilan had taken over in February 2000. He also referred to invoices paid by Fubilan to Territory Cellars and British American Tobacco for alcohol and cigarettes noting however that Fubilan did not take over nor did it keep any line of such stock. The amounts involved in the double charging were K348,079.81 and in relation to the alcohol and cigarettes amounted to K63,936.43. Mr Armstrong had prepared a written settlement proposal which incorporated the agreement that he had reached with Mr Fenwick on 2 January 2001 at Coco's Restaurant in South Perth. He made provision in his proposal for some of the issues that had been raised by Mr Kolalio in his letter of 7 February 2001. According to Mr Armstrong, he and Mr Fenwick agreed that the settlement was in full settlement of all claims to that point in time arising out of the Management Agreement. He provided a cheque for K470,000. The document which he had prepared was headed "Agreed Settlement Offer". It covered invoices paid using Fubilan funds and additional overpayments. Those amounts totalled K267,648. There was a credit for reimbursements made by Eurest totalling K108,408 and a further credit of K85,490 owing to Eurest by Fubilan. Figures for under marked third party sales, double charges for containers, the writeback of offsite labour charges and interest on double payment of purchases were also included. A sum of K85,000 was allowed for out of pocket expenses for Fubilan and its costs of engaging Star Business Consultants. The addition of these amounts came to K470,000 against the entry "Eurest Pay FCS in full settlement". The document then bore a handwritten endorsement signed by both Mr Fenwick on behalf of Fubilan and Mr Younger. Mr Armstrong and Mr Fenwick expressed their mutual satisfaction that the dispute had been resolved. 244 According to Mr Fenwick, however, he signed off on the adjustments on the basis that Fubilan was to handle supply directly and that Poelzl was to meet him to resolve the issue of rebates. In cross-examination he was asked why he didn't identify the issue of rebates as an outstanding issue on the settlement document. He said it was well understood that the questions of rebates and supply were outstanding issues. There was no reference to this in his evidence-in-chief. He also said that Mr Kolalio was present at the settlement meeting. Mr Kolalio, whose evidence had been completed before Mr Fenwick gave his evidence, made no mention, in his evidence-in-chief or his cross-examination, about his own presence at the settlement meeting. But the entire settlement and that, I wouldn't --- I cannot really say. I find that he was not present. 245 In his evidence-in-chief Mr Yalapan said that Mr Armstrong of Eurest had agreed to pay K470,000 to Fubilan and make adjustments of K370,000 to the accounts in favour of Fubilan. He did claim that the proposed way forward from the settlement had been discussed with him. He said in cross-examination it would get Eurest to agree that they had actually been receiving rebates. It was put to him that he could not speak of his personal knowledge of any agreement with Eurest that the rebate issue would be settled and the landowners would be able to take over supply themselves. He said he could because he endorsed the proposed settlement. He said he had discussed the matter generally with Messrs Fenwick and Kolalio before the settlement sheet was signed and after it was signed they also discussed the matter. This aspect of his evidence I do not find particularly convincing. I do not accept that Mr Yalapan discussed with Messrs Fenwick and Kolalio reserving Fubilan's position on the rebates for future discussions. 246 In my opinion the settlement reached on 13 February 2001 objectively regarded was an effective compromise of all outstanding matters in relation to the financial aspects of the Management Agreement to that point. In my opinion, it was also effected to preclude Fubilan from thereafter raising the question of its entitlement to the benefit of rebates obtained by the Compass Group to that point. As subsequent events unfolded however, the question of rebates became an ongoing issue. They were not treated as having been resolved by the settlement agreement. He referred to "our meeting of yesterday with Eurest in Port Moresby". This could not have been a reference to Mr Fenwick's meeting with Mr Younger on 13 February 2001 as Mr Yalapan was not present at that meeting. He referred to the audit results, the failure of Eurest to pass on rebates to Fubilan and Eurest's poor financial management of Fubilan accounts. Under the heading "EUREST/FCS SUPPLY" he said that it had become apparent through the audit that Fubilan had been significantly disadvantaged by Eurest placing supply requirements. He alleged that regardless of past negotiations and promises to pass on supply rebating, Eurest had unduly retained significant Fubilan "dues". He described the rebate issue as "significant". The fact that Fubilan did not get the rebates was a serious matter warranting corrective action. He then referred to the arrangements that Fubilan had made for direct supply. 248 Mr Yalapan referred, in his letter of 14 February 2001, to the establishment of Yamil and Limay as authorised by the board of Fubilan and guided by MRDC. Both companies were and would be owned by Fubilan. He cited the resolutions of the Fubilan board at its meeting of 24 January 2001. If OTML was having difficulties approving the arrangement with Yamil and Limay then it should guarantee Fubilan that it would reimburse Fubilan for the losses that Fubilan would incur which, on then current estimates, were more than K1 million per company per annum. He invited OTML to be present at the signing of the supply agreement to take place at the JLFS distribution centre in Brisbane on 19 February 2001. He sought OTML's support on behalf of the stakeholders of Fubilan. 249 On the same day Mr Reisenbauer sent a fax to Mr Fenwick advising that OTML would not release, to Limay or Yamil, containers of food already ordered. They would release them to Eurest in accordance with the Contract. OTML would not agree to a contract amendment. Fubilan should get something satisfactory to OTML that morning if it wanted the issue resolved since the general manager would be leaving for 2 1/2 weeks and would not be back until 3 March 2001. Mr Reisenbauer also advised that Mr Wissink worked for himself and had no right to represent OTML. 2.46 Fubilan. Mr Wissink explained he was not representing OTML but he had a title, Manager --- Rural and Economic Development for OTML, which required him to monitor potential disputes involving landowners. Mr Kolalio tabled a schedule of amounts which he believed were owing to Fubilan by Eurest. Mr Armstrong referred to the agreement which had been made on 2 January 2001. He said that Eurest did not have any problems with Fubilan operating purchasing requirements for Tabubil. If they were to do that the associated "logistics" should also be handled by Fubilan. Eurest would not want to handle the logistics as they did not have control over purchasing. On the matter of rebates, he said that if Eurest Corporate in Australia did receive rebates it could be for reasons of growth on the acquisition of a new business or the provision of early payment terms. 251 In the course of the meeting Mr Fenwick accepted that a lot of the problems that Eurest and Fubilan were facing arose from delays in Fubilan funding the operation at its commencement. The first part of the meeting ended at midday. At 2.30 pm Messrs Armstrong, Kolalio and Fenwick met again. They agreed that settlement had been reached other than on specific items which included rebates on offshore and onshore purchases. The settlement amount was K470,000. This represented the figure agreed between Messrs Fenwick and Younger on 13 February 2001 . He began diplomatically by congratulating Fubilan on the commencement of its "Logistic businesses". He acknowledged the agreement that Yamil had with JLFS, that prices were fixed at 2000 rates and that Yamil and Fubilan had obtained a discount for early payment. He pointed out that creditors were currently being paid by Eurest between 90 and 120 days in line with available funds. To facilitate the new agreement and to service current creditors it would be necessary to have an injection of funds as creditors averaged K1.4 million per month. The additional funds would be required by the end of April. 253 A rider to the supply agreement with JLFS was signed on 19 February 2001. The rider provided that prices on the product price list should be at least equal to or better than current Eurest prices as at September 2000 for the first 12 months of supply excluding meat, fruit and vegetables. 254 Mr Kolalio wrote to Mr Younger on 27 February 2001 thanking him and Mr Armstrong for their efforts to settle the issues at hand between Eurest and Fubilan. He requested their urgent attention to ensure that certain matters discussed at the meeting were resolved promptly. He referred to rebates as one of the issues which awaited further discussion and negotiation with Mr Poelzl. He stated his belief that Fubilan had lost significant benefits on the purchases made during 2000 and said that it intended to pursue some form of redress. Mr Fenwick said he played no part in the preparation of that letter. Papers for the meeting were prepared under Mr Yalapan's direction. Among them was the settlement sheet signed by Messrs Fenwick and Younger. In a board paper entitled "FCS Audit results" reference was made to the "less than pleasing" results from audits conducted in Tabubil on behalf of Fubilan. They were said to provide the board with "good reason to doubt the professionalism of our appointed Managers". The tone and text of the paper generally indicated Mr Fenwick's hand in its drafting. It described the "Settlement Offer" as "... the result of many long hours investigating months of accounts". Mr Yalapan said he did not review that board paper which came from Mr Baitia. It also reported receipt of a "Settlement Cheque" for K470,000 and listed agreed adjustments. The adjustments totalled K896,876. There was a list of items designated "FCS Benefits". These appeared to be references to projected benefits from FCS's acquisition of the supply business, its recovery of on-site management charges, reduction in management fees and interest payable to Eurest and "Tabubil Management Rights". This figure totalled K2,330,000. In both cases the proposed bank was the ANZ. 257 The minutes of the board meeting of 8 March 2001 were not in evidence. However on that day Fubilan signed a consultancy agreement with Mr Fenwick's company, Morocco. The term of the contract was to be the same as the term of the product supply agreement between Fubilan and Yamil. The services to be provided included seeking out opportunities and promoting the marketing of Fubilan's business, advising and assisting Fubilan in various respects and managing and enhancing relationships with existing customers. The consultancy fee was A$10,000 per month with the issue of or transfer of 20% of the ordinary shares in Yamil to be done by 1 March 2001. If there were any dilution of Morocco's interest "of any nature or of any extent" then it would be entitled to an additional monthly fee of A$10,000 from the commencement date of the consultancy agreement as a liquidated sum due and owing. This was an extraordinary provision which it was hardly in Fubilan's interests to accept. The agreement was drafted by Mr Fenwick's Perth based solicitors, McKie & Associates. Most of the claims put forward to date have been based on third party hearsay, but no tangible claim has been put forward to Eurest. Eurest (PNG) does not receive rebates for goods purchased for use in PNG. This discount helps Eurest to fund any acquisition of companies, and is not relevant to third parties. . E arly Payment Discounts . If such discounts are offered to Eurest to pay creditors within an agreed timeframe (we are talking about perhaps 7-14-21 and 30 day terms), such benefits would not, understandably be passed onto FCS as they have, from commencement of the contract, been remitting funds to Eurest on 90-120 day terms. He also noted that, based on local purchases only, summaries which were attached to the letter highlighted the fact that Fubilan had paid K34,237.50 more compared to the prices previously used by Eurest. Eurest said that this could be extrapolated to Fubilan paying K410,850 more than the price Eurest could get. His comments related to local purchases only. He said that Eurest would be performing a similar check on goods received from Australia once they were landed on site. He said that Eurest had done far more than required under the terms of the Management Agreement. He cited events which would have been adverse to Fubilan's commercial credibility were it not for Eurest's resolve to ignore breaches of the Management Agreement brought about by Fubilan and to pursue operational excellence. He identified in particular the unreasonably short mobilisation period and the failure by Fubilan to inject sufficient funds until some six months after the contract had commenced. Eurest was still providing extended credit terms of 90-120 days. Moreover, Fubilan had not had a board of directors until five months after commencement of the contract and during that time there was no direction from it as to operational strategies. He acknowledged, on behalf of Eurest, that it had made some administrative errors to the detriment of Fubilan. Deloittes had performed an on-site audit at Eurest's insistence to verify abnormalities. Eurest had never denied or argued its findings and had "remunerated to the satisfaction of FCS a negotiated settlement". 261 On 15 March 2001, Mr Younger wrote three letters, one to Mr Kolalio and two to Mr Buretam as chairman of Fubilan. In the letter to Mr Kolalio he said, inter alia, that the matter of rebates was currently under investigation and Eurest would formally report back in due course. In the first letter to Mr Buretam he made an inquiry in relation to payments for directors' expenses and the absence of explicit receipt documentation for some of them. His second letter to Mr Buretam expressed his concern on behalf of Fubilan about the cost of purchases made by Limay in February 2001. Eurest had monitored the cost prices obtained by Limay and compared them to the prices obtained by Eurest. The exercise had been performed on an item by item basis. The letter was written at the direction of Mr Armstrong who gave evidence, which I accept, that he had personally ascertained that the purchase of food stuffs by Fubilan for the Management Agreement was at prices higher than those that Eurest could source. 262 On 21 March 2001 Mr Younger wrote to OTML acknowledging its letter of 24 January 2001 that it would not accept the new purchasing arrangements by Fubilan. He advised that Eurest had been directed by Fubilan to place its orders for food products locally through Limay and overseas through Yamil. He advised also that Eurest had complied with this directive. He had been informed that OTML containers which it was intended to load with food from Yamil suppliers for transport to Tabubil were being held at the wharf in Townsville by OTML and not shipped for delivery. The statement of claim alleged that OTML was required under the OTML Contract to provide transport services for containerised food stocks and to provide, at no cost to Fubilan, both freezer and dry containers to service the contract. The statement of claim alleged that Strang International Pty Ltd, OTML's shipping agent in Australia, had been instructed by Mr Higgins not to release containers to Fubilan or to JLFS. On 20 March 2001 six containers were finally shipped to Port Moresby by OTML. Three contained perishable goods and the other three were freezer containers. However a further six dry boxes were said to have been held back on instructions from Mr Higgins. An interim injunction was obtained but later dissolved at a hearing on 11 April 2001. 264 In the meantime, acrimonious correspondence was exchanged between Mr Younger and Mr Fenwick. On 28 March 2001 Mr Younger wrote on behalf of Eurest to Mr Fenwick at Fubilan pointing out that Fubilan had informed OTML, MRDC and Eurest representatives at a meeting on 15 February 2001 that under its agreement with JLFS, Yamil would receive food supplies at the same price as charged by Eurest and that the quality of the goods would be equal to that delivered by Eurest in 2000. The same guarantees had been given to in-country supplies to be purchased by Limay. Fubilan would receive a 10% rebate. Mr Younger said that JLFS had informed Eurest that it had no agreement with Fubilan to hold prices for the next 12 months. The cost of goods supplied locally to date had been more expensive. He attached a calculation. Small goods were being provided by a supplier which Eurest would not use because of quality control issues. It had also come to Eurest's attention that some suppliers had been asked to increase costs of product to ensure a rebate which, in turn, had increased the cost of goods on site. Eurest required the guarantees given by Fubilan to be met in order to ensure that the contract remained commercially viable. 265 Mr Fenwick responded with a letter of the same date. The response was aggressive and not entirely coherent. He complained about direct communication between Eurest and OTML. He said that the reasons for the change in supply arrangements were Eurest's "IMPROPER MANAGEMENT PRACTISES/INCORRECT FINANCIAL ACCOUNTING/IMPROPER USE OF FCS BANK ACCOUNTS/GROSS OVER BILLING to name but a few". He acknowledged the settlement but advised that Fubilan would be convening a special board meeting in the following week "to seek the Boards recommendations as a result of last years performance" [sic] OTML would be advised accordingly. This was plainly a threat of action of some kind against Eurest. Mr Fenwick referred to the six containers held in Townsville and suggested to Eurest that they "respond to this situation with immediate action by informing the Board of your participation in the speedy resumption of shipping the same to site". As Business Manager of FCS I advise you that your information unsound and I again find your method of reporting to be unpalatable. Small goods were being obtained from the only two suppliers in the country. He asked for details of Eurest's quality control concerns. He then went on the offensive and called on Eurest to calculate rebates owed to Fubilan for 2000. He listed a number of matters of concern. These included the use of an unqualified accountant, Mr Fred Nana at site, Eurest's involvement with Tabubil Golf Club which was said to be contrary to the Management Agreement, changes in expatriate rosters and lack of advice from Eurest in respect of the recent blocking of supply on the part of OTML. 266 On 31 March 2001 Mr Fenwick responded to queries raised by Mr Younger with Mr Buretam about insufficiently documented directors' expenses. Eurest had expressed its concern in a letter dated 25 March 2001 that the transactions would not be acceptable to external auditors. Payments queried included consultancy fees and accommodation charges paid to Mr Fenwick for October, November and December 2000 without supporting invoices or receipts. There were expenses reimbursed to Mr Buretam including private car hire and payments in excess of his director's allowance in November and December 2000. There were other payments which were not invoiced or which did not appear to relate to the affairs of Fubilan. The reply letter was signed by Mr Fenwick purportedly on behalf of Mr Buretam. Its style makes it clear that it was drafted by him. It counter-attacked with reference to, inter alia, "the myriad of Eurest mistakes identified in last years [sic] accounts". He called for an urgent meeting between Eurest, himself and Mr Kolalio to set the "re adjusted Budget" [sic]. A further letter signed by Mr Fenwick on behalf of Mr Buretam and obviously drafted by Mr Fenwick was sent to Mr Younger on 1 April 2001 alleging that Eurest's records were "in a positive sense of disarray". He said "I provide the following information to assist your plight". There followed 16 numbered points responding to the various discrepancies or inadequately documented transactions cited by Eurest. It is not necessary for present purposes to enter upon the merits of those matters. It is sufficient to say that there were at this time significant tensions between Fubilan and Eurest and that Mr Fenwick's personal style exacerbated them to the detriment of a constructive working relationship. It is therefore your duty to ensure that the accounts are kept in order and I fail to understand why you have outlined these problems for my attention. My advise [sic] to you should your correspondence be correct (which it is not) would be to tighten your administration with some urgency as it has an atrocious record from last year. The covering fax was addressed to him at Yamil. One of the attached sheets related to the month of March 2001. I infer that the comparisons generally related to that month. They disclosed consistently higher prices charged by JLFS across all categories of food stuffs. The differences were not disputed and I accept that they existed as reported by Eurest. 268 On the same day, OTML sent a letter to Fubilan indicating its intention to defend the action in the National Court. Mr Jansma, on behalf of OTML, repeated that company's previous position that the new supply arrangements were in breach of the OTML Contract. OTML would also be instituting proceedings for breach of contract. 269 On 6 April 2001, Mr Buretam sent a letter, which he signed as Chairman of Fubilan and "Coordinator Principal Landowners", to the Chief Operating Officer- Minerals for BHP in Melbourne. The letter called for the removal of Mr Higgins as managing director of OTML. Mr Fenwick denied in cross-examination that he had any hand in that letter. However, having regard to its style and tone and its proximity in time to the letter from OTML threatening action for breach of contract, I think it likely that he was its instigator and that he drafted or contributed to its drafting. The OTML threat in relation to the supply arrangements with Yamil and Limay impinged on his personal interests as an equity holder in those companies as well as his personal standing in Fubilan as architect of the arrangements. 270 Mr Fenwick began to have concerns himself about the JLFS' prices. He met sometime in the first week of April with Mr Coventry of JLFS and wrote a follow-up letter on 8 April 2001. He complained that the prices charged by JLFS were "grossly over stated". He also complained that prime quality meat had not been ordered and that groceries, frozen goods and dairy goods supplied had not agreed with contracted rates. It would therefore be advantageous for Eurest to politicise any deficiency detected in the chosen supply route. Whilst FCS can live with the difficulties of logistics and at the same time appreciate the patience shown by JLFS over the past month it is unrealistic to expect that FCS can support any method of supply unless the same is extremely competitive. He said that the negotiations with JLFS had at all times been based on it matching or bettering the Eurest prices. Asked in cross-examination why he wrote the letter, Mr Fenwick said he wanted to let JLFS know that Fubilan was not happy with the situation and the invoice prices and that JLFS had not honoured the agreement. 271 On 10 April 2001 Mr Younger wrote to Messrs Fenwick and Buretam pointing out that for the period of February and March 2001 supplies received from Limay and Yamil had exceeded the prices available to Eurest by K340,000. The value included additional VAT and duty paid due to the inflated prices. The additional cost to the Fubilan/OTML Contract amounted to around three months budgeted profit. We believe that there must be a qualified representative based in all departure locations to ensure the required standards are met. He then said that Fubilan, presumably here referring to Eurest, acting on behalf of Fubilan, would only pay Yamil and Limay the agreed prices. It was the responsibility of Yamil and Limay to apply for credits for the overcharges to date. Eurest's project manager would supply a detailed breakdown of all over charges in the March operational report. 272 It was put to Mr Fenwick in cross-examination that Limay was so under-prepared to carry out its functions that it didn't even have credit facilities to purchase goods and had to apply to Eurest to pay its invoices. Mr Fenwick did not dispute that proposition save to say that the money used to pay the invoices would come from Fubilan. Eurest were merely the money manager. By way of example, he was shown a memorandum from Mr Kolalio of 10 April 2001 concerning payment due from Limay to Pelgen's Small Goods which was overdue by over a week "... as a result of Limay's bank accounts not being finalised". Mr Fenwick accepted that what Mr Kolalio said was correct. Mr Fenwick prepared the letter. In it Mr Buretam stated that the Fubilan board's ongoing review of operations had highlighted "... issues of great concern that must be brought to management's attention for appropriate action". He referred to the leniency that Fubilan had shown to Eurest given the damaging results of the internal audit. The board was said to be very seriously concerned about the return on its investments and the performance of management and hoped that the expected or promised returns on investment were delivered. A number of areas were identified which were said to highlight the "incompetence and lack of due care persistently demonstrated by the Eurest Management despite numerous liaison [sic] by MRDC and the Board office". Debtors' accounts --- long outstanding --- over K500,0000 review of aged receivables as at 30 March 2001 were said to indicate over K500,000 uncollected over 60 days. . Rise and fall billings --- over K300,0000. OTML had awarded a rise and fall adjustment in February 2001. This was said to be over 9% back chargeable to October 2000. Mr Buretam's letter estimated that the total amount to be claimed for the period was over K300,000. Eurest had not promptly submitted the award to OTML for payment. Swift action was required to bill and receive the money. . OTML billings. Mr Buretam complained that client billings to OTML were not being submitted on time for payment in accordance with timing agreed with the Towns Office. This was said to be an example of a situation which Fubilan lost money on the time taken to cash its receivables. . Change of roster. Fubilan was not aware of any agreement to change the expatriate roster from 8/3 to 6/3 after 12 months of operations. Management was required to provide Fubilan with copies of the agreement to substantiate its actions. . Insurance on damaged goods. Preparation and lodgment of insurance claims had not been done for goods received to site in damaged condition. Particular reference was made to a container of potatoes said to have been received in bad condition. No claim had been lodged with the insurers for the K20,000 loss. . Issue of credit notes. Goods sold to Eurest worth K66,504.64 were returned to Fubilan minus 12 cartons of fish. The full sale amount was credited against Eurest's account without any consideration for stock not returned. The full amount of the goods not returned was to be charged to Eurest. . Supervision of K2 million warehouse. Mr Buretam complained that the warehouse had been under the care of a student on vacation/casual employment for a period of four weeks namely Steven Mipi. Eurest had failed to provide a suitably qualified person to manage the warehouse during the absence on leave of the warehouse supervisor. The Fubilan board demanded an explanation of the "persistence of such disgraceful and unprofessional management practices". . Leanne Broadbent. Fubilan instructed Eurest that the engagement of Ms Broadbent was to be discontinued. Fubilan had a trainer and did not require an additional trainer. However, it now appears from the persistent misdemeanour as demonstrated by the foregoing issues, that the FCS Board's genuine business expressions have been taken for granted. Consequently, Eurest is now reminded, that this letter serves as a last warning. All issues of concern must be brought under control immediately. Should this be seen to fail the FCS Board will have no further alternative, but to pursue termination of Eurest's management services. He said, unpersuasively, that it was a board decision. It was a matter of the board taking the best decision for the company and Fubilan was the company. If Fubilan as a board decided not to go ahead with supply that was the way it was. He would not decide that. In my opinion however, Mr Fenwick was aggravating the board's discontent with Eurest over problems capable of resolution in order to advance his own ends. The discord between Fubilan and Eurest was driven to a large extent by Mr Fenwick. 275 The letter suggested that there had been a board meeting since the meeting of 8 March 2001 when it referred to the board's "ongoing review of operations". There had been no such board meeting although Mr Fenwick, in his letter to Mr Younger of 28 March 2001, had foreshadowed a special board meeting to be convened in the following week. He had in the two letters both foreshadowed and referred retrospectively to a board meeting which did not occur. 276 The student, Steven Mipi, who Mr Fenwick said had been put in charge of the warehouse for a period of four weeks in the absence of the supervisor, was a person he himself had introduced to Fubilan. He had employed him as a cadet manager at Bige in 1998. He had done two years of college. He accepted that Mr Mipi was in charge of the warehouse for a period of one week and two days and not four weeks as set out in the letter. In cross-examination he claimed that he had drafted the letter under Mr Buretam's instructions. He said that Mr Buretam was a very educated man and he didn't have to sign off anything that he, Fenwick, put before him. He said that at that time Mr Buretam wanted to terminate Eurest and was not happy with Eurest after the first year's operation. Mr Buretam had been wanting to have Eurest dismissed for about eight months at that stage. He said "everybody wanted to get rid of Eurest bar me at that particular time". Although Mr Fenwick said earlier in his evidence that he had prepared this letter, he said in cross-examination that that was a mistake. The letter had been copied to himself and Mr Baitia and he thought it looked like the auditor's writing. I do not believe Mr Fenwick's evidence in this respect. Mr Jansma who signed the letter, observed that during the course of the proceedings the National Court judge had indicated that it was a "requirement of the Contract for Fubilan to utilise the services of Eurest to procure food". Mr Jansma said that had always been OTML's understanding of the contract and that was the basis on which it was reluctant to transport food which had not been ordered by Eurest. He referred to evidence that the new supply arrangements had incurred higher costs for Fubilan and that significant quantities of poor quality food had been received. OTML would not accept any flow-on from these higher costs. It would transport any containers which had been presented to the wharf prior to the close of business on 12 April 2001 although it was not obliged to do so. We do intend to require that Fubilan comply with the terms of the Contract. However, we have no desire to be on bad terms with Fubilan and we would welcome the opportunity of re-establishing a good working relationship. The letter was received by Mr Fenwick on the same day. It was put to him in cross-examination that it was plain that Eurest was thereby directed by OTML to resume direct purchase of supplies. 278 Mr Coventry of JLFS also wrote to Mr Fenwick on 12 April 2001. He said supply negotiations for groceries, dairy and frozen goods had not been completed when JLFS commenced supply and therefore prices varied up and down. He accepted responsibility for overcharges and would give credits on all prices charged above contract. The price and quality of meat supplied was a matter he would discuss with Mr Stansfield. He said it was now clear that all the details about the Eurest supply arrangements had not been presented prior to the contract between Fubilan and JLFS. He suggested that a cost-to-cost comparison of prices with Eurest was not possible as Fubilan in fact had been picking up most of those costs by way of direct payment or management fees. It could not deliver the prices it had promised to deliver under the agreement. It was put to him that Mr Coventry was pointing out that the perception that Eurest was overcharging was wrong. JLFS could not match the Eurest price. These were set out in the letter of 11 April 2001 from Mr Buretam and dealt with in an internal Eurest memorandum from Mr Kroeger to Mr Younger of 19 April 2001. As at 31 March 2001, debtors' accounts stood at K291,913.58 over sixty days and not K500,000 as alleged. Third party sales of K91,346.84 would be paid by 20 April 2001. Payment was slow because OTML departments were invoiced separately to smoko and functions. The balance was being actively followed up. 2. The rise and fall claim chargeable back to October 2000 was submitted to OTML in February. It sat there for three weeks until the OTML accountant returned the invoices seeking a line by line itemised invoice to justify the increases. This was a delaying tactic by the Town's Department of OTML to avoid adjusting their budget. 3. On occasions billing to OTML had been late because of the amount of information required including contractor meal numbers and third party sales to OTML departments. 4. The insurance claim for potatoes from Limay that arrived in an unsuitable container was open to discussion. The question of who was liable for the loss had been discussed with Mr Fenwick. The invoice for the potatoes had not been processed and paid. 5. Mr Kroeger had not been informed of any short stock and this had been rectified. An invoice would be raised to Eurest totalling K2,856.34 and paid the following week. 6. Mr Steve Mipi was the son of the manager of Wangbuilt Store owned by Mr Yekim. He had been accepted for entry into the University in Queensland and was of above average intelligence. Mr Fenwick had requested that Eurest take him on as a casual employee. He was taken on as a casual storeman and later as a warehouse clerk. During a period of four months he was trained in all aspects of warehouse operation. The warehouse supervisor went on leave from 2 April 2001 to 12 April 2001. During that time all permanent warehouse staff were present. Both Mr Kroeger and Mr Reisenbauer went to the warehouse several times each day to check that everything was alright and to oversee Mr Mipi. 7. Leanne Broadbent commenced employment as a Poons' employee in November 1999 as a part time trainer at the Poons' training centre. She was taken over by Eurest after the buyout of Poons. She had a Bachelor of Education degree, Diploma of Teaching Technical and was a fully qualified TAFE teacher. All her qualifications were required in PNG and Australia to train apprentices. Practical cookery training was done by Mr Jock Turner, but she did the theory, lesson plans and teaching. He accepted that OTML usually took 60 days to pay on invoices to departments for smoko and functions. He did not know whether the explanation for the delay in the processing of the rise and fall claim was reasonable. He maintained that bills had not been submitted to OTML on time. He did not dispute that there was an enormous amount of information required for that billing. As to the insurance claim in relation to potatoes, he accepted that it was still open for discussion. He disputed the correctness of Mr Kroeger's account of the use of Steve Mipi in the warehouse. He said he knew how the warehouse was operated and that the contention that Messrs Reisenbauer and Kroeger went down at separate times each day was not right. As to Leanne Broadbent's qualifications he said it wouldn't be to his satisfaction but if the Fubilan board accepted it that would be fine. 281 Mr Kroeger was not cross-examined on his document. It was amongst a large number of documents tendered by the respondents without objection from counsel for the applicants, who was explicitly reminded of his right to object to the tender of any of them. So far as the memorandum sets out Eurest's response to the complaints raised in the letter of 11 April 2001 from Fubilan, I take it as factually correct. Mr Fenwick does not seem to have been in a position to dispute any of it in detail. Pricing errors would be fixed and a credit passed through. Mr Coventry would get back to him in relation to the meat supplied in the first order. 283 On 25 April 2001 Mr Fenwick sent a memo, under the letterhead of Morocco, to Mr Buretam saying he had been advised that Eurest had recommenced ordering supplies through their own network on behalf of Fubilan without board authority. This had serious ramifications for Fubilan, the least of which was the current "supply agreements" in place with JLFS and Karma Foods. He pointed out that Fubilan could be liable to damages claims from those suppliers. He accused Eurest of having acted in a "selfish manner throwing caution to the wind". He presumed that Eurest had preferred to act on correspondence from Mr Jansma of OTML which had offered an opinion and not a court ruling. There must be an urgent meeting called with Senior Eurest Management to discuss the situation failing issuing Eurest with a Notice of Termination effective immediately as they are in serious breach of their Management Agreement with Fubilan Catering Services. He said it should have been the Fubilan board's decision. Asked whether he had supplied Eurest with a copy of Fubilan's agreement with JLFS, he said he did not personally give them a copy. In his memorandum of 25 April 2001 he had dismissed the observation, said by Mr Jansma to have been made by the National Court, that it was a "requirement of the Contract for Fubilan to utilise the services of Eurest to procure food". He said it was an opinion of Mr Jansma's rather than a court ruling. He was cross-examined on that comment. He said he knew the court in Port Moresby had ruled that Fubilan was not to do supply, but he was not too sure of the technicalities and legal ramifications of what had happened. It was put to him that on its face his advice to the chairman of Fubilan exaggerated the position. He said "it could be taken that way yes". I find that the memorandum from Mr Fenwick to the Fubilan board was calculated to blame Eurest for a situation which was of his own making. As a result of his procuring the supply agreement with JLFS in a way that was not compatible with the requirements of the OTML Contract, Fubilan had become potentially liable for breach of that agreement if it did not continue to acquire supplies from JLFS. He perceived that one way out of the problem was to accelerate the moves he had already begun with the Fubilan board to terminate the Management Agreement with Eurest. 285 A notice of default was sent to JLFS by McKie & Associates acting as solicitors for Fubilan. The defaults alleged related to the prices charged for goods ordered which were said to have required Fubilan to pay extra duty of K31,809.20 and extra VAT of K22,486.16. The notice required the cancellation of purported invoices, the issue of invoices applying the price set out in the product list for products delivered, payment of K54,295.35 in relation to surplus duty and VAT and payment of legal costs associated with the notice in the amount of A$1,000. JLFS was given 20 business days after service of the notice to rectify the defaults. It seems that the notice may have been regarded by Mr Fenwick and by JLFS at that time as something of a formality. Mr Coventry wrote to Mr Fenwick on 1 May 2001 offering a credit of A$18,812.46 plus relevant duties. Ensure that the food procured from John Lewis Food Group through Eurest is delivered for transport by OTML. But the Court's decision was apparently made on 11 April 2001 so Fubilan's response would have occurred on 11 April or shortly thereafter. He claimed that the letter of 8 May 2001 was not drafted by him. Mr Younger responded on 9 May 2001 saying that the issue would be discussed at a meeting between MRDC, Fubilan and Eurest in Brisbane to be held on 21 May 2001. According to a memorandum from Mr Fenwick to Mr Yalapan of 3 May 2001 it was he who arranged that meeting. 287 On 9 May 2001 Mr Younger sent an internal Eurest memorandum entitled "Provisions and Accruals at December 2000". Mr Armstrong received a copy and was cross-examined on it. The memorandum set out a list of potential provisions and accrued liabilities. Item 13 was entitled "Provision for Fubilan Catering Services". A negotiated settlement of K470,000 was paid to FCS by Poon. FCS has since presented further claims to Poon indicating that they are seeking further compensation. It was put to Mr Armstrong in cross-examination that the compensation claimed at that date related in part to rebates. Mr Armstrong described it as a general ambit claim but accepted that it included a claim for rebates. 288 The board of MRSM met on 17 May 2001 in Port Moresby. Mr Baitia presented a report on Fubilan to the board. He reported an initial capital injection from MRSM of K3.5 million and Fubilan's gross turnover which, at that time, stood at K19 million. He said an internal audit had highlighted some issues and resulted in a refund from Eurest of K800,000 to MRSM. Investigations on rebates were ongoing. He complained that Eurest was not performing under the Management Agreement and not bringing Fubilan to the level of agreed profitability. The accounts were not properly maintained and Fubilan believed that up to K1.2 million could be recouped from Eurest. The managing director of MRSM stated that Fubilan had a board which ran the company and that MRSM should not interfere in the running of Fubilan. 289 Accounts to 31 December 2000 were presented at the meeting and management accounts to 31 March 2001. No dividend had been received from OTML as at 31 December 2000. No dividend income was received in the quarter ended 31 March 2001. 290 Mr Poelzl wrote to Mr Buretam on 18 May 2001 referring to his letter of 8 May 2001 concerning acquisition of supplies from JLFS. He said that Fubilan could not give directions under the Management Agreement requiring Eurest to place orders with JLFS. 291 Mr Fenwick prepared typed notes for the meeting between MRDC, Fubilan and Eurest in Brisbane on 21 May 2001. He gave copies to MRDC representatives coming to the meeting. He maintained that Fubilan had held a firm position during contract negotiations with Eurest with regard to rebates being in favour of Fubilan and not their managers. The notes were replete with rhetoric condemnatory of Eurest. He suggested that the court action could have been avoided with "firmer supportive action from Eurest as our Managers". Yamil Supply Pty Ltd (a company fully owned by Fubilan Catering Services Limited) has to date been non functional. Various other complaints about Eurest were made in the memorandum. The meeting took place as arranged on 21 May. Messrs Buretam, Yekim and Fenwick represented Fubilan, Baitia and Yalapan, MRDC and Poelzl, Younger and Armstrong, Eurest. It appears however that Messrs Buretam and Yekim left early in the meeting. Mr Yalapan said in cross-examination that he thought they had personal matters to attend to. Mr Fenwick chaired the meeting. It lasted from 9.25am to 1pm. The opening discussion recorded in the draft minutes concerned Fubilan's supply arrangements involving JLFS and Karma Foods, the rebate which they offered and the rebate enjoyed by Eurest but not passed on to Fubilan. Mr Fenwick was said to have asserted that rebates paid to Eurest by its suppliers ranged from 4% through to 10%. He listed specific suppliers and rebates. Mr Poelzl was recorded as saying that Eurest did not get the rebates claimed by Mr Fenwick. It was a major purchaser in Australia and PNG and was able to negotiate excellent prices. Those charged to Fubilan reflected economies of scale and payment arrangements which had been negotiated with suppliers. Information suggested that early payment discounts on average were in the order of 2%. The same was true in country. Eurest had funded purchases for Fubilan and so Fubilan had not benefited from payment arrangements. 293 Mr Poelzl referred to Fubilan's advice that it would continue doing its own purchasing. Eurest would agree to that if price, quality and delivery were good. However to that date they had been unsatisfactory. There was discussion about containers of rotten potatoes, short supply and an overcharge of K70,000 on meats. Mr Poelzl said that supply, quantity and price and "[lack of] clarity on company structures" was a problem with supply through Fubilan. Eurest could not agree to any arrangements other than purchasing through Eurest until these were solved. He said that Eurest had contractual obligations under the Management Agreement and could not follow instructions "contrary to a court's decision or the intent of the agreement". He said stock prices as at February 2000 were not inflated. Eurest had obtained 30% better prices than those available on the stock system on site. Mr Fenwick was recorded as saying that suppliers were prepared to give Fubilan the same prices as Eurest plus a minimum of 6% rebate. Mr Poelzl asked for evidence of Mr Fenwick's claims about rebates. If the prices obtained were equal to or better than those available to Eurest through their nominated suppliers, Eurest would purchase through JLFS. Mr Baitia was said to have endorsed the proposal. Mr Younger made the point that Fubilan had been making payments to Eurest on 90 to 120 day terms. This could not go on otherwise rebates would be forfeited. Mr Fenwick referred to the agreements that Fubilan had in place with JLFS and Karma Foods and his wish to honour them if possible. Mr Baitia was recorded as agreeing that a joint effort was preferable to work through pricing together. The rebate issue would evolve through exercises. Messrs Fenwick, Baitia and Yalapan agreed that there was no intent to alter the management fee in any form. They also agreed not to pursue the rebate issue. Mr Younger was said to have stated that two expatriate site managers were necessary. He would look for a trainee manager candidate. He would approach OTML for financial assistance to place a supernumerary trainee manager. At the end of a twelve month period he would place the trainee into a fulltime management position. This was to be raised at the next Fubilan meeting and a proposal to be submitted to OTML by Eurest. 294 Mr Fenwick's evidence-in-chief on this meeting was spare. It appeared at [133] of his statement of evidence of 22 June 2006. A copy of the minutes prepared by Eurest and a letter of response from Melvin Yalapan were prepared. Mr Yalapan said "so absolutely not, no rebates at all? ", to which Mr Poelzl replied "no". According to Mr Yalapan he repeated his question three times and Mr Poelzl denied each time that Eurest received rebates. Mr Yalapan said that Fubilan believed there were rebates and they needed to get a final audit done as this was a big issue on site. Mr Baitia made no mention of the meeting of 21 May 2001 in either of his witness statements. Mr Buretam, in his witness statement, said the meeting took place on 21 May 2001 and that Lee Yekim was present. His statement also recorded that "Before we left the meeting Gerhard Poelzl said that Eurest did not receive rebates. I clearly remember this. " Unfortunately as Mr Buretam was deceased by the time the matter came to trial, his recollection could not be tested in cross-examination. Mr Yekim's statement did not refer to the meeting. 295 In Mr Armstrong's evidence-in-chief he placed the meeting at or about 24 May 2001. He said that Mr Baitia stated that Fubilan considered it was entitled to rebates that Eurest was receiving from suppliers and that they were in a range of up to 10%. Mr Poelzl acknowledged that Eurest did receive rebates but not at the percentage amount claimed by Mr Baitia. Moreover, according to Mr Armstrong, Mr Poelzl said Eurest was not obliged to pay the rebates to Fubilan. Mr Poelzl said they were in the order of 2% only. He then said he recollected Messrs Baitia, Yalapan and Fenwick saying at the meeting that whether or not there was a claim for rebates against Eurest they did not wish to proceed with that claim. 296 Mr Baitia was cross-examined on the meeting. It was put to him that Mr Poelzl said that Eurest received an early payment discount but didn't get the rebates claimed by Mr Fenwick. It was also agreed that he, Mr Fenwick and Mr Yalapan said there was no intention of altering the management fee. 297 In cross-examination Mr Yalapan recalled that Mr Poelzl said something to the effect that his information suggested Eurest was receiving 2% early payment discounts only. Mr Yalapan added "Effectively that they were not receiving any rebates". In his witness statement he had alleged that Eurest's draft minutes "did not accurately reflect what occurred at the meeting, particularly in relation to the issue of rebates". He said the minutes were "cooked up to reflect a particular perspective". He then retracted that characterisation. Mr Yalapan did not in fact dispute much of the content of the minutes when taken through them in cross-examination. He denied however that Fubilan had agreed not to pursue the rebate issue. Mr Fenwick and nominated Eurest people would work out rebate issues together. They would ascertain whether rebates were provided and discounts given. He wanted to be sure there were no rebates. 298 Mr Yalapan wrote a letter to Messrs Poelzl and Armstrong on 16 July 2001 in which he said that the draft minutes "substantially reflect the matters discussed". He also said that the significant issue on which he differed was the recorded resolution in relation to the issues on suppliers and rebates. He said in the letter that he did not recall agreeing to "give up the issue". The purpose of the discussions which were to take place after the meeting between Mr Fenwick and Eurest's technical person (ie Mr Ellis) was "... to ascertain whether the additional benefits in terms of rebates will be available, whether Eurest had been receiving these benefits and that these could be passed on to FCS". [sic] The letter alleged that Eurest had attempted to use the minutes to "hedge" its position. It was put to Mr Yalapan in cross-examination that he was speaking prospectively. The reference to the benefits being passed on to Fubilan meant that if JLFS were prepared to give a 10% discount at a better price than Eurest they should buy through them. Now, the denial by Mr Poelzl was that Eurest didn't get rebates as you contended, wasn't it? A. - - - he certainly denied it. Q. Get the rebates that you contended. "Eurest does not get rebates as stated by WAF" WF? That's right. What --- yes, what actually happened, Mr Bennett, is that Mr Poelzl said that we could go and talk with the Supply Manager in Sydney who would reveal everything about supply, assist us to get on with supply and do it in a proper fashion. The Supply Manager in Sydney gave us the cold shoulder, closed the door on us and we flew back to New Guinea, as simple as that. It is correct, isn't it, that Mr Baitia, Mr Yalapan and yourself at the conclusion of the meeting, when Mr Poelzl said let's forget the past, we will move forward and grow together, you agreed not to pursue the rebate issue, it is now finished and agreed? A. He agreed that, as at February 2000, it was part of the business practice of Eurest to obtain rebates or discounts from suppliers. He was asked for the highest rebate figure in 2000. He could not give an accurate figure. He said there may have been early payment discounts. To the best of his knowledge, if they were averaged out, the average would have been about 3%. He added that he had mentioned this "in a meeting". I took this to be a reference to the meeting of 21 May 2001 although that was not specifically put to him. 302 Mr Poelzl was referred in cross-examination to a rebate of 7% mentioned in a letter from Pelgen's Small Goods received in September 2001. Mr Poelzl said that his 3% figure was an average rebate. Other cross-examination of Mr Poelzl on the rebate question was based in part on a document he had never seen and of which he knew nothing. He was not cross-examined about the meeting of 21 May 2001. Nothing he said was inconsistent with his evidence-in-chief in relation to that meeting. In particular, his evidence that Messrs Baitia, Yalapan and Fenwick said at the meeting that whether or not there were a claim for rebates, they did not want to proceed with a claim, was not challenged. Mr Armstrong was not cross-examined at all about the meeting. 303 The record contained in the draft minute and the responses of Messrs Yalapan, Baitia and Fenwick in cross-examination on it lead me to reject their statements in evidence-in-chief that Mr Poelzl denied receiving any rebates. The emphatic character of their witness statements, particularly that of Mr Yalapan, raises a question about the extent to which they were reconstructed from self-serving correspondence post-dating the meeting rather than reflecting any actual recollection. I find that at the meeting Mr Poelzl rejected Mr Fenwick's claim about the level of rebates being sought. I accept that the draft minutes reflected the substance of the discussions that took place at the meeting of 21 May 2001 and that the parties agreed then and there to put behind them the question of rebates received by Eurest up to that time. What they agreed to do was to compare the benefits that could be obtained through JLFS and those obtained from Eurest purchasing through its suppliers. 304 Mr Fenwick, having received a copy of the draft minutes, wrote to Mr Baitia on 29 May 2001 raising concerns about them. He foreshadowed a meeting in Sydney with Mr Russell Ellis of Eurest. To accept their statement that they do not receive rebates simply is not convincing against every supplier stating that they do. Perhaps it would be wise to measure their statement against the recently completed Deloittes audit. A good result may encourage FCS to offer leniency in past rebates however a poor result will determine a prompt recovery. He regarded this as a stroke of luck as there would be no dispute about pricing and there was a solid contract agreement to provide a 10% rebate. 305 It was put to Mr Fenwick in cross-examination that, on 21 May 2001 only eight days before he wrote the letter, he had agreed not to pursue the rebate question. He did not disagree but said that when he went to see Mr Ellis, Mr Ellis did not know anything about rebates. The problem with that answer was that he had not seen Mr Ellis when he wrote the letter. He changed tack and said his change of heart about the rebates occurred because Mr Armstrong rang him after the meeting and wanted him to sign off on the minutes. Further pressed, he said it was "probably discussions from the board after the meeting". By this he evidently meant discussions between himself and other board members who had been present at the meeting. There was no reference to the Armstrong telephone call in his witness statement. 306 In my opinion, Mr Fenwick's explanations of his change of mind were made up in the run of cross examination. It is most likely that he had decided, upon receiving the draft minutes, that he had too readily given away a bargaining chip in his ongoing dispute with Eurest and his drive for purchasing to be done by Fubilan involving companies in which he had an equity. Although there was no direct evidence on the point, in my opinion the probability is that he influenced Messrs Yalapan and Baitia to accept his interpretation of what had occurred at the meeting. 307 On 1 June 2001, Mr Fenwick wrote to Mr Armstrong apparently in response to a fax seeking his reaction to the draft minutes. He wrote that both Messrs Baitia and Buretam felt that the question of rebates was a matter for the board to be considered at a meeting in Port Moresby on the following Thursday. He requested that references in the minutes to rebates and subsequent conclusions be struck out until the board was fully advised. He also said he had spoken with Mr Yalapan who stated his belief that the rebate issue was put into the "hard basket" to be addressed between the nominated Eurest representative, Russell Ellis, and Mr Fenwick. He expressed his extreme disappointment that Fubilan and Eurest had returned to "Pre-Meeting" conduct. He said that Eurest would not issue the minutes while Fubilan, MRDC and Eurest were unable to agree on their content. Nor would they delete any items. He stated his clear understanding that the draft minutes were a true record of intent of the meeting. Minutes of the meeting indicate that Mr Fenwick told the board that he had a letter from OTML confirming that Eurest had been receiving rebates, a fact which Eurest had denied. He also advised of the takeover of JLFS by Burleigh Mars, the national suppliers for Eurest. He advised that there was nothing wrong with Eurest doing the order supply for Fubilan, but he disagreed with them collecting the rebates. Mr Yalapan told the board about the meeting of 21 May 2001. There was discussion of the question of supply. Mr Buretam said that landowners were calling for a meeting with OTML because they believed that OTML was protecting Eurest. However Mr Yalapan advised Mr Buretam not to drive the issue too hard and risk a knockback from OTML. Mr Buretam was recorded as stating that the landowners had concerns about the managing director of OTML. THAT the Management formally write a letter to Eurest on the amendment of the Minutes of Meeting that Eurest minuted and agree to that effect. 2. THAT FCS and Eurest agree on the rebates offered on how much they are and for a better price. Mr Reynolds of Karma Foods attended. Mr Fenwick explained that he was there to propose that Limay deal with both local and off shore supply. According to the minutes Mr Fenwick advised the board that the proposed arrangement for supply utilising Yamil had never been implemented. Mr Reynolds is recorded as having reported that Yamil had not traded and had not been able to fulfil its contractual obligations with JLFS. An arrangement to supply Fubilan, bypassing Yamil, and using Limay as the only intermediary company for both local and off shore supply, should be created. Mr Fenwick agreed in cross-examination that the minutes reflected accurately what was said. A contract to give effect to the proposal was tabled. Fubilan at that time was effectively being supplied by JLFS. The board resolved that the draft contract be noted and endorsed subject to further review. The draft contract was not before the Court. Mr Fenwick was unable to explain where it was. 312 The minutes of the meeting of 2 July 2001 also recorded Mr Fenwick saying that Eurest had been withholding the benefit of rebates and that he had letters from suppliers confirming this. Mr Yekim proposed that the evidence be presented to OTML with a view to the termination of the Management Agreement. The board resolved to send a letter to Eurest giving it 14 days "to rectify the situation regarding rebates", that a copy be forwarded to OTML and that they endeavour to meet with OTML. Alternative management arrangements were considered at the meeting. Mr Boas tabled a letter from Niolam Catering Services of Lihir (Niolam) offering management services. Mr Fenwick was requested to get quotes from possible alternative firms. The board also resolved that legal proceedings be commenced against Eurest for breach of the Management Agreement. The board additionally relied upon Mr Fenwick's advice to send a notice of termination to JLFS for failure to give correct invoices. 313 Mr Fenwick said that the operations on the ground were running fairly well but that Eurest had made major changes without board approval. This comment concerned the alleged employment by Eurest of eight expatriates. The board resolved to seek an explanation for their employment. Eurest was also to be given written notice that the information contained in financial statements provided by it was inadequate. The acknowledgment that operations on the ground were running fairly well stood in sharp contrast to the strident denunciations of Eurest that were to follow from the hand of Mr Fenwick in the lead up to the attempted termination of the Management Agreement in November 2001. On the other hand, Mr Fenwick was to make very similar acknowledgments on the very day, 29 November 2001, that he delivered the notice of termination of the Management Agreement to Eurest. The notice was based on JLFS's failure to comply with the notice of default of 27 April 2001. Mr Fenwick said in cross-examination that he had two meetings in Brisbane with JLFS and senior management. Both meetings were "to rectify the situation". Neither resulted in the agreed prices or rebates, "That is what prompted the termination". He complained that matters raised in the Brisbane meeting of 1 June 2001 had "not been ratified". The issues included non-compliance with the Chairman's directive about supply and failure to credit Fubilan with rebates. On the latter issue, the letter threatened recovery action in the PNG or Australian courts. Other "issues" related to changes in site rosters without approval, unacceptable Operational Reports, incorrect accounts, failure to "gear" the level of expatriate management to allow the introduction of local management and billing Fubilan for the payment of a relief manager's salary at the Tabubil Bakery. The letter attached a "Technical Paper" purporting to relate various of the deficiencies in Eurest's performance to provisions of the Management Agreement. 316 On the same day a letter was sent to Eurest, again on MRDC letterhead, signed by Mr Yalapan. This was the letter, referred to earlier in which he stated that he disagreed with what the minutes of the meeting of 21 May 2001 recorded as to rebates. I want to once again place on record that we are determined to work within the spirit of the Brisbane meeting to resolve all outstanding issues. Perhaps it is appropriate that a further meeting is held before issues become too contentious. Drafts had been exchanged between him and Messrs Yalapan and Baitia. It is clear that he also prepared the Technical Paper. He sent a draft version of it to Mr Yalapan and a copy of it to Mr Baitia on 12 July 2001. The letters were laying the groundwork for the termination of the Management Agreement. The letter signed by Mr Baitia had the tone of a default notice. The letter signed by Mr Yalapan was clearly designed to try to maintain the contention that the rebates' issue had not been resolved on 21 May 2001. It was put to Mr Fenwick that the Technical Paper was a log of claims "put up to consider the termination of the contract". He replied "possibilities". I take this to mean that he accepted that the Technical Paper set out possible grounds for termination of the Management Agreement. 318 The cross-examination of Mr Yalapan and of Mr Fenwick bore out the proposition that at the beginning of July 2001 they decided to send out a number of documents simultaneously. The documents were prepared and sent to Mr Fenwick on 4 July 2001. He returned them on 11 July. He forwarded the Technical Paper on 12 July and the two letters and the Technical Paper were despatched on 16 July 2001. Mr Yalapan agreed that it was primarily Mr Fenwick who put together the Technical Paper. This was inconsistent with his evidence-in-chief that he had had Mr Kolalio prepare it. Mr Fenwick agreed that he prepared the Technical Paper although he said he did so under instructions from Mr Yalapan. He denied "absolutely" the proposition that the exercise was undertaken in order to organise a termination. The timeframe of their preparation did not permit that and that is consistent with Mr Fenwick's evidence. He expressed his extreme disappointment at its content. He asked what had gone wrong since the meeting in Brisbane in May. Eurest had only sent draft minutes for confirmation and there had only been a dispute about one aspect of the minutes, namely the rebate discussions. The Fubilan chairman was not empowered under the Management Agreement to direct Eurest to purchase from JLFS but the matter was extensively discussed at the Brisbane meeting and a strategy was put in place with the agreement of both parties. 2. Rebates. The issue was discussed and settled at the Brisbane meeting. Mr Fenwick had subsequently reneged on that agreement. Further discussion was warranted between the parties. 3. Change of site rosters. A full explanation of change of site rosters was provided to Mr Fenwick at Tabubil. It was also detailed in a letter to Mr Kolalio on 19 March 2001. For the year to June 2001 there had been a saving on labour budgets of K301,557. 4. Operational reports. The letter of 16 July 2001 was the first that Eurest had heard that operational reports were unacceptable as a true/concise account of events. 5. Accounts presented incorrectly. For the previous six months there had been no queries as to account presentation. The accusation was unfounded. 6. Level of expatriate management. The OTML Contract stipulated the number of expatriates to be employed on site. Eurest had reduced the level by one person and the position was filled by a national employee. OTML had stated that the level of expatriates was not to be decreased any further. At the Brisbane meeting Eurest had agreed to look for a trainee manager candidate. 7. Relieving manager's salary at Tabubil Bakery. Eurest was unaware of that situation. Immediate checks did not support the accusation. If an adjustment was necessary after checking a credit would be processed. To date, despite Eurest's assistance, his proposals were operationally and economically unsound and would require OTML's and Eurest's agreement. Nevertheless in our Brisbane meeting Eurest offered Supply Chain assistance which will further aid FCS. This was based on our understanding that all the past issues were resolved. The letter in evidence bore Mr Fenwick's handwritten notes including a number of rhetorical comments such as "not wrong here", "save your breath" and "sure!". 321 Mr Poelzl replied on the same day to Mr Yalapan's letter of 16 July 2001 noting that Mr Yalapan and Mr Baitia could have communicated with him direct to discuss the content of the minutes of the meeting of 21 May 2001. We believe that this whole issue together with other issues, has tainted the credibility and understanding of all parties. Additional consultant costs included fees and expenses for Messrs Herman, Reynolds, Fogarty, Fenwick and Kolalio as well as directors' travel costs for the signing of the Product Supply Agreement with JLFS. These totalled K133,427.38 over the period February and March 2001. Costs incurred through the new purchasing system, by reference to local and overseas orders totalled K345,824 for February and March 2001. The memorandum containing this calculation was not objected to nor was it tendered on a limited basis. I accept it as evidence that Fubilan incurred significant additional costs in February and March 2001 as a result of its arrangement with JLFS and its use of consultants and that these additional costs were in excess of K400,000. 323 On 25 July 2001 Mr Younger wrote to Mr Fenwick pointing to the additional costs of the OTML Contract of K345,824 for February and March 2001 flowing from Fubilan's purchasing arrangements with Yamil and Limay. He said that Mr Fenwick had failed to secure credits for overcharges raised in the course of those purchases. He pointed out that Mr Fenwick had told the meeting on 21 May 2001 that he had obtained the credits but later told Mr Kroeger that he had not. Mr Fenwick replied on 27 July 2001. His reply was lengthy and not easy to follow. He did say however that Fubilan had not paid "a penny for the goods from John Lewis Food Services". The thrust of the letter seemed to be that the dispute over pricing with JLFS was unresolved. This letter therefore serves to advice that we are now reviewing the management agreement. Copies of the same correspondence had been hand delivered to MRDC on 1 August 2001. Mr Baitia responded on 7 August 2001 acknowledging Mr Poelzl's earlier letter. Mr Fenwick's drafting was apparent in his letter. Transparency/Honesty/Commitment --- all essential components for the "go forward" position as discussed in Brisbane. 2. Your lack of recognition of the technical paper as supplied by us to prove the extent of the problems. Advice received post-Brisbane Meeting highlighted the actions taken to reneg on the outcome. Our shareholders' protection is paramount, therefore, you may be comfortably assured that we had good reason not to sign off on the minutes as presented. 325 On 8 August 2001 Mr Fenwick wrote to Mr Baitia pressing him to expedite the completion of the "internal audit" of Fubilan's affairs and accounts. In order to support this presentation it would be advantageous to complete the outstanding investigative work in Tabubil thereby ensuring Fubilan Catering Services recover all monies rightly due to them. He expressed his confidence that Mr Kolalio would "speedily identify the necessaries to formulate an accurate and substantial dossier for reference by all". This was a reference to the rebate discussion. He alleged that Eurest was retaining a significant benefit by way of supply rebates, credits and other pre-arranged bonuses. Eurest had categorically denied its involvement in any such benefits. He asked Mr Blenkhorn to give consideration to an early meeting with the chairmen of MRSM and Fubilan and with himself at a convenient time. Copies of this letter were sent to Mr Jansma and Mr Wissink. A paper produced for the Fubilan board referred to "past and current experiences with Eurest" and "countless attempts to overcome these problems". Eurest was said to have failed to perform in accordance with the Management Agreement. It had serious problems with the rebating issue. The style of the paper was suggestive of Mr Fenwick's drafting. If those entitlements were "proven in Court" then OTML would have no alternative but to support a change or review of the current management. The paper proposed that McKie & Associates be appointed "to fully remedy the situation of rebates by instituting proceedings against Eurest (Australia) ASAP". Eurest should be given a notice "to remedy the Rebate issue within sixty (60) days" and the "Business Manager (ie Mr Fenwick) and a representative from MRDC to fully brief Barristers in Perth ASAP". Eurest was said to have finally relented with a payment of K20,000 credited to the Fubilan account. He didn't remember the document at all. He had already engaged McKie & Associates to provide advice in relation to JLFS and Eurest. He instructed them on advice from MRDC. In my opinion Mr Fenwick drafted most, if not all, of the board paper. Hence, should this be proven to Court, OTML would have not option but to change or review the current Management. The Fubilan board resolved to authorise Mr Baitia to work with the chairman to recover money due to Fubilan from Eurest. It resolved that the company secretary formally advise OTML of the pending legal action and that every effort be taken to raise Fubilan's concerns about Eurest with OTML. The board also resolved that it should seek the support of the Secretary-Department of Mining to pursue the matter with OTML management. 331 It was put to Mr Fenwick in cross-examination that the purpose of the legal action against Eurest was to force OTML to agree to the removal of Eurest as manager. Mr Fenwick denied this. He said it was necessary to commence court action because Fubilan could not get rebates that were due to it or the balance of adjustments required. I do not accept his evidence in this respect. In my opinion he was actuated by the desire to get rid of Eurest by whatever means it took. The other members of the board were greatly influenced by his views. His role in heightening antagonism between the board and Eurest was illustrated in a letter he wrote to Mr Buretam on 27 August 2001. He told Mr Buretam that Eurest had informed Fubilan on numerous occasions that Fubilan was "going broke" and had threatened to liquidate its business. They had even taken that threat to OTML in May 2000. In cross-examination Mr Fenwick said that these things were true. This exchange in my opinion indicated, as counsel for the respondents rather colourfully put to him in cross examination, that he "wanted to keep pressing the nerve ending". Mr Fenwick was, in my opinion, working to maintain a level of antagonism towards Eurest by members of the Fubilan board so that they would not lose enthusiasm for proceeding against Eurest and terminating the Management Agreement. He advised that Eurest would formulate a reply to the document and forward it in due course. He reiterated his suggestion in the email which he had sent on 4 August 2001 that there be a meeting to discuss the Management Agreement and key areas of interpretation. Mr Poelzl requested that Mr Hayes attend the meeting. He suggested it be set for either 28 or 29 August 2001 in Brisbane or Port Moresby. 333 A response to the Technical Paper was prepared by Mr Armstrong of Eurest on 15 August 2001. In a summary section Mr Armstrong observed that letters from both parties clearly indicated that their interpretation of the Management Agreement was inconsistent. Eurest had been, and still was, willing to meet with Fubilan and MRDC. He asserted that Eurest continue to operate the business as professional diligent managers for Fubilan. In the majority of cases it disputed the breaches of contract alleged by Fubilan. The rebates issue required further discussion. The in-country management fee would not be refunded as Eurest had demonstrated on numerous occasions that it was a legitimate charge. Mr Fenwick had accepted the charges as correct at the Brisbane meeting. Eurest rejected any claim for a refund flowing from alteration of expatriate rosters and the claim for repayment of management fees collected from third parties. Mr Poelzl sent Mr Armstrong's response to MRDC on 21 August 2001. He described the Technical Paper as a deliberate attack on Eurest. He reiterated his disappointment about Fubilan's "turn about" after the acceptance of resolutions reached at the meeting on 21 May 2001. Copies were sent to Mr Blenkhorn of OTML and Messrs Armstrong, Younger and Hayes. JLFS had acted in good faith at all times, relying on an incorrect list provided by Fubilan on 12 April 2001 as evidence that it could offer competitive pricing. It incurred expense negotiating the agreement and it would seek damages against Fubilan. Payment of the outstanding sum of $617,279.16 was demanded within 7 days. McKie & Associates forwarded a copy of the letter to Mr Fenwick who wrote back on 23 August 2001 disputing the Metcash claims. He said that JLFS were aware at all times that goods had to be invoiced to site at prices equal to or better than Eurest's and that failure to do so would result in "Operational complications". Over the months that followed there were numerous meetings in Cairns, Brisbane, Port Moresby and Tabubil with members of Fubilan, MRDC, MRSM, OTML and Eurest. There was no agreement on any common ground to move forward on the contract so ultimately the boards of MRSM and Fubilan resolved to terminate the Management Agreement with Eurest. Some of that history follows. 336 On 27 August 2001, Mr Baitia wrote to Mr Blenkhorn at OTML about a meeting at Tabubil at which MRDC had briefed OTML executive management on Fubilan's concerns about Eurest. There were issues which he believed to be significant financially and which posed threats to the survival of Fubilan as a "fledgling company". First, was the failure of Eurest to pass on rebates to Fubilan. He alleged that Eurest had also breached its fiduciary duty to Fubilan in utilising Fubilan bank accounts for its own purposes and that it had "embezzled funds through duplicate invoicing". To be specific, K 470,000 was received in cash and the balance in adjustments. This was said to be evidenced by the alteration of the expatriate roster, the attempted use of Fubilan bank accounts to finance Eurest operations, slow collection of outstanding debts, untimely submission of billings and non-investment of excess cash. Mr Baitia said that MRDC deplored "in the strongest terms, the unprofessional and unethical management style of Eurest". It was evidently written as part of the process of enlisting OTML's support for the termination of the Management Agreement. 337 On 30 August 2001, McKie & Associates, prepared a Notice of Default addressed to "Eurest (Australia) Support Services Pty Ltd" and "Eurest (South Pacific) Limited". Mr Fenwick delivered the notice to the Tabubil site office. The alleged defaults included failure to pass on rebates and obtaining rewards or payments directly or indirectly in relation to Tabubil Bakery, Bige JV, KCS and the Tabubil Golf Club in breach of cl 2.4 of the Management Agreement. They extended to a failure to exercise due care and skill in performing obligations to Fubilan resulting in additional costs, failure to exercise due care and skill in relation to the value of stock purchased from Poons as at 31 January 2000 and failure to observe a direction from the board of Fubilan in breach of cl 10.2(a)(ii) of the Management Agreement. 338 It appears that at about that time Eurest began to move to a net price arrangement rather than receiving the benefit of any rebates. Mr Michael Hutton of Zenag Chicken wrote to Mr Povey, the Manager Papua New Guinea Operations-Purchasing-Logistics for Eurest on 7 September 2001. He referred to a telephone conversation in which Mr Povey had requested a new net Fubilan price effective 7 September 2001. A price list was attached as a net price with no other discounts or rebates available. This pricing structure will be effective 10 th September 2001. This does not require a full explanation but it would be beneficial to understand that the Tabubil Bakery has purchased on average 1.5 containers of Coke a Cola per month over the nine (9) year term. This equates to Eurest having received K324,000 in rebates which have not been recorded in the Tabubil Bakery accounts at any stage. Mr Younger responded on 19 September 2001 pointing out that Eurest was not privy to any agreement entered into by Fubilan and JLFS. He stood by his contention of overcharging by JLFS. Eurest would not reconcile Yamil's accounts. Yamil's relationship with Fubilan and JLFS was a matter for those parties to resolve. 340 On 28 September 2001, Messrs Kroeger and Younger met with OTML to answer concerns raised at the earlier meeting between MRDC and OTML. Mr Younger expressed extreme concern about the allegations of embezzlement and fraud in Fubilan's letter of 27 August 2001. He accepted that there were some issues of Eurest's administration in the past which had required attention but those aspects had been remedied and "signed off" by MRDC several months previously. Nothing about those issues could be construed as "unlawful". He said he would refer the matter to Eurest lawyers should untrue and scurrilous comments about Eurest's integrity again be made. He referred to an alleged overcharge of K300,000 based on an invoice raised by Eurest for K912,000. He said Eurest was unaware of the invoice or the overcharge. 341 Mr Younger responded to a statement by OTML representatives that they had been informed that Eurest had not produced any profit for 2001, the second year of the contract. He attached a copy of a budget accepted by the board and highlighted the actual operation profit against forecasted budget. The interest paid to MRDC was K553,332. Mr Younger contended that although the year to date figure was unaudited it showed that Eurest had exceeded the budget. Had Fubilan not been purchasing through Yamil and Limay there would have been an additional K326,801 profit to that date to bring the year to date profit to K1,326,740. This represented an excess to budget of K346,228 which equated to 35% above budget. He pointed out that ongoing repetitive expenses were the direct result of Mr Fenwick entering into a business venture without proper care and attention. 342 On 4 October 2001 Mr Baitia wrote to Mr Poelzl and suggested that they meet in Port Moresby on 9 November 2001. He said that the Fubilan board had lost total confidence in Eurest's ability to properly manage its business in accordance with the Management Agreement. In the meantime, on 8 October 2001, Mr Faulkner the General Manager Operations of OTML wrote to Mr Baitia requesting a meeting at OTML's office in Tabubil on Friday, 12 October 2001. He expressed OTML's extreme disappointment about the decline in the relationship between Fubilan and Eurest and required that matters of dispute be resolved properly in the shortest possible time. It contained provisions for dispute resolution which Fubilan had not sought to use. OTML management had tried unsuccessfully to facilitate a resolution by meetings and correspondence. Mr Baitia responded on 8 October 2001 indicating that MRDC management would attend the meeting on 12 October 2001 at Tabubil. 343 Mr Younger sent Mr Buretam finalised audited statutory accounts for the period 1 February 2000 to 31 December 2000. The accounts were audited by Deloittes. For the period mentioned the operating profit for Fubilan before any financing costs or directors' expenses was K972,313. After the deduction of financing costs and directors' expenses the profit reduced to K159,863. Mr Younger also wrote to OTML on 9 October 2001 indicating that Messrs Armstrong, Kroeger and Reisenbauer would attend the meeting at Tabubil on 12 October 2001 "with a positive attitude and a goal to stabilise our relationship with both OTML and Joint Venture Partners". 344 Mr Buretam acknowledged the receipt of the audited accounts in a letter dated 12 October 2001. He stated that it was regrettable that the audit process had taken an unacceptably long period of time to complete. He said the board would not accept the draft audit in its current form and would require a completion of the internal audit conducted by Mr Kolalio. 345 A meeting was held on 12 October 2001. Messrs Faulkner, Jansma, Blenkhorn, Moyner and Musio were present from OTML. Messrs Baitia, Yalapan, Kolalio and Ms Hobart represented MRDC, Messrs Buretam and Fenwick represented Fubilan and Mr Menim represented MRSM. Eurest was represented by Messrs Armstrong, Kroeger and Reisenbauer. Early in the meeting Mr Baitia told Mr Faulkner that he did not want to discuss the catering contract as OTML had no intention "of dismissing Eurest". Mr Faulkner reiterated that Eurest would not be terminated. Mr Yalapan also said that MRDC wanted Eurest terminated. Mr Buretam warned OTML that if it did not fix the problem, it would have big problems. This was its last warning. The landowners had invested K4 million and all they had was a problem. Mr Yalapan said that Fubilan intended to commence litigation against Eurest and wanted full settlement of all past claims. There will be civil and criminal actions. It would define the responsibilities of MRDC, Fubilan and Eurest. Mr Yalapan assured everybody that the proposed litigation against Eurest would commence on 1 December 2001 unless some form of satisfactory negotiation had occurred. Despite his name appearing on the notes of the meeting Mr Fenwick did not think he had attended. I accept that the meeting was unproductive. 346 On 13 October 2001 Mr Younger wrote to Mr Boas providing, as requested, an overview of charges raised by Eurest for interest on operational funds provided for Fubilan in the initial stages of the OTML Contract. Finance for the OTML Contract had not been forthcoming as stated in the tender document. To ensure that the company remained solvent, Eurest had continued to pay operating costs. He supplied documentation covering the issue. He said that in June a commitment had been made at an MRSM board meeting to pay Eurest the moneys outstanding within two weeks. Eurest had agreed to reduce its then accumulated interest to K50,000 but the funding was not received. Eventually, in July, Eurest agreed to charge K50,000 up to the end of June and 2% less than bank interest until the debt was paid. 347 Mr Fenwick wrote to Mr Younger on 14 October 2001 about the operational report. He referred to "regular problematic misrepresentations conveyed by yourself". He instructed Eurest to hold the line on JLFS and not to pay any JLFS invoices until advised that correctly priced invoices had been received. 348 On 15 October 2001 Mr Faulkner wrote to Mr Buretam about the meeting of 12 October 2001 and restating OTML's commitment to the success of the contract. OTML was quite satisfied with the level and quality of service provided by Fubilan through Eurest and did not want to see that situation jeopardised. Under the OTML Contract, OTML, Fubilan and Eurest were bound together. Much of the difficulty between them arose from the lack of clarity in their responsibilities and reporting relationships. OTML was prepared to provide resources to draft a Corporate Manual and facilitate agreement between Fubilan and Eurest. It was of vital importance that Mr Buretam, as chairman, and the board of Fubilan should take an active role in the process so that they had a clear understanding of the workings of the business in which their shareholders had invested. This was a clear indication that they should not leave it all in the hands of Mr Fenwick. Mr Faulkner said he would be pleased to meet with the board of Fubilan or MRSM. Mr Buretam responded on 16 October 2001, laying blame at the feet of Eurest. He accused OTML of seeking a way forward without addressing the core problem. He rejected the proposition that their dispute had anything to do with clarity of responsibilities and reporting relationships. He accused Eurest of fraudulent conduct. He said that the MRSM and Fubilan boards were willing to discuss current and future local business development plans provided that their gestures were viewed "in a professional and unbiased business attitude". 349 Mr Poelzl wrote to Messrs Baitia and Yalapan on 26 October 2001 repeating Eurest's request and invitation to MRDC to meet to discuss issues currently outstanding between them. He rejected the claim that at the meeting on 21 May he had denied knowledge of the rebate issue. He referred to the draft minutes of the meeting which, he said, clearly stated he did acknowledge early payment discounts and further commented on why they had not been afforded to Fubilan. 350 On 8 November 2001, Mr Poelzl wrote to Mr Baitia stating that MRDC's determination to seek Eurest's termination rendered a meeting pointless. There was no legitimate basis for MRDC or Fubilan to seek termination. Fubilan had met its budget for the first year of operation and was operating well in advance of its budget for its second year. We hasten to add that the amount of early payment discounts does not even come close to the percentage being quoted by MRDC. Upon receipt of a statement of a positive position, Eurest would willingly arrange to meet with MRDC. They would also be brought to the attention of the Fubilan board. Many of the financial issues raised in the previous audit had resulted from erroneous and double payments. The most recent audit was concentrated on all large payments made to suppliers to ensure that they were proper. The site accountant had done a very good job of ensuring that duplicate payments did not occur. However, because of the way in which Eurest (Australia), Eurest (South Pacific) and Eurest (Lae) charges were billed, the tendency to make double payments had been high. He had noted incidences of the same charges being communicated to site through invoices, correspondences and journal entries. He gave examples. One was the management fee. He said charges for the months of February 2001 to April 2001 were paid twice resulting in a double payment to Eurest of K104,029.99. These however were subsequently recouped through deductions on subsequent payments to Eurest. Expatriate salaries for the pay period ending 31 January 2001 were paid twice. The board of Fubilan would formally request a cheque for K74,249.93 plus three months interest from Eurest. Expatriate staff were said to have been taking advances from Fubilan which were repaid through salary deductions. Such advances should not be allowed. Staff travel costs were high given the number of staff travelling on breaks and leave. He claimed Mr Reisenbauer had incurred excessive travel costs including a sum of over K10,000 for a single trip. He sought an explanation. Stock receipts showed that for the period January 2001 to October 2001 "a huge amount of stock" had been short supplied. Fubilan could not be liable for the charges on stock it had not received. He sought reimbursement of K119,758.47. This was net of "stock received" and "over received" from overseas suppliers. He also referred to expenditure control. In connection with the management of bank accounts, a sum of K1,500,000 had been placed in an interest bearing deposit with the BSP Bank. That deposit, however, had been liquidated and the funds transferred to operating accounts to meet creditors' liabilities. He complained that the withdrawal was done without the knowledge of the Fubilan board. It was not necessary because there were sufficient funds to cover maturing obligations. It represented careless financial management. Mr Kolalio referred to proper management of the cash flow. There were insufficient checks and management supervision at the warehouse. Purchase orders had been used without carbon copies to back up procurement. However, the existence of same problems only indicates a lack of urgency on the part of the management to take corrective action. A schedule of the total claim will also be presented to management together with the notes on the systems. On 7 November 2001 Mr Baitia wrote to Mr Vale referring to a telephone conversation "in relation to the opportunity and assistance by Niolam to provide supportive management services to Fubilan Catering Services". He suggested that Mr Vale meet Mr Fenwick at Crowne Plaza Hotel in Port Moresby. That meeting took place on Saturday 10 November 2001. A memorandum from Mr Vale to Mr Fenwick of 11 November indicated his understanding that it was Fubilan's intention to remove the incumbent caterer by the end of November and that Niolam should be ready to take over the management of the contract "at a moment's notice". Fubilan would be responsible for payment of accounts. Fubilan and Niolam had agreed that Karma Foods would be the agent for all supplies except local produce procured on site. Fubilan would give Niolam a letter of intent that basically stated that subject to agreement with OTML and the removal of Eurest, Fubilan would appoint Niolam as managers of the Fubilan Catering Contract. A fee structure had not been established. The letter was to be signed by Mr Baitia. It complained about OTML's failure to attend to Fubilan's concerns about the performance of Eurest. The opportunity to rectify these difficulties has been offered without recognition, we remain frustrated and our patience is diminishing rapidly. The Board of Fubilan Catering Services through MRDC have provided instructions for the termination of Eurest forthwith. Should OTML not support the removal of Eurest in these circumstances it may place Fubilan Catering Services with the prospect of facing a protracted legal battle in the Courts. This is unethical and immoral, for OTML to protect an Off shore contractor who has knowingly stolen monies from the Land owners. Alternative managers had been approached. Niolam was a fully accredited service provider. Mr Fenwick was cross-examined about the draft letter. He repeatedly denied that he had drafted it. Yet it was plain on the face of the covering document that he was sending it to Mr Baitia. It was his style of writing. It represented an attempt on his part, through Mr Baitia, to exploit political concerns about the position of landowners and their relationship with a large mining company to advance the cause of terminating the Management Agreement with Eurest. 354 On 14 November 2001 Mr Fenwick sent a memorandum to Mr Baitia of his meeting with Mr Vale on 10 November 2001. He said, inter alia, that Niolam was awaiting instructions for the next move which at that stage should be Wednesday 21 October 2001. He wrote as though the termination of Eurest and the takeover of its functions by Niolam was a fait accompli. He observed that Mr Kolalio had not consulted with Eurest management at Tabubil and if he had done so most of the issues he raised in his report would have been explained. There were internal control systems in place to control food issues from warehouse, contractor meal ticket and purchase orders. They were consistently reviewed and upgraded. 2. An inadvertent double payment to which Mr Kolalio referred had been discovered and a credit raised immediately. A credit had also been raised for the double payment of expatriate salaries for January 2001 and a copy of the credit given to Mr Kolalio in Tabubil before he wrote his report. No expatriate staff advances had been made through Fubilan accounts since 1 November 2000. All subsequent advances were through a Eurest account. 3. All expatriate staff returned to Australia on rest and recreation leave and the amount varied according to the fluctuation in the exchange rate. 4. Spreadsheets relevant to stock receipts compiled from warehouse information showed that Eurest was owed K1,398.91 by Fubilan for oversupply. Fubilan was owed K100,240.73 by Yamil in respect of goods ordered without reference to Eurest. Lamberts had short-supplied K22,760.85 worth of food and a request for credit had been raised. 5. Expenditure control was in hand. He responded to particular matters raised by Mr Kolalio. The Bakery would be charged for photocopying and fax services. Eurest did not control the Golf Club. 6. Bank accounts --- surplus funds of K1,500,000 placed in an IBD for three months. Eurest was no longer paying for Fubilan local and overseas goods and reinvoicing Fubilan. Fubilan was now paying Eurest who would then pay suppliers. The funds in the IBD were required to pay local and overseas suppliers over 30 days. 7. He rejected Mr Kolalio's statements in relation to cash flow management. Payment from OTML would not have covered Eurest's liabilities at the time. 8. Warehouse management --- management was present at the warehouse on a daily basis. 9. All Fubilan purchase order books were self-carbonating in triplicate. He was not cross-examined on it. Some other documents were tendered subject to express limitation as to the purposes for which they were tendered. So far as it stated matters of fact apparently based on his own knowledge or upon an examination of the records of Eurest, it may be received as evidence of those facts and particularly matters relating to payments, stock receipts, expenditure control, bank accounts, warehouse management and purchase order books. He requested OTML support "to terminate Eurest forthwith". He advised that Eurest would be served with a notice of termination on 29 November 2001. He indicated that Niolam was Fubilan's preferred replacement manager. Lengthy discussions with Niolam over the past two months had provided the Fubilan board with genuine commercial comfort. He believed that, subject to Eurest agreeing, there was an opportunity to discuss an out-of-court settlement relieving Eurest from further litigation. Copies of this letter were sent to the Minister for Mining, the OTML General Manager-Operations, Mr Faulkner, to MRDC and to other officers of OTML. 358 On 26 November 2001 Mr Higgins replied to Mr Buretam. He noted that the letter was received by OTML that morning following a blockade of the Mine Access Road on the weekend. This was a blockade which he attributed to Mr Buretam and people associated with him. He spoke of the confrontational approach that Fubilan had taken from the outset to both Eurest and OTML. He referred to the tender history. In this he was inaccurate for he suggested that Fubilan had submitted a proposal which was commercially and technically unsatisfactory, that the winning bid had been submitted by Eurest (presumably a reference to the Poons' bid) and that rather than accept the Eurest bid OTML arranged for Eurest and Fubilan to resubmit jointly. I remind you again of Clause 6 of the Special Conditions of our Contract with FCS (Contract OTML 99046). This condition permits termination of the Management Agreement between FCS and Eurest only with the written permission of OTML. Should FCS terminate the management agreement with Eurest without the consent of OTML, then the FCS contract is immediately subject to termination. OTML would then seek new proposals from all interested parties in open competitive bidding. He was therefore aware that if Fubilan purported to terminate without the consent of OTML it would render the OTML Contract subject to immediate termination. 359 On 28 November 2001 Mr Poelzl wrote to Messrs Baitia and Yalapan suggesting a meeting on 6 December 2001 between representatives of Eurest, Fubilan, MRDC and OTML in Sydney. Eurest was prepared to meet travel and accommodation costs for up to three delegates representing MRDC and Fubilan. The major strain on the business relationship was the question of rebates. Eurest proposed to table and discuss its recent detailed investigation into that issue in order to clear up any misunderstanding. It recited the Notice of Default of 30 August 2001 and Eurest's alleged failure to remedy the defaults set out in it within 60 days of service of the notice. It recited that OTML had approved the termination of the Management Agreement by Fubilan pursuant to the terms of the Contract. It appears that another Notice of Termination was drafted without the inclusion of any provision for OTML to sign. At the date that the Notice of Termination issued, the Secret Commissions Act 1905 (Cth) to which it referred had been repealed. It was repealed with effect from 24 May 2001 by the Criminal Code (Amendments Theft Bribery and Related Offences) Act 2000 (Cth) (No 137 of 2000) Schedule 2 Item 365. Astonishingly, the applicants' solicitors and counsel persisted with the claim up until the trial of these proceedings. 361 A meeting of the Fubilan board took place at 2pm on 29 November 2001 at Tabubil. Mr Baitia presented an overview of events relating to Eurest's alleged mismanagement of Fubilan "as revealed by the recent audit conducted by Ronald Kolalio". He said that Eurest had been given ample time to fix the problem with respect to rebates received by Eurest. He advised the termination of the Management Agreement. Mr Yalapan claimed that "corporate fraud and mismanagement" had been evident. He acknowledged that Fubilan was profitable but that Eurest retained "by other means FCS profits". The board resolved "... to move the motion of terminating Eurest" [sic] and to "appoint Niolam Catering Services as replacement of Eurest". According to the minutes the meeting closed at 4.30pm. It appears, however, that the Notice of Termination was served at about 3.30pm. 362 Mr Kroeger and Mr Reisenbauer prepared a file note of what passed at the Eurest office. According to the memorandum Messrs Fenwick, Baitia and Uglinga came into the office and said "sorry that we have to do this but this is the termination notice of the management contract between FCS and Eurest.". Fenwick acknowledged that this was the case and said there is no denying that you guys have managed very well. Bill then outlined that this is their decision and they have the right to terminate the contract. He then pointed out that they had the right to take over management immediately but they will be coming tomorrow morning to introduce the new manager which will be NIOLAM under Colin Vale, and the new project manager will be Gus McKenzie. They pointed out that it was not signed by OTML but that does not matter since FCS own the contract and Samson is talking to Roger at this moment and we should have OTML's approval shortly. He told Messrs Kroeger and Reisenbauer that Eurest staff had 14 days to leave site, that they would be talking to some people and if they wanted to stay on, they could stay on. Everything had to be in place to mobilise a complete team within 24 hours. On two further occasions it was recorded that Mr Fenwick acknowledged that Eurest had managed the contract well and profitably. 363 Mr Fenwick agreed in cross-examination with the substance of the record of his comments. He said that he did not think that Fubilan would get OTML's approval. He appeared to suggest in cross-examination that by saying at the Eurest office that Fubilan should get OTML's approval shortly, he had meant that OTML ought to give its approval. His responses in this respect were not credible. It was put to Mr Fenwick that he had engineered the whole procedure to try and bluff OTML. He denied that. He said it would have been an absolute waste of time as he knew OTML too well. If by this, he meant, that he did not believe that OTML would ever approve the termination, then his promotion of the appointment of Niolam as Eurest's replacement would seem to have been pointless. The most likely explanation is that he was endeavouring to pressure OTML into accepting Niolam as a replacement for Eurest. 364 Mr Baitia sent a letter to Eurest (Australia) on the same day enclosing the Notice of Termination of the Management Agreement. Mr Buretam wrote to Mr Higgins. He said that Fubilan could not and would not be forced to do business with a party that institutionalised and executed dishonest business practices. The OTML Contract was "owned by FCS". He attached the Notice of Termination and appealed to OTML to endorse it. He rejected the proposition that the OTML Contract was subject to termination by OTML. He advised that arrangements were in place for Niolam to be "deployed immediately" as replacement managers. Immediately after their discussions, Mr Higgins sent Mr Buretam a letter. He said that OTML accepted that the relationship between Eurest and Fubilan had broken down and was probably not recoverable. The breakdown was their responsibility. The relationship between OTML and Fubilan was also very poor although hopefully recoverable. OTML would not sign the Notice of Termination. It insisted that proper contract procedures were followed. I look forward to hearing from you as soon as possible that this arrangement is acceptable to FCS. As Chairman of Fubilan Catering Services Limited I wish to express my delight that OTML have recognised the problems that we are experiencing with our managers, Eurest. Your offer to use best endeavours between now and 1 st February 2002 is accepted. We look forward to the first of these meetings on 11 th December 2001 as agreed with Mr Keith Faulkner on 30 th November 2001. They stated that Eurest did not accept that the direction was valid and requested that the bank not allow funds to be withdrawn on the account until further notice. Confirmation of the change came in a letter dated 5 December 2001 from Westpac in Port Moresby to Mr Yalapan. The signatories for the two relevant accounts were to be any two of Messrs Buretam, Fenwick, McKenzie, Uglinga and Baitia. Mr McKenzie was Mr Gus McKenzie who was brought to Tabubil under the proposed arrangements with Niolam which was to take the place of Eurest. Mr McKenzie was to be the new project manager. 367 A meeting was scheduled for 11 December 2001 between OTML and Fubilan to open discussions about their ongoing business relationship. In a letter dated 10 December 2001 to Mr Baitia, Mr Higgins said that the purpose of the meeting was to allow both sides to place on the table the issues that must be addressed if the contract were to continue. They had until 1 February 2002 to see if they could address the issues to everyone's satisfaction. If the contract between OTML and Fubilan could not be performed in accordance with its terms, it would be of no worth and should be terminated. Mr Higgins attached a letter giving notice of breaches of the OTML Contract by Fubilan. I draw your attention to Clause 7.1 and 8.7 of the Contract, which allows OTML to exercise veto over the employment by FCS of particular persons in the performance of the Contract. Please be advised that Mr Fenwick is not welcome at meetings that are intended to create a satisfactory contractual relationship between OTML and FCS. Fubilan's purported termination of the Management Agreement. The roadblock arranged by the Fubilan managing director, Mr Buretam, on 25 November 2001. 3. Unauthorised procurement of food supplies. The proposed meeting was rescheduled to 14 December 2001 in Port Moresby. On 12 December 2001 the court ordered that Fubilan direct Westpac Bank-PNG Ltd to restore Messrs Bond, Povey, Rotor, Kroeger, Reisenbauer and Trapett of Eurest as co-signatories to the two relevant accounts at Westpac. The order was made "returnable before the Court" on 17 December 2001. Minutes were prepared by OTML. They recorded the attendance of Messrs Faulkner, Blenkhorn and Jansma from OTML, Messrs Baitia and Yalapan from MRDC and Mr Buretam from Fubilan. The OTML representatives stated that the contract would remain with Fubilan and would continue to be managed by Eurest. If Fubilan could not work with Eurest, OTML would have no alternative but to terminate the OTML Contract and re-tender the catering requirements. It had no reason to remove Eurest based on the accusations and information supplied to it by Fubilan. The MRDC representatives said that the situation could be "workable" but that further discussion was needed to move forward under the current contractual arrangements. The OTML representatives stated that in re-tendering the contract the selective contractor pre-qualification criteria would be enforced and that Fubilan might not meet those criteria on the basis that it had not successfully managed the current contract. 371 It was OTML's position that Mr Fenwick should not have any further involvement in Fubilan's relationship with OTML and Eurest. OTML could, at its discretion, veto his employment under the provisions of the OTML Contract. Nor should Mr Uglinga be involved further as he had a conflict of interest in relation to Fubilan. 372 Mr Faulkner emphasised the immediate need for the "Corporate Manual" which was to have been produced by Eurest to be agreed and utilised by both parties. OTML would assist Fubilan in producing the manual as a platform to build on and define the requirements and responsibilities of the parties to allow Fubilan and Eurest to work successfully together. He also canvassed the possibility that OTML fund and undertake an investigative audit into the accounts of Fubilan and Eurest to determine whether breaches of the management and financial responsibility in relation to the OTML Contract were occurring. If that were to be done, Fubilan would have to abide by decisions OTML took about the outcome of the audit. If Eurest were found to be substantially at fault, OTML would authorise termination of the Management Agreement. 373 A copy of the minutes of the meeting of 14 December 2001 were sent to Mr Baitia on 20 December 2001 by Mr Faulkner. He said in his covering letter that he had initiated the process of developing the Corporate Manual through OTML's Business Development Department. I accept the minutes as a substantially correct record of what occurred on 14 December 2001. He complained about OTML's refusal to support Fubilan in disciplining Eurest and trying to prevent Eurest from mismanaging landowner funds. He referred to OTML's refusal to endorse the Notice of Termination. He said that frustration by landowners continued and had reached a stage where the Minister responsible needed to assist to resolve the matter. The brief proposed an amicable resolution that would allow Fubilan to change Eurest and put in place a reputable manager "like Niolam Catering Services". Mr Kakaraya recommended that the Prime Minister remind OTML of its obligation under the 1991 MOA and the Ok Tedi Mining Agreements and direct it to comply with those commitments, that he direct OTML to endorse Fubilan's appointment of a new contract representative on site and that he direct OTML to put in place a system to phase out Eurest over the next two years beginning 1 February 2002. A copy was sent to the Minister for Mining. This left a gross profit of K4,085,402 together with operating income of K798,981. Administrative expenses were K2,062,534 with a profit of K2,821,849. Directors' fees totalled K650,605, finance costs K829,999 and the incentive fee payable to Eurest, K810,925. The profit before tax was K530,320 and the net profit after tax was K408,121. For the year 2000 there had been a net loss of K113,699. You are just the employee. I am the owner and Boss of this Company. Don't act, as you own this contract. It was not written by Mr Fenwick. Mr Kroeger responded on the same day pointing out that because one vehicle was being refurbished Fubilan was down one. Eurest had a responsibility to ensure there were sufficient resources on hand to fulfil the contract with OTML. There was nothing personal about his dealings with the board and whenever there was a spare vehicle or personnel to carry out Mr Buretam's requests those requests had been fulfilled. His successor, Mr Daniel Kakaraya, met Mr Fenwick in Port Moresby in the second week of January 2002. Mr Fenwick wrote to him after the meeting in a letter dated 21 January 2002. Eurest have only one gate available and that is to hide unde OTMLs skirt and taking protection from the client, at the same time detracting focus from the real issues. There remains little to add that has not already been argued and proven. Mc Kie & Associates (FCS lawyers, Australia) are presently preparing a Notice in draft to be served on Eurest Australia. This Notice will have specific emphasis on the retainment (by Eurest) of secret commissions or rebates. OTML believe that FCS should take this action to Arbitration/Mediation as per the Management Agreement. FCS are advised that Eurests actions are leaning on criminal repercussions and should rely on the Courts to decide the outcome and not a Arbitrator, criminality and contract disagreement are a mile apart. His proposed solution was that OTML terminate the contract on the basis that it was untenable in its current form and that Fubilan commence working a pre-tender schedule with Niolam and continue with litigation against Eurest. He listed a variety of alleged business opportunities lost because of Eurest, moneys recovered from Eurest to that date, moneys retained by Fubilan and adjustments required. He set out what he described as "current agreements" to which Fubilan was a party. He accused OTML of misleading the courts in April 2001 by advising that it was Eurest's responsibility to purchase goods for and on behalf of Fubilan and that this had created a "mine field of perplexing probable situations". This is not simply a compendious issue relating to rebates, it relates to partnership, commitment, honesty, transparency and all the other tantalising offerings promised by Eurest. He responded that Mr Kakaraya's assessment had already been poisoned by his executive manager, Michael Baitia. He said he was presenting a case to the managing director. The letter speaks for itself. It illustrates Mr Fenwick's unwillingness and indeed incapacity to offer the kind of calm and detached advice which was required in these circumstances. Mr Poelzl attended with Messrs Armstrong, Younger and Kroeger from Eurest. Mr Faulkner attended from OTML. When Mr Fenwick arrived with Fubilan board members, Mr Faulkner refused to continue the meeting in his presence. The meeting with the full board did not take place. Mr Poelzl nevertheless went ahead with a power point presentation to Messrs Yalapan and Baitia. Mr Yalapan was very agitated at the beginning of the presentation and accused him of having lied about the question of rebates. Mr Poelzl said that while Eurest did not have to account to Fubilan for its rebates it had in any event set off rebate benefits against the interest it had paid on the capital needed to run the catering contract from its commencement in 2000. He offered to settle the dispute on the rebate by waiving the claim for outstanding interest and to pay Fubilan K600,000. He said that following his presentation Mr Yalapan said he now understood what the position was and apologised for his outburst at the start of the presentation. According to Mr Poelzl, Messrs Baitia and Yalapan said that his financial calculations about rebates would be checked by Sarah Ellis, an accountant employed by Fubilan. In the event that checking did not take place. 380 In his presentation Mr Poelzl pointed out that Eurest had given Fubilan the benefit of a K2 million, six week interest free loan for goods and a 40% discount on some stocks at hand over. It had funded working capital. Fubilan had had no funds for wages or for paying suppliers on normal commercial terms. Eurest took the initiative in asking OTML for an advance payment. There were mobilisation accounting errors which were rectified. He set out in a slide under the heading "Commercial Issues", a calculation of interest costs against credit payment terms. Eurest's funding had incurred a net cost of K1,022,000. Credits received by Eurest in PNG after payment of K104,000 to Fubilan netted K256,000. Credits received in Australia totalled K306,000 making an overall total of K562,000. When that was subtracted from the net costs of Eurest's funding there was a balance owed to Eurest of K460,000. That is to say, in commercial terms, Eurest believed that it had contributed approximately K460,000 to Fubilan. 381 Mr Poelzl proposed, in relation to rebates, that there should, in future, be net pricing purchases for PNG and that primary rebates in Australia should go to Fubilan if payment terms could be met. Eurest would no longer deal with Mr Fenwick. The previous year's audit had to be signed and six monthly audits should be implemented. He made the point that the direct purchasing experiment by Fubilan using the Yamil/Limay arrangement would have incurred costs over a period of twelve months of K1,642,000. By effectively stopping direct Fubilan purchases Eurest had saved it K1,642,000. Eurest had contributed K460,000 by way of net interest in funds used by Eurest to purchase supplies in the earlier stages of the contract. It had therefore helped Fubilan to save a total of K2,102,000. His evidence as to what passed at the meeting was not the subject of cross-examination. Mr Yalapan's evidence-in-chief characterised the power point presentation as involving an admission that Eurest had been receiving rebates. He had called Mr Poelzl a liar. He also claimed to have said to Messrs Armstrong and Younger that they had heard Mr Poelzl say there were no rebates. As a result of the Cairns meeting he had no trust or confidence in Eurest. Mr Baitia also said in his witness statement that Mr Poelzl admitted during the power point presentation that Eurest had been receiving rebates that had not been passed on to Fubilan. Mr Armstrong's evidence-in-chief about the meeting was brief. He said the presentation was given by Mr Poelzl in the presence of himself, Messrs Yalapan and Baitia. Mr Younger was excluded to ensure there were only two Eurest and two Fubilan/MRDC representatives present. Mr Faulkner joined the meeting at the end. He described the outcome of the presentation as identifying only a few matters then still in dispute between Fubilan and Eurest. These related to the audit of Eurest cash flow costs, PNG payment terms and rebates and Australian payment terms and rebates. MRDC was to carry out its own investigation of Yamil and Limay arrangements and to advise of any rebates due and Mr Yalapan to advise of any outstanding operational matters, sign off statutory accounts and review and approve the Corporate Manual/statutory audit for 2001. Following the presentation Mr Poelzl directed him to ensure that Eurest's purchases of food stuffs under the Management Agreement would be on a net/net with no rebate. As Mr Armstrong put it, this meant that Fubilan received, from February 2002, the full benefit of whatever rebates would have accrued to Eurest. 382 I accept the evidence of Mr Poelzl and Mr Armstrong as to what occurred at the meeting. I do not regard Mr Baitia and Mr Yalapan as reliable witnesses on the issue of what was said in relation to rebates, particularly having regard to the differences between their evidence-in-chief and their evidence in cross examination in relation to the Brisbane meeting. There was a difficulty with a number of the Fubilan witnesses that they were so affected, during the events of which they spoke, by Mr Fenwick's relentless campaigning that their detailed recall in that context could not be relied upon. This was reflected in the tone of their correspondence and internal memoranda. 383 On 6 February 2002 Mr Poelzl wrote to Messrs Baitia and Yalapan attaching the content of his presentation with some explanatory notes and backup documentation. He expressed Eurest's concern that figures submitted to MRDC might be made available to Mr Fenwick and used to find competitors to the business of Fubilan and Eurest. He requested that MRDC conduct its own investigation and exclude Mr Fenwick from it. This followed advice from Mr Yalapan that the resolutions of the previous meeting should remain on the record. The board also resolved that KPMG accountants be engaged to undertake an independent audit of the company's operations and that the sum of K30,000 be authorised to pay for those fees. Mr Baitia presented a report on the Corporate Manual. He said that basically the manual was highlighting clauses in the Management Agreement. He advised the board to read through the draft manual and advise management of any changes required in it. The proposed manual would be further considered by the next meeting of the board. He also presented the operations report on Fubilan prepared by Eurest. A meeting to discuss the manual took place on 25 March 2002. Messrs Buretam, Yekim, Kaiyakim, Musolok and Itulam attended from Fubilan. Mr Menim and Mr Asekim represented MRSM. Mr Kroeger attended for Eurest together with three officers from OTML and Mr Crane. The meeting concluded with a commitment by the Fubilan and MRSM boards to hold a joint meeting to ratify the manual. The meeting was postponed with a tentative date being fixed for 26 April. Mr Crane wrote to Mr Buretam on 23 April 2002 indicating that he had received no instructions from the Fubilan board that the intended meeting was to proceed. He expressed his disappointment with the apparent unwillingness of the board to reach closure on the matter of the Corporate Manual. In the event, the manual was rejected by the Fubilan board. So we wouldn't sign. They referred to earlier correspondence of 3 April 2002 from McKie & Associates. They said that if Fubilan wished to pursue mediation in relation to the dispute it should follow the procedures laid down in the Management Agreement and in particular cl 17. Clause 17 provided for a dispute resolution mechanism involving an expert determination before recourse to arbitration. On 13 May 2002 McKie & Associates responded to Phillips Fox seeking a formal mediation of issues between Fubilan and Eurest rather than an expert determination. They stated, inter alia, that the allegations raised by their client related to fraudulent and/or criminal conduct by Eurest (Australia), Eurest and by officers, agents and employees of both entities in PNG and in Australia. They added that the relevant parties in relation to the allegations extended beyond the parties to the Management Agreement. There was therefore no agreement between all relevant parties to settle the dispute by expert determination or otherwise. Fubilan was not prepared to go through the dispute determination provision under the Management Agreement but wanted to take the matter out of PNG and bring in allegations of criminal conduct for the purpose of pressuring OTML to accept the termination of Eurest. Mr Fenwick denied these propositions. It is hard to escape the conclusion that this was the strategy being pursued by Mr Fenwick and ultimately by Fubilan. The determination to pursue the matter in Australia rather than in PNG, to avoid the expert determination process, to raise allegations of criminal conduct the function of which in the context of the civil proceedings was not clear, and the joinder of the UK holding company, all point to a litigious process designed to maximise pressure and extract a settlement rather than deal with the matter under the alternative dispute resolution mechanisms of the Management Agreement in a commercially sensible way. Mr Kroeger presented the 2001 operations report. Management accounts for the quarter ended 31 March 2002 were also presented and showed a profit for the quarter of K1,181,856. The net assets of the company at that point were K13,493,480. In the course of the meeting Mr Buretam expressed concern about MRDC management's incompetence reflected in its failure to attend to Fubilan's affairs on a fulltime basis. The audit proper commenced with site visits by Gillian McTernan of KPMG to Tabubil and Lae in June 2002. It was not without incident. There was an exchange of solicitors' correspondence about whether Eurest was attempting to interfere in the conduct of the audit. Allegations to that effect raised by McKie & Associates were rejected by Phillips Fox on behalf of Eurest. There seems to have been nothing in them. It appears that Mr Fenwick endeavoured to have some involvement in the KPMG audit. He agreed in cross-examination that he had put together folders of documents and marked them up for the assistance of the auditors. That is not to say that KPMG took any notice of them. However it is clear enough that Mr Fenwick and the board regarded the KPMG audit report as a potential weapon in their dispute with Eurest. 389 The Fubilan board met on 12 July 2002. Ms McTernan outlined her progress. She anticipated that a final report would be ready by the end of July or early August. The board resolved that KPMG complete its audit within a month. There was discussion about Fubilan acquiring the contract to provide catering services to the PNG defence force barracks. Eurest was the current provider of those services. Mr Yekim advised the board to wait for the KPMG report. Once Eurest was "exposed" Fubilan could target the army barracks contract. 390 An MRSM workshop was conducted at Madang on 24 June 2002. Mr Fenwick prepared a presentation for it which recited complaints about Eurest and JLFS. It listed what he called "outstanding adjustments to be confirmed by KPMG report". These included rebates in excess of K1 million on Australian purchases by Eurest and the same figure for PNG purchases. He referred to a sum of K1,200,000 not paid to JLFS on the basis that JLFS had failed to produce correctly priced invoices. An incentive fee of K800,000 claimed by Eurest was also included as an adjustment. This appeared to be premised on non-payment of the incentive fee to Eurest. Pending litigation against Eurest (Australia) was to await the KPMG report. Mr Buretam wrote a letter on 18 July 2002 to Mr Martin Painning, the General Manager of that Department, entitled "NO INTERFERING AND INSTIGATION". He told Mr Paining he should stop "instigating problems and interfering with the landowners with regards to MRSM or FCS business". He warned him and his officers against "implicating Mr Bill Fenwick and MRDC" saying that this was detrimental to Fubilan. The letter was highly critical of OTML. I accept, having regard to the phrasing of the letter, that Mr Fenwick did not draft it. He said in cross-examination that he did not know what was behind it and only received a copy well after it had been sent. Mr Paining wrote back to Mr Buretam on 22 July 2002 saying that the shareholders of MRSM and Fubilan had asked OTML Business Development to assist them in relation to the exercise of their rights as shareholders because no information was reaching them about their business affairs. He pointed out that the shareholders had rights under Companies legislation and had waited "long enough to exercise their rights at Annual General Meetings and that has not happened since MRSM and FCS were incorporated". He told Mr Buretam he had a moral and legal obligation to allow shareholders to exercise their rights at annual meetings. Localisation of Training position in October 2002 as Leanne Broadbent has resigned with effective [sic] 27 July 2002 and Mark Mondoro will take over that position once he has obtained Certificate 4 assessment course. 2. The further localisation of an expatriate Chef Supervisor position in April 2003. 3. Retain the following expatriate supervision positions to close of contract to ensure proper service and training. a. A proposal for the development of such a system had been submitted to Fubilan in September 2001. It involved a thorough review of its current business processes, the design, development and implementation of an internationally recognised and acceptable quality management system and certification of the system as compliant with the ISO9000:2000 series of Quality Standards. The objective of the project, according to the letter from JSE Management was to position Fubilan so that it could assume responsibility for the management of its own affairs. It was proposed that the project commence on 2 September and be completed and the system receive certification by 8 December. The letter attached an implementation schedule. Personnel proposed for the project comprised Mr Jon Macindoe as project manager, Mr Paul Macindoe for quality management systems design and documentation, Mr Gus McKenzie for implementation and training and Mr Ern Payne for training and system design. Mr McKenzie was said in the letter to have had more than 20 years experience in the catering industry and to have previously worked closely with nation wide catering services in PNG and the south-west Pacific region. Mr McKenzie had been involved with Niolam, Mr Fenwick's replacement choice for Eurest and had come to Tabubil at the end of 2001 as the proposed project manager for the post-Eurest OTML Contract. 394 Mr Younger sent a letter to Mr Buretam on 14 August 2002 saying that Eurest had become aware that Fubilan wanted to implement a quality management system. Eurest reserved the right to be responsible for any implementation of the system. It had fully trained and competent personnel to carry out that task. Mr Baitia wrote to Mr Younger on 15 August 2002. He said that before engaging the consultants Fubilan had advised Mr Kroeger who had agreed with the arrangement. The consultants had been engaged without any financial assistance from Fubilan as Eurest controlled Fubilan's funds. The European Union could provide the business assistance to enable the exercise to go ahead. He said that the exercise would be of benefit to Eurest. 395 In a letter dated 16 August 2002 to Mr Boas at Fubilan, Mr Faulkner said that he had told Mr Buretam on 14 August 2002 that the implementation of the quality management system was a matter between Fubilan and Eurest provided that the third parties engaged in the task were acceptable to OTML. He said that Mr Buretam was well aware that Mr Fenwick and persons or organisations associated with him were not acceptable to OTML. He had been told by Mr Buretam that none were involved. He had subsequently discovered that among the persons brought to Tabubil purportedly to implement the quality management system were the same associates of Mr Fenwick who in November 2001 sought to assume control of the catering contract. This was a reference to Mr McKenzie. Mr Faulkner expressed his extreme displeasure at the "deceit employed in this matter". Their involvement with the Contract must cease immediately. They do not have authority to remain within the Tabubil township lease, and are required to leave without delay. He suggested that McKie & Associates ascertain the authority of the person from whom they had received instructions. He referred them to the terms of the OTML Contract. Persons engaged on site were required to be approved by OTML. Mr Fenwick and his associates were not approved. In August 2002 there was a liability in the balance sheet of Fubilan by way of its debt to JLFS in the sum of K1,157,175.53. Mr Fenwick had indicated that a sum of K1.2 million was being held back from JLFS because of its failure to provide invoices at correct prices. In a letter dated 25 July 2002 Mr Baitia had written to Mr Younger attaching a Fubilan board resolution that K1.2 million from JLFS and any surplus funds be deposited into the Investment Account for the purpose of pursuing investment activities for the company. Mr Bond, the Financial Manager PNG for Eurest, responded to Mr Baitia on 5 August 2002 stating that the board's request would be met as soon as surplus funds were available. He referred to the debt which, according to the balance sheet, was owing to JLFS and said that until it was discharged it would be wrong to proceed with the transfer unless there were a provision or understanding with the board that the funds could be recalled when required. He asked the Eurest manager to seek confirmation from JLFS that there was no debt outstanding. On 9 August 2002 he sent Mr Baitia a cash flow projection for the period to 27 September 2002. While it showed a healthy cash position the liability to JLFS was still outstanding. The fee amounted to K810,925 in accordance with the audited financial statements for the year ended 31 December 2001. There was discussion of an investment in New Ireland Seafood Limited (NIS) previously approved by the board. Money for the investment had not been released by Eurest. The board resolved to take full responsibility for the Investment Account and all surplus funds transferred to it for investment purposes. It also resolved that "Management prepare a letter for signing by the Chairman to Eurest stating the Resolution of the Board". It resolved that Messrs Boas and Yekim travel to Townsville to view a fishing vessel which was to be purchased by the company as part of its investment in NIS. 400 Mr Boas presented a report on the proposed Quality Management Program and about OTML's refusal to allow the consultants to attend on site. Mr Fenwick "categorically denied any personal association with JSE Management". The board resolved that the Management should write to OTML and "qualify Director Fenwick's position on the Board and the requirement for his presence on site; and confirm Mr Fenwick's appointment on his merits". At this time Mr Baitia, who was still a member of the Fubilan board, had ceased to be an employee of MRDC. Mr Boas was appointed "contract representative" of the company in accordance with the OTML Contract. There was discussion in Mr Baitia's absence about his continuation as a director. Consideration was given to his appointment as a consultant. Mr Fenwick supported that idea. But because of concerns raised by Mr Yekim that OTML would query the need for another consultant, given the consultancy arrangements with Messrs Fenwick and Uglinga, it was proposed that MRSM be approached to hire Mr Baitia. Mr Fenwick was involved in the preparation of a briefing paper for the meeting. It set out matters of which the Minister was to be made aware. It said that Fubilan had experienced profound difficulties with Eurest and OTML senior management. The Eurest managers had "persistently stolen Fubilan Catering Services monies and mismanaged financial accounts to an unacceptable degree". OTML management had taken "a negative and unsupportive view preferring to side with the Management (who had had a long association with BHP globally)". Fubilan had conducted many audits, both internal and external, which had indicated that the board was correct and that there were "serious problems afoot". KPMG had been given instructions to conduct an investigative audit which had taken four months "due mainly [to] the lack of assistance and provision of accounts and records from both Eurest and Deliottes" [sic]. KPMG's interim report supported every concern that Fubilan had about Eurest. A list of "facts" was set out. OTML was accused of wrongly refusing to take part in meetings in which Mr Fenwick or his associates were present. It had refused to allow JSE Management to conduct the proposed quality assurance management program. It had also refused to support the termination of Eurest "knowingly aware that Eurest have fraudulently operated FCS business". It does not appear from the evidence whether a meeting with the Minister took place or any outcome of such meeting. 402 The MRSM board met on 3 September 2002. Mr Fenwick was present by invitation. A 90 page draft report had been prepared by KPMG following its audit. Fubilan was unable to receive the final version until KPMG was paid. Fubilan was unable to do this unless Eurest approved it. Mr Buretam advised the MRSM board that Fubilan needed MRSM's assistance in paying KPMG's fees of K80,000. It required an additional K500,000 to fund its participation in NIS and a quality assurance review of its catering facilities and services. 403 Mr Aua stressed the need for the MRSM board to review Fubilan's financial information. Mr Kakaraya said that the investment proposals would have to be presented to the MRSM board. MRSM resolved to settle any fees payable to KPMG by Fubilan to enable release of the final report into the operations of Fubilan. It also resolved that Fubilan reimburse MRSM for any moneys expended on its behalf in paying KPMG. Management was to conduct an immediate legal review of the catering contract. They asked OTML to confirm that JSE Management would be given access to the site to carry out its assignment on the basis that Eurest or OTML would nominate a team leader and that Mr Fenwick would not be further involved. They reiterated their request that OTML identify its concerns about Mr Fenwick and his associates. Mr Faulkner replied on 23 September 2002. OTML had put its position in previous correspondence and he repeated that position. Under the terms of the OTML Contract, OTML had the right to prohibit involvement in the execution of the Contract by any individual and it exercised that right in respect of Mr Fenwick, JSE Management and their associates. He repeated that Mr Fenwick did not have permission to enter Tabubil. 405 On 3 October 2002, McKie & Associates wrote to Phillips Fox about the dispute with JLFS. They confirmed that JLFS had made demand of Fubilan for $617,279.16 and that Fubilan disputed the claim. They asserted that Fubilan had a potential claim against JLFS for a 10% rebate on purchases over a three year period and that, on their instructions, the value of the claim against JLFS was approximately $1.2 million. They referred to Eurest's requirement for a written release from JLFS in respect of the claim and its statement that in spite of Fubilan's direction to the contrary, it would communicate with JLFS as and when it saw fit. Eurest's position had forced Fubilan to contact JLFS to obtain a release in respect of the relevant funds. Fubilan reserved its rights in relation to Eurest's conduct including the right to claim against Eurest for any loss or costs in relation to the approximately $1.2 million claim against JLFS if Eurest did not comply with Fubilan's requests. The letter was apparently written in anticipation of any claim that Eurest might raise that Fubilan had failed to mitigate its loss in relation to Eurest's conduct and its position in connection with JLFS. Mr Fenwick was involved in its preparation. Professional consultants. Eurest had not blocked the use of JSE Management nor of Yamil or Limay. It was OTML that had concerns about those matters. The proposed Aus Trade benefits were linked to the use of Yamil as a supply company. As to the New Ireland Seafoods acquisition, Mr Fenwick did not recall how it was halted by OTML and Eurest. In truth it was MRDC that had concerns about that acquisition. The statements were made in a way that was careless of the truth. They were part of Mr Fenwick's ongoing campaign, and that of Fubilan, against Eurest. Mr Kroeger presented the operations report for the period ended October 2002. He reported that the company was not complying with tax laws as financial reports had not been signed off by the board. The operations report was accepted. A question was raised about the status of Mr Baitia's directorship. The company secretary confirmed that he was still a director and entitled to attend the board meeting. 408 Mr Boas presented a report on the acquisition of NIS. MRDC management had a major concern about the amount of money Fubilan was required to inject into the venture compared with the contribution of the other two proposed shareholders. As part of its purchase price Fubilan had acquired a fishing vessel for $25,000 and had deposited K50,000 into the NIS account. Doubts were expressed by MRDC representatives, at the meeting on 7 and 8 November, about the acquisition of NIS. Fubilan had purchased goods from Australia between June and September from Eurest suppliers. The invoices from those purchases were now overdue for payment. The amount involved was A$858,908.75. If paid to the Australian creditors on that day the value in PNG currency would be K2,232,671.56 which would generate an exchange loss for Fubilan of K329,308.18. The import value was K1,903,363.38. Eurest made a "once off" offer to Fubilan that if Fubilan paid K1,903,363.38 to Eurest (PNG) on that day, Eurest (PNG) would settle the debt in Australia on behalf of Fubilan. 410 For the year ended 2002 the financial statements for Fubilan showed a gross profit of K6,367,160. After subtracting administrative expenses and adding back other operating income, the profit from the operation was K1,896,226. Directors' fees of K569,250 and finance costs of K860,259 left a profit before tax of K466,717. The after tax profit was K353,068. 411 Fubilan board papers for a meeting to be held on 21 March 2003 included an operations report for February 2003. One of the board papers entitled "Updates on Outstanding Issues" indicated that copies of the KPMG report had been distributed to Eurest and OTML for review. It was intended to start formal negotiation on Fubilan's claims against Eurest. He signed himself as chairman of Fubilan and as the "Landowners Coordinator". He said that he did not believe that the State, OTML, Eurest and MRDC were genuine about coming to the table to resolve the long standing issue amicably. If this happens it will be a major disruption and would take longer period than what has been experienced. He said he had nothing to do with its drafting. Mr Aua responded to Mr Buretam stating that making threats in letters did not show rational thinking but represented an unbalanced assessment of the situation. He had spoken to Mr Boas with a view to organising a follow-up meeting at Tabubil with OTML and Eurest. He thought it was unfair on Mr Buretam's part to assume that OTML management had secret plans to pull the contract away from MRSM and Fubilan. He reminded Mr Buretam of his responsibility to maintain cordial business relations at the corporate level with contracting parties in order to ensure continuity of their business relationship. Mr Michael Young of Eurest presented an operational report for May 2003. The audit reports for the years 2000 and 2001 were yet to be signed and accepted by the board. Absent those reports Fubilan could not pay its company taxes which put it in a precarious position with OTML. It was noted in the minutes that if OTML became aware of the non-compliance 10% could be deducted from the monthly invoices submitted by Fubilan. Mr Young also reported that Eurest did not have nationals at the management level at that time but that there were opportunities available. He said there were several nationals undergoing managerial training courses to undertake the roles of responsibility but it was difficult to train someone within a year or two to take up a managerial post. The operations report was accepted. 414 Under the heading "Updates on Outstanding Issues" Mr Boas presented a paper about the claim against Eurest. Mr Buretam said that because Eurest was an Australian-based company litigation was in order in Australia in a bid to expose Eurest's activities. He also said that the on-going feud between Fubilan and Eurest had to be settled once and for all. The board resolved that A$100,000 be paid as a deposit to McKie & Associates to commence legal proceedings against Eurest in the Federal Court. MRDC was to provide a deed of release for the JLFS funds to be released to Fubilan. A firm of accountants called Kiddie & Associates would be engaged to audit the company's books. The next minutes in evidence were of a joint MRSM/Fubilan strategic planning meeting held on 4 October 2003 at Cairns. Mr Fenwick apparently reported that the claim against Eurest could amount to K30 million. Affidavits of witnesses were being prepared with PNG witnesses being interviewed and statements sworn within the next fortnight. 415 On 16 October 2003 Mr Andagali, the Manager-Corporate Development, for Eurest met with Mr Boas and other representatives of MRDC. Mr Andagali said that the OTML Contract was a successful operation and that profits had exceeded expectations. It was important to keep communication lines open. Mr Poelzl had requested a meeting at Mr Kaupa's office on 29 October 2003. Eurest was prepared to fly Mr Kaupa and Mr Boas to Brisbane on a suitable day between 29 and 31 October 2003. It does not appear from the evidence whether that meeting ever occurred. He also advised that the new catering services contract would not be tendered out. A formal close out agreement would be forwarded. On 10 December 2003 Mr Aua wrote to Mr Faulkner about the decision to "cancel" the OTML contract with Fubilan. He identified two areas of concern. The first was a proposal by OTML to set up another landowner company. The other was its failure to appreciate Fubilan's concerns about the results of the KPMG audit report which showed mismanagement by Eurest. Mr Faulkner responded on 15 December 2003. He told Mr Aua that after an approach from the landowners OTML had developed the idea of all 12 mine villages having clan companies each with shares in a company called Star Mountain Investment Holdings Ltd (SMIH). OTML had signed a memorandum of understanding with SMIH and had brokered an agreement for it to enter a joint venture to operate the Tabubil supermarket. Its next major project would be the catering contract. He pointed out that OTML was not cancelling the catering contract with Fubilan. It would expire on 31 January 2004. 417 Mr Faulkner wrote of OTML's numerous attempts to resolve differences between Fubilan and Eurest over the four years of the contract. He identified as a major shortcoming the absence of a Corporate Manual required by the Contract to define the respective roles of Fubilan and its manager. Such a manual had been developed but the Fubilan board had refused to endorse it. He acknowledged that there had been mistakes which Eurest had made genuine attempts to correct but was "firmly of the opinion that the relationship between the parties has been actively poisoned by external influences". He was aware of the KPMG report which he said did not have the clear cut conclusion drawn by Mr Aua. On the same day, Mr Faulkner met with the Minister for Mining at Waigani. On 29 December 2003 the Minister sent Mr Faulkner a letter about their discussions to "reaffirm my views on this issue". He was convinced that OTML's approach to resolving the "core issues" was not appropriate. He did not think that the decision, apparently foreshadowed in their discussions, to award the catering contract to SMIH for a year was commercial in nature. He said OTML had not carefully considered the sensitivity of the catering contract. While landowner leaders were divided on the question, OTML's decision which seemed to favour a particular faction would create disharmony and conflict. Mr Faulkner responded on 8 January 2004. For clarity, this includes FCS retaining Eurest as Manager for the duration of the contract, which is a current condition of Contract 99046. Mr Buretam agreed that FCS does not have issue with the Eurest site management's conduct of the contract and therefore this should not give rise to any problem. An independent third party would be invited to scrutinise its management of the tenders. He also wrote to Mr Kaupa then acting managing director of MRDC on 13 January 2004 to inform him of the proposal. He had stressed to Mr Faulkner that Eurest must leave within the next six months. Mr Faulkner had insisted that Eurest would remain as managers. Mr Buretam denied saying that Fubilan had no issue with the conduct of Eurest's site management. All he had said was that the site managers were good operators. He was referring to Mr Kroeger. 420 Mr Buretam wanted Eurest's management contract to end at the end of July 2004 and a contract rollover of the catering contract for the remaining life of the mine. MRDC, MRSM/Fubilan and OTML should work together to have new management in place to conduct business by the end of July. Fubilan would get ready to be self-managed. No tender should be let and there should be no competition between SIMH and MRSM/Fubilan. Mr Kaupa conveyed Mr Buretam's views to Mr Faulkner in a letter dated 20 January 2004. 421 Mr Buretam died on 1 February 2004. The Fubilan board met on 13 and 18 February 2004. None of the resolutions passed at the first of those meetings addressed the extension of the contract. Mr Rumsley of McKie & Associates Lawyers was present. He reported that JLFS had agreed to mediation. On the Eurest issue, it was resolved that the report, designated the "litigation brief", be noted and accepted. Morocco, Mr Fenwick's company was appointed to make arrangements for mediation with JLFS. Further costs of A$200,000 were approved for payment to McKie & Associates' trust account. The meeting also considered the renewal of Morocco's consultancy arrangements. The board resolved, in Mr Fenwick's absence, that the consultancy agreement was to be referred to management to negotiate and to come back to the board with an appropriate recommendation. Under the agreement Fubilan was to pay to Metcash the sum of A$425,000 by 19 March 2004. On 31 March 2004, a cheque in the amount of K1,057,214.20 issued to Metcash pursuant to the terms of the settlement. Under the heading "Board Directorship and Consultancy" Mr Boas stated that the board needed to decide on the involvement of Mr Fenwick. He indicated that there had been discussions with Mr Fenwick about the need for him to formally resign from the Fubilan board and for his consultancy with Fubilan and MRSM to be limited to the litigation proceedings against Eurest. 425 The MRSM and Fubilan boards met jointly on 20 April 2004. The minutes were lengthy. Mr Boas said that Mr Fenwick should move away from Fubilan. Mr Yekim, who was still chairman of Fubilan, said that Mr Fenwick should stay with Fubilan until the litigation was over. The Fubilan board met again on 23 April 2004 with Mr Yekim in the chair. The directors present were Messrs Kayangkim, Musolok, Itulam and Fenwick. Mr Paul Povey was present by invitation. There was discussion of a draft memorandum of understanding between OTML and Fubilan which had been prepared by Messrs Crane and Faulkner. Mr Fenwick said that documents pertaining to the memorandum of understanding should be reviewed before anything was signed off. He recommended that they be reviewed by the Minister of Mining, the Secretary of Mining and the managing director of MRDC. He advised that the proposal, which was outlined in a paper prepared by OTML, could have an adverse impact on the litigation against Eurest. According to the minutes he claimed that the proposal could reduce the amount of the claim against Eurest by as much as 80%. He said it was important that the legal proceedings not be compromised. If, as seems likely, this was an attempt to avoid a situation in which Fubilan's alleged damage would be reduced, it was hardly advice in Fubilan's interests. It was put to Mr Fenwick in cross-examination that he was concerned Fubilan would not be able to claim for the loss of the OTML contract for the life of the mine if it continued with a new catering contract. He responded evasively and rather unconvincingly. In my opinion his concern was that which counsel put to him. 426 The board resolved that the draft memorandum of understanding must be reviewed by all stakeholders and must be in favour of Fubilan. The business structure proposed was not to be adopted. Mr Bill Menim chaired the meeting. Renewal of the OTML contract was discussed. Mr Yekim advised that OTML expected MRDC and MRSM to withdraw their involvement with Fubilan and that Mr Fenwick would resign as a director of Fubilan. If the restructure proposed were undertaken by Fubilan, OTML would have no problem issuing the catering contract for the life of the mine but management would be put to an international tender. It was then proposed that Mr Fenwick resign as a director of Fubilan but "be retained as a key witness in the FCS/Eurest litigation". Mr Yekim suggested he be retained by MRSM. That way there would be no further association between him and Fubilan. The board passed a number of resolutions. The board terminated the engagement of Morocco and noted an undertaking by MRDC to withdraw from management of Fubilan. Mr Yekim expressed thanks to Mr Fenwick for his contribution as director and consultant. The OTML contract was rolled over for a further six month period from 1 July 2004. 428 In his witness statement dated 22 June 2006, Mr Fenwick said he was currently a director of Fubilan. In a supplementary witness statement he said that he remained a director of Fubilan until 20 April 2005. He swore to the truth of both. In cross-examination he accepted that each of those statements was incorrect. It attached an extract of the minutes of the meeting of 19 June 2004. MRSM shareholding in FCS to be transferred to the ten mine villages and MRSM will cease all involvement with FCS. . The engagement of Mr William Fenwick (through Morocco Holdings) as the FCS business manager & consultant to be terminated and William Fenwick to resign as a Director of FCS. . OTML to award the catering contract (Tabubil) to FCS on the basis that OTML will source a suitable remote catering firm to provide full management services. . MRSM will continue the legal action against Eurest on behalf of FCS and will retain Bill Fenwick as a key witness. Therefore, we support OTML's to tender for the management of the contract and will support OTML's final choice. On 18 November 2004 Mr Faulkner wrote to Mr Kaupa stating that OTML had never undertaken that Fubilan would manage the contract in its own right after the first four year term was completed. Fubilan had been told that it would be granted the Tabubil catering contract for the life of the mine. Such an undertaking would be contrary to OTML's business processes. This has been documented and communicated several times in the past to FCS, MRSM and MRDC. Further, as you know these local commercial enterprises can only succeed when managed locally where the beneficiaries can see the fruits of their efforts, and can also hold their leaders accountable on the ground. OTML did not propose to further extend the contract. This had been done for two six month periods. As a direct result of this FCS and MRSM took action against Eurest in the Australian Federal Court. This step was taken only after 4 years of ongoing disputes and unsuccessful attempts to resolve them. Rather it arose from the business conduct of Fubilan and its board. The history of the OTML Contract and the Management Agreement make it clear that many of the difficulties experienced between the parties were related to the conduct of Mr Fenwick and of the board in the way they dealt with Eurest and OTML, their ill-fated attempt to set up a supply channel for Fubilan and the hamfisted attempt to terminate the Management Agreement. There was a lack of commercial maturity and good corporate governance which would give pause to any third party considering a relationship unmediated by an operator experienced in the industry and in the conduct of civil business relationships. 433 OTML's perception of Fubilan was indicated in a presentation prepared by OTML about future relationships with Fubilan and entitled "The development of FCS as a preferred contractor to OTML". OTML had two preferred candidates in that respect. OTML would, after negotiation of final details, award to Fubilan the Tabubil catering contract in its own right without a manager or management agreement. Exit strategies would be written into the agreement that would provide for one of the shareholders in the future to sell its interest. Under the proposal Fubilan would adopt a new constitution covering the makeup of the board, proceedings at meetings of the board, appointments and change of directors, governance and the audit committee. It was proposed that if the offer were acceptable it would be a condition of the catering contract that appropriate commercial arrangements be in place by the end of June 2005. 434 Mr Crane wrote to Mr Yekim on 8 July 2005 referring to a letter which he had written on 4 July 2005 to the OTML managing director. This concerned the proposed changes to the structure of Fubilan. Each of the ten mine villages was to have a 10% equity in Fubilan. Mr Crane asked Mr Yekim to consider the idea of issuing shares to the existing clan investment companies that comprised the shareholding of SMIHL. A new management agreement was put in place between Eurest and Fubilan. It was based upon the Management Agreement of 2000. The new Management Agreement between Fubilan and Eurest was signed on 30 August 2005. He was acting as a consultant on behalf of Fubilan and MRSM. After some evasion he agreed that he was acting as a consultant "in respect of this litigation". It was put to him that at the time he gave evidence on 30 June 2007 he would have received approximately $240,000 in such payments. He did not dispute this but said that it was not a large amount in the way of consultancy for catering firms. His consultancy role, as he described it, had been "probably analysing the paperwork and things that have been --- gone through in the past a few years, in the early years of the contract". He had no documentation of his consultancy arrangements with MRSM. 437 Mr Fenwick continued as a consultant in connection with this litigation at least up to the time of the hearing. He was asked whether in discussion of the litigation with Fubilan there had ever been any discussion of the downside risk, namely the cost exposure, if the litigation were unsuccessful. He could not recall any such discussion. 3. From his experience working for Poons from 1980 to 2000 and being responsible for the Ok Tedi contract from 1989 to 1999, he was aware that discounts or rebates in the order of 7% to 15% were paid by large suppliers on the kinds of quantities of food needed for the Ok Tedi mine site. 439 He accepted in cross-examination that a buyer with bargaining strength could obtain a lower price or a rebate. He drew a distinction between a discount, which is a price reduction, and a rebate, which is a payment made to the purchaser by the supplier of goods. In the majority of cases rebates are offered where the purchaser is operating under a management contract such as a canteen or cafeteria and the purchase price is paid by the client of the manager. A purchasing company might ask a supplier to allow 10% of the purchase price, structuring 5% as a discount and 5% as a rebate. The level of rebate or discount would depend upon the skill of the procurement officer. A national buyer buying for a number of contracts could get more significant rebates than a local buyer. The same to national buyers. So a group might negotiate rebates through its head office. 440 Mr Fereday agreed that the practice of providing rebates or discounts or some sort of hybrid was well known in the industry. He added that discounts could also be made available in the form of extended terms for payment. While the range of the discount or rebate was usually in the order of 7% to 15% it could be lower. He accepted that his assessment of the percentage of price which could be reduced under a discount or rebate scheme was not precise. 441 I accept Mr Fereday's evidence as a description of industry practice. 4. Ms Broadbent is a qualified TAFE teacher of adult students. She holds a Bachelor of Education Technical Degree from the Sydney College of Advanced Education. She has been involved in writing and delivering training programs for employees since 1982. She has provided such programs either as an employee or, during the period 1989 to 1991, when she operated her own training business. 443 Ms Broadbent was employed by Eurest (Australia) Support Services Pty Ltd as training and chef supervisor in respect of the OTML Contract. She said her duties were to develop and deliver training programs for the Fubilan employees involved in the performance of the Contract. More specifically she was to organise the training department, analyse training needs and develop and deliver programs to those requiring the training. 444 She drew up a training needs analysis audit. A copy, which was comprehensive and detailed, appeared as an annexure to her statement. She also prepared and began implementation of a training program. A copy was also attached to her statement. She provided the needs analysis and the program to Mr Kroeger. Ms Broadbent wrote the training programs for two levels of trainees. The first level was of a basic type so that trainees could acquire generic skills for use in the catering industry. The second level was for supervisory positions. All trainees were to be PNG nationals with emphasis on the first level of training for locals from the Preferred Area designated in the OTML Contract. 445 The programs were delivered in early 2000. There were two other PNG nationals in the catering department who provided Ms Broadbent with assistance in that delivery and an expatriate in the catering section whom she could call on for assistance. From early 2000 until about 26 July 2002 a number of programs were carried out. She gave many of them herself and supervised others. Some were given by trainers whom she had trained to deliver the courses which they provided. 446 Ms Broadbent was required to provide senior management with reports on the training which she conducted. She provided those reports initially on an intermittent basis, but in 2001 was instructed to provide them monthly. She attached to her statement copies of examples of the training reports which she put out from time to time. 447 Ms Broadbent referred to the original tender which required localisation of chef instructor positions in July and December 2000, July 2001 and July 2002 and a catering manager's position by July 2003. The first position localised was that of a chef supervisor/trainer. A PNG national called Roland was appointed to that position which was renamed warehouse supervisor. The second chef supervisor/trainer position was localised in July 2000 with the appointment of Lucas Togemas, as training chef instructor. His position was renamed as executive chef. The executive chef was responsible as senior chef and to assist with the training of other employees. After his appointment Mr Togemas completed a Chef (Frontline) Management course in Queensland. Ms Broadbent mentored him for the purposes of that course which he completed and passed. A third chef supervisor/trainer position was localised in December 2000 with the appointment of Kevin Soko. His title was changed to national supervisor. The next position of chef supervisor/trainer was localised in July 2001 and renamed national supervisor mine/mill. Mr John Getsy was the PNG national appointed to that position. A further localisation was effected in November 2001 when Mark Mondoro was appointed to the chef supervisor/trainer number 5 position. He was appointed as her understudy. His position was renamed chef trainer (assistant to the training supervisor). 448 Ms Broadbent described the localisation process. As a particular expatriate employee left employment the position would be filled with a PNG national. The person was not usually a local person from the "Preferred Area" because she had found that these persons generally had not completed education levels to the equivalent of Year 6. They lacked the basic educational levels needed for the training she was providing and lacked any prior work exposure. She reported to her manager, Mr Kroeger, that it was evident that many of the locals did not have sufficient basic education to enable them to benefit from training at high levels. 449 Ms Broadbent's own position of training supervisor/chef supervisor was localised in July 2002 with the appointment of Mark Mondoro in her place. She returned to Australia on 26 July 2002. Since that time the training provided by Eurest under the Management Agreement was under the day to day supervision of Mr Mondoro until he was dismissed. 450 Ms Broadbent said that while training was under her supervision she met all localisation and training requirements and deadlines. During the period July 2002 to May 2004 she would return to Tabubil during school holidays to monitor and check the training programs then being given by Mr Mondoro and his staff. On 17 May 2004 following Mr Mondoro's departure she resumed employment at Tabubil providing more training. In her new capacity she was required to be mentor/supervisor and an overseer of the training process. She continued in that role until 4 June 2005 when she returned to Australia. 451 In her various capacities as a trainer under the catering contract, Ms Broadbent wrote annual training reports for 2000/2001 and 2001/2002. She attached copies of the reports to her statement. She also viewed monthly training reports from April 2002 to May 2004 although they were ultimately written by Mark Mondoro without her endorsement as to their contents. There was no dispute about Ms Broadbent's evidence and I accept it. 452 Mr Kroeger gave evidence about the training program. He had provided a copy of Ms Broadbent's analysis of training needs and the proposed program to Mr Baitia at a time when Mr Baitia was the daily contact between himself and MRSM. MRSM was still in control of the Contract as Fubilan had no operating board of directors until October 2000. He also provided training reports initially to Mr Baitia and sometimes Mr Fenwick and later on to the board of Fubilan. 453 Mr Kroeger recalled being present at a meeting of the Fubilan board in November 2002 at which Mr Fenwick complained that Eurest was not training managers. He responded that there was no requirement under the tender document for managers to be trained other than the catering manager. In any event there were no candidates to be trained for such senior positions. He told the board that if Fubilan wished to nominate people they thought would be eligible for training for managerial positions, they should do so. He had never received from Mr Fenwick, nor from any other official from Fubilan, any nomination of persons to be trained as managers. The position of catering manager was localised ultimately with the appointment of Mr Togemas in 2003. 454 Mr Kroeger equated the training requirements set out in the tender documents to those required under the OTML Contract. He said in cross-examination that Eurest did not do anything to find candidates for training for senior positions. There was no requirement under the OTML Contract to train senior managers. 455 Mr Kroeger said that as manager he was responsible for liaison with OTML and their management. From time to time he would discuss the localisation program with Terupo Apoki of OTML. He recalled Leanne Broadbent reporting to him that many of the locals did not have sufficient basic education to enable them to benefit from training at higher levels. He discussed this with Mr Apoki. On 23 July 2002 he sent Mr Apoki a memorandum about the matter. Localisation of Training position in October 2002 as Leanne Broadbent has resigned effective 27 July 2002 and Mark Mondoro will take over that position once he has obtained the Certificate 4 assessment course. 2. The further localisation of an expatriate Chef supervisor position in April 2003. 3. Retain the following expatriate supervision positions to close of current contract to ensure proper service and training. a. This document was also attached to his statement. On 10 April 2002 Mr Reisenbauer signed an agreement which was countersigned by Mr Mullins of OTML varying the OTML Contract by extending the anticipated localisation date for the catering manager by six months from April 2002 to October 2002. 456 On 17 March 2003 Mr Kroeger reported to Mr Buretam that localisation of the last expatriate position under the current OTML Contract would take place on 11 April 2003. The retiring expatriate would be Mr Ian Trappett. Mr Jock Turner would take up the position of Catering Manager with further training being given to Lucas Togemas to eventually take over. On 8 April 2003 Mr Younger submitted a "Training and Localisation Program" for the years 2003 to 2006. That program was submitted to the Labour and Employment Training Division of the Department of Labour and Employment and was approved by a letter from the Department dated 22 April 2003. 457 Mr Kroeger had prepared a summary of all training carried out by Eurest between 2000 and April 2004. He attached a copy to his statement together with a summary of external training provided in the same period. 458 In 2003 the PNG Ministry of Labour and Industrial Relations carried out an audit of the training conducted by Fubilan under Eurest's management. According to Mr Kroeger the audit was successfully passed. He said that Fubilan is now, and has been since 3 January 2005, an approved Training Provider in PNG pursuant to the National Training Council Act. He attached a copy of a registration certificate evidencing that fact. Mr Kroeger was cross-examined about the number of expatriates working on the OTML Contract during its life. He agreed that at the end of the first four year period of the Contract, ie 31 January 2004, there were seven expatriate positions that had not been localised. One was a relief position, leaving six substantive positions. This, he said, was in accordance with the variation which had been authorised by OTML. 459 It was put to Mr Kroeger that the nationals who had been employed should have come from the Preferred Area. He agreed but added "... unless those people aren't qualified or have the educational background or the desire to work". It was then put to him that Eurest had done nothing about "giving them the educational background". He pointed out that the education of which they were speaking was primary or high school education. It was not his responsibility to make arrangements for people to have a high school education. 460 There was some debate in cross-examination of Mr Kroeger about the proportion of employees who came from the Preferred Area. He said that 59 out of 87 PNG nationals employed came from that area. 32 came from West Sepik and Sandown Province. The remaining came from the West Province and, according to their records and his familiarity with the area, they came from the Telefomin area within the Preferred Area. Between 1962 and 1997 he worked as an auditor. He became a partner of KPMG in 1981 and retired as a partner in 1997. He has acted as a director, company secretary and/or financial controller of companies with trading operations. He has never had experience of the catering industry and claimed no expertise in it, although he has been involved in the audit of a company operating in the industry. In his role as auditor of a number of public listed and proprietary companies when he was a partner and manager of KPMG, he reviewed the propriety of charges made from one entity to another. 462 Mr Campbell produced three reports dated 8 April 2006 (his original report), 26 May 2006 (his first supplementary statement) and 23 July 2006 (his second supplementary statement). Whether or not the accounts of Fubilan complied with the requirements of the Management Agreement. 2. What documents he would require to conduct an audit of Fubilan to determine if benefits had been derived by the respondents in the supply of materials to Fubilan. 3. Whether there were any irregularities in the invoices or supporting documents which he had been given. 4. The proper accounting treatment to be given to a transfer of accrued employee entitlements and the re-employment by Eurest of existing employees of Poons as at 1 February 2000. 5. A comparison of the rates contained in the original and revised schedules of rates submitted to OTML by Eurest as part of the tender process. He was also provided with schedules of the tender and contract rates. 463 Mr Campbell's report primarily highlighted areas of uncertainty or inadequacy in the records which he was asked to review. Some of these matters were addressed in the responding evidence of Jonathan Coraton, who was called for the respondents. Mr Coraton is a certified practicing accountant who has worked as an external auditor for Deloittes. He has carried out auditing work for large companies in the manufacturing, trading and catering industries. He was the lead auditor from Deloittes engaged by Eurest to perform its audit on Fubilan. He is now the financial controller and company secretary of Eurest. At the time of his report in July 2006 he had held that position for two years. 464 In his evidence Mr Coraton responded to specific aspects of Mr Campbell's evidence. There seemed to be no substantial factual dispute between them on the matters they dealt with although there were differences in relation to some inferences and observations. In reviewing Mr Campbell's report Mr Coraton examined all of the records there referred to and some financial records which were relevant because of what was said in the report. It may be accepted that Mr Coraton was not an independent expert but his credibility was not under substantial challenge. His evidence, like that of Mr Campbell, was careful and considered. He explained his approach to analysing Mr Campbell's report. He would go back to the basic underlying documentation to determine whether Mr Campbell's factual observations were consistent with it. In some cases he was able to locate many supporting documents inconsistent with Mr Campbell's observations and drew attention to them in his report. In cross-examination he said that he had obtained extra supporting documents from Mr Nana, the site accountant and from Eurest's Brisbane office. 465 In opening his report Mr Coraton made a general statement about rebates. He could say of his own knowledge and from his inspection of Compass Group operations that, since early 2002, invoices for the supply of goods for the Management Agreement had been provided by suppliers on a net/net basis. That is to say all suppliers in Australia and PNG were requested to invoice Compass their supplies at the net amount (and resultant lower amount after deduction of such rebate as was allowable but subject in any event to price fluctuations). He attached emails and letters from Compass records concerning the direction to invoice net/net. I accept his evidence in that respect and find accordingly. Mr Campbell agreed that he was not purporting to express an opinion on the question whether rebates should have been passed on to Fubilan but rather that there should have been consistency in their accounting treatment. 466 Mr Campbell considered what documents he would require to conduct an audit of Fubilan to determine whether benefits were being derived by the respondents in the supply of materials to it. The initial source of such information would be Fubilan accounting records. He would also need access to a copy of the Corporate Manual provided by Eurest under the Management Agreement. Absent a Corporate Manual alternative documents, providing information about internal control procedures would be necessary. He would also need to observe the internal control processes in operation. It would be necessary to obtain access to purchase documents comprising Eurest and other Compass Group companies' invoices to Fubilan and appropriate support, including supply invoices. Third party supplier invoices would need to be examined because of the agency role undertaken by Eurest in these operations. I took him to use "agency" in its commercial rather than legal sense. He said it would be impracticable to specify all the types of documents which might be required to support charges from Compass Group companies to Fubilan as these might vary dependent upon the nature of the charges. He was not confident that the documents discovered comprised the total "population" of documents supporting the charges raised. Appendix 4 - List of Compass Group PNG (Kina) invoices to Fubilan per discovered documents. 5. Appendix 5 - Comparison of Fubilan billings to OTML as invoiced versus tender rates --- year 2000. These were relevant to claims of unconscionable conduct, breach of fiduciary duty and negligence on the part of the respondents in relation to the submission of varied tender rates to OTML late in 1999. For reasons set out below, I consider these claims to have no basis whatever. It is not necessary to assess the asserted losses. 469 Mr Campbell was asked to advise whether any irregularities were disclosed by his review set out in Appendices 3 and 4. He said a number of pages in the pdf files with which he had been provided were difficult to read or illegible. He expected that Eurest invoices seeking recovery of purchases made on behalf of a third party would be supported by a package of documentation including supplier's invoice, purchase order and delivery evidence. He also expected to see bills of lading for items shipped by sea. There were generally deficiencies in the completeness of supporting copies. He noted 39 instances from the Appendix 3 invoices where the packing slip included what appeared to be a Eurest internal charge referred to as a "container charge" (eg invoice 48006312), or "packing charge" ( eg invoice 48006312) or "service fee" (eg invoice 48006331). In most instances the fee charged was $300 but in some cases significantly more (eg Eurest invoice 48005618 for $613.75). Compass invoices 48011969 and 48011979 each charged $400. In a small number of other cases it was less (eg invoice 48006984 for $266.60). Mr Campbell was unsure whether this constituted a situation where Eurest had profited from the supply of goods to Fubilan. 470 Mr Coraton said that a standard charge of A$300 applied to all dry containers. Charges for freezer containers differed based on volume and content. He set out reasons for those disparities. It is not necessary to go into these for present purposes. He also obtained payment details for various container consolidation charges which Mr Campbell had said were not supported. He concluded that all container consolidation charges queried by Mr Campbell were duly supported by details of payments made to suppliers. 471 Mr Campbell referred to an invoice mentioned in Appendix 3, being a P&O Catering Service invoice dated 11 November 1999 for $15,995.83 which had an attached packing slip number 1198. The first page of that slip totalled $15,995.83 but it continued on a second page with a grand total of $48,054.04 meaning that P&O had undercharged Fubilan. In other instances packing slips supported the amounts invoiced. Mr Coraton pointed out that the invoice referred to by Mr Campbell related to 11 November 1999 prior to the award of the contract to Fubilan. The issue raised was of no relevance to Fubilan. 472 Mr Campbell listed at the end of Appendix 3 a group of 12 invoices and 2 credits headed "Other invoices and credits". The first 11 were addressed to Eurest and comprised recharges of expenses incurred by Eurest (Australia) Support Services Pty Ltd in Australia and charged to Eurest stating such items as "per attached schedule". There was no attachment in the scanned invoices provided to him. He said it was not possible to determine if these recharges constituted irregularities without reviewing support available and obtaining explanations of why recharges should be charged to Fubilan. He thought there was a risk of duplicate charging. 473 Mr Coraton said that the first 11 invoices referred to in Mr Campbell's report were identified as "Schedule D charges". These were miscellaneous charges from Eurest BNE to Eurest (PNG). Charges listed in the Schedule D could be related to various sites in PNG. Each charge in Schedule D was identified by site location for simplicity in recharging respective sites. Mr Coraton obtained copies of the 11 invoices referred to. He reviewed the accompanying back up documents supporting the Eurest invoices. He noted a clerical error made by Eurest in one case where Fubilan had been overcharged for an amount of K420.96. This had evidently not been credited back to Fubilan. 474 Mr Coraton pointed out that from 2000 to mid 2003 all Eurest (Australia) (now Compass Group (Australia)) invoices were sent to Eurest. During those times Eurest had settled some of the debts owed by Fubilan to Eurest (Australia) upon receipt of funds from Fubilan. There were instances in which Eurest had settled, in advance, debts of Fubilan in advance relating to Eurest (Australia) invoices. This occurred particularly when Fubilan's cash flow did not permit payment or when there were delays in payments from OTML. Under no circumstances did Eurest (Australia) send invoices direct to Fubilan prior to mid 2003. In Mr Coraton's opinion there was very little chance that duplicate charges had been raised against Fubilan during those periods. I accept that evidence. 475 Two credit notes included in Appendix 3 represented the transfer of supplier credits for purchase rebates from Eurest (Australia) to Fubilan. These were invoices issued during the period 18 January 2002 to 5 February 2003. They represented less than one month's transactions amounting to a rebate of $24,236.40. Another credit note related to a 5% rebate on a single Golden Circle invoice, the amount being $76.80. These were the only instances Mr Campbell saw in the discovered documents of rebates being transferred to Fubilan. He would have expected there to be one or more credit notes for rebates due in respect of each accounting period. While it was possible that credits were passed to Fubilan it seemed to him that if this had not occurred Eurest (Australia) would have profited from the supply of goods to Fubilan in this respect and that the amount involved might be in excess of 5% of the total of the goods supplied ($8.1 million as per Appendix 3) depending on the percentage rebate obtained from the supplier. Mr Coraton said he was unable to obtain the supporting documentation for the two credit notes. He was therefore not in a position to comment on the assertions. 476 Mr Campbell referred to the last item listed in Appendix 3 to his report. This document indicated that Fubilan was charged for expenses incurred by Eurest including an account for $5,000 being a fee for Hayes Consulting without any explanation or reason for the service or its relevance to Fubilan. Mr Coraton said that the Hayes Consulting invoice dated 10 May 2004 for $5,000 was incorrectly charged to Fubilan by Eurest. However the total amount had been refunded to Fubilan on 12 August 2005 with the inclusion of interest at 9%. I accept that evidence. Eurest Lae invoice 3202 in March 2002 contained a handwritten comment "received insurance claim from AON K18,182.38 on 11/6/03". There was no indication that the benefit of that insurance claim was passed on to Fubilan. 2. There were no third party supporting documents for Poon invoice 2453, Lotic Poon invoice 142 and Eurest invoices 3141 and 3322 without which it was not possible to determine if irregularities had occurred. He verified that that amount was credited to Fubilan on 24 November 2003 as evidenced in its bank statement. It formed part of a K949,098.55 credit transaction in the Fubilan bank statement. In relation to the four invoices mentioned by Mr Campbell, Mr Corotan noted that they were ex-Lae invoices. This meant that goods supplied to Fubilan were supplied from the Lae warehouse and an internal Eurest invoice generated to recharge Fubilan. The Lae warehouse, being the purchasing department of Eurest in PNG, maintained certain inventory items for the purpose of supplying sites around PNG when goods were not readily available from local suppliers. It was impossible to trace or provide an attachment to the supporting Eurest invoice as the goods supplied could have related to current or previous month's purchases. 478 In relation to documents listed under the heading "Specific Recharges" in the second section of Appendix 4 to Mr Campbell's report. Mr Campbell said that none of the invoices included in the respondents' discovery was supported by third party documentation which would have demonstrated that Eurest was only recovering a cost incurred by it on Fubilan's behalf. Absent that support, it was not possible to determine whether irregularities had occurred. Mr Corotan said in reply that most of the items listed in Appendix 4 were in fact supported by third party documentation. Mr Campbell's assertion was not correct. He referred to Appendix 2 of his report which identified invoices for which supporting documentation was attached. 479 Mr Campbell next commented on documents listed under the heading "Recharges of invoices from other Compass Group Companies" in the second section of Appendix 4. He said that none of the invoices, as they applied to container consolidation charges, was supported by third party documentation or by copies of the invoices referred to in most instances. Six of these were issued in July to September 2000 by Poons and totalled over K4.5 million and presumably related to invoices of the type listed in Appendix 3. The documents were unsupported. There was a gap in dates between the last Poons' invoice in March 2000 and the first Eurest (Australia) invoices in August 2000 as shown in Appendix 3. The total of relevant invoices in Appendix 3 was A$8.1 million covering a 4.5 year period. This suggested an average of A$400,000 to A$500,000 per quarter as normal. 480 Mr Corotan said he obtained third party supporting documentation for invoices 00951 and 00950 out of the six invoices referred to by Mr Campbell. The other four invoices and supporting documentation for them could not be found. However, they agreed with the total amount of the Poons' invoice. He noted variances. For invoice number 00951 he noted a difference of K17,212.36. In that case the Poons' invoice was less than the total amount of all third party supplier invoices. He thought it possible there might be some invoices in the batch that should not form part of the summary. It was also possible that Poons could have made an error in billing Fubilan by omission of certain invoices which could have led to under billing. For invoice 00950 he noted a difference of K2,099.91. In that case the Poons' invoice was greater than the total amount of all third party supplier invoices. It was possible that there were invoices included in the batch summary that he prepared that should not form part of the summary. It was also possible that Poons had overcharged Fubilan for an amount of K2,099.91. 481 Mr Campbell referred in the third section of Appendix 4 to a Eurest invoice to Fubilan in August 2002 for K37,611.56 for Eurest (Australia) "back charges". This appeared to be a duplication of amounts charged on three invoices mentioned in Appendix 3. Mr Corotan reiterated that under no circumstances did Eurest (Australia) bill directly to Fubilan until mid 2003 when the accounting procedure was changed. The invoices referred to in Mr Campbell's report were not double charged to Fubilan. They were made to Eurest and the dates reflected on them were prior to mid 2003. The goods were sent to site without a copy of the Eurest BNE invoice on some occasions and the accountant on site requested the Eurest head office for a copy. Upon request, the accountant received a copy of the Eurest BNE invoice from Eurest head office and both were translated using the exchange rate ruling at that date and journalised into the Fubilan general ledger. 482 In his review, Mr Corotan noted a double posting in the "Age Payable Ledger" where invoice 48006292 for K7,530.80 and invoice 4800626 for K2,582.83 were posted in the ledger forming part of the June 2002 age payable listing. He also noted that invoice number 00108 for K37,611.56 was posted subsequently to the ledger forming part of the August 2002 age payable listing. This was erroneously posted in the ledger as the two Eurest BNE invoices had already been posted in the prior period. Subsequently the two Eurest BNE invoices mentioned were deleted from the ledger. He further extended his verification procedure by requesting Eurest (Australia) to confirm whether the payments were partially received from Fubilan for the three invoices. No payments were received from Fubilan. Mr Corotan requested Fubilan to confirm whether payments were made by them directly to Eurest (Australia) and further payments made to Eurest. Fubilan confirmed that no payments were made to Eurest (Australia) in respect of those invoices. 483 Under the heading "Invoices and Credits for Management Salary Recharges" in the fourth section of Appendix 4, none of the invoices in the respondents' discovery was supported by appropriate documentation such as management approval of salaries paid or payrolls. There was a question whether Eurest was entitled to recover some or all management salaries from Fubilan or whether its management fee, pursuant to cl 11 of the Management Agreement, should cover management salaries. The invoices covered only the calendar year 2002. They included recovery of other Eurest's costs in some instances. Mr Campbell identified a risk that some of these might represent duplications of amounts charged on Eurest (Australia) invoices or taken up as a portion of the amounts charged. 484 Mr Corotan referred to the Management Agreement and the definition of the term "management fee". He asserted, on the basis of what Mr Younger had told him, that the management fee did not relate to on-site management. The management fee was for services supplied to the operation team which included supply and upgrade of policies, procedures and safety documentation, procurement from within PNG and Australia where Fubilan would benefit from Eurest's purchasing power. Off-site labour for consolidation did not form part of a management process. This, of course, was a matter of construction of the agreement which is dealt with separately. As to the comment that the invoices covered only calendar year 2002, Mr Corotan said he had obtained all invoices and supporting payroll costing reports by employee detail as listed in Appendix 4 of Mr Campbell's report. He had also obtained management salary invoices together with all supporting payroll costing reports pertaining to the years 2003 and 2004. 485 Mr Campbell said that the invoices included recovery of other Eurest costs in some instances and there was a risk that some of them might represent duplications of amounts charged on Eurest invoices or taken up as a portion of other amounts charged. So Eurest invoice 00103 included an amount for K1050 which was also charged in invoice 00307 referred to in the second section of Appendix 4 of Mr Campbell's report. As to that Mr Corotan said that invoice 00103 was sent by Eurest's head office to Fubilan. It included Lae warehouse issued document 3307 as a back up document. He agreed that the document 3307 could be mistakenly identified as an invoice. 486 In the final section of Appendix 4 headed "Invoices for Management Charges under the Management Agreement" Mr Campbell listed invoices from Eurest for management fees for January to November 2002. It was probable that there were other invoices covering 2000, 2001, 2003 and 2004/05 evidenced by the inclusion of some of them in invoices scanned by the applicant's solicitors. Questions arose from the charges in these invoices. 487 Incentive fees had been invoiced for 2002. Invoice 00113 dated 23 August 2002 charged Fubilan with K810,925 which was said to be in accordance with cl 11.2 of the Management Agreement. Audited financial statements were necessary to confirm the amount of the net profit before tax on which it was based. Other incentive fees might have been charged for other "calendar semesters" as it seemed to him that all invoices were yet to be provided. Another Eurest invoice 2024 dated 31 May 2004, charged Fubilan an amount of K431,079.59 which represented CPI increases on management fees since the commencement of the OTML Contract. He had no instructions as to the extent of fee increases payable by OTML under the Contract. The Management Agreement did not contain the clause on VAT application. VAT had been applied to this and other management fees invoiced. 488 Mr Corotan said that the Management Agreement stipulated that the incentive fee was an amount equal to 50% of any net profit before tax in excess of K1,200,000 per annum to Fubilan achieved from the operations, not including the sale of surplus assets, after payment of the management fee. He claimed that Eurest had informed Fubilan on numerous occasions that the incentive fee was calculated on the profit from the operation without consideration of board expenses and finance costs as Eurest had no direct control over them. In addition the budget presented to MRDC prior to the Management Agreement being drafted, which was accepted by all parties as the benchmark for Eurest's performance, did not include board expenses and finance costs. This, however, was ultimately a matter of construction of the Management Agreement and not a matter for Mr Corotan. 489 As to the Eurest invoice 2042 of 31 May 2004, Mr Corotan stated that the management fee was subject to review under cl 11.1(b) of the Management Agreement. Absent agreement as to its adjustment, an upward adjustment would apply based on the same percentage adjustment as was applicable to the fees payable by OTML to Fubilan. The CPI rate used by Eurest in this calculation was based on the same CPI rates applied by Fubilan in its billing to OTML. He referred to a copy of an email from Mr Kroeger of 1 June 2004 which indicated the CPI rate for each year from 2001 to 2004. In relation to Mr Campbell's question about the application of VAT, he referred to s 10 of the PNG VAT statute and its definition of "taxable activity". He contended that the management fee fell within the definition of taxable activity. This was not however within his expertise. 490 Mr Campbell referred to invoices scanned by the applicants' solicitors and irregularities which he had observed in them. Legibility was a problem with a number of documents. Mr Corotan agreed that most of the scanned documents were very hard to read. He said that Eurest (Australia) invoices scanned by the solicitors for the applicants were usually supported by copies of suppliers' invoices. There were deficiencies in such supporting copies. A number of supporting supplier invoices did not indicate that the shipment was for the Ok Tedi mine site or otherwise so as to satisfy him that they were intended to be shipped to Fubilan at Ok Tedi. Mr Corotan said that Mr Campbell's comment in relation to three Eurest invoices numbered 600, 625 and 632 was correct. He had requested Eurest BNE to provide supporting supplier invoices. He also agreed that the comment made in relation to four scanned documents numbered 556, 565, 579 and 582 was correct in that the total of the batch of all supplier invoices pertaining to a Eurest BNE invoice did not agree with the total of the Eurest BNE invoice charged to Fubilan. There was a possibility that some supplier invoices were not attached to the Eurest BNE invoice and that this caused the variance. At the time he gave his evidence he had not received a response from Eurest BNE. Mr Campbell commented that in respect of documents numbered 561, 563, 581, 626, 627, 634 and 640, the supporting documents did not agree exactly with the amount charged but either exceeded it or were within a few dollars of it. Mr Corotan agreed. In his review he noted that all the scanned documents under review did not exactly agree to the amount charged in the Eurest BNE invoice, but either exceed it or were within a few dollars difference. 491 Mr Campbell said that a number of supporting supplier invoices did not indicate that the relevant shipment was for the Ok Tedi mine site or otherwise to satisfy him that the goods were intended to be shipped to Fubilan at Ok Tedi. He gave as examples documents 577 and 579. It would be necessary to examine the purchase order and goods received records to obtain that satisfaction. In other instances only the last page of a multi page supporting document was attached. He referred to documents 580 and 616. Mr Corotan noted that both documents 577 and 579 with a corresponding Eurest BNE invoice number of 480024778 and 48002480 respectively had indicated in the attached supplier invoices that the shipment was for Ok Tedi. He noted also however that Eurest BNE invoice 48002480 did not agree with the total of the supplier invoices attached. There was a difference of K161.20. Eurest BNE had been requested to provide an explanation. In relation to documents 580 and 616, he found in his review that both documents contained the relevant supporting documentation agreeing with the total amount of the invoice charged to Fubilan. 492 Mr Campbell referred to Eurest invoices 562, 568 and 581 where he said suppliers' invoices for goods shipped ex-Australia included GST which had been passed on to Fubilan. He said his understanding of GST legislation was that export sales were exempt. The GST should not have been on-charged to Fubilan. The amount involved was $2,791.06. Mr Corotan agreed with Mr Campbell's comment that the relevant supplier invoices included GST credits for which Eurest BNE had charged Fubilan. There was a difference between the total amount calculated by Mr Campbell in his calculation. His calculation showed a total of K2,386.33 GST credits. He also noted that supporting supplier invoices did not agree to the total of a Eurest BNE invoice 48002484 of A$37,425.72. The total of all the supplier invoices attached to that Eurest BNE invoice came to A$36,528.38 (exclusive of GST). He had requested Eurest BNE to provide an explanation in respect of that matter. 493 Mr Campbell referred to documents 559 and 578 which included credit notes from suppliers for rebates of amounts invoiced totalling $1,543.17, representing 5% of the amounts invoiced in those two instances. Such rebates were usually to be related to overall volumes purchased and more usually documented by a single monthly or quarterly credit issued from the supplier's head office to the purchaser which might have exceeded 5% in some instances. He thought it fortuitous that the two credit notes were attached to the invoices concerned, numbers 559 and 578, and he believed there may have been many more of the documents in the sample scanned by the applicants' solicitors. Mr Corotan noted that invoice number 41000046 relevant to document 559 and invoice 4800247 relevant to document 578 were dated 15 November 2000 and 18 January 2001 respectively. He understood that Eurest had acknowledged receiving certain rebates and agreed with Mr Campbell's comment that the attachments included credit notes from the suppliers for rebates of amounts invoiced totalling A$1,543.17. He agreed that there was no evidence that these credit notes had been passed on to Fubilan. 494 Mr Campbell noted the absence of shipping, port and P&G customs charges from the sample selected. Marine insurance costs had not been included. However he understood that OTML provided those services free of charge for Eurest (Australia) shipments. Mr Corotan agreed. It was his understanding that Fubilan was "freight free" ex Port Moresby. A consignment identified by Mr Campbell for which Fubilan was apparently charged, document 641, originated from Lae. 495 In the case of Eurest invoices in Kina to Fubilan for recovery of expenses and goods supplied, Mr Campbell said the majority were unsupported by external supplier documentation. In some cases there were supporting documents which did not agree with Eurest invoice amounts. In one case third party invoices only supported 50% of the quantity invoiced. A number of Eurest invoices to Fubilan for salaries incurred by Eurest and recharged to Fubilan were not supported by copies of the payroll in all instances. He raised a question whether the management fee should include all management salaries. Mr Corotan was able to identify third party invoices to support a number of the documents to which Mr Campbell referred. As to the question whether the management fee should include management salaries, Mr Corotan's comments were based upon Mr Younger's understanding of the management fee. Mr Corotan claimed that the management fee referred to an annual management fee in the initial flat amount of A$225,000 covering all of the expenses of the manager incurred in the performance or discharge of its obligations under the Management Agreement. He contended that it did not relate to on-site management. Rather, it covered the services supplied to the operations team which included supply and upgrade of policies, procedures and safety documentation, and procurement from within PNG and Australia where Fubilan benefited from Eurest's purchasing power. Off-site labour for consolidation would not form part of a management process. This also involved a question of construction which was not within Mr Corotan's expertise. 496 Mr Campbell referred to an invoice dated 23 August 2002 for K576.92 for the supply of baseball caps. There was a deposit slip attached indicating that amount was overpaid and refunded but no indication that the benefit of the refund was passed on to Fubilan. Mr Corotan said it was true there was a duplication of charge to Fubilan on the relevant invoice. However, the overcharge was refunded on 17 December 2003. 497 Mr Campbell then referred to instances (eg in document 613) where PNG VAT had been added to the total amount invoiced by Eurest while no VAT was shown on supporting vouchers. He was unaware whether the relevant foodstuffs were exempt from VAT in PNG. Mr Corotan observed that document 613 referred to a Lae invoice for a supply of banana prawns to Fubilan. He referred to the relevant section of the VAT legislation which provides for a 10% VAT on supply (not including exempt supply) in PNG of goods and services by a registered person in the course of a "taxable activity". He did not comment on the application of that provision to the supply of which Mr Campbell spoke. 498 Mr Campbell referred to documents 623 and 624 posting summaries of amounts charged to Fubilan which might represent the same items invoiced to Fubilan on documents 613 and 614. Mr Corotan said that the relevant documents represented two different consignments which were not double charged to Fubilan. There was a 5% administration fee charged by Eurest in Port Moresby for the supply of milk powder. Mr Corotan said the 5% was a mark up charged by Eurest as the milk powder was supplied from its UPNG warehouse. 499 Mr Campbell noted a charge to Fubilan of K5,843.95 in respect of a travel allowance for Mr Kroeger absent any supporting claims or explanation. It also appeared that Fubilan was charged for expenses incurred by Eurest (Australia) including an account for $5,000 being a fee for Hayes Consultant. Mr Corotan reviewed the documents numbered 608 and 631 to which Mr Campbell referred. He noted no duplication of charges in the work papers under review. Mr Corotan agreed that there was no supporting document in Mr Kroeger's personal file stating that his entitlement of A$2,500 per quarter travel allowance was correct. As to the Hayes Consulting invoice, Mr Corotan said it was incorrectly sent and charged to Fubilan by Eurest. The total cost of the invoice had been refunded to Fubilan on 12 August 2005 with a 9% interest figure which has already been mentioned. 500 On the question of employee entitlements, after referring to the relevant accounting standards Mr Campbell said that generally entitlements are recognised and provided for as they accrue on the basis of the expected amount payable. He was confident that the relevant standard would have required Fubilan to recognise a liability for accrued employee entitlements immediately upon taking over their employment. If disclosed to the board of Fubilan at the time he would have expected the directors to seek compensation from Poons for the expense involved. This issue was not raised on the pleadings and so I do not consider it further. 501 Mr Campbell went on to consider the varied tender rates applicable under the OTML Contract. As already noted, having regard to the conclusion which I have reached in relation to the claims arising out of the variation of the tender rates, I do not propose to refer to that evidence. His second report focussed entirely upon that question. 502 In his third report, Mr Campbell referred to Mr Buretam's evidence. He did not dispute it. 503 In cross-examination Mr Corotan was taken to signed financial statements for Fubilan for the year ended December 2000. He had prepared those statements which were not actually signed off until November 2005. They showed a loss of K113,699 which was a correct statement on the financial position at the end of that period. There had of course been much debate with Fubilan directors about the inclusion of directors' fees and expenses in the calculation of net profit or loss. 504 The expert evidence generally was not supportive of any inference of dishonest or systemic managerial incompetence on the part of Eurest. Undoubtedly there were errors and anomalies and differing perspective views about Eurest's managerial obligations. However, it is not surprising that such things could occur in an operation as complex as that involved in the provision of remote catering services. Issues which turn on the proper construction of the Management Agreement are dealt with below to the extent they are relevant to a pleaded cause of action. To the extent that Mr Corotan was able to explain deficiencies or anomalies identified by Mr Campbell, I accept his evidence. They will be discussed further below. This amount was said to represent the difference between revenue that Fubilan earned under the OTML Contract and revenue that would have been earned had the respondents "withdrawn the P&O tender". The calculation was said to be based on the evidence of Mr Campbell. B. These are management fees payable under the new management agreement that would not have been paid or be payable had the respondents' representations as to training been true. (c) K7,903,368 being K1,975,842 per annum from February 2004 to February 2008 for the loss of opportunity to cater to other sites in PNG. The same sum is claimed in relation to the causes of action for negligence and breach of contract. This is said to be necessary if forensic analysis of payments allowed are to be conducted. That is to say the original purchase orders, invoices and payment documents should be obtained. This claim is in the alternative to the misleading or deceptive conduct claim. E. Breach of contract by retention of rebates. This cause of action is raised as an alternative to the claim for breach of fiduciary duty and for negligence. F. Breach of contract for expenses incorrectly charged . This claim is said to arise from the no compete clause 2.4(a)(ii) of the Management Agreement. The notice of demand relied upon in respect of the guarantee is exhibit 228. The claim is against Compass Group (Australia) for Eurest's breaches of the Management Agreement. The indemnity claim is said to be to the same effect, but not requiring a notice of demand. So much was admitted on the pleadings. In [5] of the statement of claim it was asserted that Compass Group (Australia) Pty Ltd was the agent of Compass Group Plc in relation to the dealings of each of the respondents with the applicants. 508 The Compass Group acquired Eurest in November 1999. There is however no evidence to suggest that Compass Group (Australia) Pty Ltd was acting as agent of the Compass Group Plc in relation to dealings with the applicants. The ill-conceived nature of the pleading so far as it relates to Compass Group Plc was illustrated by [19] of the statement of claim which asserted that all respondents "were, at all material times, aware of or ought to have been aware of, the International Management Requirement". This was a reference to OTML's requirement that the applicants appoint an internationally reputable firm to be their catering managers to manage and implement the OTML Contract before OTML would consider any proposal in relation to the contract. This requirement, as pleaded, was raised in 1998, the year before the Compass Group acquired Eurest. So too did the allegation that it made various representations to MRSM in November 1998 as pleaded in [49] and following. 509 After its acquisition by Compass Eurest promoted itself as part of the international Compass Group. That, however, did not establish an agency relationship nor draw the holding company Compass Group Plc into any of the causes of action that have been pleaded in this case. 510 The claims against Compass Group Plc in this case approach abuse of process. On the evidence there seems to have been no warrant for them. Their inclusion raises the suspicion that it was designed to put pressure on the international holding company by having it named as a respondent in an action by indigenous landowners. I will dismiss the application as against Compass Group Plc. The applicants should be required to pay its costs which, in these circumstances, should be indemnity costs. (2) This section does not apply to conduct that is prohibited by section 51AB or 51AC. They include the relative strengths of the bargaining positions of the supplier and the business consumer and whether, as a result of the supplier's conduct, the business consumer was required to comply with conditions not reasonably necessary for the protection of the legitimate interests of the supplier. Other factors include the capacity of the business consumer to understand documents relating to the supply or possible supply of goods or services and whether any undue influence or pressure was exerted on, or unfair tactics used against, the business consumer. Factors less directly material here include the extent to which the supplier was willing to negotiate the terms and conditions of any contract for the supply of goods or services with the business consumer and the extent to which the supplier and the business consumer acted in good faith. Other factors relevant to the supplier's conduct in similar transactions and the requirements of industry codes are not material for present purposes. 513 The concept of unconscionable conduct as used in s 51AA was discussed by the High Court in Australian Competition and Consumer Commissioner v CG Berbatis Holdings Pty Ltd [2003] HCA 18 ; (2003) 214 CLR 51. The case was argued on the basis that it involved, as does this case, an allegation of unconscionable conduct comprising the knowing exploitation by one party of the special disadvantage of another. The idea of special disadvantage was propounded in Berbatis Holdings [2003] HCA 18 ; 214 CLR 51 as "... a disabling circumstance seriously affecting the ability of the innocent party to make a judgment in [that party's] own best interests". Gleeson CJ accepted that formulation as "... consistent with what the Act calls the unwritten law concerning unconscionable conduct, bearing in mind that the Act also allows for the development of the law from time to time" (at [5]). Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests. The unconscionable conduct which it prohibits is not limited in its range to "unconscionable conduct within the meaning of the unwritten law" as is that prohibited by s 51AA. In this case, however, the difference in the fields of operation of the two provisions is immaterial. The applicants rest their causes of action in unconscionable conduct upon the proposition that they were at a special disadvantage and that the respondents took unfair advantage of that special disadvantage. 10. Fubilan and MRSM pleaded OTML's requirement that they appoint an internationally reputable firm as catering manager before OTML would consider any proposal from Fubilan and MRSM in relation to its catering contract. It was designated in the statement of claim as the "International Management Requirement". The respondents were or ought to have been aware of that special disadvantage. Through their agent Mr Hayes they agreed to prepare a proposal for the OTML Contract on behalf of the applicants and to act as their catering contract manager if the proposal were successful. Reference was then made to elements of the Tender Proposal. 518 The applicants pleaded the lodgment of the Poons' tender which did not include a joint venture or similar arrangement with any individual or group from the Preferred Area as defined in the OTML tender document. The effect of the Poons' tender proposal, if successful, was that Poons would not have been required to share any profits or benefits from the OTML Contract. 519 The applicants also pleaded the acquisition of the Poons' business by Eurest as part of the acquisition of P & O (PNG) Ltd and related companies in Australia. The material effect of the acquisition was said to have been that the respondents had two tender proposals with OTML for the OTML Contract including the Poons' proposal. The Poons' proposal was more beneficial to the respondents and detrimental to the applicants than the tender proposal submitted by Eurest on behalf of MRSM. 520 Fubilan and MRSM alleged that in November or December 1999 the respondents assured them that they would only proceed with the Eurest tender proposal. They said they were in a position before November 1999 where they were not reasonably aware, or able to be reasonably aware, of the need to appoint a company to replace the respondents for the purposes of the International Management Requirement. For this reason also they were unable or had a diminished ability to protect and conserve their own interest and were at a special disadvantage as against the respondents. 521 The applicants pleaded the variation of the tender proposal to remove price differences identified by OTML leading to an annual reduction of K3,451,200 in their income from the contract. Based solely on the respondents' advice the varied proposal was approved by MRSM and lodged with OTML in or about early January 2000. In maintaining the two tender proposals for the OTML Contract, the respondents and, alternatively, Eurest (Australia), placed them in a position where they were not reasonably able to replace the respondents in order to meet the International Management Requirement. The respondents thereby took advantage of the special disadvantage of the applicants in a manner that was, in all the circumstances, unconscionable and thereby in contravention of s 51AA of the TPA. In the alternative, it was alleged that the respondents had engaged in unconscionable conduct contrary to s 51AC(1)(a) of the TPA. 522 MRSM and Fubilan said that they were inexperienced in understanding and assessing the financial implications of the original tender and the varied tender and were unable to properly protect and conserve their respective commercial interests in relation to those proposals. The respondents were said to have been aware of, or to have had reason to be aware of, these matters. In support of the invocation of s 51AC it was said that the remuneration due to MRSM under the Management Agreement did not exceed the amount of A$3 million referred to in s 51AC(9) of the TPA. Fubilan claimed to have suffered loss and damage as a result of the conduct of the respondents. 523 It was a common feature of the allegation of unconscionable conduct raised under both provisions that because of the so-called International Management Requirement the applicants were unable or had a diminished ability to protect and conserve their own interests. On that basis it was said they were "at a special disadvantage" as against the respondents. This aspect of the pleading was the foundation upon which the causes of action in unconscionable conduct rested. It was a foundation without substance. Mr Higgins wrote to Mr Hayes on 1 October 1999 saying that OTML wanted to amalgamate the two competing proposals that it had received from Poons and from Eurest as soon as possible with a view to an immediate award. Mr Baitia protested in his letter of 5 October 1999 that MRSM had independently tendered for the contract with Eurest as its manager and should be awarded the contract as tendered. Whilst your tender is attractive in many aspects, in some areas it is incomplete and in certain respects not competitive. Mr Higgins in his response to Mr Baitia on 6 October pointed out that neither of the MRSM or Poons' tenders had been accepted at that time. At the meeting which took place in Cairns on 9 October 1999 Mr Cox-Martin told representatives of MRSM and the future Fubilan as well as Eurest that OTML wanted new contract rates to be provided picking up the best from the previous MRSM and Poons' tenders. 524 Mr Baitia's memorandum, after the meeting, to his managing director, Mr Andrew, included the observation that OTML had organised the meeting to achieve an alignment of the proposals from MRSM, Poons and Eurest. Mr Baitia was well aware that Mr Hayes was working after the Cairns meeting to bring the two bids together. Mr Fenwick was involved in that work. In subsequent correspondence in December 1999, Mr Hayes quite properly told Mr Baitia that because of the renegotiation of the rates the profit expectation from the contract would need to be reduced. 525 In none of the circumstances surrounding the creation of the varied tender is there any basis for the contention that MRSM or Fubilan was unable to look after its own interests or that it was at a special disadvantage as against Eurest. MRSM had competent advisers available to it and therefore to Fubilan. The pressure for revision of rates came from OTML which indicated that neither tender was satisfactory as it stood. There is nothing to support the proposition that Eurest took advantage of MRSM in any way. Eurest was not bargaining with MRSM or Fubilan. It was bargaining with OTML. The claims of unconscionable conduct should never have been made. They will be dismissed. 527 The representations variously relied upon were broken up into groups designated the "Initial Representations", the "Assurance Representations", the "Further Representations", the "Tender Proposal Representations", the P&O Representations, the "Varied Tender Proposal Representations" and the "Continuing Representations". The latter category was a collective term for all of the other groups of representations. 528 The "Initial Representations" contained in the letter of 25 November 1998 relating to the provision of training to employees of MRSM, the assembly of a strong management team from Australian, PNG and international resources, the highest possible involvement of PNG residents, training and staff development programs, clearly demonstrated accounting procedures, reconciliation of goods and services supplied every four weeks, substantial administrative and operational support, benefits through purchasing, operational and management expertise and an awareness of the benefits and requirements of training PNG citizens. In addition it was said the respondents represented that they would pass on directly to Fubilan the benefit of their large PNG, Australian and global purchasing power which allowed them to purchase at the best possible price [ 49]. 529 The "Assurance Representations" were said to have been made at a meeting at the Sheraton Hotel in Brisbane in or about November 1998 through Mr Jeff Hayes. The Initial Representations were confirmed and Fubilan was told through Mr Fenwick that the respondents could handle the Management Agreement and that management and training provided during the term of the OTML Contract would enable the applicants to acquire adequate knowledge and experience to bid for the renewed contract in their own right. In addition, it was said that Mr Hayes assured Fubilan through Mr Fenwick that the respondents would rectify the failure of Poons to promote localisation of management positions in PNG. 530 The "Further Representations" were said to have been made in the period from November 1998 to June 1999 in negotiations relating to the Management Agreement and the tender proposal. They were said to have been "consistent with the Initial Representations and the Assurance Representations". 531 The applicants said that based upon the Initial Representations, the Assurance Representations and the Further Representations, MRSM engaged "the respondents" under the First Retainer [54] and would not have done so if the representations had not been made [55]. The pleading of the engagement under the First Retainer however did not seem to lead anywhere in terms of a cause of action for misleading or deceptive conduct. 532 The Tender Proposal Representations were said to have been made in or about July 1999 in the tender proposal for the OTML Contract. They related to the status of the respondents as outstanding providers of support services and the world's leading catering and services management company, their organisation structure for the OTML Contract and their promises to provide monthly performance reports and comprehensive reporting mechanisms, weekly service audits and monthly management audits. Another representation identified was that the focus of the respondents would be the ongoing development of national workers achieved through a predetermined training and localisation program. A more specific representation pleaded was that the respondents would localise expatriate positions in the operations on a predetermined basis providing for the localisation of five expatriate positions to commence in July 2000. 533 The P&O Representations were said to have been made by Mr Hayes between November 1999 and January 2000 in answer to assurances requested by Fubilan that the respondents still intended to provide training and benefits which they had not previously provided including localisation of management and that employees of Poons would not be involved in the management of the OTML Contract. 534 The Varied Tender Proposal Representations were said to have been made between December 1999 and January 2000 in the content of the Varied Tender Proposal to the effect that 27 Australian suppliers and 25 PNG suppliers were nominated that would supply Fubilan under the OTML Contract and that the respondents would localise expatriate positions in the operations on a predetermined basis for six expatriate positions commencing April 2000. They were said to embody the original Tender Proposal Representations which were thereby remade. It was said to follow that the representations made by the respondents, including the Initial Representations, the Assurance Representations, the Further Representations, the Tender Proposal Representations, the P&O Representations and the Varied Tender Proposal Representations continued in effect at all material times on both applicants. These were referred to collectively as the "Continuing Representations". It is alleged that in reliance on those representations the applicants entered into the Management Agreement. 535 The applicants alleged the Continuing Representations were false. The bases of falsification were set out in [67] of the statement of claim. They were all in the nature of a failure to honour promissory aspects of the representations relied upon. It was not pleaded that the respondents did not have reasonable grounds for making the various statements of a promissory or predictive character attributed to them. Then it was pleaded that "in reliance upon the Continuing Representations the applicants entered into the Management Agreement" [65] and would not have entered into it if those representations had not been made [66]. 536 The pleading thereafter lost its way logically. Three new paragraphs 71A, 71B and 71C had been included by amendment to the statement of claim. By those additional paragraphs the applicants alleged that in January 2002 they met with the respondents and OTML in Cairns to discuss management problems. OTML recommended that a third party auditor be appointed to carry out an investigative audit. The applicants alleged that they appointed KPMG. In or about June 2003 KPMG produced a report "which identified ongoing problems with the Second Respondents' management and supervision of the conduct of the Contract, as pleaded at paragraph 186, below". The pleading of the report was not a pleading of the problems it identified. The KPMG report itself was never put into evidence. 537 The pleading then alleged that in July 2003 the applicants agreed to take an interest in Pacific Catering Services Ltd, a PNG company, to provide catering services for other mining operations in PNG, "... instead of doing so in their own right" [72]. It was said that the conduct of the respondents prevented the applicants from obtaining the reputation and training to provide the customer service and management skills necessary to provide services to other mining operations in PNG in their own right [73]. 538 The applicants pleaded the notice given by OTML on 8 December 2003 that the OTML Contract would not be renewed [74]. It followed that they would not be able to provide catering services to OTML and had thereby suffered loss or damage. This pleading was of course drafted well before August 2005 when OTML awarded the new catering contract to Fubilan with Eurest as its manager. No amendment was made to the statement of claim to reflect this. They have now claimed management fees paid to Eurest under the extensions. They have also claimed management fees payable under the new management agreement and a sum for loss of opportunity in relation to catering for other sites in PNG. It is necessary in considering the merits of this cause of action to have regard to its elements. 12. 542 The loss or damage recoverable under s 82 is loss or damage suffered "by conduct of another person that was done in contravention ... of Part V". So where misleading or deceptive conduct is alleged it must be shown that the applicant suffered loss or damage as a result of that conduct. "By" is a curious word to use. One might have expected "by means of", "by reason of", "in consequence of" or "as a result of". But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E & M H) Pty Ltd [1991] HCA 12 ; (1991) 171 CLR 506, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so. It does not require that the contravening conduct be the only cause of the applicant's loss. Nor is it necessary, where the misleading or deceptive conduct involves a misrepresentation, that the applicant who suffered loss or damage relied upon that misrepresentation. It may be that misleading or deceptive conduct will set in train a chain of events where one person is led into error on the basis of that conduct and induces some other person to do something that causes them to suffer loss or damage. 544 In this case s 51A was invoked in the statement of claim. (2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation. (3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead. Paragraph 68 seemed to suggest that it was invoked as an element of the prohibition imposed by s 52. But s 51A "... does not of itself create a cause of action, nor ... define a norm of conduct": Ting v Blanche (1993) 118 ALR 543 at 552 (Hill J). It does not create a cause of action independent of that created by s 52 when read with s 82. There are authorities which say that it casts a burden of proof on the respondent: see Ting 118 ALR 543; Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) 46-179 at 54,432 (Goldberg J). It certainly casts the "evidential burden" on the respondent in the sense of an obligation to adduce evidence on the issue of whether there were reasonable grounds for making the representation. It does not impose on the representor the legal or persuasive burden to prove that it had reasonable grounds for making the representations alleged. As Emmett J said of s 51A in Australian Competition and Consumer Commission v Universal Sports Challenge [2002] FCA 1276 , the section does not reverse the onus of proof when it applies. It merely requires the alleged representor to "adduce evidence to the contrary". There may be a question whether a representor can discharge the evidential burden by pointing to evidence which forms part of the applicant's case. In my opinion a respondent may rely upon evidence called by an applicant which answers the description "evidence to the contrary". 546 To make a promise which is not performed or a prediction which is not fulfilled is not of itself misleading or deceptive: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88; Bill Acceptance Corporation Ltd v GWA Limited (1983) 50 ALR 242. The making of a promise or prediction may contain implied representations of present fact such as the promisor's intention or capacity to perform the promise. Such representations if false may be misleading or deceptive within the meaning of s 52. A prediction which is apparently based on the expertise or experience of the representor may carry with it an implied representation as to the existence of that necessary expertise or experience and perhaps also an implied representation that relevant inquiries have been undertaken to support the opinion being offered. 547 It is important however to bear steadily in mind that s 51A does not introduce a rule of law that a promise which is not performed or a prediction which is not fulfilled is thereby misleading or deceptive. Section 51A(1) requires that a statement about a future matter made without reasonable grounds will be treated as if it is misleading or deceptive. It may be that in many if not most cases a person making a statement about the future will be treated as making the implied representation that he or she has reasonable grounds for the statement. If the reasonable grounds do not exist, the statement will generally be misleading or deceptive although that need not always be the case. Section 51A(1) may be said to involve a limited extension of the scope of s 52 to the extent that it transforms a logical proposition which is of broad scope into a rule of universal application. In my opinion a pleading of misleading or deceptive conduct which relies upon s 51A should make clear that it involves the allegation that the representor did not have reasonable grounds for making the statement alleged. Section 51A will then operate, to require the conduct of the representor, if established, to be treated as misleading or deceptive for that is its substantive operation. Its adjectival operation puts the evidential burden upon the representor and supports it with a powerful deeming provision. If a pleading of misleading or deceptive conduct based upon a statement about future facts does not expressly plead want of reasonable grounds yet invokes s 51A, then it should be taken to so plead or if that implication is not open it should be regarded as deficient. 548 The preceding analysis has consequences for dealing with the way in which the cause of action for misleading or deceptive conduct based upon statements of future fact is set up. The causal connection between the respondent's conduct in such a case and the loss or damage claimed is not the breaking of the promise or the failure of the prediction. The causal connection which must be shown to exist is a causal connection between the loss or damage claimed and the making of the promise or prediction without reasonable grounds. 13. These were said to be false entirely on the basis that things said to have been promised were not done, or things were done contrary to promises made [67]. The applicants alleged that "the Continuing Representations have proved to be false in that ..." [67]. There followed a list of failures to do the various things which it was said were promised. As already noted it is elementary that a promissory statement is not falsified by failure to perform the promise. 550 The applicants' case is that they were induced to enter into the Management Agreement by the false promises of the respondents. They then say, in effect, that because of the various failures of the respondents to perform according to their promises, Fubilan was prevented from obtaining the necessary reputation and skills to secure the renewal of the OTML Contract in its own right and to secure catering contracts in other areas. The loss or damage flowing from that comprises the management fees paid under the extended OTML Contract and the new OTML Contract and the loss of opportunity to Fubilan to undertake work in its own right in the future. 551 I have already found that the operative obstacle to Fubilan's capacity to secure the renewal of the OTML Contract in its own right was not any deficiency on the part of Eurest but its own lack of capacity at the level of its board and senior management to conduct reasonably workable commercial relationships with Eurest and OTML. To the extent that Fubilan lacks "the reputation and training to provide the customer service and management skills necessary to provide services to other existing and developing mining operations in their own right" the evidence did not, in my opinion, establish that that was due to the entry into the Management Agreement with Eurest. Given its composition and particularly its choice of advisor in Mr Fenwick, it would have faced the same difficulties, of which there was little direct evidence, whoever its manager had been. 552 At the threshold of this cause of action lies the contention that the various representations attributed to the respondents were made without reasonable grounds. In my opinion, putting aside puffing statements about strong management teams, status as "an outstanding provider of Support Services", as "the world's leading catering and services management company" and the achievement of "operational excellence", for which there were no falsifying allegations, the evidence adduced from Eurest was sufficient to establish reasonable grounds for making each of the statements alleged. The respondents plainly had the organisational capacity to do the things allegedly promised. There is no suggestion that Mr Hayes was other than honest in his intentions. It cannot be said that the respondents lacked the relevant intent to give effect to any promises they made and I find that, to the extent that their intention derived from Mr Hayes' they had that relevant intention. In so saying, I have not made particular findings about whether each of the alleged representations was in fact made. At least in part they are constructed from documents. But even if they were all made as alleged the causal connection to the loss and damage alleged is not made out. There was no evidence to support the proposition that had Fubilan not entered into the Management Agreement with Eurest it might, in some other way, have achieved the capacity to provide catering services in its own right to OTML or any other client. Even with appropriate levels of employee competency, Fubilan fell well short of the commercial maturity at board level necessary to maintain ongoing commercial relationships in a complex service delivery exercise conducted in its own right. 553 In my opinion the causes of action based on misleading or deceptive conduct are not made out and the claims based on them will be dismissed. 14. Assuming the existence of a relevant fiduciary duty, there was no relevant wrong doing on the part of Eurest in this respect. 15. Eurest (Australia) would order the goods from Australia or from within PNG. It would retain invoices from Australian suppliers at its Brisbane office. Copies were not provided to the applicants, although the respondents maintained that copies were provided from time to time upon request. Eurest (Australia) would arrange for the goods to be delivered to OTML's freight forwarder's depot at Townsville for transportation by OTML to PNG for use by Fubilan in delivering services under the OTML Contract. 556 Eurest (Australia) issued Fubilan with its own invoices for the cost of the goods so provided. The applicants pleaded admission statements allegedly made by Mr Poelzl in an email to Mr Younger dated 6 October 2000 in which it was said that Eurest (Australia) "recovers about A$500,000 per annum in rebates for PNG purchases" [93]. This was denied. The applicants pleaded a further admission by the respondents on 24 August 2001, in a response to the MRDC technical paper. 94.2 Eurest may receive some early payment discounts. These had not been passed on to FCS. 94.3 Eurest have received early payment discounts from some "in country" suppliers. These discounts were not passed on to FCS in the year 2000. In so doing the respondents said that Eurest was not obliged to pass the benefit of rebates or early payment discounts on to Fubilan. The applicants' pleading was curious. What were alleged were admissions rather than the facts admitted. That was a pleading of evidence rather than of material facts. A similar plea was made by the applicants, and admitted by the respondents, that on 29 January 2002 in Cairns Mr Poelzl admitted that the respondents had received rebates estimated at K88,000 which rebates had not been passed on to Fubilan [96]. 557 Schedules provided by Eurest (Australia) to KPMG relating to Australian and PNG suppliers were alleged to have set out applicable rebates received in relation to each supplier and the volume of supplies for the period from the commencement of the Contract to 30 September 2001 [98]. That matter was also admitted although again it was in the nature of a plea of evidence rather than of a material fact. 558 In [100] of the statement of claim the applicants pleaded that KPMG had provided a report, in December 2002, based on information provided by Fubilan and MRSM. Statements made in the report were pleaded. They were to the effect that KPMG found Eurest had estimated the amount of rebates for the period 1 February 2000 to 31 December 2001 as A$159,000. KPMG's calculated rebates of A$205,464 due to Fubilan were said to be based on total purchases posted to the books and records of Fubilan for Eurest (Australia) at the same rebate percentage of 3.63%. KPMG was also said to have calculated outstanding rebates due for the period 1 February 2000 to 31 December 2001 on PNG supplies as K355,730. It was said that the findings in the KPMG report were qualified on the basis that KPMG did not have access to all supplier agreements. Finally it was pleaded that KPMG concluded that Eurest had received rebates relating to the purchases of Fubilan from the commencement of the Contract. This pleading was not an allegation of the facts set out in the KPMG report. It was an allegation of what the KPMG report contained. It had no place in the pleading. Nevertheless the statement of claim went on to treat the conclusions in the KPMG report as though they were allegations of material fact pleaded by the applicants. The report itself was not put in evidence. Absent its author it would have been inadmissible hearsay. 559 It was said that Fubilan at all material times had no knowledge of the invoicing and rebating arrangements allegedly undertaken by Eurest (Australia). 560 The statement of claim went on to plead matters relevant to the alleged breach of fiduciary duties by the respondents in advancing the varied tender proposal. In that context it was also pleaded that the respondents acted, in all dealings with the suppliers of goods or services to be used in providing the services under the OTML Contract, as the representative and agent of the applicants [100.4]. This, however, was said, in [110] to be "as part of and in furtherance of the First Retainer and the Second Retainer". The terms "First Retainer" and "Second Retainer" referred back to the engagement of the respondents to prepare a proposal for the OTML Contract for and on behalf of the applicants (the First Retainer) and to act as the applicants' catering contract manager if the proposal the subject of the First Retainer was successful [22]. This was on the basis that MRSM intended to incorporate Fubilan as a wholly owned subsidiary. The alleged agreement by the respondents through Mr Hayes to act as the applicants' catering contract manager was designated the "Second Retainer" [22.2]. That agreement was outside the framework of the Management Agreement. It would have been subsumed by its terms. The pleading then descended into further confusion. By reason of the matters pleaded in [106] to [110], none of which raised the Management Agreement, it was alleged that the respondents occupied a position and were, and each of them was, in a relationship of agency with the applicants in their dealings with OTML and in their dealings with the suppliers of goods or services to be used in providing services under the OTML Contract. The applicants were said to have reposed their complete trust and confidence in the respondents to act in their best interests. They depended upon the respondents acting in their best interests in all their dealings with the suppliers of goods or services to be used in providing the services under the OTML Contract [111]. 561 The fiduciary duties alleged to have been owed by the respondents to the applicants were said to have been breached in relation to the negotiation of the rates in the tender proposal ultimately accepted by OTML. That aspect has already been dealt with. 562 The applicants claimed that there was a breach of fiduciary duty by Eurest in relation to rebates. In substance they alleged that, while engaging in purchasing and invoicing of supplies from PNG suppliers, Eurest directly or indirectly accepted or obtained or agreed to accept or obtain from the suppliers consideration, including, without limitation, discounts, incentives and rebates which consideration was not passed on to the applicants [122]. In so doing it acted to their detriment and in breach of the fiduciary duties pleaded in [110], [111] and [112]. As a result Fubilan was said to have suffered loss and damage [126]. The damages were said to have included "the value of the rebates received by the respondents for the purchase of goods and materials for the Contract". Similar allegations were made against Eurest (Australia) which was also said to have been in breach of fiduciary duties owed to Fubilan. 563 Related to the rebate question was another alleged breach of fiduciary duty by Eurest. This derived from its operation of the Fubilan bank account. It was said that in operating the bank account Eurest owed a fiduciary duty to Fubilan not to pay out funds to Eurest (Australia) or otherwise without accounting for any consideration that the respondents directly or indirectly accepted or obtained, or agreed to accept or obtain, from suppliers including, without limitation, discounts, rebates or incentives [136]. Eurest was said to have paid out funds from the bank account to Eurest (Australia) without accounting for consideration received by way, inter alia, of discounts or rebates. Eurest (Australia) was said to have been involved in this breach of fiduciary duty on the part of Eurest by, with knowledge, receiving payments from Eurest in breach of its fiduciary duty and by reason of the fact that it took part in, and directed and controlled, Eurest's purchasing activities. 564 Eurest (Australia) admitted that it had not passed on any discounts, incentives and rebates to Fubilan and said it was not obliged to do so. It said that even if it were obliged to pass on such benefits to Fubilan it was entitled to set off the amount owed against interest paid by Eurest on moneys advanced to Fubilan to fund its operation during 2000. Eurest also contended that it was not obliged to account for discounts, incentives or rebates received from suppliers. In the event, it was not really in dispute that Eurest (Australia) had received rebates or discounts on goods supplied for the OTML Contract. The quantum of those rebates and/or discounts was not clearly established. 16. The relationship thereafter was defined by the Management Agreement. How that contractual relationship gave rise to fiduciary obligations was never explained on the pleadings or in the closing submissions. 566 In the applicants' closing written submissions some generally uncontentious propositions about fiduciary duties were advanced. It was said that a fiduciary duty will arise where there has been an undertaking to act in the interests of another party together with the power to affect that interest in a practical sense and as a consequence of that power to affect the interests of the person to whom the duty is owed. Where the person is vulnerable and the power is abused breach of duty is established. Reliance was placed upon Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64 ; (1984) 156 CLR 41 at 96-97 (Mason J). The critical feature of a fiduciary relationship was said to be the reposing of trust or confidence in the fiduciary who undertook to act for, and on behalf of, and in the interests of, vulnerable persons in the exercise of a power or discretion which would affect the interests: Breen v Williams [1995] HCA 63 ; (1996) 186 CLR 71 at 82. The obligation of the party owing the fiduciary duty to act reasonably and in good faith was referred to. 567 Without rectifying the discontinuity in the pleading, the closing submissions moved from general statements about fiduciary duties to the calculation of damages. The applicants submitted that they had produced evidence of the quantum of damages to the extent that it was available to them and that their evidence had not been contradicted by evidence put on by the respondents. Mr Fereday's evidence of rebates of up to 15% in the industry, read with Eurest documents showing that rebates were taken, entitled them to claim rebates on the basis of a percentage of total purchases for the taking of an account of profits in the relevant period. Mr Younger's email to the effect that rebates for goods sent to PNG were $500,000 per annum was said to confirm that the amounts in issue were substantial. 568 The respondents pointed out that it was settled in evidence, at least until mid 2003, that Eurest spent its own money purchasing stock for the Contract. This was not disputed. There was no clear evidence that reinvoicing was done by either Eurest or Eurest (Australia). Critically, neither Eurest nor Eurest (Australia) was spending Fubilan's money. They were spending their own. I accept that submission. They were supplying stock at the fixed price contemplated by the OTML Contract. This reflected Mr Fenwick's insistence, as early as March 1999, in correspondence with Mr Baitia, that food supply to site should be at a fixed contract rate. His letter clearly demonstrated his awareness of the availability of rebates and discounts in the industry. He wrote that if food prices were set in this manner MRSM would have the opportunity to prepare forecast budgets. Moreover the possibility of price hedging through rebating and invoicing offshore would be reduced. 569 At the heart of this claim was the applicants' contention that there was a fiduciary relationship between them and Eurest. The relevant relationship in this case was in fact defined by the Management Agreement although not pleaded in reliance upon it. 571 Eurest was "appointed and engaged by Fubilan Catering Services to manage, supervise and control the Operations" (cl 2.2). The operations were "all the undertakings, activities and operations engaged in by Fubilan in carrying out, performing or providing the Services under the Contract ...". The latter obligation included ":the payment of all sums payable by Fubilan Catering Services with respect to its acquisition of all services and remedies ...". (cl 4.2(iii) and (vii)). 572 Reliance was placed by the applicants, in the context of the claims of breach of contract in relation to the rebates, upon cl 5.13. That clause related to the engagement of subcontractors by Eurest "to carry out and/or perform any but not all of the Services". The engagement of subcontractors was to be by written subcontract. This requirement was applicable to subcontractors "exceeding K20,000 in value with supplies of food stuffs, consumables or other goods or services required for carrying out the Operation". In my opinion however this provision did not extend to require written subcontracts to be entered into between Eurest and those from whom it purchased food in Australia or Papua New Guinea. The purchasing of food was an element of the Services to be provided under the OTML Contract. To purchase food from a supplier did not involve entering into a subcontract. As was pointed out by counsel for the respondents in his closing oral argument, one of the stated duties of Eurest under the Management Agreement was to notify the Fubilan board of any suspected breach of a subcontract. 573 In Schedule 2-7, Volume 2 of the OTML Contract there was a list of "subcontractors and suppliers whom the contractor proposes to use in the performance of the Services". But that Schedule was not part of the contract. The terms and conditions of the Contract appeared in Volume 1 of the Contract documents. 574 Eurest was to be paid a fixed management fee. The relationship between Eurest and Fubilan was that of manager and client. It was not a relationship of agent and principal. Eurest was not authorised to, and did not, purchase supplies for OTML as an agent for Fubilan. At all times it was required to act consistently with the rather general terms of the Management Agreement. Eurest (Australia)'s purchases for which Fubilan was said to have been directly invoiced by it were, strictly speaking, outside the framework of the Management Agreement. To the extent that it invoiced Fubilan directly it avoided any suggestion that Eurest was imposing a mark-up on a purchase from a member of its own corporate group. Compensation shall be on a per plate basis for each service actually provided in accordance with the scope of work at section 4. So the lower the price at which food could be acquired for the OTML Contract, the greater the profit to Fubilan. 577 The matter at issue in relation to the cause of action for breach of fiduciary duty in relation to the rebates is whether there was a fiduciary obligation imposed on Eurest as manager or upon Eurest (Australia) by virtue of the relationship defined by the Management Agreement. In considering that question, it is not necessary to explore the range of all possible fiduciary obligations which might be superimposed on the contractual obligations in this case. In operating Fubilan's bank account pursuant to the authority given to it by cl 5.11 of the Agreement, Eurest might have a fiduciary obligation not to apply Fubilan's funds for its own benefit for purposes outside those related to the performance of the agreements. Plainly reimbursement for expenses incurred would fall within the scope of a proper use of the account. This is the kind of obligation that attaches to any person given funds to be applied for a particular purpose. 578 In my opinion Eurest was authorised, under the Management Agreement, to purchase foodstuffs both offshore in Australia and onshore in PNG in order to provide the services which Fubilan had contracted to provide under the OTML Contract. There was a debate about the requirement that in so doing it was to operate within the parameters of an approved program and budget (cl 4.2(iv)). That debate is not however relevant to the question whether there was a fiduciary obligation imposed on either it or Eurest (Australia) in relation to such purchases. 579 It is clear that a fiduciary relationship can co-exist with a contract and may be an incident of all or some aspects of the contractual relationship. 580 In Hospital Products Ltd [1984] HCA 64 ; 156 CLR 41, the High Court was concerned with a distribution agreement for hospital products between an American company and an Australian distributor. The Australian distributor acquired a large quantity of the company's demonstration products, sterilised them and sold them in competition with, or in substitution for, the company's products. He later manufactured the same products locally. While he was held in certain respects to be in breach of the distribution agreement, the High Court held by majority (Gibbs CJ, Wilson and Dawson JJ, contra Mason and Deane JJ) that there was no fiduciary relationship between the parties. 581 Gibbs CJ observed that the categories of fiduciary relationships are not closed, the difficulty being however to suggest a test by which it may be determined whether a relationship, if not within one of the accepted categories, is fiduciary (at 68). The courts have often expressed a cautionary note against the extension of equitable principles into the domain of commercial relationships so as "not to strain [them] beyond [their] due and proper limits", to use the words of Lord Selborne LC in Barnes v Addy ([1874] 9 Ch App 244 at 251). In ordinary business affairs persons who have dealings with one another frequently have confidence in each other and sometimes that confidence is misplaced. That does not make the relationship a fiduciary one. ... A fiduciary relationship exists where one party is in a position of reliance upon the other because of the nature of the relationship and not because of a wrong assessment of character or reliability. That is to say, the relationship must be of a kind which of its nature requires one party to place reliance upon the other; it is not sufficient that he in fact does so in the particular circumstances. Of course, where a relationship is fiduciary in character it will be so whether or not the party in whose favour the fiduciary obligations are imposed actually trusts the party upon whom the obligations are imposed. He cited Phipps v Boardman [1966] UKHL 2 ; (1967) 2 AC 46 for the proposition that relationships of trust and confidence or confidential relations such as those between trustee and beneficiary, agent and principal, solicitor and client, employer and employee, director and company and between members of a partnership are accepted fiduciary relationships. A mere subcontractor is not a fiduciary. Although the subcontractor's work could be described as work carried out in the interests of the head contract, the subcontractor "cannot in any meaningful sense be said to exercise a power or discretion which places the head contractor in a position of vulnerability". The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction. The decision did involve a consideration of whether fiduciary obligations arose out of the doctor/patient relationship. Gummow J accepted that the mere presence of a contract does not exclude the coexistence of the concurrent fiduciary duties and that it may in particular circumstances provide the occasion for their existence. His Honour relied upon what was said by Mason J in Hospital Products Ltd [1984] HCA 64 ; 156 CLR 41. Fiduciary duties are less likely to be identified in commercial transactions between parties at arms' length effective in written form: Artifakts Design Group Ltd v NP Rigg Ltd [1993] 1 NZLR 196 at 231; Auag Resources Ltd v Waihi Mines Ltd [1994] 3 NZLR 571. A trust or an agency, for instance, is none the less fiduciary because it happens to arise in the commercial context. The more difficult question is, to what extent will courts, in a commercial context, find fiduciary relationships to exist outside the "accepted" categories. Traditionally there has been considerable reluctance to do so. But if that expectation is not inappropriate in the circumstances of the relationship between the parties, and this will be presumed in a settled category of fiduciary relationships, then fiduciary duties will arise. This is particularly so when the parties involved are substantial corporations, having equal bargaining power. MRSM which initiated the discussions with Mr Hayes did so with the backing of MRDC and the assistance of the advisor of its choice, Mr Fenwick a person widely experienced in the industry although, as events turned out, he was not a good choice for a long term relationship. The terms of the Management Agreement which required competence and diligence on the part of the Manager, responsibility for and supervision of the activities of Fubilan, preparation of programs, budgets and a Corporate Manual and of accounts and records, as well as reports, do not convey the sense of a relationship of a fiduciary character. The relationship under the Management Agreement was commercial and arm's length. Indeed, the provision of programs, budgets and reports presupposes the existence of the capacity in Fubilan to consider and make decisions based on those matters. That Fubilan may have been constrained in its ability to terminate its manager or to do certain other things by reason of OTML's powers under the OTML Contract does not change the relationship under the Management Agreement into a fiduciary one. 590 The question that then arises is whether in some more limited way Eurest and Eurest (Australia) had fiduciary obligations to Fubilan in relation to the purchase of foodstuffs for the OTML Contract. 591 Eurest (Australia) had no fiduciary obligation to Fubilan arising out of the Management Agreement. Its obligations under the Agreement were those imposed by cl 15 whereby it guaranteed to MRSM and Fubilan Eurest's performance of its obligation to indemnify them against any loss or liability suffered in connection with any default or delay by Eurest in the performance of those obligations. It was not in any sense a representative or agent of Fubilan in relation to the purchase of food stuffs. Nothing about its relationship to Fubilan or MRSM outside the framework of the Management Agreement gave rise to any such obligation. No basis for such a duty was pleaded. The First and Second Retainers which were relied upon generally for establishing the claimed fiduciary obligations, were subsumed in the Management Agreement. To the extent that it was able to secure rebates or discounts in respect of purchases of food stuffs for which it invoiced Fubilan, Eurest (Australia) was not in breach of any fiduciary obligation to Fubilan. And if Eurest had breached fiduciary obligations owed to Fubilan they were not contractual obligations and not within the scope of Eurest (Australia)'s guarantee and indemnity obligation. 592 To the extent that either Eurest or Eurest (Australia) purchased food stuffs for use in the provision of the services under the OTML Contract, they did not purchase as agent for Fubilan as principal. Rather each purchased as a principal in its own right. Although Eurest can be said, in a loose sense, to have been acting in a representative capacity, the terms of the Management Agreement were sufficiently prescriptive in relation to expenditures to be incurred by the manager that a fiduciary relationship cannot properly be superimposed upon its terms. 593 It is important in the present case to put to one side, in determining whether there was a fiduciary obligation, questions about the alleged failure by Eurest to comply with requirements of the Management Agreement relating to budgets and programs under which expenditure was to have been authorised. Such failures, if made out, would not change the character of the relationship to which the contract gives rise so as to superimpose upon it fiduciary obligations. Nor is it to the point that Fubilan was a company effectively controlled by indigenous landowners who were not commercially sophisticated. As already noted in connection with the unconscionable conduct claim, there was no basis for the contention in any of the circumstances surrounding the creation of the varied tender that MRSM or Fubilan was unable to look after its own interests or that it was at a special disadvantage as against Eurest or Eurest (Australia). MRSM had competent advisors available to it and to Fubilan. It had management services provided to it by MRDC. Fubilan had Mr Fenwick engaged as its consultant in the relevant period. These structural arrangements along with the terms of the Contract themselves tell against the imposition of any fiduciary obligations. 594 Consistently with the weight of authority and the textbook writings, the law will not lightly impose fiduciary obligations, outside settled categories, on parties to well defined contractual relationships entered into at arms length and prescribing in detail their rights and obligations. When a contract is entered into at arm's length by parties properly advised, the court should not shadow the contractual obligations of one of them with judge-made fiduciary obligations simply because the other is commercially inexperienced. Too great a readiness to impose such duties is apt to give rise to uncertainty and associated risks in commercial relationships. This may be to the disadvantage of those who, although commercially unsophisticated, wish to enter into such relationships with the assistance of their own advisors. 595 In my opinion the claim for breach of fiduciary duty against the respondents in respect of rebates and discounts cannot succeed. These conclusions apply to the claims for breach of fiduciary duty by Eurest and Eurest (Australia). They also extend to the alleged breach of fiduciary duty by Eurest in respect of dealings on the Fubilan bank account and the alleged involvement by Eurest (Australia) in the breach of fiduciary duty by Eurest. 17. Moreover it was said that at all material times from their acquisition of Poons, the respondents knew or ought to have known that unless the Poons' tender proposal were withdrawn it was likely that it would detrimentally affect the applicants' position on the basis that the tender proposal would either be unsuccessful or need to be varied [157]. Eurest and Eurest (Australia) were said to have failed to advise the applicants of the likelihood of problems with the tender proposal [158]. By failing to advise the applicants of those matters, Eurest and Eurest (Australia) were said to have breached their duty of care to exercise "the standard of care and skill normally exercised by the world's leading catering and services management company". Then it was said that if Eurest and Eurest (Australia) knew the potentially detrimental effect of the Poons' tender proposal on the applicants' position, the applicants would have been able to require them to withdraw their proposal. If the Poons' proposal had been withdrawn, OTML would not have had a competing tender against which to request a reduction in the prices contained in the tender proposal. 597 On the basis of the facts found in relation to the variation of the tender proposal including the insistence by OTML for a revised tender, it is difficult to see what, if any, difference the withdrawal of the Poons' tender would have had. Eurest and Eurest (Australia) acted reasonably in the circumstances. It did so in conjunction with Mr Fenwick. There was no negligence. This claim is dismissed. 18. Suppliers to the catering industry provide discounts and rebates based on the volume of purchasing and/or payment times directly to the customer. Primary rebates provided by suppliers with international supplier networks were said to be available at three levels, namely locally, nationally and internationally [166]. Where the supplier was not also the manufacturer, rebates, discounts or incentives were available from the manufacturer directly [167]. These were referred to as secondary rebates and were said also to be available at the local, national and international levels [168]. Primary and secondary rebates were available to all the respondents through their purchasing networks in PNG, Australia and globally. The value of rebates received by the respondents for the purchase of goods and materials for the contract. 2. The value of rebates available to the respondents for the purchase of goods and materials for the contract. The essence of their complaint was not that the respondents failed to secure rebates from purchases of food for use in the catering contract, it was rather that in breach of their contractual and/or fiduciary obligations they failed to pass them on to the applicants. It is difficult to see how any question of breach of duty of care properly arose here. The matter is determined essentially by the existence or non-existence of fiduciary or contractual obligations. No basis for negligence on the part of the respondents in this respect is shown and this complaint to will be dismissed. 19. These were set out in [173] to [194]. Each of the matters was said to constitute a breach of a duty of care pleaded in [154] of the statement of claim. That duty of care was said to have arisen under the First and Second Retainers which, as has already been noted, were subsumed by the terms of the Management Agreement. 602 The applicants alleged failure on the part of Eurest to provide timely advice about or include in any proposed budgets or cash flow projections reference to nine containers of goods ordered by the respondents which arrived at Kiunga in or about February 2000. No relevant loss or damage was identified in the pleading or in the particulars of damages. The respondents referred in their submissions to Fubilan's own cash flow projections showing a requirement to pay K1 million for transit food on 31 March 2000. A report sent to Mr Baitia by Mr Ehlers on 7 January 2000 referred to transit goods worth K1.4 million described as "overseas and local due late January 2000". Mr Fenwick was cross-examined about this complaints. It was clear from his evidence that there was no basis for it. 603 Eurest was also said to have failed to advise Fubilan and MRSM that under the terms on which it had acquired Poons' business, Fubilan was not required to pay for the Poons' stock held in the OTML warehouse at Tabubil until October 2000 and that the price of the stock included charges in excess of the stock to Eurest. Fubilan was said to have paid Eurest K2,615,065.09 for the purchase of the stock in or about August 2000. The figure paid was not disputed on the pleadings. It is to be invoiced to MRSM (Mineral Resources Star Mountains) which operates as FUBILAN CATERING SERVICES. Mr Armstrong said he had received it but there was no more specific evidence about its provenance. Equipment on hand at the warehouse on the same date was shown as K44,958.46. The total value of food stocks at the messes on 31 January 2000 was shown as K79,621.47 already discounted by 40%. Total equipment in the messes, warehouse office and main office was shown at K190,040.06. A figure of K40,000 was shown as the valuation for a Hino truck. After deducting the duty component on overseas product and adding VAT, the total for these items came to K2,014,365.80. In addition to that figure, the document contained a breakdown for four containers in transit which, together with duty paid by Poons and VAT, totalled K600,699.29. The sum of both invoices was K2,615,065.09. Mr Armstrong accepted that the deduction for duty on the overseas product was made because OTML had paid that duty. 605 A second document put to Mr Armstrong comprised a report printed off the Eurest MYOB Excel system on 17 September 2004. It set out a summary of supplier payments made by Eurest for the period 1 January 2000 to 31 December 2000. Evidently they were made from the Fubilan Imprest account. Cheque 386553 dated 25 May 2000 for a total amount of K1,092,763.23. The amounts for which each of the cheques was drawn were broken up in the summary by reference to particular invoices. The invoices relevant to the opening stock and equipment at the Poons' warehouse and at the messes appear to have been invoices 1311 and 1312. Invoice 1311 was for an amount of K2,014,365.80. Invoice 1312 was for an amount of K600,699.29. Those sums referred back to the two totals shown on the breakdown of invoices for final stock and equipment and containers in transit sent to Mr Armstrong. The greater sum covered food stock and equipment on hand at the Poons' warehouse and in the messes at 31 January 2000 together with the Hino truck. The lesser sum covered the cost of four containers in transit. On the face of it there does not appear to have been an overpayment. The First Applicant paid the First Respondent 2,615,065.09 Kina in or about August 2000 for stock in the warehouse at Tabubil. The prices paid for the stock were approximately 29% higher than the prices paid for the same stock later in 2000. 15. The First Applicant's loss or damage is approximately 758,368.88 Kina ($493,440.61) being 29% of the price paid for the stock. Counsel for the respondents objected to cross-examination of Mr Armstrong that proceeded on the basis that overpayments for stock in fact amounted to K3,661,000. In the event, in closing submissions the applicants claimed a total of K3,987,091.07 for alleged stock overpayments. The additional payments were not identified in the statement of claim nor in the Schedule of Damages. Nor was any such claim foreshadowed in the document entitled "Cross Referencing of Paragraphs in the Amended Statement of Claim to the Applicants' Schedule of Damages" which was extracted from the applicants at trial in an endeavour to achieve some clarity about the nature of their claims. 608 The additional claims were based in part upon cross-examination of Mr Armstrong who was the last witness at trial. The respondents correctly contended that this effectively denied them any real opportunity to make enquiries about the cheques relied upon. 609 Counsel for the applicants invoked [180E.2] of the statement of claim. The fact that it included charges in excess of the cost of the stock to Eurest that Fubilan was not required to pay was pleaded with a promise of particulars of the excess payments after discovery [180(b)]. The fact that MRSM borrowed K2 million from the ANZ Bank to provide funds to Fubilan to make the payment to Eurest pleaded in [180A] was also pleaded together with the additional allegation that payment was not required to be made until October 2000 [180C]. By failing to inform or advise the applicants of the matters pleaded in paragraph 180 above, the First and Second Respondents breached the duty of care pleaded in paragraph 154, above. 180E. As a result of the First and Second Respondents' breach pleaded in paragraph 180D above the applicants have suffered loss or damage and continue to suffer loss or damage. 180E.2 Further particulars of the First Applicant's loss or damage will provided after the parties have provided discovery. 180E.4 Further particulars of the Second Applicant's loss or damage will be provided after the parties have provided discovery. Paragraph 180E.2 did not entitle the applicants to raise additional claims of the kind which they now seek to raise and which seem to bear little relationship to the head pleading in [180]. In respect of the alleged overpayment for opening stock which, in my opinion was not made out on the evidence, I accept that, whether or not it occurred, it was covered by the settlement of 13 February 2001, which was pleaded in the defence at [115]. 611 The various matters alleged under the general heading of "Negligence" in the Management of the Contract in [181] to [185] of the statement of claim related to alleged failures by Eurest in the period February 2000 to October 2000. They did not lead to any discrete claim for damages, but rather into the plea in [194] for the loss of opportunity to Fubilan, in its own right, to make profits by providing catering services in the national market of PNG. The various failings of Eurest alleged in [180] to [185] were covered by the settlement agreement of 13 February 2001. In any event, for the reasons already outlined, these and the other matters said to have been outlined in the KPMG report were not causative of Fubilan's inability to provide catering services in its own right. It is significant that despite the fact that these failures were alleged against Eurest, OTML insisted on retaining Eurest as the manager in the new catering contract. 613 There was a claim for K65,808.90 by way of fees and interest paid by MRSM to the ANZ Bank on borrowings to fund the purchase of the stock in the warehouse. This is actually the only claim which was made by MRSM itself. The respondents point out that the cost of the loan was fully reimbursed at a profit to MRSM. The financial statements for Fubilan for the 11 months ended 31 December 2000 contain a balance sheet entry of K3,531,910 by way of borrowings. Security pledged under this contract is fixed and floating charge over the assets and liabilities of the Company and an unlimited guarantee from Fubilan Catering Services Ltd. Interest charge on this loan is 23.5% per annum with a term of 3 years. 20. The provisions of cl 5.13 were concerned with the engagement by Eurest of subcontractors. They did not, for reasons already set out, have any application to Eurest's purchasing arrangements. The allegation of breach of contract in relation to the obtaining or passing on of rebates fails. The allegations set out in [206] to [208] of the statement of claim relating to payments made out of the Fubilan bank account, which do not account for rebates, discounts or incentives, are dependent upon the construction of the Management Agreement for which the applicants contended and which I do not accept. 21. The Management Fee includes all expenses that the Second Respondent incurs in the performance or discharge of its obligations under the Management Agreement. 211 At all material times from 1 February 2000 the Second Respondent has charged the First Applicant for expenses that the Second Respondent incurred in performing or discharging its obligations under the Management Agreement in excess of $225,000, including, without limitation, salaries, accommodation and travel expenses in relation to employees of the First and Second Respondents. The payments so made were said to have been in breach of cl 4.2(a) and 11.1(a) of the Management Agreement. The loss and damage said to have been incurred was K5,907,896.92 covering a period from February 2000 to August 2005. The applicants also sought an account of the expenses of Eurest's expatriate employees in relation to travel and accommodation. 617 The respondents denied the allegations generally and contended that the management fee was payable after deduction of all expenses including salaries, accommodation and travel expenses. In closing oral submissions counsel for the respondents referred to the letter dated 7 July 1999 from Mr Hayes to Mr Yalapan which was included in the tender submitted by MRSM to OTML. That letter set out what was described in it as "the legally binding intention of SHRM (South Pacific) Pty Limited ... to enter into a management agreement with Mineral Resources Star Mountains Limited ... in relation to the proposed tender by MRSM to carry out catering services for OTML pursuant to the Contract". If the tender is successful. Counsel for the respondents pointed out that the reason for the exclusion of direct project related expenses from the management fee was that they were on-billed to OTML. The management fee was intended to cover costs not recoverable from OTML. The letter of 7 July 1999 forms part of the background to the formation of the Management Agreement against which that agreement may be better understood. The construction of the agreement is to be determined by what a reasonable person in the position of the parties would have understood it to mean. In my opinion that is a reference to expenses which the manager itself must bear and which were not included in the calculation of moneys recoverable by Fubilan from OTML. It cannot have been intended that expenses which were built into the lump sum payments recoverable from OTML by Fubilan were not able to be charged to Fubilan by the manager. The Management Agreement should be read in this respect in light of the compensation provisions of the OTML Contract which formed part of the factual matrix against which it was drafted. 620 Section 3 of the OTML Contract dealt with compensation and the provision of, inter alia, monthly lump sum payments for fixed and variable operating and overhead costs. The lump sum covers travel, salaries, etcetera for expats and also nationals award and staff. The basis for that renegotiation was dependent upon variations in occupancy levels. There was no provision for negotiation based on a greater or lesser component of expatriate salaries and expenses. 622 In my opinion the construction of the Management Agreement for which Fubilan contends would effectively confer upon it a windfall. It would recover from OTML the monthly compensation calculated by reference, inter alia, to the salaries and expenses incurred by Eurest onshore. In my opinion this cannot have been intended. This aspect of the claim also fails. Such a payment was disbursed by Eurest and backcharged to Fubilan. There was a percentage in the lump sum charged to OTML that was "used as a buffer for things like that in the lump sum". The word "not" appeared in the transcript of the evidence before the word "used" but the sense of the answer suggested that that was either an error or preceded a break in the testimony. 624 No objection was taken that this evidence took the applicants by surprise, nor was it challenged or controverted by other evidence. 22. The relevant activities were said to have been carried out at the Bige dredging site on the Fly River in relation to catering services provided by KCS Limited at Kiunga, operations at the Tabubil Golf Club and at the Tabubil Bakery. In engaging in each of these operations it is said that Eurest breached cl 2.4(a)(ii) of the Management Agreement as a result of which Fubilan suffered loss or damage. The nature of the loss was said to be the consideration, benefit, reward or payment that Fubilan would have been able to obtain in providing the same or similar services. A sum of K1,823,380 was claimed representing K455,845 per annum for four years. In the alternative, an account was sought. In their defence the respondents said that the Bige dredging site activities were not within the Contract Area as defined under the Management Agreement. In relation to the Tabubil Golf Club and Bakery operations, they said that both activities were in place and known to the applicants at the time the Management Agreement commenced. Both were permitted by the applicants at the time and terminated, when requested, in the normal course of business by the respondents. 626 Mr Poelzl gave evidence in cross-examination that in 2000 Eurest operated a number of sites in PNG and derived revenue from them. They were inclusive of the Tabubil Bakery and Bige/Lotic. A document dated 2 August 2000, tendered without objection from Eurest, showed an annual turnover for the Tabubil Bakery of K2.3 million. It also showed an annual turnover for OTML Lotic of K2.2 million. 627 Reliance was also placed upon a document obtained from Eurest's discovery entitled "MONTHLY TRADING SUMMARY" which related to a number of Eurest's operations including the Tabubil Bakery, Lotic and the Tabubil Golf Club. (X 439) It seems that the claimed profit derived from these sites was calculated as 12% of revenue from each of them. This was the only evidence referred to in closing submissions on this claim along with the reference to the cross-examination of Mr Fereday to the effect that there were two national firms tendering for catering work in PNG with some success. Bige/Lotic was not shown to be within the Contract area. 628 The evidence, in my opinion, was simply insufficient to establish that Fubilan was displaced by Eurest in relation to its activities in the areas pleaded or that it would have, on a stand alone basis, been able to provide the relevant services and make the profit alleged. This claim also fails. 23. It was alleged that there was an implied term of the Management Agreement that Eurest would do "whatever is reasonably necessary to give [Fubilan] the benefit of the Management Agreement and to refrain from doing anything that would interfere with, frustrate or deprive [Fubilan] of the benefit of the Management Agreement" [227]. The applicants alleged that Eurest had not made available or provided sufficient training to Fubilan's employees to the level necessary for Fubilan to gain the benefit of the Management Agreement [228]. In this respect it was in breach of the implied term [230A]. In the alternative, it was alleged that Eurest's conduct was in breach of cl 4.2(a) of the Management Agreement [230B]. The statement of claim then alleged the non-renewal of the contract by OTML, a plea which of course has been overtaken by events with the awarding of the new contract involving Fubilan and OTML [231]. The applicants claim that as a result of the breach of the implied term and alternatively cl 4.2(a) of the Management Agreement, Fubilan suffered loss or damage [232]. The loss claimed was the loss of opportunity to make profits in providing industrial catering services in the national market of PNG in its own right [232.2]. It also claimed any fee paid to Eurest for the supervision and management of Fubilan's conduct in providing catering services to OTML after 31 January 2004 [232.3]. 630 It is not open, in my opinion, to imply the term which the applicants sought to imply. It amounted to a guarantee that Eurest would put Fubilan in a position to undertake the renewed management agreement in its own right. Moreover Eurest had no obligation to train a cohort of executive managers who would put Fubilan in that position. There was no evidence that any personnel with the relevant education and aptitude were available for such training. The evidence of Ms Broadbent, which was unchallenged, indicates that Eurest took its training responsibilities seriously and did what was reasonably within its power to discharge them. Nor in my opinion have the applicants shown any breach of cl 4.2(a) of the Management Agreement which could be said to be causative of the loss and damage claimed. 631 In the event and for the reasons already given, Fubilan was unable to take the benefit of the Management Agreement in its own right for reasons unrelated to any failures on the part of Eurest to provide training. According to the plea, JLFS was to equal or better the prices charged by Eurest and pay a rebate of 10% of the value of purchases within 14 days of payment of any invoice. The applicants pleaded the placement of orders with JLFS in February and March 2001 and Eurest's subsequent advice to Fubilan that the prices charged by JLFS were in excess of the prices charged by Eurest for the same or similar goods. Then the applicants pleaded that Fubilan requested JLFS to adjust the prices charged for the relevant goods to the prices supplied by Eurest. They pleaded that by a letter dated 8 May 2001 they directed Eurest to place any orders for supplies from outside PNG in accordance with the Product Supply Agreement. They alleged that Eurest was required to comply with this direction. By continuing to place its orders with Eurest (Australia) rather than with JLFS Eurest was said to have acted contrary to Fubilan's direction and to have breached cl 10.2(a)(ii). It was alleged that, as a result of Eurest's breach of the Management Agreement, Fubilan agreed to settle its dispute with JLFS on 26 March 2004. The terms of the JLFS settlement were pleaded. It was said that Fubilan agreed to pay JLFS based on prices provided by Eurest with a 10% rebate and to give up any claim for rebates for the balance of the three year term of the Product Supply Agreement, estimated at $900,000. In return JLFS released Fubilan from any claim arising out of Eurest's breach of the Management Agreement. 633 The claim was hard to follow. In his closing oral submissions counsel for the applicants handed up a two sheet summary of what were called "the primary claims". He accepted that the claims set out in the sheet were the only claims being advanced. There was no claim identified in that list in relation to the alleged breach of contract relating to JLFS. Nor were any such damages set out in the closing written submissions. In my opinion there was no substance in this claim and I will simply treat it as not having been pressed. 25. It followed that Eurest (Australia) was in breach of the guarantee given under cl 15.1(a)(i) of the Management Agreement. This claim cannot succeed as it depends upon the causes of action for breach of the Management Agreement which, as I have already found, do not succeed. The claim against Eurest (Australia) will also therefore be dismissed. 26. This was on the basis of representations said to have been made to Mr Fenwick by Mr Armstrong that Mr Poelzl was the only person who could deal with the rebates issue. It was pleaded that the settlement document of 13 February 2001 related only to the accounting adjustments identified in the first and second audits and the Deloittes' audit and did not extend to other matters in issue including the rebates and supply issues. I have already made findings adverse to the conclusion for which the applicants contended in the reply. The further contention in the reply that Mr Fenwick was induced to sign the settlement document by misleading or deceptive conduct on the part of the applicants is rejected and the claim for a declaration refused. 27. An alternative cross claim was also raised for contribution by way of equitable contribution. The applicants having failed on all of their causes of action, the cross-claim will be dismissed. I certify that the preceding six hundred and thirty-six (636) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | unconscionable conduct special disadvantage taking advantage lodgment of tender for mining company catering contract by landowner company in papua new guinea preparation of tender in conjunction with experienced catering company catering company to enter into management agreement with landowner company catering company acquiring competing tenderer variation of tendered rates to level acceptable to mining company whether constituted unconscionable conduct by manager against landowner company independent advice to landowner company involvement of landowner company representative in process no special disadvantage no taking advantage no unconscionable conduct misleading or deceptive conduct precontractual representations promissory character alleged failure to honour promises in performance of contract no express pleading of absence of reasonable grounds invocation of s 51a of trade practices act 1974 inappropriate pleading of section operation of section evidential burden on representor persuasive burden not reversed misleading or deceptive conduct not established loss and damage requirement for causal connection no causal connection to loss fiduciary duty whether fiduciary relationship existed contractual relationship outside settled categories reluctance to impose fiduciary relationship whether fiduciary obligations to landowner company by catering company under management agreement with respect to catering contract no fiduciary relationship no breach of fiduciary obligation no relevant loss negligence whether breach of duty of care in performance of management agreement by management company in management of catering contract for landowner company whether loss or damage sustained construction of contract background of contract commercial purpose whether breach no relevant breach no relevant loss or damage trade practices trade practices equity tort contract |
The first was an application for review of a decision of the respondent in the matter of an Age Pension application made on 12 July 2004. The second was an application for review of a further decision of the respondent in the matter of an application for a Disability Support Pension made on 22 July 2004. 8 Both applications, and the decision by the AAT on them, have to be considered in the context of many acrimonious disputes between the applicant and Centrelink, and the respondent Department and some of its officers. As will appear, that history has clouded a dispassionate view of the entitlement of the applicant to an Age Pension. 9 The decision by the AAT in respect of the application for an Age Pension has involved a significant error of law, and a serious misunderstanding of its role, and of the extent to which other decisions on other applications by the applicant had utility in disposing of the applications then before it. 10 In respect of the application for Age Pension, Centrelink, by a letter dated 16 July 2004, requested the applicant provide certain information in order that his claim could be assessed. Private Trust module, Separation details form, Accommodation details form, and Real Estate details form. For instance, on the form headed 'Separation Details' the applicant stated ' Your records have such information, ' and in answer to the question ' Address where you and your wife were living prior to your separation? ', the applicant again stated ' Your records have such information '. In relation to a document ' MODPT --- Private Trust ' a diagonal line with the words ' N/A ' was submitted, and similarly in a document ' MODR --- Real estate details' . 12 By letter dated 16 August 2004 the applicant was advised that his claim had been rejected due to his failure to provide enough information in order for a proper assessment of the claim to be carried out. The letter said: ' After careful consideration your claim for Age Pension has been rejected because you have not provided enough information for an assessment to be made. In particular, with regard to your involvement in the Solon Theo Family Trust . 15 In respect of the application for a Disability Support Pension made on 22 July 2004, Centrelink advised the applicant by letter dated 23 July 2004 that his claim was rejected as such a pension ' can not be assessed for a person whom [sic] is of age pension age '. The applicant sought an internal review of that decision which was ultimately affirmed on review. 16 The applicant appealed both decisions to the Social Security Appeals Tribunal ('the SSAT'). On 11 October 2004 the SSAT affirmed each decision under review and on 22 October 2004 the applicant commenced proceedings in the Tribunal seeking to have, in effect, the SSAT's decisions set aside. 17 The applicant appealed to the AAT on 22 October 2004. The AAT handed down its decision on 25 July 2005, and made the Orders earlier referred to. The defects in the Applicant's age pension claim and supporting documents in this case are the same as those carefully rehearsed by the Federal Court Theo v Secretary, Department of Family and Community Services [2005] FCA 880 . Little purpose would be served by elaborating these in any detail in these Reasons for Decision. As noted by the Federal Court in Theo v Secretary, Department of Family and Community Services [2005] FCA 880 at [16] and [18], the Applicant's written responses to the requests of the Respondent for further information relating to the family trust structure in which the Applicant apparently has a present interest or entitlement (a claim disputed by the Applicant) were " combative " as was also at least one of his oral communications with the Respondent concerning the same matter. ... At the time of his application for disability support pension (made 21 July 2004), the Applicant was 71 years of age. Under section 28 of the Social Security (Administration) Act 1991 , a person cannot make a claim for a disability support pension unless that person is under the pension age on the day on which the claim was lodged. This provision must be read side-by-side with section 23(5) of the Social Security (Administration) Act 1991 , which states that a man reaches pension age when he turns 65. ... The combined operation of sections 23(5) and 28 of the Social Security (Administration) Act 1991 preclude the Respondent from paying disability support pension to the Applicant. ... the application for review in relation to the disability support pension application ... is utterly hopeless, is futile, is without foundation in point of fact or in point of law, and should be dismissed as frivolous or vexatious ... under section 42B. At the time of his application for disability support pension (made on 21 July 2004), the Applicant was 71 years of age. Under section 28 of the Social Security (Administration) Act 1991 , a person cannot make a claim for a disability support pension unless that person is under the pension age on the day on which the claim was lodged. This provision must be read side-by-side with section 23(5) of the Social Security (Administration) Act 1991 , which states that a man reaches pension age when he turns 65. This Tribunal has found as a fact that on the date of his application, the Applicant was of 71 years of age (and 72 years of age as at the date of decision). The combined operation of sections 23(5) and 28 of the Social Security (Administration) Act 1991 preclude the Respondent from paying disability support pension to the Applicant. The Tribunal is prepared to infer that the Applicant's application for disability support pension was made to outflank his lack of success on his age pension claim (at the same time the Tribunal notes that the Applicant does have some poor health and the documents admitted into evidence as Exhibit 5 did demonstrate that point to some extent). The reasoning of the Social Security Appeals Tribunal in paragraphs 15 to 17 of its decision made 11 October 2004 in disposing of the application for review to that Tribunal of the disability support claim rejection decision made by the Respondent is correct and unimpeachable. The Tribunal is guided by the norm that it should reach the correct and preferable decision on the basis of the material before it: Ajka Pty Ltd v Australian Fisheries Management Authority [2003] FCA 248 at [33] . The Tribunal is required to stand in the shoes of the original decision-maker and consider all evidence anew, bearing in mind statutory provisions and any significant legal precedent : Bantick and Secretary, Department of Family and Community Services [2003] AATA 472 at [23] . The Tribunal proceeds de novo : Bramwell v Repatriation Commission (1998) 51 ALD 56 at 60 per Weinberg J. The Tribunal must base its decision upon the material that is logically probative of the existence of facts that emerge from the evidence before it: Collins v Minister for Immigration and Ethnic Affairs (1981) 36 ALR 598 at 602. In a substantive sense, the merits of these appeals are governed by the Social Security Act 1991 . For reasons that will become apparent later in these Reasons for Decision, section 42B of the Administrative Appeals Tribunal Act 1975 is also decisive in the resolution of these appeals. This Statement was, so the material before this Court indicates, given to the applicant on the morning of the hearing at the Tribunal, 24 March 2005, shortly before the hearing commenced. In the Statement of Facts and Contentions the respondent contended, amongst other things, that the applicant be declared vexatious and further applications only be made with the leave of the Tribunal. The Tribunal indicated at the hearing that it would deal with the s 42B issue first. 27 The Tribunal appears to have given no attention to the question of whether the application by the respondent contained in its Statement of Facts and Contentions was made in circumstances which accorded with the principles of natural justice, including the right properly to be heard. 28 The Tribunal in its Reasons given on 25 July 2005 contains an extensive, and it has to be said, precious analysis, of legislation concerning frivolous or vexatious applications, including the provisions in the High Court Rules, the Federal Court Rules , the Federal Magistrates Court Rules, the Uniform Civil Procedure Rules 1999 made under the Supreme Court of Queensland Act 1991 (Qld), and the Supreme Court Act 1970 (NSW). Moreover the elaborate 'Review of the Jurisprudence on section 42B' undertaken in the Reasons for Decision reveals a fundamental misunderstanding of the operation of s 42B. 29 The Tribunal referred to the judgment of French J in Duncan v Fayle [2004] FCA 723 , but failed to understand the Reasons for Judgment of French J. His Honour said at par [22] 'A decision dismissing an application as frivolous or vexatious under s 42B(1) is a decision which finally disposes of the application. It has necessarily involved a consideration of the merits in the sense that it requires a finding that the application cannot succeed. ' The Tribunal referred to what it considered the critical passage: ' that the situation... falls within the provisions of s 42B...not only because of the futility of the proceedings, but also because they are being pursued by the applicant for a collateral purpose --- a purpose which is irrelevant to any issue which could legitimately be raised in these proceedings. Moreover that collateral purpose is itself a futile one. ' As that passage demonstrates, the Tribunal in re Williams held that s 42B applied because the proceedings were futile, and the collateral purpose of the applicant was irrelevant to any issue in the proceedings, and was itself futile. Re-examination by the Applicant did not repair this damaging concession elicited during cross-examination. The Tribunal notes that the Federal Court carefully reviewed the factual history and applicable law of the Applicant's previous unsuccessful claim for age pension made in October 2003 (refer in particular to paragraphs [19] --- [37] and [51] --- [53]). The Tribunal took into consideration that the Applicant initiated the previous application for merits-based review from the Social Security Appeals Tribunal to this Tribunal that culminated in the decision of McCabe SM in Theo and Secretary, Department of Family and Community Services [2004] AATA 1273 , as well as the subsequent appeal to the Federal Court which culminated in the decision in Theo v Secretary, Department of Family and Community Services [2005] FCA 880. The Tribunal stresses that reliance upon res judicata in this case is simply by way of analogy in connection with the section 42B application, not by way of direct application. The Tribunal proceeds de novo . The Tribunal must base its decision upon the material that is logically probative of the existence of facts that emerge from the evidence before it . 34 The applicant has made many applications concerning his entitlement to an Age Pension. In those applications, he had filed much material concerning the Solon Theo Trust. It may be that the terseness of his reply to the request for information and the paucity of it before the rejection of his application for Age Pension on 16 August 2004 was a consequence of this fact. 35 Before the AAT he was expressly asked, 'Do you want me to take note of the T documents from those previous hearings? ' The AAT noted, 'I think Mr Ffrench [the departmental advocate] is actually trying to help you out. ' Importantly, the AAT asked, 'Do you want the Tribunal to have regard to the previous Tribunal documents from earlier hearings? ' ; to which Mr Theo answered, ' Yes. ' The Tribunal said 'I'm happy to take them on board and Mr Ffrench has offered or undertaken to provide those and I'm happy to consider them. I request that the trustee whoever he/she might be, of whichever trust, to recognise my request that I receive no benefits from any trust in his/her power and furthermore recognise this as a renunciation of any beneficial interest in any trust as irrevocable, and I reiterate that such beneficial interests do not exist. The Deed was made on 8 September 1978 and while the applicant was the trustee of that trust, he had no interest in the trust as a possible beneficiary of it, and in particular as possible entitlement to any or trust assets of trust income. Apart from the statutory declarations of the applicant which the Tribunal said it would consider there are also statutory declarations from his then wife indicating that she no longer had any interest or connection with the trust. In particular, there was before the Tribunal an affidavit of Athena Theo dated 25 March 2003 to that effect. 39 It is plain that the Tribunal failed to consider the previous Tribunal documents from earlier hearings, as it had indicated during the hearing before it that it would. Each hearing has involved a number of decisions and have, in the main, concerned the same issue: the failure of the applicant to provide full and satisfactory details of his involvement in the Solon Theo Family Trust. In particular, the AAT said 'So if you want to take me to particular pages or folios in this document now is a great opportunity to do so,' , to which Mr Theo directed the Tribunal to Page 3 of document T2: ' "Mr Theo advised that he had relinquished control of the trust and that that occurred prior to 1 April 2002 " , and you have a bundle of documents Exhibit 9 which substantiate this statement. Generally, there can be an estoppel against the terms of a statute. 43 The decision before the Tribunal was the decision made on 16 August 2004 to reject the applicant's claim for Age Pension on the basis that he had not provided requested information. The application for review by Mr Theo by the AAT of that decision required the Tribunal to reach the correct and preferable decision on the material that was before it: that material, it seems to me, amply satisfied the request for information about the position of the applicant in relation to the Solon Theo Trust, namely that he had no interest, either legally or beneficially in any of the trust assets, or any income of the trust. The Tribunal ignored this material, contrary to its promise, and thus failed in its central duty, to reach the correct or preferable decision on the material before it. 44 In short, the material before the AAT was much more extensive and comprehensive than the material that was before the decision-maker on 16 August 2004. The proceedings, insofar as they involve an application for review of the decision concerning the Age Pension, could not possibly have been the subject of a s 42B dismissal, because as French J pointed out in Duncan v Fayle [2004] FCA 723 at par [22] , 'A decision dismissing an application as frivolous or vexatious under s 42B(1) ... necessarily involved a consideration of the merits in the sense that it requires a finding that the application cannot succeed. On the contrary, notwithstanding the applicant's dealings with the Department and the various Tribunals have been acrimonious and frequently conducted by the applicant in a belligerent way, and in a way which is contrary to his own best interests, the material that was before the Tribunal on this occasion, dealing with the requirements of the Act for an Age Pension seem, on that material, to have been satisfied. While it is a matter for the Tribunal, the totality of the information and material before the Tribunal seems plainly to establish that there is no disqualification by virtue of any interest that the applicant may have in any trust and in particular the Solon Theo Trust. 46 For the above reasons the Orders made by the AAT on 25 July 2005 must be set aside and the application Q2004/823 should be remitted to the Administrative Appeals Tribunal to be considered by it according to law. 47 Having regard to the fact that the applicant is unsuccessful in his appeal to this Court concerning the decision of the Tribunal in proceedings Q2004/824, it is appropriate that there be no Orders to costs in respect of the appeal to this Court. | whether frivolous or vexatious applicant failure to provide adequate information to a decision-maker entitlement to disability support pension entitlement to age pension further information put before the administrative appeals tribunal appeal from the decision of the administrative appeals tribunal no issue estoppel in the administrative appeals tribunal whether the tribunal had regard to the material properly before it. administrative law |
The original native title determination application was filed with the Court on 6 July 1999 and subsequently amended on 26 July 1999. The application as so amended was registered with the National Native Title Tribunal ('the NNTT') on 24 September 1999. Leave was granted by this Court on 29 November 2006 to the applicants to amend the application. The amended application was accepted for registration by the Registrar of the NNTT on 16 March 2007. The parties to the application have reached agreement about the existence of native title and about the nature and extent of the native title rights. They now ask the Court to make an order in the terms of a minute of proposed consent determination filed with the Court on 3 July 2009 ('the minute'). In addition, the applicants and the Northern Territory have filed a statement of agreed facts, a joint tenure report and joint submissions, in support of the minute. The persons who hold the common or group rights comprising the native title are the Aboriginal persons who are members of the Ilkewartn and Ywel Anmatyerr landholding groups by virtue of descent (including adoption) through father's father, father's mother, mother's father and mother's mother, or who are recognised and accepted as members of one or both of the Ilkewartn and Ywel Anmatyerr landholding groups by senior members of those landholding groups, on the basis of one or more non-descent based connections set out in paragraph 4(b) of the minute. The applicants and the Northern Territory agree that the materials filed in the Court disclose in detail the laws and customs of the Ilkewartn and Ywel Anmatyerr people. In particular, they agree the materials include details of the Ilkewartn and Ywel Anmatyerr peoples' mythological traditions; ceremonial life; systems of land tenure; including their land holding groups; estates and dreamings; and the rules about the transmission of customary knowledge. The historical and contemporary connections of the Ilkewartn and Ywel Anmatyerr people to the claim area are also described in the materials and in the affidavits from individual applicants, including Archie Glenn Angal, Lindsay Bird Ampetyan, Harold Payne Ampetyan, Dorothy Ampetyan and Bunny Ampetyan. The native title rights and interests that the parties agree should be recognised are particularised in paragraph 5 of the minute. In summary, that statement discloses that, in September 2004 the applicants, through their solicitors, provided to the Northern Territory an anthropological report, prepared by Mr Craig Elliott. In that report, Mr Elliott outlined the laws and customs governing the applicants' relationship to each other and their connection to the claim area. That report was supplemented by a further report in October 2006. In this supplementary report, Mr Elliott addressed specific issues raised by Emeritus Professor Basil Sansom, who undertook an assessment of his 2004 anthropological report for the Northern Territory. The Northern Territory advised the applicants in February 2007 that it was satisfied that the materials provided formed a proper basis for the Northern Territory to enter into an indigenous land use agreement and to join in proposing a consent determination to the Court in settlement of these proceedings. Section 87 provides that if a number of conditions are met, the Court may make an order in, or consistent with, the terms of the agreement reached between by the parties, without holding a hearing. The minute filed with the Court (see [3] above), has been signed by all the parties to the proceedings and it relates to the whole of the proceedings. Accordingly I am satisfied that the pre-conditions set out in ss 87(1)(a) and (b) of the Act have been met. Having considered the terms of the minute, I am satisfied that they address the requirements of ss 94A and 225. Accordingly, I am satisfied that the Court has power to make of the consent determination sought. The discretion conferred by s 87(1) must be exercised judicially, and within the broad boundaries ascertained by reference to the subject matter, scope and purpose of the Act: Lota Warria (on behalf of the Poruma and Masig Peoples) v State of Queensland (2005) 223 ALR 62 at [7] . One of the most important purposes of the Act is the resolution of disputes by negotiation and agreement rather than by litigation. The primary consideration of the Court is to determine whether there is an agreement and whether it was freely entered into on an informed basis...". In assessing whether a free and informed agreement has been reached, the Court pays close regard to the process the state respondent party has followed in assessing the evidence establishing the existence of native title. The mere fact that the State was a party may not be sufficient. The Court may need to be satisfied that the State has in fact taken a real interest in the proceeding in the interests of the community generally. That may involve the Court being satisfied that the State has given appropriate consideration to the evidence that has been adduced, or intended to be adduced, in order to reach the compromise that is proposed. The Court, in my view, needs to be satisfied at least that the State, through competent legal representation, is satisfied as to the cogency of the evidence upon which the applicants rely. Other important factors that various decisions of the Court have pointed to in assessing whether the agreement reached was free and informed, include: In this case, the parties have had the benefit of independent and competent legal representation in arriving at the agreement, the terms of the minute are unambiguous and clear and the agreement has been produced as a result of a process of negotiation. Turning then to the involvement of the state respondent party, the Northern Territory. In my view, it is clear on the evidence before me that the Northern Territory has taken a real and significant interest in the proceedings. Before the proposed consent orders were signed, the Northern Territory had Emeritus Professor Sansom consider the anthropological reports prepared by Mr Elliott going to the existence of native title. Professor Sansom's queries in relation to the report initially provided were subsequently answered to his satisfaction in Mr Elliott's supplementary report. Furthermore, in March 2009, the Northern Territory Cabinet considered the proposed consent orders and instructed the Solicitor for the Northern Territory to agree to the proposed consent determination of native title. The joint submissions of the applicant and the Northern Territory indicate that the parties are in agreement that there is adequate evidence to support the consent determination. I understand the term adequate evidence to reflect the fact that there is a credible or arguable basis for the application, which in my view is the appropriate standard: see Lovett at [37]-[38]. I am therefore satisfied that the interests of the community generally have been properly considered by the Northern Territory. For these reasons, I am satisfied that it is appropriate that the Court make the consent determination sought. The nomination is in writing and the Corporation has given its consent to the nomination. I am satisfied that the requirements of the Act have been met. Because of a long history with the Northern Territory land claims process and native title claims, the legal practitioners employed with both the Northern Land Council and the Central Land Council are generally very experienced and competent. The legal practitioners employed to deal with land claims and native title claims in the Northern Territory government are similarly experienced and competent. Moreover from my experience with the native title list in the Northern Territory, all of the legal practitioners and the parties they represent appear to be willing to progress the matters in the list in a co-operative manner, as quickly and efficiently as possible. To that end, in 2008, it was agreed by all involved to adopt a goal to finalise all matters in the Northern Territory native title list --- then numbering approximately 160 - by 2013. As a result, it is expected most of the outstanding applications will be progressively resolved by a series of consent determinations. This is only the second consent determination in the southern part of the Northern Territory and the third in the whole of the Northern Territory --- I made a consent determination in Elliott last week: see Wilson v Northern Territory [2009] FCA 800. Nonetheless, given the co-operative approach of the legal practitioners and the parties I have mentioned above, I am confident that these two consent determinations will be the first of many that the Court will be making in the Northern Territory in coming months and years. I congratulate the parties on reaching this agreement. In so doing, I congratulate the native title holders whose rights will now be recognised. The order that the Court will now make determines, under the laws of Australia, that native title exists according to the traditional laws and customs of the Ilkewartn and Ywel People, and is held by those peoples. Of course, this order does not grant something new to the Ilkewartn and Ywel peoples, it merely recognises what they have long held. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves. | consent determination request for orders to be made under s 87 of the native title act 1993 (cth) consideration of whether the orders appear appropriate to the court and whether orders ought to be made as sought determining native title rights and interests in the ilkewartn and ywel and other groups. native title |
The decision gave approval to the second respondent, the Port of Melbourne Corporation (PMC), to deepen the shipping channels of Port Phillip Heads in Port Phillip Bay (the Bay) and the Yarra River and its approaching channels. 2 Blue Wedges Inc is an association which was incorporated on 30 May 2005 under the Associations Incorporation Act 1981 (Vic). It started as an unincorporated association in June 2003 in response to the proposed channel deepening project. By its statement of purpose, it is committed to work to preserve the ecosystems of the Bay and the estuary and ocean environments in and around the Bay and Westernport Bay. No objection was taken to its standing to bring this application. 3 The PMC was established under the Port Services Act 1995 (Vic) and is the proponent of the channel deepening project. The PMC is responsible for the management of the port, port waters, shipping movements in the Bay and dealings with shipping operators and stevedores. The shipping channels to which the channel deepening project relates provide access to the Port of Melbourne. 4 The third respondent, the State of Victoria, undertook the environmental assessment process which will be explained later in these reasons. The PMC and the State of Victoria were joined as parties to this proceeding because their interests may be affected by the outcome. Again, no issue was raised over the inclusion of these parties. 5 The Bay is a coastal estuary within the territorial limits of Victoria. It is a shallow bay of about 1930 square kilometres with a coastline length of 264 kilometres. It has a maximum depth of 24 metres but is mostly shallower than 8 metres. The cities of Melbourne and Geelong lie on the north east and western shores of the Bay respectively, and the Yarra and Maribyrnong rivers flow into the Bay from the north. Some of the localities distant from the main cities on the shore of the Bay are holiday places for the people of Melbourne. Around the Bay there is commercial, residential and recreational activity. 6 The Bay is environmentally significant in a number of respects. There are some protected sites of national and international environmental significance, including Ramsar wetlands, intertidal mudflats, salt marsh fringes and coastal dunes. The area also supports some internationally significant populations of migratory birds and endangered native birds, fish and cetaceans. A number of social activities, including swimming, diving, recreational fishing, sailing and boating, take place in the locality of the Bay. It also has a number of tourist attractions and is used for commercial fishing. 7 The entrance to the Bay is through Port Phillip Heads, which is partly closed by a shallow rocky submarine plateau --- Rip Bank and Nepean Bank --- that is cut by a deep canyon. The Great Ship Channel crosses through this area into the Bay. Most merchant ships then follow the south channel towards Hovell Pile near Dromana on the eastern shoreline and then travel north towards the docks in and at the mouth of the Yarra. This path takes ships along the Port Melbourne, Williamstown and Yarra River channels. 8 The aim of the project is to modify the shipping channels to enable access for 14 metre draught vessels to the Port of Melbourne in all tidal conditions. Currently, access to the port is restricted to vessels of maximum draught of 11.6 metres or 12.1 metres at high tide. • Dredging of berth pockets at Appleton Dock, Swanson Dock, Holden Dock and Gellibrand Pier. • Placement of dredged material into two dredged material grounds; one in the north of the Bay and one in the south of the Bay. • Modifications to existing infrastructure including berth works, river works, protection of services, upgrades to existing navigation aids and installation of new navigation aids. One contentious aspect of the project concerns contaminated sediment found in the Williamstown and Yarra River channels and in part of the Port Melbourne channel. The total amount of contaminated material is about 2.11 million cubic metres, that is to say, a small fraction of the total dredged material. The contaminated material is to be taken to a bund which is to be constructed on the floor of the Bay. The contaminated material is to be dumped in the bund and capped with uncontaminated material. 11 The Act was first introduced in 1999. It had three important aims which were endorsed in principle in 1997 at the meeting of the Council of Australian Governments. Firstly, the Act was designed to define the areas of Commonwealth environmental responsibility and, hence, the role of the Commonwealth in environmental matters. Secondly, it sought to integrate the State and Commonwealth laws by providing mechanisms for Commonwealth accreditation of State assessment processes. And thirdly, the Act sought to provide a new and more efficient assessment and approval process. These aims were reflected in the objects of the Act. One of the objects of the Act was to provide for the protection of those aspects of the environment that are of national environmental significance (s 3(1)(a)). To achieve its objects the Act recognised the role of the Commonwealth by focusing Commonwealth involvement on matters of national environmental significance (s 3(2)(a)), and providing for intergovernmental accreditation of environmental assessment processes (s 3(2)(c)). It also sought to achieve the objects by adopting an efficient and timely Commonwealth environmental assessment and approval process that ensured that activities that would be likely to have significant impacts on the environment were properly assessed (s 3(2)(d)). These objects explain the purpose for the provisions of the Act which applied to the channel deepening project, and which will now be examined. 12 Part 3 of the Act prohibits the taking of certain actions without ministerial approval. The actions are those which have, will have, or are likely to have significant environmental impact. Relevant to this proceeding are actions which have or might have such impact on declared Ramsar wetlands (ss 16 and 17B), listed threatened species (ss 18 and 18A) listed migratory species (ss 20 and 20A) and the environment of Commonwealth land (ss 26 and 27A). 13 An action which requires approval is called a controlled action (s 67). A person proposing to take such action must refer the proposal to the Minister for a decision whether the action is or is not a controlled action (s 68(1)). The Minister must decide whether the action is a controlled action (s 75(1)) and must make that decision within 20 business days of receiving the referral (s 75(5)). 14 If an action is a controlled action the Minister must decide which of several different assessment processes are to be used (s 87(1)), and that decision must be made within 20 business days of receiving the referral (s 88(1)). 15 One of the assessment processes available to the Minister is an accredited assessment process (s 87(1)(a)). 17 The process started over five years ago, as far back as 15 February 2002, when the predecessor of the PMC referred the channel deepening project to the then Minister for a decision under s 68 as to whether the proposal was a controlled action. On 20 March 2002, the delegate of the then Minister decided that the channel deepening project was a controlled action. This decision reflected the view that the dredging would or may have an environmental effect on the specified matters of concern to the Commonwealth, namely the declared Ramsar wetlands, listed threatened species, listed migratory species and Commonwealth land. 18 At the same time, the government of Victoria considered whether the project would have environmental concerns within its jurisdiction. Under the Environment Effects Act 1978 (Vic) (the Vic. Act), the proponent of public works which might have a significant effect on the environment may be required by the Victorian Minister to provide an environment effects statement (EES) (s 8B(3) of the Vic. Act). The Victorian Minister decided he did require an EES. 19 On 21 May 2002, the same delegate of the then Minister decided that the approach to be used for the assessment of the channel deepening project was by an accredited assessment process, pursuant to s 87(1)(a) of the Act. The accredited assessment process was to be the same as that required by the Victorian Minister, namely, an EES. 20 In October 2002, the Victorian Minister issued assessment guidelines for the EES. In June 2004, the PMC completed the EES. 21 The PMC engaged a number of specialist consultants to prepare reports that formed the basis of the EES. Relevantly, there were specialist studies which examined tourism and recreation, and developed a community impact assessment. The EES examined social and economic effects, having regard to tourism and recreation and above-water amenity. It was exhibited between 5 July and 16 August 2004, and 906 submissions were received. 22 In August 2004, the Victorian Minister appointed an inquiry under s 9(1) of the Vic. Act to consider the channel deepening project. Hearings were conducted between September and December 2004, and the inquiry reported on 11 February 2005 (the 2005 inquiry). The 2005 inquiry report examined, inter alia, the human effects of the channel deepening project, including the economic effects and social impact of the project. 23 In July 2005, the Victorian Minister decided that a supplementary EES (SEES) under s 5(1) of the Vic. Act was required. Guidelines for the SEES were completed in October 2005. The SEES was exhibited between 22 March and 7 May 2007. The SEES examined the effects, among other things, on tourism, amenity and perception, community concern about the dredging activities and various recreational activities around and on the Bay. The SEES also considered matters of national environmental significance, identical to the protected matters identified under the Act. An independent expert group (IEG) was appointed to advise initially on the SEES guidelines and then on the technical adequacy of the SEES studies as they progressed. The IEG reported to the Victorian Minister in May 2007. A second inquiry was established by the Victorian Minister to consider the project again (the 2007 inquiry). It conducted hearings between June and July 2007 and reported on 1 October 2007. This was the end of the assessment process required under the Vic. Act, but it provided the basis for the approval process under the Act. 24 It will be recalled that s 87(4)(d) provided for a report by the State Minister of the outcome of the assessment process that would provide enough information on the relevant impacts of the action to allow the Minister to make an informed decision whether or not to approve the action. This report formed the basis of the accredited assessment process nominated by the Minister pursuant to s 87(1)(a). In the present case the assessment report was received by the Minister on 8 November 2007. 25 The assessment report had regard to the information presented in the EES, the 2005 inquiry report, the SEES, the 2007 inquiry report and the IEG report. On the basis of this information, the assessment report examined the economic and ecological effects of the channel deepening project. Further, the assessment report examined the effects on human health, public amenity and recreation, marine based tourism and commerce and cultural heritage. 26 Overall, the assessment report judged any effects of the channel deepening project to be minor, acceptable and / or short-term. It examined the effect of the project on controlled matters under the Act. These matters correlated with those the Minister was bound to consider. On these issues, the assessment report concluded that the effects would not be significant and recommendations were made to impose mitigation measures in an attempt to prevent or minimise impacts on matters of national environmental significance. The assessment report related this discussion directly to the approval requirements under the Act, stating that "This Assessment... will inform the decision by the Australian Government Minister for the Environment... whether to approve the CDP [channel deepening project] under section 130 of the Act. The report stated "Through the assessment process under the EE Act [the Vic. Act], including this Assessment, careful consideration has been given to "ESD" [ecologically sustainable development] principles and objectives as variously defined under... the EPBC Act [the Act]". The report concluded that the channel deepening project "would provide a net benefit to the State of Victoria, having regard to long-term and short-term economic, environmental, social and equity considerations. These provisions relate to two matters. Section 131 concerns the need to invite comments concerning the project from other ministers. Section 136 stipulates some matters which the Minister must, some which he may, and some which he must not, take into account in making his decision. This does not limit the comments such a Minister may give. This meant that 20 December 2008 was the last day on or by which he would have to make his decision. The Minister was appointed on 3 December 2007. The process by which the Minister made his decision during that timeframe is now outlined. In the course of the briefing Ms Vicki Middleton, the Assistant Secretary, Environment Assessment Branch 1 of the Approvals and Wildlife Division, said to the Minister that one question he needed to consider was whether there were other Commonwealth ministers with administrative responsibilities relating to the proposal, because it was necessary to inform any such Commonwealth minister of any proposed decision on the proposal. She advised the Minister that it was the department's view that the Minister might wish to invite the Minister for Infrastructure, Transport, Regional Development and Local Government to comment on any proposed decision. ... The Department is of the view, based on the available evidence, that the impacts of the proposed action on matters under the EPBC Act will be acceptable, subject to a number of conditions. ... Given the Minister for Infrastructure, Transport, Regional Development and Local Government has responsibilities for infrastructure planning and coordination the Department recommends you invite his comments on your proposed approval decision under s131 of the EPBC Act. 36 The Minister indicated, by his signature in the place provided for his response, that he had noted these attachments. 37 The brief also recommended that the Minister consider the assessment documentation listed in attachment C to the brief. The Minister indicated in the place for his response that he had considered the documents. Further reference to the contents of the attachments will be made later in these reasons. 39 The Minister for Infrastructure, Transport, Regional Development and Local Government replied to the Minister on 17 December 2007, stating his support for the project proceeding with appropriate environmental safeguards. This brief was to provide information in relation to the Minister's decision to approve or not approve the proposal. The relevant contents of the brief are recorded in the Minister's statement of reasons for his decision and will be set out in that context shortly. The brief recommended that the Minister approve the action. It indicated that the Act required a decision to be made by 20 December 2007. On 20 December 2007, the Minister noted on the brief his approval of the action, and signed a notice of approval attached to the brief. 41 On 18 January 2008, the Minister provided a statement of reasons for the grant of approval which he had given on 20 December 2007, in response to a request by the applicant pursuant to s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act). 42 The Minister's approval was conditional upon the PMC formulating an environmental management plan (EMP) to address some of the environmental concerns still held by the Minister, and the Minister giving approval to the EMP. The EMP detailed the environmental management requirements of the channel deepening project, including project delivery standards outlining environmental controls and limits, monitoring programs, post construction requirements, regulatory controls and reporting procedures. That final approval of the EMP did not occur until 5 February 2008. 43 It is now necessary to refer to the Minister's statement of reasons. The first section set out such of the legislation which was relevant to the decision, namely, provisions found in ss 130, 131, 133, 134, 136, 138, 139 and 140 of the Act. The proposed action is to deepen the shipping channels at Port Phillip Heads, in Port Phillip Bay (the Bay), and the Yarra River and its approaching channels. 10. On 20 March 2002, the then Minister's delegate, Mr Gerard Early, First Assistant Secretary, Approvals and Legislation Division, decided under Section 75 of the EPBC Act that the proposed action is a controlled action. The controlling provisions are Sections 16 and 17B (Wetlands of international importance), Section 18 and 18A (Listed threatened species and communities), Section 20 and 20A (Listed migratory species), and Sections 26 and 27A (Commonwealth Land) of the EPBC Act. 11. On 21 May 2002, Mr Early, delegate of the then Minister, decided under Section 87 of the EPBC Act to accredit the Environment Effects Statement (EES) process under the Victorian Environment Effects Act 1978 . The EES was released for public comment on 5 July 2004. 12. The Victorian Government appointed a panel to review the submissions on the EES, conduct public hearings and provide recommendations to the Victorian Minister. 13. On 11 July 2005, the Victorian Minister issued a statement confirming the requirement for a Supplementary Environment Effects Statement (SEES), in the context of a range of shortcomings in the EES documentation, with approval of a trial dredging program, to inform the SEES. 14. The SEES process included preparation of new assessment guidelines, exhibition of the SEES and an appointment of a new Inquiry under the Act. 15. On 22 March 2007 the SEES was released for public comment. 16. The Inquiry held a directions hearing on 29 May 2007 and public hearings were held from 18 June to 31 July 2007. An Inquiry Report was then given to the Victorian Minister for Planning to assist in the preparation of that Minister's Assessment Report under the Victorian Environment Effects Act 1978 . 17. The Assessment Report of the Minister for Planning was completed on 31 October 2007. 18. The Assessment Report and notice under Section 130(1B) of the EPBC Act were received from the Victorian Government on 8 November 2007. 19. On 7 December 2007 I invited the Minister for Infrastructure, Transport, Regional Development and Local Government to comment on the proposed decision, in accordance with Section 131 of the EPBC Act. That Minister replied on 17 December 2007, indicating support for the proposed decision. 20. On 20 December 2007 I approved the proposal with conditions and notice of my decision was published on my Department's website on the same day. Under separate subsections, the Minister considered each of the four protected matters which was the subject of controlling provisions, namely, listed threatened species and communities, wetlands of international importance, listed migratory species and Commonwealth land. I found that the Australian Grayling is likely to be present in the lower Yarra River, though in relatively small numbers. I found the species may be vulnerable to the dredging following spawning until their upstream migration, in the spring-early summer period. I found that, if dredging in the Yarra River using the trailer-suction hopper dredge was excluded between 15 October and 30 November in the Yarra River, this would reduce the risk to the extent that the action would not be likely to have a significant impact on this species. 26. I also found that there could be a temporary and limited reduction in habitat suitability for the species as a consequence of the dredging, however I considered that the population, if affected, was likely to recover within one to two years. I found that the temporary impact could be offset by the contribution by the Port of Melbourne Corporation of not less than $300,000 to a fund to assist the recovery of the Australian Grayling through actions such as research and habitat protection and restoration. He assessed the threat of increased turbidity from the dredging and concluded from modelling presented in the SEES that the effects of any increase would be negligible. He further concluded, having regard to the SEES, that it was unlikely that there would be any impact from contaminated sediments because of the limited extent to which the contaminants could be mobilised. He next concluded, again having regard to the SEES, that the additional nutrient released during dredging would be small and would be unlikely to have significant flow on effects to the wetlands. The Minister then considered, having particular regard to the 2007 inquiry report, that small changes to tidal levels, currents and hydrology around the Ramsar wetlands may occur. Finally, he referred to the hydrodynamic and sediment transport modelling in the SEES and noted that it did not predict measurable changes to tidal currents or waves around the Ramsar wetlands that would result in erosion or coastal instability. However, he found that this was not certain. The Minister concluded this section by indicating a number of actions which would reduce the risk to the wetlands, namely, the implementation of an EMP that required turbidity and contaminant monitoring, hydrodynamic monitoring to detect changes to bathymetry, and wetlands vegetation monitoring to verify the level of effects, with the inclusion of response measures. He then determined that whilst the remaining risk of impact of an ecological character on the area was very low, nonetheless it could be offset by the contribution by PMC of $500,000 towards management monitoring and improvement of the areas and a further $100,000 towards observation and monitoring of migratory bird species. He concluded that in the light of his findings, the channel deepening project was unlikely to significantly impact on the ecological character of the wetlands concerned. He also found that there would be a likely increase in the intertidal area around the Bay due to the increased sea level range following the dredging which might benefit these species through an increase in habitat. He concluded that the implementation of an EMP that required monitoring and response measures for coastal and intertidal areas in specified places would further ensure that migratory species were not significantly affected. However, he indicated that an EMP which included the monitoring and response measures for the coastal processes and effects on Commonwealth land would ensure that Commonwealth land was not significantly affected. 51 The next section of the statement of reasons was headed "Economic and Social Matters". In considering economic and social matters I had various sources of information, including public comments, concerning the economic significance of the proposal. I noted the economic modelling studies commissioned by the Victorian Government that the Port of Melbourne generated an economic output of about $2.5 billion in 2004/2005 and supported about 13,750 full time jobs and added value of $1.14 billion to the Victorian and Australian economies. 55. I noted that an economic impact on businesses related to recreation and tourism is expected to arise largely due to the fact that some key dive, fishing, and ecotourism/charter sites are located within, or in close proximity to, the dredging works in the Entrance and south of the Bay. I noted that the economic cost of the proposal to recreational diving businesses has been estimated at $4.1 million. I noted that commercial fishing is also likely to be affected by a reduced catch during the dredging and for the following three years as the commercial fish species recover to normal population levels. I noted that the estimated cost in lost commercial fish harvesting is $1.5 million. 56. I noted that extensive public submissions were received by the Victorian Government and that the issues raised were considered through the Victorian Government's inquiry process. On the basis of the SEES inquiry report I found that there is likely to be short-term effects on amenity due to the activities of dredge vessels and associated turbidity plumes, as well as the perceived impact on seafloor habitats and perceived risks of contamination of the water column. I noted the Victorian Minister for the Environment has proposed ongoing community consultation to address these concerns. 57. I noted that the SEES indicated that the consequence of not proceeding with the proposal is likely to be a reduction in the international competitiveness of the Victorian and Australian economies, with the additional costs borne by Victorian importers and exporters predicted to rise to about $450 million per annum by 2035. 58. I carefully considered all the information before me that related to economic and social matters relevant to the proposal. I recognised that the proposal was highly controversial in Victoria, however, I found that, on balance, there was a net economic benefit and that there were no economic and/or social matters to indicate I should decide not to approve the proposed action. In deciding whether or not to approve the taking of the proposed action, I took into account, among other matters, the principles of ecologically sustainable development, as required under Section 136(2)(a) of the EPBC Act, and the precautionary principle, as required under Section 391 of the EPBC Act. 61. In particular, I considered that my proposed decision would be consistent with the principles of ecologically sustainable development because of the strict conditions I was contemplating imposing to ensure the adequate protection of the relevant matters of national environmental significance. I formed the view that the conditions are appropriate measures for preventing degradation of the environment in relation to the matters of national environmental significance addressed by the conditions, including for those matters where there is a lack of full scientific certainty about the effects of the proposed action. In light of my findings, I concluded that the proposed action is unlikely to have an unacceptable impact on matters protected by the controlling provisions for the action. I therefore decided on 20 December 2007 to approve, subject to conditions, the taking of the proposed action for the purposes of Sections 16 and 17B (Wetlands of International Importance) Sections 18 and 18A (Listed threatened species and communities), Sections 20 and 20A (Listed Migratory Species) and Sections 26 and 27A (Commonwealth Land) of the Environment Protection and Conservation Biodiversity Act 1999 . At this time the dredging could not begin because the Minister's approval was subject to a condition, namely, that the PMC produce an EMP and that the Minister approve the EMP. The Minister had not given approval for the EMP. However, the applicant sought a stay of the Minister's approval until the determination of the application as it was believed that approval of the EMP was imminent. Rather than programming the application for interim relief, the Court listed the final hearing to commence on 20 February 2008 and made directions for the preparation of the matter for hearing on a very tight timetable. 55 In order to allow the stay application to be adjourned, the PMC undertook to give the applicant 24 hours notice of its intention to start dredging if the EMP was approved. 56 On 5 February 2008, the Minister approved the EMP and the PMC gave notice of its intention to commence dredging. On 6 February 2008, the applicant filed a motion seeking a stay of the Minister's decision until the determination of the application. The motion was listed on the same day. 57 The PMC opposed the stay on the ground that the cost of delay was in the region of $250,000 per day. The dredging ship "Queen of the Netherlands" had arrived from Singapore and was waiting to start work. The dredging program was complex and interlocked with other works. Delay in commencement would, the PMC contended, produce great inconvenience in the execution of a very large and intricately planned project. That might be an inconvenient and unfortunate result in a case like this, because the dredging would be stopped, even though the decision of the Minister might ultimately be upheld. That is one outcome, and it is perhaps the worst case scenario from the point of view of the proper administration of justice, although it is the way the law works. What remains the hub of the problem for this morning is a claim by the applicant for an order from the court compulsorily requiring the dredging to stop, in effect until next Tuesday. The interlocutory application will divert resources of the parties to preparing that matter and arguing that matter when they could be much better spent by preparing for the final hearing a little earlier. This seems to be the sort of situation ideally suited to the use of mediation as an alternative way of solving such a problem. The system is designed as an instrument of our society to resolve disputes. In times past the emphasis has been on the provision by courts of judicial determination of disputes as the single means to achieve that end. But it has become more and more recognised that judicial determination is but one means of dispute resolution. A greater role is now given to dispute resolution by mediation and other methods such as early neutral evaluation. The advantages of parties to disputes taking control and responsibility for outcomes rather than leaving the results in the hands of judges are well recognised. Some disputes are particularly appropriate for assisted dispute resolution. Many native title cases fall within this category because the issues raised often concern the very identity, beliefs, culture and history of people. It is unlikely that an enforced resolution of such issues by judicial determination will be accepted or durable. The worldwide trend is towards the development of courts with many doors. One door leads to judicial determination, but other doors lead to other forms of dispute resolution. Unless the courts in Australia continue to reflect this development they will gradually decrease in relevance as the social institution for dispute resolution. The conclusion of this case using sophisticated techniques of assisted dispute resolution is a sure mark that this court embraces the modern concept of a court with many doors. The agreement permitted the preparation and hearing of the case to proceed without the diversion of resources of the parties and the Court to the temporary situation which arose pending the hearing of the proceeding. 61 This hearing commenced on 20 February 2008. 62 The arguments relied upon by the applicant will now be considered against the background outlined earlier in these reasons. The final version filed by leave on 3 March 2008 was the third amended application. The respondents did not oppose leave being granted to the applicant to make these amendments. In any event, the amendments considerably narrowed the scope of the debate, and followed the first day of argument when it became clear that a number of the original arguments were clearly untenable. 64 The final form of the application relied on three grounds. They will be considered in turn. The failure to take those principles into account provided grounds for review of the decision of the Minister under s 5(1)(b) (procedures required to be observed were not observed) and s 5(1)(e) with s 5(2)(b) (failing to take a relevant consideration into account) of the ADJR Act. In the first argument the applicant contended that the evidence provided by the text of the statement of reasons showed that the Minister did not take into account the principles of ecologically sustainable development when considering the social impact of the channel deepening project. 69 In [60] of the statement of reasons, the Minister stated "I took into account ... the principles of ecologically sustainable development as required under Section 136(2)(a)" of the Act. The applicant contended that this statement did not mention social matters and hence could not be read as a statement that the principles of ecologically sustainable development were applied in the consideration of social matters. 70 Then, in [58] of the statement of reasons the Minister stated "I carefully considered all the information before me that related to... social matters relevant to the proposal". The applicant argued that, whilst this reference concerned social matters, it did not make mention of the principles of ecologically sustainable development. It could not be read as an assertion by the Minister that he took into account those principles when considering social matters. 71 This argument should not be accepted. In [60] of the statement of reasons the Minister explained that he took into account the principles of ecologically sustainable development. He also explained the purpose for which he took the principles into account, namely, "In deciding whether or not to approve the taking of the proposed action". This was a reference back to the opening words of s 136(1). It conveyed that the Minister took the principles of ecologically sustainable development into account when considering the matters referred to in s 136(1)(a) and (b). Social matters were the subject of s 136(1)(b). Thus, [60] incorporated reference to social matters by its linkage with the verbiage of s 136(1). The contention of the applicant that [60] did not relate to the Minister's consideration of social matters cannot be sustained. 72 The second argument was that, in the alternative, assuming that the Minister did take into account the principles of ecologically sustainable development, he did not do so in the way required by ss 136(1) and (2)(a) of the Act. The applicant argued that ss 136(1) and (2)(a) required that each of the principles of ecologically sustainable development had to be considered individually in the consideration of each of the protected, economic and social matters. The result was that each of the principles had a relevance to the consideration of social matters in s 136(1)(b). 74 It was further argued that each of the principles of ecologically sustainable development had to be applied to the consideration of each of the protected matters in s 136(1)(a). This construction was said to flow from the form of s 136(1). Subsections (a) and (b) are separate and independent matters. The legislature had deliberately not connected them with the word "and". This language, so it was submitted, required the mandatory considerations to be considered separately. This argument was also relied upon in support of the second argument under the third ground considered later in [124] of these reasons. 75 Then, the applicant argued that the statement of reasons did not deal separately with the consideration of each of the principles of ecologically sustainable development. It was not enough for the Minister to state in [60] that he had taken the principles of ecologically sustainable development into account in deciding whether or not to approve the channel deepening project because the statement did not disclose whether he had done as required by ss 136(1) and (2)(a), namely, by taking into account each of the principles of ecologically sustainable development when considering each of the protected, social, and economic matters. At the very least, it was argued, the Minister had to identify which principles were relevant to apply to the consideration of a particular matter. In this way the applicant argued that the manner in which the reasons were expressed revealed that the Minister failed to take into account relevant matters. The statement must also indicate expressly or by necessary implication how the reasoning process took account of that consideration in coming to each decision to which it was relevant. Section 136(2) requires the Minister to take into account the principles of ecologically sustainable development "In considering those matters", that is to say, the matters referred to in ss 136(1)(a) and (b). The section does not require the Minister to take the principles of ecologically sustainable development into account when considering each of the matters referred to in s 136(1) separately and independently of each other. The applicant's argument to the contrary requires reading the opening phrase as if it said "In considering each of the matters" referred to in s 136(1). This construction would require the addition of a word which does not appear in the section. 77 Furthermore, the subject matter of the principles of ecologically sustainable development point away from a requirement that each of them must be taken into account when considering social matters. For instance, the principles referred to ss 3A(c), (d) and (e) are not in terms applicable to social matters, and focus on environmental consequences relevant to the protected matters. Indeed, the applicant accepted that the principle referred to in s 3A(d) was relevant to environmental rather than social matters. The concession is inconsistent with the applicant's argument. Resort to the definition of the word environment in s 528 of the Act does not assist the applicant because that word is only used in the principle referred to in s 3A(c). In any event, the definition is subject to the expression of a contrary intention. Section 3A contains such an expression because it makes specific reference to social matters in one of the principles, namely, the principle referred to in s 3A(a). The absence of reference to social matters in the other principles reflects an intention that the other principles do not relate directly to social matters. 78 Thus, the Minister was not obliged by ss 136(1) and (2)(a) to take into account each of the principles of ecologically sustainable development when considering each of the protected, economic or social matters. He was entitled to consider the matters together and to take the principles of ecologically sustainable development globally. It follows that if the statement of reasons is evidence that the Minister took such a global approach as the applicant contends, then the statement of reasons is not evidence of the Minister's failure to take the principles into account when considering social matters in the way mandated by ss 136(1) and (2)(a), and the applicant's argument must fail. 79 However, even if the Minister was obliged to take each of the principles of ecologically sustainable development into account when considering social matters as contended by the applicant, the respondents submitted that the evidence showed that he had done so. I noted that extensive public submissions were received by the Victorian Government and that the issues raised were considered through the Victorian Government's inquiry process. On the basis of the SEES inquiry report I found that there is likely to be short-term effects on amenity due to the activities of dredge vessels and associated turbidity plumes, as well as the perceived impact on seafloor habitats and perceived risks of contamination of the water column. I noted the Victorian Minister for the Environment has proposed ongoing community consultation to address these concerns. I carefully considered all the information before me that related to economic and social matters relevant to the proposal. I recognised that the proposal was highly controversial in Victoria, however, I found that, on balance, there was a net economic benefit and that there were no economic and/or social matters to indicate I should decide not to approve the proposed action. In deciding whether or not to approve the taking of the proposed action, I took into account, among other matters, the principles of ecologically sustainable development, as required under Section 136(2)(a) of the EPBC Act, and the precautionary principle, as required under Section 391 of the EPBC Act. 61. In particular, I considered that my proposed decision would be consistent with the principles of ecologically sustainable development because of the strict conditions I was contemplating imposing to ensure the adequate protection of the relevant matters of national environmental significance. I formed the view that the conditions are appropriate measures for preventing degradation of the environment in relation to the matters of national environmental significance addressed by the conditions, including for those matters where there is a lack of full scientific certainty about the effects of the proposed action. • There were no other social matters of concern which indicated that approval for the dredging should be refused. • In considering these social matters raised in the information provided, the principles of ecologically sustainable development were taken into account. 81 This reasoning reflects the written the advice of the Department contained in attachment D to the 7 December 2007 brief which set out the legal considerations for the Minister's decision. • The Victorian Assessment Report, the EES, SEES and the Inquiry comprehensively reviewed social and economic impacts. The issues raised were considered through the Victorian Government's inquiry process. From the Victorian Assessment Report: The SEES concluded that effective communication and environmental management will ensure that no long-term social effects, in terms of how people feel about or use the Bay passively, will occur. However, it is predicted that there will be short-term effects on amenity due to: the presence of the dredger, associated noise and the visible turbidity plume, as well as the perceived impact on seafloor habitats and perceived risks of contamination of the water column. The Victorian Minister for the Environment has proposed ongoing community consultation to address these concerns. As highlighted in [27] of these reasons, the assessment report stated that "Through the assessment process under the EE Act [the Vic. Act], including this Assessment, careful consideration has been given to "ESD" [ecologically sustainable development] principles and objectives as variously defined under... the EPBC Act [the Act]". It found that the assessment process had effectively integrated both long-term and short-term economic, environmental, social and equitable implications of the channel deepening project, addressed potential threats of environmental degradation and considered both the interests of the present and future generations. In respect of social impacts, the Inquiry's principal concern was that it had "found a deep and unrelenting concern by community participants about the CDP". In each case, the Report concluded that, to the extent that there were social impacts of concern, those could be appropriately managed through specified measures. The Minister described those limited social matters in [56] and concluded that they were to be addressed by the Victorian Minister. In [58] he undertook a process of balancing the short term social effects against the net economic benefit of the project. This discussion applied the principle of ecologically sustainable development referred to in s 3A(a). 87 The focus of the principles of ecologically sustainable development referred to in ss 3A(b), (c) and (d) is on environmental rather than social matters. For instance, in relation to the principles of intergenerational equity referred to in s 3A(c) the focus is on maintaining or enhancing the quality of the environment, not on protecting or enhancing social activities per se. If there were social matters which might be affected by a proposed action, ensuring that future generations do not carry an inequitable cost in terms of the quality of the environment would of itself ensure that the impact of the proposed action would be minimised. In the present case, the Minister formed the view that there would be no significant effect on the protected matters taking into account the principles of ecologically sustainable development. Thereafter, there was no occasion to apply those principles to the limited social matters identified by the Minister for mention. 88 Finally, the Minister was obviously aware of the principle of ecologically sustainable development referred to in s 3A(e) because he applied it by requiring the PMC to fund certain conservation activities in relation to the protected matters. That he did not apply it to the limited social matters considered demonstrates that he did not regard it as appropriate for the purpose, not that he did not take the principle into account when considering social matters. 89 Thus, the evidence as a whole demonstrates that the Minister took into account those principles of ecologically sustainable development relevant to his consideration of the limited social matters which he regarded as likely to be affected by the channel deepening project. He thereby complied with the requirements of ss 136(1)(b) and (2)(a), and the applicant's second argument under ground one must fail. The Minister, thereby, did not observe a procedure required by law in connection with the making of the decision or in respect of conduct for the purpose of making a decision, and s 5(1)(b) or s 6(1)(b) of the ADJR Act were available respectively to challenge the decision or the conduct. 92 Alternatively, the applicant argued that the Minister for Tourism and the Minister for Climate Change and Water were both Ministers with administrative responsibilities relating to the channel deepening project and the Minister acted unreasonably in failing to form a belief that they had administrative responsibilities relating to the project and in failing to invite them to comment on the project. Section 5(1)(e) with s 5(2)(g) or s 6(1)(e) with s 6(2)(g) of the ADJR Act (each of which concern the exercise of power which was so unreasonable that no reasonable person could have so exercised the power) were relied upon as the basis for this part of the challenge. It further contended that the impact of the channel deepening project on tourism was directly raised in the departmental brief, and in the SEES and assessment report which were part of the assessment documentation provided to the Minister with the departmental brief. The Minister indicated on the departmental brief that he had considered these documents. The economic cost of the CDP to recreational diving businesses has been estimated at $4.1 million. The Minister for Climate Change and Water thereby had a concern with the effect which the channel deepening project might have on sea levels and tidal level changes in the Bay. It considers such matters as the greenhouse emissions and impacts from predicted climate change upon the sea levels and tidal level changes. It is noted that this report at p 39 predicts tidal changes resulting from climate change of 16.5cm rise in global sea levels by 2030 at the high range and 30cm by 2040. The mid range prediction is for a 9cm increase by 2030 and 12cm by 2040. After all, the departmental brief of 7 December 2007 was directed to observance of the requirements of that section. The purpose of the brief was explicitly stated as "To provide you with a proposed decision for the purpose of inviting comments from other Ministers in accordance with s 131 of the Environmental Protection and Biodiversity Conservation Act 1999 . 98 The applicant asked the Court to infer from the facts that tourism and climate change were issues addressed in the assessment documents, that the Minister for Tourism and the Minister for Climate Change and Water had administrative responsibilities in those areas, and that no reference to those Ministers was made in the brief meant that no consideration was given to inviting them to comment under s 131 of the Act. 99 In the face of these contentions, the first respondent filed an affidavit sworn by Ms Vicki Middleton on 28 February 2008. It will be recalled that Ms Middleton signed the 7 December 2007 departmental brief to the Minister. In her affidavit she explained that the Environment Assessment Branch 1 of which she was Assistant Secretary was divided into a number of sections including the Ports and Marine Section. She said that she reviewed a copy of the Administrative Arrangements Order for the purpose of determining whether to advise the Minister that he should invite comments relating to the channel deepening project from other ministers. On 4 December 2007 I met with Matthew Johnston, Director of the Ports and Marine Section and discussed with him my view that it was appropriate for the Minister to write to Minister Albanese, Minister for Infrastructure, Transport, Regional Development and Local Government ( Minister Albanese ) to invite comments pursuant to s 131 of the Environment Protection and Biodiversity Conservation Act 1999 (the Act ). I formed this view on the basis of my discussion with Matthew Johnston and on the basis of my understanding that Minister Albanese's department has administrative responsibility for maritime transport, including safety and security, and that ports are significant infrastructure. I also took into account my understanding that Minister Albanese has administrative responsibility for approving the Maritime Transport Program for the Port of Melbourne under the Maritime Transport and Offshore Facilities Security Act 2003 . I understood that any changes to the shipping capacity of the Port of Melbourne (such as the types and numbers of vessels entering the Port) might require changes and new approval of the Transport Security Program for the Port. 6. Matthew Johnston and I also discussed whether or not the Minister for Resources, Energy and Tourism (the RET Minister ) should be informed of any proposed decision and invited to make comments pursuant to s 131 of the Act. On the basis of my discussion with Matthew Johnston and on the basis of my understanding of the administrative responsibilities of the RET Minister, I formed the view that I would not advise the Minister to invite the RET Minister's comments. In forming that view, I took into account that the identified potential impacts on local tourism operators were of a temporary nature. I also took into account that the RET Minister's principal role is to promote Australia as a tourist destination internationally, with no direct regulatory role in relation to local or specific tourism operations. 7. As noted in paragraph 4 above, I reviewed the AAO [administrative arrangements order] on 3 December 2007. I considered whether any other Minister might have administrative responsibilities relevant to the proposal. In particular, I considered whether the Minister for Climate Change might have such responsibilities. I formed the view, however, that the Minister for Climate Change had a broader policy portfolio, rather than any direct regulatory or approval responsibilities in relation to the proposal, and on that basis I decided that I would not advise the Minister to invite the Minister for Climate Change's comments. (original emphasis. In the course of that briefing, I said to the Minister that one question which he needed to consider was whether there were other Commonwealth Ministers with administrative responsibilities relating to the proposal, because it would be necessary to inform any such Commonwealth Minister of any proposed decision on the proposal. I informed the Minister that it was the Department's view that he may wish to consult with Minister Albanese in relation to his proposed decision and that the Department would provide a briefing package with a proposed draft decision for the purpose of inviting comment from other Ministers within 48 hours. He was entitled to rely on the recommendations of his department and their officers: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 30-31 per Gibbs CJ, and 65-66 per Brennan J ( Peko-Wallsend ). There is therefore no basis for the claim that the Minister failed to comply with s 131(1) in this regard. The applicant must establish that the Minister's conclusion, when viewed objectively, was "so devoid of any plausible justification that no reasonable [person] could have reached [it]": Bromley London Borough Council v Greater London Council [1983] 1 AC 768 at 821 per Lord Diplock. See also Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230, 233-234 per Lord Greene MR; Fares Rural Meat & Livestock Co Pty Limited v Australian Meat & Livestock Corporation [1990] FCA 139 ; (1990) 96 ALR 153 at 166 per Gummow J; Peko-Wallsend at 41 per Mason J. 103 The applicant argued that the material before the Minister established that there were tourism and climate change issues involved in the channel deepening project. The Administrative Arrangements Order provided that the two Ministers had administrative responsibilities for those subjects. Section 131(1)(a) does not require that the administrative responsibilities be great or small, but simply that they exist. In these circumstances the Minister, not acting unreasonably, was effectively compelled to form the belief that the two Ministers had administrative responsibilities relating to the channel deepening project. 104 In her affidavit Ms Middleton explained the basis for her belief that the two Ministers did not have administrative responsibilities relating to the project. In forming that view, I took into account that the identified potential impacts on local tourism operators were of a temporary nature. I also took into account that the RET Minister's principal role is to promote Australia as a tourist destination internationally, with no direct regulatory role in relation to local or specific tourism operations. Whether right or wrong, this approach was tenable and not so unreasonable that a reasonable minister could not adopt it. Further, in relation to the Minister for Tourism, Ms Middleton had regard to the temporary nature of the impact of the project on tourism. Behind this consideration seems to lie a view that a long term impact might give rise to administrative responsibilities, whilst a short term impact may not. The applicant did not seek to demonstrate that such an approach was completely untenable. The applicant's challenge based on unreasonableness cannot be upheld. 107 The first respondent argued that the formation of a belief under s 131 was not a decision or conduct reviewable under s 5 or s 6 of the ADJR Act. Rather, it was a step along the way to the making of the decision to approve the project. The second and third respondents contended that even if the Minister's belief was so unreasonable that a reasonable minister could not have formed it, the Act did not disclose an intention that the decision to approve the project following the formation of such a belief would be invalid: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 ; [1998] HCA 28. In view of my conclusion that the unreasonableness challenge cannot succeed, it is unnecessary to consider these arguments further. 109 The applicant argued that the Minister failed to consider three matters which were relevant, namely, the impact of maintenance dredging, the impact of oil or chemical spills, and the impact of the removal and disposal of toxic sediment in the north of Port Phillip. 110 Further, it was contended that the Minister failed to consider the protected matters taking into account the principles of ecologically sustainable development contrary to s 136(2)(a) of the Act. These failures were said to give rise to rights of review under s 5(1)(e) with s 5(2)(b) (failing to take a relevant consideration into account) and s 5(1)(b) (procedures required to be observed were not observed) of the ADJR Act. 111 As to the first limb of the ground, it was necessary for the applicant to establish that s 136(1)(a) bound the Minister to take into account the three allegedly relevant matters. If the relevant factors --- and in this context I use this expression to refer to the factors which the decision-maker is bound to consider --- are not expressly stated, they must be determined by implication from the subject matter, scope and purpose of the Act. In the context of judicial review on the ground of taking into account irrelevant considerations, this Court has held that, where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard: see Reg. v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) HCA 62 ; (1979) 144 CLR 45 at 49-50, adopting the earlier formulations of Dixon J in Swan Hill Corporation v Bradbury [1937] HCA 15 ; (1937) 56 CLR 746 at 757-758, and Water Conservation and Irrigation Commission (NSW) v Browning [1947] HCA 21 ; (1947) 74 CLR 492 at 505. By analogy, where the ground of review is that a relevant consideration has not been taken into account and the discretion is unconfined by the terms of the statute, the court will not find that the decision-maker is bound to take a particular matter into account unless an implication that he is bound to do so is to be found in the subject matter, scope and purpose of the Act. It is largely for the decision-maker, in the light of the matters placed before him, to determine which matters he regards as relevant and the comparative importance to be accorded to matters which he so regards: Sean Investments Pty Ltd v MacKellar (1981) 38 ALR 363 at 375. As long as the decision-maker considers those things that the legislation requires to be taken into account and ignores any prohibited consideration, the grounds of failing to take into account a relevant consideration, or taking into account an irrelevant consideration, will not be available. Nor are those grounds available where the essence of the compliant is that the decision-maker paid either too little or too much attention to a relevant factor: Aronson & Dyer, Judicial Review of Administrative Action (2 nd ed, 2000), p 225. The subject matter, scope and purpose of the Act was approached in the following way. The Act employs an assessment process to inform the Minister's decision. The process requires an assessment of relevant impacts of the action contemplated (s 87(1)). Relevant impacts are impacts which the action has, will have, or is likely to have, on the protected matters (s 82(1)). An impact is defined as an event or circumstance which is a direct consequence of the action, or where the event or consequence is an indirect consequence of the action, the action is the substantial cause of the event or circumstance (s 527E(1)). Certain secondary actions are within the definition of impacts if they are the foreseeable consequence of a primary action, and within the contemplation of the person undertaking the primary action (s 527E(2)). 115 Section 136(1)(a) left it to the Minister to decide what were the matters relevant to the protected matters which he should take into account. The section does not suggest that there was a defined set of specific matters to be taken into account such as might be intended if the section had referred to "all matters relevant" or "the matters relevant". 116 In his statement of reasons, the Minister discussed each of the protected matters, namely, the listed threatened species, the listed migratory species, the Ramsar wetlands of international significance, and the environmental impact on Commonwealth land in the area. In this discussion he considered matters which he had determined to be relevant to those protected matters. 117 There is nothing in the subject matter, scope or purpose of the Act which required the Minister to take into account the impact of maintenance dredging, the impact of oil or chemical spills or the impact of the removal and disposal of toxic sediment in the north of the Bay. The Act required him to be provided with an assessment report with sufficient information on the impacts of the project to allow him to make an informed decision, and required him to make his decision within a very short timeframe. The assessment report synthesised the material from the EES, SEES, the 2005 and 2007 inquiry reports and the IEG report. In these circumstances, the subject matter, scope and purpose of the Act justified the Minister placing considerable reliance on the assessment report. 118 In relation to maintenance dredging, this was to occur in the future and was excluded from the channel deepening project under consideration by the Minister. It was not the subject of the approval decision. It would be subject to separate referral and assessment in the future. There was no certainty that such maintenance dredging would be necessary in the future. The purpose of the Act was served by the requirement for approval under the Act in the future when further maintenance dredging was to be undertaken. The applicant contended that it was not open to the Minister to defer consideration of the impact of maintenance dredging, and relied upon the reasoning of the majority (Sheppard and Ryan JJ) in Commonwealth of Australia v Pharmacy Guild of Australia (1989) 91 ALR 65. In that case, the Pharmaceutical Benefits Tribunal deferred consideration of labour costs when fixing the way in which pharmaceutical benefits payable by the Commonwealth were to be calculated. The majority held that the Tribunal had failed to take into account a relevant consideration, namely, the impact of labour costs. However, the majority held that the scope and purpose of the legislation governing the fixing of pharmaceutical benefits indicated that labour costs had to be taken into account. As I have said, the scope and purpose of the Act in this case does not indicate that the impact of maintenance dredging had to be taken into account. The case does not assist the applicant. 119 In relation to the possibility of oil and chemical spills, the risk assessment in the SEES rated the risk of a major oil spill from collision with the dredger in the Bay as almost impossible, and the chance of a collision with the dredger in the entrance to the Bay leading to an oil spill as around 3 in 1 million. In these circumstances it cannot be said that the subject matter, scope or purpose of the Act implicitly required this matter to be taken into account by the Minister when considering whether or not to approve the channel deepening project. 120 In relation to the impact of the removal and disposal of toxic sediment in the north of Port Phillip, the Minister expressly referred to the impacts from contaminated sediments in relation to the wetlands of international importance. The 2007 inquiry report was part of the assessment documentation before the Minister which was intended by the Act to give the Minister a basis for determining his approach to the approval decision. The contamination risks and potential bioaccumulation, stemming from the Yarra River arises principally from unconsolidated silts carried in runoff from the catchment into the Bay, affecting it and users. This runoff, often associated with flooding events, will continue, irrespective of whether the CDP [channel deepening project] goes ahead. Accordingly, the Inquiry finds implications for bioavailability and bioaccumulation in Port Phillip Bay are generally low at present although evidence indicates some issues of concern (such as eels). The additional risks due to the CDP will therefore be minimal. Management of these materials should aim to minimise the risk. The decision to contain unconsolidated material (assumed to be unsuitable for unconfined marine disposal based on the National Ocean Disposal Guidelines (NODG) classification), and localised consolidated sediment volumes classified as unsuitable, is endorsed by the Inquiry. Moreover, the IEG [independent expert group] advised that the technology used to manage these sediments is best practice. To provide assurance to the community, the IEG advised that the EMP should monitor the additional risk to human consumption of disturbing sediment during dredging. The Inquiry concurs with this advice. ... The NODG are recognised best practice for classifying sediment chemical and toxicological characteristics, while Best Practice Environmental Management Guidelines apply to dredge material management and other matters. The Inquiry concludes the proposed CDP design (including for the Channels, dredged material grounds and navigational aids) is safe, suitable and technically feasible to implement using the proposed dredging technologies. The subject matter, scope or purpose of the Act therefore did not require the Minister to consider this as a relevant matter. He was free to do so if he chose, as he did in the case of the wetlands where he indicated in the statement of reasons that they were not likely to be affected. 123 Even if, contrary to the view just expressed, the Minister was required to consider these three matters, the question arises whether the applicant has shown that the Minister did not consider them. The evidence from the Minister's notation on the departmental briefs of 7 December 2007 and 20 December 2007 demonstrates that he considered the assessment documentation. The submissions of the second and third respondents in particular set out in great detail the discussion of each of these matters in the various environment effects statements and inquiry reports. It is not necessary to traverse that material now. Rather it is sufficient to observe that the material shows that each of these matters was dealt with in detail in the assessment documentation which was before the Minister. Some of the matters were expressly referred to in the statement of reasons, such as the impact of contaminated sediment on the wetlands referred to in [38]. The mere fact that not every issue was addressed in the statement of reasons or in the departmental advice contained in the departmental briefs does not prove that the material was not considered by the Minister. There are other explanations for the absence of mention of the matters in the statement of reasons. The Minister may have excluded some on the basis that they were not sufficiently important, or that the environmental concern was not sufficiently in question to warrant express mention. There is no reason to doubt in the circumstances of this case that the Minister did as he noted on the departmental briefs, namely, that he considered the assessment documentation provided to him. The applicant has thus not established that the Minister's assertion in the departmental briefs did not represent the fact. Consequently, the first part of the challenge to the Minister's decision in ground three has not been made out. 124 The second part of the challenge to the Minister's decision under ground three argues that the Minister failed to take into account the principles of ecologically sustainable development when considering matters relevant to the protected matters under s 136(1)(a). This argument is the same as that raised in ground one regarding social matters under s 136(1)(b). As discussed in [71] of these reasons there is no reason to doubt the Minister's statement in [60] of his statement of reasons that he took into account the principles of ecologically sustainable development when considering his approval decision. As stated in [78] of these reasons, the Minister was entitled to consider the matters together and take a global approach to the application of the principles of ecologically sustainable development referred to in s 3A. The applicant has not pointed to any matter of substance which demonstrates that the Minister's statement of reasons does not reflect the true position. There was little scope to apply the principles of ecologically sustainable development to the consideration of the protected matters because in nearly all instances the Minister made an express finding that the protected matter would not be significantly affected by the channel deepening project. 125 Again, as found in [89] of these reasons regarding social matters, there is evidence in the statement of reasons apart from the assertion in [60] that the Minister applied the principles of ecologically sustainable development to the consideration of protected matters as well. For instance, in [43] he required the PMC to fund measures concerning the wetlands and migratory birds and hence applied the principle referred to in s 3A(e). The assessment documentation, considered by the Minister, examined in depth the environmental effects on the protected matters and the assessment report found that principles of ecologically sustainable development had been given careful consideration throughout the assessment process. The second part of the challenge under ground three must also be rejected. The application must therefore be dismissed. As the question of costs has not been addressed, the costs of the application will be reserved. 127 A final observation should be made in view of the public profile of this case. 128 The channel deepening project has attracted much public attention, particularly in Melbourne. Some people hold very strong views opposed to the dredging on environmental and other grounds. 129 It is important to emphasise that in this case, the Court was not called upon to make a judgment as to whether the channel deepening project is a good thing or a bad thing or whether it is harmful to the environment or not. 130 State and Federal laws provide for a very elaborate process of assessment of those matters. The law then requires the Minister to evaluate the benefits and detriments of the proposal. 131 The Court has a limited function. It can only consider challenges to the process by which the Minister made his decision and determine whether the Minister acted in accordance with the law. In this case, the Court has determined that the arguments raised by the applicant in that regard cannot be sustained. I certify that the preceding one hundred and thirty-one (131) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North. | whether failure to take into account relevant considerations whether procedures required to be observed were not observed s 136 of the environment protection and biodiversity conservation act 1999 (cth) whether failure to observe a procedure required by law unreasonableness s 131 of the environment protection and biodiversity conservation act 1999 (cth) " environment " administrative law administrative law words and phrases |
In the judgment dated 10 July 2009, the Federal Magistrate dismissed the applicant's application for the Federal Magistrate to disqualify himself from dealing with the main proceeding. The judgment of 20 July 2009 dismissed the applicant's application for leave to appeal against that decision. These applications to the Federal Magistrate arose in proceedings commenced by the applicant in the Federal Magistrate's Court on 22 April 2008, in which the applicant alleges misleading and deceptive conduct in relation to design work allegedly performed by him under a contract with an entity described as "Highline", in relation to a design and construct tender for Worken Pty Ltd (Worken) (WAD 123 of 2009). This appeal was heard at the same time as the related matter, Ibrahim v Highline Building Construction (WAD 124 of 2009). This judgment comprises reasons for decision in both matters. These were summarised by his Honour at [84]: that the applicant will not be listened to by the presiding Federal Magistrate; that the extension of time for filing of affidavits by the respondents and a limiting of the applicant's opportunity to reply favoured the respondents; that there was an extension of time for discovery by the respondents; that there was a limited time for the applicant to discover drawings and a failure to consider reasons relating to this issue; that the applicant was denied the right to issue subpoenas; that every decision has been determined the respondents' way; that orders that the parties agreed in the Federal Court on 1 May 2009 would be made in this Court were changed by the presiding Federal Magistrate; that there was previous similar course of conduct in another matter by the presiding Federal Magistrate; that costs have been awarded against the applicant; and that the nature of the major issue in the proceedings has been misapprehended by the presiding Federal Magistrate. His Honour gave extensive reasons for judgment, and in doing so had regard to these contentions and the general nature and history of the litigation: see Ibrahim v Highline and Ibrahim v Worken Pty Ltd (No 3) [2009] FMCA 510 (10 July 2009 judgment). If there is no provision in the FM Act or the FMC Rules for the grant of leave, leave cannot be granted. The application states: The applicant applies for leave to appeal from the judgment of the Federal Magistrate Court Of Australia given on 10/07/2009 and on the 20/07/2009 at 1 Victoria Ave Perth WA. Leave to appeal is required under the Federal Court of Australia Rules. 3. The ground of the application appears in the annexed affidavit. 4. The applicant wishes to have an oral hearing to address the application. 5. The applicant filed an affidavit, sworn 23 July 2009, in support of his application. In summary, the applicant makes the following submissions: Under the heading "The Magistrate creating a confusion in the case/and his bias attitude" the applicant states: That the magistrate rewarded the respondents for failing to file their affidavit as ordered by 8 December 2008. The applicant deposed that when he raised this with the Magistrate at a directions hearing on 22 December 2008 "the Magistrate refused to do anything about it he rather rewarded the respondent for not complying with his orders by giving them more time". b) The Magistrate "allowed the respondent all of the month of February to do the discovery" and "tolerated" the respondents' delay in complying with orders relating to discovery. The applicant alleges that this "gave the respondent's solicitor time to sieve through the document in their position [sic] to represent the ones that does not incriminate their client". He also alleges that that the Magistrate reserved the costs against the applicant in the proceedings relating to discovery even though "they were the respondent [sic] fault". Under the heading "The Magistrate double standard", the applicant deposes that the Magistrate was "biased and has a double standard" when he ordered the applicant to produce drawings that would be relied upon by the applicant in the proceedings, to the respondent, within 24 hours. The applicant deposes that he "pleaded with him [the Magistrate] because he was very sick at the time" and his computer did not work but "the Magistrate was so adamant that this has to happen in 24 hours". Under the heading "The issue of the subpoena and the discovery issues", the applicant states that the Magistrate has "the same bias attitude...in the case of the subpoena and the discovery". He deposes that "the Magistrate did everything he could to delay approving the subpoena". Under the heading "The Magistrate contradicting decisions and another chaos", the applicant states that the Magistrate made it clear "that the evidence in chief are the evidence in the affidavits" but then later stated that he "might allow some [new] evidences during the trial". The applicant deposes that the Magistrate has therefore made contradicting decisions. Under the heading "The Magistrate personality", in addition to making certain allegations about the Magistrate's personality, the applicant states that the magistrate "is bias, prejudice, his decision is unpredictable, does always the opposite of what the appellant applies for even if the appellant application is legally correct. He failed to deal with this case effectively". The applicant also filed a draft notice of appeal with this application. He outlined four grounds of appeal, alleging that the Magistrate made errors of fact and law, had a "double standard" and was biased. A hearing of this application was held on 11 August 2009. The applicant spoke briefly at the hearing and, at his request, the Court granted him leave to file additional written submissions. Counsel for the respondents appeared at the hearing but sought leave to take no further part in the proceedings in this Court, and an order was made to that effect. Section 24 of the Federal Court of Australia Act 1976 (Cth) deals with the Court's appellate jurisdiction and outlines that the Court has jurisdiction to hear and determine appeals from the Federal Magistrate's Court exercising original jurisdiction or regulations under such Acts. Section 24(1A) states that appeals from interlocutory judgments cannot be brought unless the Court or a Judge gives leave to appeal. It is well established that in considering an application for leave to appeal, the Court should have regard to whether the decision at first instance was attended to with sufficient doubt to warrant it being reconsidered and whether substantial injustice would result if leave were refused, supposing the decision at first instance was wrong: see Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397. The applicant deposed that when he raised this with the Magistrate "the Magistrate refused to do anything about it he rather rewarded the respondent for not complying with his orders by giving them more time". The applicant raised the issue at a directions hearing on 22 December 2009, held in relation to the Highline matter. The applicant complained that Worken had not filed an affidavit as required by 8 December 2008, and that he was due to file a responsive affidavit that day, and he was not sure what ought to happen. Counsel for Worken acknowledged that Worken was out of time to file the affidavit, but indicated that the affidavit was in preparation and that that had taken some time because Mr Ibrahim's affidavit was substantial and that Worken wanted to get the response right, and also had an issue with respect to ' gathering annexure '. The applicant protested that he had not been contacted by Worken's solicitor and had therefore worked until 4.00am the previous night on his affidavit. The Court told the applicant that ' it's the sort of thing that happens ', but that if he wanted to take objection or oppose any application for extension of time, or not consent to orders extending time, that was a course that was open to him. On that date his Honour made orders in relation to the filing of the affidavits in the Highline matter. He made the same orders in the Worken matter which effectively extended the time of the filing of the affidavits in the Worken matter. This assertion by the applicant is incorrect. In the judgment of Ibrahim v Worken Pty Ltd (No 2) [2009] FMCA 156 which related to the subpoena and discovery issues, it is stated that an order was made that costs be reserved in the proceedings. His Honour discussed the costs issues in the 10 July 2009 judgment at [124] --- [126] and identified at [18], [30], [45] the times when costs have been awarded against the applicant. It is clear from the lengthy reasons published by his Honour that the orders made relating to the filing of the affidavits and costs were appropriate. There is no basis for the applicant's assertions above that the Magistrate created "a confusion" and was biased. In addition to the above, the applicant's statement that the Magistrate "created a confusion" and was biased, in that the Magistrate "gave the respondent's solicitor time to sieve through the documents in their position [sic] to represent the ones that does not incriminate their client", also has no basis. I agree with what has been outlined by his Honour at [94] of the 10 July 2009 judgment, that this is a complaint about the conduct of the respondents, and cannot constitute a basis for an apprehension of bias on the part of the Magistrate. The applicant deposes that he believes that the Magistrate is biased and has a double standard. His Honour addresses these issues at [65] --- [74] and [103] of the 10 July 2009 judgment. At [65] it is stated that on 27 March 2009 the respondent Highline made an application seeking the following orders: That the applicant provide the respondent with a copy of the building plans prepared by the applicant that the applicant will rely on at trial. Alternatively, the applicant identify for the respondent the building plans prepared by the applicant that the applicant will rely on at trial. This application was heard on 2 April 2009. As outlined in the judgment dated 6 April 2009 at [10] (and discussed in the 10 July 2009 judgment at [70]) the Court observed during the hearing of that application that "there is no explanation from the applicant as to why what are perfectly normal and reasonable requests in the course of civil litigation have not been complied with other than to say ...that he intends to rely upon all of his plans and to say that the respondent already has those plans...neither of which...are in the Court's view a sufficient answer": see Ibrahim v Highline (No 2) [2009] FMCA 297. An order was made that by 4 pm on 3 April 2009, the applicant file an affidavit of discovery specifying the building plans prepared by him and to be relied upon by him at the hearing of the application and attaching legible copies of those plans so specified as annexures to the affidavit. After that judgment had been delivered the applicant submitted that he needed more time to complete the affidavit due to medical issues and problems with his computer. His Honour listened to the submissions, made post judgment, and amended the order so that the applicant was then required to file the affidavit by 4 pm 6 April 2009. The applicant's allegation that the magistrate was biased or had a "double standard" has no basis. As highlighted by his Honour at [103] of the 10 July 2009 judgment, the applicant was given four days, not 24 hours, to file an affidavit attaching legible copies of the drawings to be relied upon in his case. He deposes that the Magistrate delayed "approving the subpoena" and that "the Magistrate perception of biasness is very apparent here in his prompt response to the respondent request and applications and totally ignoring for few months now the appellant request for this document to be provided either by subpoena or by discovery". The issue of the subpoenas is discussed at length by his Honour at [47] to [64] of the 10 July 2009 judgment. On 1 December 2008 the applicant caused to issue a subpoena for the production of documents to Mr Philip Marsh, a director of the respondent Worken. In summary, on 18 December 2008 the Registrar made an order that this subpoena for production be dismissed, and on 8 January 2009 the applicant filed an application for the order made by the Registrar to be revoked: see Ibrahim v Worken Pty Ltd (No 2) [2009] FMCA 156. Mr Ibrahim's application came on for directions on 30 January 2009. At that directions hearing it became apparent to the Court that the ultimate issue in dispute was as much about discovery generally as it was about the Marsh subpoena. The Court ordered that all the matters associated with documents ought to be able to be resolved by conferral and the application was adjourned to 13 February 2009. On 13 February 2009, the matter was further adjourned until 23 February 2009 due to Worken not being in a position to provide discovery. When the matter returned on 23 February 2009 it was apparent to the Court that there had not been any meaningful conferral. Orders were made on that date that: Each party attend the offices of the respondent's solicitors at 9:00am on 25 February 2009 to exchange copies of all relevant documents in their possession, power, custody or control. The parties attend a further directions hearing at 4.30pm on 26 February 2009. On 26 February 2009 the Court was advised that the parties had met on 25 February 2009 but there had not been an exchange of documents because the applicant had refused to pay for the copying of the documents. The Court extended the time for compliance with order 1 of 23 February to 27 February 2009 and further that the costs of photocopying the documents be reserved for later determination. At a further directions hearing on 27 February 2009 the parties advised that the order for informal discovery had been complied with. The is because the Court considers that this is the only proper means of ensuring that, as between the parties, all of the relevant documents are discovered, and, if there is a dispute about that discovery, to provide a means for the Court to resolve it pursuant to an application for particular discovery. The ongoing issuance of further subpoenas to Worken, or officers of Worken, by the applicant represents a piecemeal approach by comparison. The Magistrate brought the matter back on for directions within short time frames to ensure that the issues were resolved as quickly as possible. The Magistrate's orders in relation to the subpoena and discovery were appropriate. There is no evidence of any bias on behalf of the Magistrate. The applicant deposes that the Magistrate has therefore made contradicting decisions. There is no basis for this assertion. As outlined in the judgment dated 10 July 2009 at [89] and [90] his Honour merely assisted the applicant by explaining that the Court "would entertain an application from him at hearing to adduce oral evidence if he perceives that he has been disadvantaged in any way in relation to the presentation of evidence". He failed to deal with this case effectively". There is no evidence to support the applicant's assertions. I agree with the comments made by his Honour in the 10 July 2009 judgment that the Court has spent considerable time and resources listening to the various interlocutory applications and submissions made by both the applicant and the respondents, that in dealing with the various interlocutory applications detailed reasons for judgment have been published and that nothing has been identified as a basis for finding that the Magistrate might decide the case other than on its legal and factual merits. In my opinion the applicant has not disclosed any arguable ground of appeal. Nothing has been raised by the applicant which leads me to consider that the decisions of the Federal Magistrate are attended with sufficient doubt to warrant them being reconsidered. Furthermore, I am of the opinion that no injustice arises from leave to appeal not being granted. I consider I should add that it is important for the applicant, if he wished seriously to pursue the proceeding he has commenced in the Federal Magistrates Court, to ensure compliance with orders made by the Federal Magistrate from time to time that are designed to enable the parties to present their cases adequately at a final hearing. Interlocutory applications for leave to appeal of this kind are only apt to delay the whole process and add expense to the process, neither of which can be considered to the advantage of any of the parties. For these reasons I would dismiss the application. Accordingly, I order that: The application for leave to appeal against the decisions of the Federal Magistrate made 10 July 2009 and 20 July 2009 be dismissed. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | application for leave to appeal interlocutory judgments of federal magistrate whether decisions of federal magistrate were attended with sufficient doubt to warrant being reconsidered whether substantial injustice would result if leave were refused application dismissed. practice & procedure |
The prospectus made clear that Laserbond was intending to apply for its securities to be listed for official quotation on the Australian Stock Exchange (ASX). The offer under the prospectus was fully subscribed. However, through a misunderstanding, while all other formalities were complied with in relation to that process, the necessary documents to achieve admission to the ASX were provided to the ASX one day late. ASX has confirmed that if remedial orders are made by the Court in relation to and consequential upon that one day delay, there is no reason why Laserbond should not be listed. 2 ASIC, in also indicating lack of opposition to the relief sought does so subject to the relevant securities being admitted to quotation within five business days of the making of the order. I am now informed that has occurred. These proceedings were commenced on 10 December 2007. There is an obvious urgency about the matter. The urgency includes the desire that if a listing is to be permitted, it should be within a market that is from a time point of view, reasonably close to the market which operated at the time at which the listing was intended to occur. 3 While it is not obvious that any person would be adversely affected by remedial orders being granted, leave has also been granted for any person interested or affected by the orders to be heard in relation to them on giving 24 hours notice. He was engaged by Laserbond to assist with the preparation of a prospectus giving rise to this application. Mr Suriano's instructions from Laserbond come through Mr Tim McCauley, the Chief Executive and Chairman and Messrs Wayne and Greg Hooper, directors. 5 A prospectus which was lodged by Laserbond with ASIC on 3 September 2007 provided for the issue of up to 15 million fully paid ordinary shares at an issue price of 20 cents each together with a free attaching option for every three shares issued. The objective of the prospectus was to raise $3 million. 6 On 7 September 2007, Laserbond lodged an application for listing with the ASX. On 22 October 2007, Laserbond extended the offer under the prospectus from the expected closing date of 23 October 2007 to 16 November 2007. On that date it closed the offer under the prospectus having received applications for shares totalling in value $3,079,200. 7 Seven days later a letter from the ASX to Laserbond's solicitors dated 23 November 2007 indicated that ASX had decided that Laserbond would be admitted to the official list of the ASX subject to compliance with specific conditions precedents. 8 Shortly after receipt of the letter on 23 November 2007 a solicitor engaged by Laserbond forwarded advice in an email to Mr Wayne Hooper, Mr Tim McCauley and to Mr Suriano. It stressed that Laserbond 'must be admitted (not necessarily listed) on or before 3 December 2007, accordingly the required documents must be provided to ASX asap'. This date marked the expiry of a 3 month period from the lodging of the prospectus. 9 Although this advice focussed on the need for Laserbond to be admitted on or before 3 December 2007, it did not spell out specifically the significant effect of the operation of s 723(3) and s 724(1) CA as referred to below. Specifically, it did not underline that if the 3 month time limit was not met, an issue of securities under the prospectus would be void. The solicitor concerned who swore an affidavit confirming these events and the fact that he was not aware at that time of the operation in that respect of those two subsections. Neither were any of the company's directors aware of the effect of those subsections and nor was Mr Suriano. 10 Mr Suriano himself also experienced some difficulties during the period around the closure of the offers on 16 November 2007 until 30 November 2007. These were simply administrative and technical difficulties in that a number of deposits of money had been made directly into Laserbond's bank account and it was not possible to swiftly reconcile all of those deposits with the applications which had been made in respect of the funds. There was also a delay with the dishonour of two cheques and a delay with a discrepancy in the reconciliation between the amounts received by way of payment and the amounts referred to in the applications. 11 There was a different sort of delay in complying with the conditions imposed by the ASX. It was not caused by any of the persons mentioned thus far. The email of 26 November 2007 from the solicitors for Laserbond setting out the ASX requirements was, in relevant content, mirrored in an email from Mr Suriano to those in charge of the Sydney based share registry on 28 November 2007. It sought documents and information. 12 As the documents and information had not in their entirety been provided by the share registry by the morning of 3 December 2007, the solicitor pursued the share registry by email. He informed Mr Suriano at 2.14 pm that day that he had not received those documents from the share registry and asked Mr Suriano to chase them up. Mr Suriano then made several unsuccessful attempts to contact the share registry by phone and emailed the share registry office at 4.47 pm that day requesting a phone call. The phone call did not come until the following morning at which stage it was too late. 13 The solicitor was telephoned by an officer of the ASX on 4 December 2007 advising that the ASX required the immediate finalisation of the documents from Laserbond to enable Laserbond to achieve its listing. Following receipt of that phone call, the solicitor at 2.15 pm emailed officers of the ASX the documents required by it to enable Laserbond's securities to be admitted for quotation on the ASX. However, following receipt of the email, the original ASX officer telephoned the solicitor again to say that the ASX could not admit Laserbond to the official list due to the operation of s 723(3) CA. On the following day the solicitor briefed counsel who appeared before me in this application instructing him to seek the relief which has been sought. 14 The ASX has since written to Laserbond making it clear that if the Court makes the orders the subject of the application and, if there is no reason for it not to, it will admit Laserbond to the official list of the ASX. The period set out in sub-sections 723(3)(b) and 724(1)(b)(ii) of the Corporations Act for the admission to quotation by the ASX Limited ("ASX") of securities issued pursuant to the Prospectus dated 3 September 2007 (the "Prospectus") be extended to 5 business days after the making of this order. 2. (b) Pursuant to section 1322(4)(a) of the Corporations Act , the issue of options by the Applicant pursuant to the Prospectus is not invalid by reason of any contravention of section 723 or section 724 of the Corporations Act . The Applicant do forthwith lodge a copy of these orders with the Australian Securities & Investments Commission. 4. Upon the Applicant becoming listed on the ASX, the Applicant do make an announcement to the ASX disclosing the terms of these orders. 5. The Applicant and all other interested or affected parties have liberty to apply to vary these orders upon first giving 24 hours prior written notice. The same observation applies in relation to the consequence which flow by reason of s 724(2) CA. Again, it prescribes a consequence rather than a duty as such. Purported compliance was achieved a day late on 4 December 2007. Using this approach, it follows that s 1322(4)(d) enables the Court to extend the time periods referred to above in ss 723 and 724 even though no absolute positive obligation to make the application for listing and to achieve quotation on the ASX is spelt out in the time periods designated in those sections. 22 In addition to the statutory requirements to be taken into account by the Court pursuant to subs (6) of s 1322 , there is, as with the exercise of any discretion, a requirement to exercise it judicially having regard to the subject matter, scope and purpose of the specific provisions and the general legislative framework. It must also be exercised having regard to the interest of all parties affected and the public interest in ensuring compliance with statute law and company constitutions. Evidence of a blatant disregard of the provisions of the Act or the constitution of the company may lead to refusal of relief. The reason for this is to put beyond doubt the legitimacy of that issue given that since 4 December 2007, the issue will have been regarded as having been void pursuant to the effect of s 723(3) CA. For those reasons, Lee J in Re Golden Gate Petroleum Ltd (2004) 50 ACSR 659 at [33] granted relief validating an issue as did French J in Re Onslow Salt Pty Ltd (2003) 198 ALR 344 at [31]. In construing the meaning of 'invalid' in s 254E , the liberal approach is again applied. This is because of the remedial purpose behind the section and thus requires that 'invalid' includes 'void'. This is consistent with the approach taken in the cases on which Austin J commented in Howard v Mechtler (1999) 30 ACSR 434 at [47]-[48]. Accordingly, Laserbond has sought relief pursuant to s 1322(4)(a) in relation to the options referred to in the prospectus. Section 1322(4)(a) has been set out above. It is clear once again that s 1322(4)(a) is to be given a beneficial or liberal construction. As was observed by Young J in NRMA Ltd v Gould (1995) 18 ACSR 290 at [20], a contravention should be construed in a very wide sense. That expression is in wide terms. As there has been non-compliance with ss 723 and 724 , that would constitute (giving a wide meaning to the phrase 'any contravention of a provision of this Act') such a contravention. 30 But the Court is required to be satisfied of one or more of the grounds in (a), (b) or (c). I will now consider that requirement. I accept Laserbond's submission that there can be no suggestion of any blatant disregard for the terms of the relevant legislation or the bodies charged with its implementation. There has certainly been no deliberate delay, let alone any motive for delay on the part of Laserbond. Clearly Laserbond was keen to effect the admission to the ASX. The delay concerned occurred because of the delay in receiving documents from the share registry. Laserbond had been aware of the deadline and had been pressing for the documents from the share registry but it was not aware of the consequences of not meeting the deadline. Obviously, had it been aware of the seriousness of the consequences, the steps taken to ensure compliance may have been more vigorously pursued at an earlier date with the result that the delay of a day would probably not have occurred. 32 Insofar as relief under s 1322 CA is concerned, the interests of the applicants for shares are also to be considered. On the evidence before me, that matter has been specifically addressed. The Chairman of Laserbond has turned his mind to the question and deposes to the fact that he is unaware of any person who would be adversely affected in any way if the orders which are sought were made. I am equally unable to discern any adverse effect of making the orders but, in any event, if there is an unforeseen adverse impact the urgent liberty to apply provision is likely to respond to that seemingly unlikely prospect. As against that, many investors stand to be disappointed or prejudiced if the relief is not granted. 34 Again, in relation to the validation relief under s 254E CA I am conscious that an underlying purpose of the provisions set out in s 723 and s 724 CA is to ensure that where people apply for securities on the basis that they will be quoted on a stock exchange, they have the right to withdraw their application if there is a delay in pursuing that listing. If prompt application for admission is not made and prompt admission is not obtained within the timeframes contemplated by the legislation and by the arrangements between the parties, there is a provision which ensures that there is adequate protection provided to those who have made a commitment on the assumption of prompt listing. 35 Again, however, it seems to me that making the orders sought rather than defeating the purpose of the provisions is more likely to advance than stop it and the interests of the parties affected by the relevant issues will be better protected by granting the relief which is sought. 36 Given all those circumstances I consider I should exercise a discretion to grant the relief which is sought both in connection with the extension of time and the validation. The period set out in sub-sections 723(3)(b) and 724(1)(b)(ii) of the Corporations Act for the admission to quotation by the ASX Limited ("ASX") of securities issued pursuant to the Prospectus dated 3 September 2007 (the "Prospectus") be extended to 5 business days after the making of this order. 2. (b) Pursuant to section 1322(4)(a) of the Corporations Act , the issue of options by the Applicant pursuant to the Prospectus is not invalid by reason of any contravention of section 723 or section 724 of the Corporations Act . The Applicant forthwith lodge a copy of these orders with the Australian Securities & Investments Commission. 4. Upon the Applicant becoming listed on the ASX, the Applicant make an announcement to the ASX disclosing the terms of these orders. 5. The Applicant and all other interested or affected parties have liberty to apply to vary these orders upon first giving 24 hours prior written notice. | application for listing to asx lodged 1 day late administrative error only analysis of appropriate relief and considerations relevant to exercise of discretion if relief is to be granted turns on own facts corporations |
By the orders the IM Court imposed a penalty of $6000 on the first appellant ('the Union'), $1500 on the second appellant ('Mr Powell') and $1000 on the third appellant ('Mr Molina'). The respondent to the appeal ('Mr Clarke') is an inspector appointed pursuant to s 84 of the Workplace Relations Act 1996 (Cth) ('the Act') who brought the action against the appellants. He claimed that they were in breach of the provisions of s 170MN of the Act in that they engaged in industrial action contrary to the terms and conditions of a certified agreement. The Industrial Magistrate (Mr WG Tarr) held that the appellants did engage in industrial action for the purpose of supporting and advancing claims against the employer as claimed and therefore that they were in breach of s 170MN of the Act. It was for that breach that he imposed the penalties, the subject of his orders. 2 On 8 August 2005 the Chief Justice determined, pursuant to s 25(5) of the Federal Court Act 1976 (Cth) that this appeal be heard by a single judge: see Construction, Forestry, Mining and Energy Union v Clarke [2005] FCA 986 ; (2005) 144 FCR 226. It was engaged relevantly in concrete, structural and bridge work on the Thornlie Railway Station and bridges. It was certified in accordance with s 170LT of the Act coming into operation on 26 May 2004 and remained in force until 1 July 2005. 5 The parties bound by the Agreement were the Employer, the 'employees of the [Employer] who are engaged on the Thornlie Rail Extension Structural Work Project ['the Project'], in the classifications detailed in section 3' of the Agreement ('the Employees') and the Union. The Agreement was stated to have exclusive operation and to be in full and final settlement of all claims during the period of its operation. 6 Clause 4.5 of the Agreement dealt with 'Dispute Resolution Procedures. If not resolved at this stage within reasonable time the matter shall then proceed to the next stage. If not resolved at this stage within a reasonable time, the matter shall then proceed to the next stage. The decision of the Australian Industrial Relations Commission shall he [sic] accepted by all Parties subject to legal rights of appeal. However these procedures do not prevent an employee from seeking any redress available under the Workplace Relations Act 1996 . Procedure for Dealing with and Resolving Safety Issues. The first related to cl 2.10 which addressed the issue of redundancy. This clause generally provided for the payment of $60 per week ($65 with effect from 1 December 2004) where the redundancy was occasioned otherwise than by the employee. The Employees wanted these varied to be the same as the inclement weather conditions provided for in cl 21 of the National Building and Construction Industry Award 1990. 10 The third clause which was the subject of contention was cl 3.7 which addressed the special project allowance. Pro rata entitlements will be calculated as detailed below. Similar expansion occurs in subrules (C)-(J). The purpose of these clauses is to refer to specific activities of workers under the umbrella of the Union. Rule 49 provides that a member who has been elected to any position in a fulltime capacity shall be employed fulltime and be under the control of the Divisional Branch Management Committee between Divisional Branch Council meetings and shall carry out all instructions of the Divisional Branch Council or Divisional Branch Management Committee in accordance with the Rules. 17 Rule 57 provides that shop stewards/job delegates may be appointed by the Divisional Branch Management Committee or appointed by the members in such shop or job. They receive proper credentials from the Divisional Branch Management Committee. It is their duty to endeavour to enrol appropriate workers in their respective shops or jobs into the Union. 18 Rule 58 provides that should any shop or job steward (among others) be victimised or reasonably supposed to be victimised for carrying out any duties of the Union, the Divisional Branch Management Committee shall take all necessary steps to see that that person's interests are protected. It stated that the Employees had gone on strike on three occasions, namely, 9-11 July 2004 (inclusive); 29 July 2004; and 19-20 August 2004 (inclusive). It claimed that their conduct was 'industrial action' within the meaning of that expression in s 4 of the Act. 20 The charge alleged that the Union engaged in the industrial action because it was directly or indirectly a party to or concerned in that conduct by reason of the following conduct. First, representatives or agents of the Union (including Messrs Powell and Molina) attended meetings of the Employees on 9 July 2004, 29 July 2004 and 19 August 2004 as a consequence of which meetings the Employees commenced the industrial action the subject of the charge. Additionally, two representatives or agents of the Union had attended meetings on 13 July 2004, reporting back on the industrial action and on 13 August 2004, meeting with the Employees on the site of the Project. The second category of conduct was that representatives or agents of the Union (being Messrs Powell and Molina) conveyed information and claims relating to the industrial action to representatives of the Employer. This is said to have occurred on 9 July 2004, 26 July 2004, 29 July 2004 and 19 August 2004. The third category of conduct was that on 9 July 2004 Mr Powell threatened that he would 'take the boys out' when speaking to the Project Manager for the work employed by the Employer. It was claimed that the threat was intended to mean that the Employees would take industrial action by striking. 21 It was pleaded in the amended statement of claim that each of these categories of conduct breached the Agreement. Further, it was pleaded that the conduct of the Union breached cl 4.5 of the Agreement in that it did not follow the dispute resolution procedure. In relation to the industrial action on 29 July 2004, it was said that it was taken during the term of the Agreement and for the purpose of supporting and advancing claims against the Employer in respect of the Employees and had been engaged in by each of the appellants in contravention of s 170MN of the Act. Maximum penalties are prescribed by s 178(4). All these meetings had been attended by Mr Powell who was accompanied by Mr Buchan (an employed organiser of the Union), Mr Molina and also Mr McDonald (one of the Union's assistant secretaries). Each meeting had been attended by Mr Levy. He said Powell told him he was there to investigate the incident on 8 July 2004 where a truck dumping fill in area B had its tray tip over onto its side. Radalj described Powell as becoming hot-headed after Radalj had queried Powell's right to enter the site without giving notice. He said Powell had told him to "... off " and that " he would come on site when I want to when it's to do with the boys' safety ' and when told that there had already been an investigation into the truck incident Powell said he would do his own investigation and stormed out. The meeting lasted fifteen to twenty minutes and after it finished Powell came back to the office and said the boys are withdrawing their labour. When asked why, Radalj said Powell told him it was because management had failed to consult about the incident with the truck, the facilities in area D were not up to standard, toilets were not cleaned and there was no first aid box in area D. It was Radalj's view that the issues were of a minor nature and could have been readily resolved. After the meeting Powell and Molina attended at the site office and raised with Radalj the issues of the $22.00 per day allowance and the redundancy payment. On that day the workforce left the site after the meeting. The meeting was later transferred outside the gates. On the conclusion of the meeting Mr Powell came in and spoke to me and basically said that the workforce is out on strike. I'm not sure if it was one, two or three days. He identified the reasons why they were going on strike. ... One of them was that I was that I was hassling people on how to do their job; that I was taking money away from people by saying when they can and cannot work; that I was allowing work to proceed in an unsafe area. I'm pretty sure inclement weather was raised again --- about when people can go home. 32 He described the evidence of Mr Powell. In relation to 9 July 2004, his evidence was that he had told the meeting that the dispute resolution procedures should be followed; they should remain on the site (of the Project) while the dispute resolution procedures were gone through. Nevertheless the workforce had voted to go on strike for the day. 33 In relation to 29 July 2004, Mr Powell's evidence was that he had told the employees that there was an Agreement in place and the conditions of that Agreement had to be worn. 34 In relation to 19 August 2004, Mr Powell's evidence was he had attended the meeting at the request of the shop steward. He testified that he had told the meeting of the need to follow the dispute resolution procedure. 35 His Honour said that Mr Aleknavicius had given evidence that on 9 July 2004 Mr Powell had told the Employees that it was in their best interest to stay at work because it was a safety issue. 36 In relation to 29 July 2004, Mr Powell had told the meeting that he still wanted to try and negotiate with the Employer at that stage and he believed that if they had time they could negotiate a bit more. However, the Employees voted to go on strike. 37 The evidence of Mr Molina was referred to in relation to the evidence Mr Levy. It was said by his Honour that his evidence generally supported the appellants' position that the workers withdrew their labour of their own volition, notwithstanding being advised of the Agreement and Mr Powell's advice to the contrary. Mr Levy also gave evidence that it was he who arranged for the Union officials to attend the site (of the Project) each time and was instrumental in gathering the Employees for the meetings, including collecting them from site areas. 39 He found that the issues of concern to the Employees and the Union and its hierarchy and officers were the three issues of special project allowance, the redundancy provision and the inclement weather clause. These had become a concern soon after the Agreement had been certified on 26 May 2004. He understood the evidence to be that all workers on the site were aware of the Agreement before accepting employment. 40 His Honour then found that on any construction of the Agreement the action of the workers on the three occasions they withdrew their labour and left the site was in breach of the provisions of the Agreement. He found the evidence did not support any claims that the industrial action was based on a reasonable concern by the Employees about an imminent risk to his or her health or safety as provided for in s 4 of the Act. He therefore concluded they had withdrawn their labour in pursuance of their claim in relation to the three issues identified. 41 In relation to the claim by the appellants that they played no part in the industrial action taken by the Employees, his Honour considered that claim could not be substantiated on the evidence. In his view there was an irresistible inference that the Union by its officers played a significant part in the activities which led to the withdrawal of labour and in turn the breach of the Agreement. 42 He also found that there was no evidence of any bona fide attempt by the Union to follow the dispute resolution procedures of cl 4.5. 43 Referring to s 170MN of the Act, his Honour said that all three appellants were covered by the section. He found that the industrial action was for the purpose of supporting and advancing claims against the Employer. They had direct involvement in the industrial action and, in my view, at least with the knowledge of the outcome of the meeting on 9 July 2004, it was foreseeable that a similar outcome was likely following the next two meetings as the three issues had still not been resolved and the union had not engaged in the steps provided for in the dispute resolution procedure. At the request of the Court the appellants have grouped these grounds and it is proposed to address the grounds of appeal in accordance with that grouping. They are directed specifically in the conclusion of the Industrial Magistrate that there was an irresistible inference that the Union, by its officers, played a significant part in the activities which led to the withdrawal of labour and breached the Agreement. 47 The appellants submit that the evidence left no room for his Honour to conclude there was an 'irresistible inference' of involvement in the activities leading to the withdrawal of labour and in turn the breach of the Agreement. Further, given the undisputed fact that the appellants had taken positive steps to prevent the withdrawal of labour at the meetings of the workforce, it is submitted that a finding of indirect engagement in industrial action was not, in any event, open. Additionally, it is submitted that it is not apparent from the reasons for decision that the Industrial Magistrate appreciated that the case against the appellants for the contravention of s 170MN of the Act was limited to the industrial action alleged to have occurred on 29 July 2004. 48 The appellants also state that as is apparent from the above quoted findings of the Industrial Magistrate in respect of s 170MN, his finding was of direct involvement only and that the reliance on the site shop steward was not a matter pleaded in the statement of claim. 50 It was not in dispute that the evidence established that the Employees (including Mr Levy, the shop steward and a member of the Union) who were subject to the Agreement took industrial action, as defined in s 4(1) of the Act, by the cessation of work on 29 July 2004. 51 There was evidence before the Industrial Magistrate that the industrial action was taken for the purpose of supporting or advancing claims against the Employer in respect of the employment of the Employees whose employment was subject to the Agreement in relation to the Issues. In his recitation of prosecution evidence given by Mr Radalj and quoted above, the Industrial Magistrate relied on evidence that after meeting with the workforce, Messrs Powell and Molina attended at the Project office and raised with Mr Radalj the issues of the inclement weather conditions and special project allowance. In recounting evidence given by Mr Powell, the Industrial Magistrate said that he and Mr Molina had attended the Project on 29 July 2004 where the issues raised were about those two matters as well as safety issues. He further recounted the evidence of Mr Aleknavicius to the effect that the meeting of 29 July 2004 was one which asked Mr Powell to go to talk to management in relation to the same two matters. Those matters were subject of a provision in the Agreement. This evidence recounted was but part of the evidential matrix before the Industrial Magistrate entitling him to conclude that the purpose of the meeting was as he found. There was no basis on the evidence concluding that the Issues were merely 'matters related to interpretation or the like'. Indeed, Mr Molina said in cross-examination that the Union was not pursuing extra claims but rather asking for a particular clause to be changed. 52 The evidence of the involvement of the Union and of its officers and employees was as follows. 53 Messrs Powell and Molina as organisers were officers and employees of the Union and were acting in their capacities as officers and employees of it when they went to the Project. Additionally they were Branch Council delegates. They represented the Employees and they engaged themselves in the dispute by conveying information from the Employees to the Employer. 54 Mr Levy, the shop steward was an employee of the Employer and a member of the Union. His position was recognised under the rules of the Union (r 57) and in cl 7.3 of the Agreement. As was said by Wilcox J in Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees' Union (No 2) (1987) 15 FCR 64 at 78, the function of a job delegate is to act as the link between the union members on a particular job and management, and to be on the site, the voice of the union. Consequently, when the job delegate speaks to management about the union position on an industrial matter prima facie he or she speaks for the union. While Mr Levy was not relied upon in the amended statement of claim, nevertheless the evidence relating to him was part of the evidentiary matrix which required consideration by the Industrial Magistrate. 55 When the Employees stopped work, went on strike and left the Project on 29 July 2004, it was in relation to claims concerning the Issues. That is, claims arising under the Agreement. Mr Powell went and talked to the Employer about the Issues. He and Mr Molina in their capacity as employees and officers of the Union, came to the Project. Prior to doing so they spoke to Mr Levy. Mr Levy in his capacity as shop steward organised the meeting of the Employees. At the meeting a cessation of work was resolved upon. At the conclusion of the meeting, Mr Levy in his capacity as shop steward and Union member and Mr Powell or Mr Molina in their capacities as officers and employees of the Union told the Employer that there was to be a cessation of work and actively pursued the issues with that company while the cessation of work continued. 56 The position therefore was that Messrs Powell and Molina pursued a resolution to the Issues with the Employer prior to the cessation of work occurring; while the cessation of work was taking place; and until the Issues were resolved to the satisfaction of the Union. 57 The Industrial Magistrate was bound to apply the provisions of s 170MN. He was required to take into account the conduct, not only of the Employees but also of the Union and of any officer or employee of the Union. He was required to do this in the context of the provision in s 4(8) of the Act. There was abundant evidence, the outline of which appears immediately above, entitling him to reach the conclusions which he did of direct involvement by the appellants in a breach of s 170MN. 58 That view however requires testing against the issues raised by the next two groupings of the grounds of appeal in particular, relating to the allegedly preventative steps taken by the Union officials. The principle evidence related to these grounds is that said by the appellants to establish that the appellants as the 'Union' took positive steps to prevent the withdrawal of labour by the Employees and that the decisions to withdraw labour were those of the Employees. This submission relies on evidence of actions taken by Mr Powell. For example, in the examination-in-chief of Mr Aleknavicius he testified that on 29 July 2004 Mr Powell had spoken against the motion to go out on strike and told the workers that he still wanted to try and negotiate with the Employer at that stage. This advice had been ignored. In cross-examination Mr Levy testified that on 9 July 2004, once the vote had been taken to withdraw, Mr Powell had said to the workers that they were going down the wrong path and that they should leave the matters open for negotiation. 60 The respondent challenges the claim of the appellant that the actions taken in this respect are capable of being characterised as intended to be preventative of the undertaking of industrial action by the workers. It is said this is so because the evidence demonstrates that Mr Powell, Mr Molina and Mr Levy pursued the Issues with the Employer after the cessation of work began and while it continued. I accept that there is appropriate evidence that was the case. In the case of s 178 of the Act, the respondent contends the cessation of work itself was sufficient to establish the liability of the first appellant under that section. In the case of s 170MN, the respondent relies on the evidence principally referred to in connection with the preceding group of grounds of appeal. 61 The contentions of the appellants in relation to preventative action can only be of significance if it is open to acceptance that the 'Union' (being relevantly the appellants) acted as a separate juristic entity from the Employees. In my opinion, this simply cannot be the case. I have set out earlier in these reasons the particulars of the constitutional arrangements of the Union. Examination of that shows that the Union consists of the Employees. The Union comprises every part of the Union. There is no constitutional concept of the Union on the one hand and the Employees on the other hand. The Employees are as much an integral part of the Union as the officials. The consequence is that if the Employees make a decision to go on strike, the Union is on strike. 62 Once it is understood that a duality of juridical existence is not possible between the Employees and the Union, the evidence falls for consideration in this light. If officials of the Union did give advice to the Employees that they would be wiser to follow a path of negotiation, that cannot exempt the Union from any liability from the undertaking of industrial action when the Employees embark upon it. In Skilled Engineering Limited v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2001) 108 IR 116 at 119 Finkelstein J relied upon evidence of union organisers having been involved in discussions with employer management about the two issues of concern which caused workers to walk off the site, to suggest that they had a role to play in organising the strike. (There were additional affidavits and a failure to deny the unions were concerned in the strike which supported such an inference being drawn). 63 Ground 5(c) contends that the Industrial Magistrate was in error in acting on the erroneous principle that the actions of the Employees (the Union's members) or the site steward could constitute engagement in industrial action by the Union for the purposes of the relevant provisions of the Act. In argument in reply the appellants relied on Kelly v Construction, Forestry, Mining and Energy Union (1994) 56 IR 373 at 380-381 and Rowe v Transport Workers' Union (1998) 90 FCR 95 at 112 which in turn cited Tesco Supermarkets Ltd v Nattras (1971) 2 WLR 1166. The submission is that the provisions at issue in these decisions were 'widening' provisions of which there is no equivalent in the legislative provisions in issue here. The essential point of the submission for the appellants was that the Union is a separate juristic entity so that, absent evidence the Union was authorised to act on behalf of the Employees, the latter cannot be liable for the actions of the Employees. Added to this was the submission that there was no evidence of membership before his Honour. 64 These submissions fall, firstly, because a proper understanding of the Constitution of the Union shows that it is not a separate juristic entity from its members, in this case the Employees. Secondly, the absence of provisions such as those at issue in Kelly and in Rowe does not mean that the evidence pertaining to the Union cannot establish the nature of its juristic character. As Cooper J stated in Rowe at 112, it is only after the relevant facts are ascertained that the issue of the conduct of an individual in relation to the body corporate becomes a question of law. 65 Thirdly, as to evidence of membership, the appellants contend that the evidence of Mr Levy could not be taken into account because he was not the agent or representative of the Union, as they juridically perceive it. Likewise they contend the evidence of the actions of the Employees was not relevant on the basis this is not conduct of the Union, as they perceive it. That, in their submission, left the evidence only of Mr Aleknavicius, Mr Powell and Mr Molina. Of these, Mr Powell on the evidence spoke against the Employees going out. 66 However, these submissions are grounded in the error of perception of the Union as juridically separate from its members. Additionally there was evidence Mr Levy and Mr Aleknavicius were members of the Union who participated in the meetings and left the Project. There is also their evidence on what the other Employees did. Their evidence included reference to actions of Employees of the Employer capable of breaching the Agreement. There was therefore evidence from which the Industrial Magistrate could draw inferences relevant to the finding of a breach. 67 In short I do not perceive any error of law or of fact by the learned Industrial Magistrate in terms of the issues raised by these grounds. It is submitted that he failed to examine the evidence with sufficient care or to explain why important parts of that evidence were apparently rejected: Waterways Authority v Fitzgibbon [2005] HCA 57 ; (2005) 221 ALR 402 at [85] - [87] . The appellants argue that the drawing of the 'irresistible inference' was vitiated by error as the effect of the evidence was that it showed the appellants had taken positive steps to prevent the withdrawal of labour: Rosenberg v Percival [2001] HCA 18 ; (2001) 205 CLR 434 at 447-448 per McHugh J. It is further submitted that the resolutions of the Employees were expressions of their will alone. These submissions cannot be accepted in the light of the above resolution of the juridical character of the Union. 69 Ground 20 is directed to 'the extent that the Learned Industrial Magistrate found that Appellants breach section 178 of the Act (which is denied) ...'. I agree with the appellants no such breach was expressly found by the Industrial Magistrate. Section 178 is a facilitative provision appearing in Pt VIII of the Act relating to compliance. 70 The adequacy of the reasons of the Industrial Magistrate in relation to issue of breach of the dispute settlement procedure is considered below in connection with other issues concerning that procedure. 71 Then the appellants contend that the Industrial Magistrate erred to the extent that he found that the appellants had breached s 170MN of the Act on dates other than 29 July 2004. The appeal was conducted on the basis that the finding was only in respect of that date, so that contention does not require further consideration. That is, 'the nature of the issue necessarily affects the process by which reasonable satisfaction is attained'. 73 The grounds under this head seek to challenge the finding of engagement in industrial action, the reliance on the 'irresistible inference', the finding of direct involvement in any industrial action and of the pursuit of the Issues by the appellants. 74 In my view, this ground adds nothing to the first series of grounds considered in the context of the second grouping of grounds. For reasons there given, I have found no error in the conclusions of the Industrial Magistrate in respect of the matters raised by these grounds. There was in his reasoning in that respect no failure to bring requisite care to the evidence upon which he founded his findings and reasoning. His reasons were not dependent upon inexact proofs, indefinite testimony, or indirect inferences. I do not consider this ground succeeds. First, he failed to adopt an interpretation which recognised the appellants' obligations to be involved in the disputations which gave rise to the withdrawal of labour by the Employees. Second, he failed to adopt an interpretation which required the Employer to reduce the nature of the dispute to writing in step 4 of the clause. Alternatively, he failed to find that cl 4.5 was ambiguous and not capable of being breached by the appellants. 76 The starting point for the application of cl 4.5 is the requirement that 'work shall continue in the usual manner without loss of time or wages and without bans or limitations so as to allow the steps...to be followed'. It is patent that because of non-compliance with this condition, the appellants did not seek to invoke the dispute resolution procedure. It was therefore not an issue in the way in which the grounds contend. The Industrial Magistrate was therefore entitled to conclude that there was no evidence of any bona fide attempt by the Union to follow the procedure. Accordingly, no issue of the adequacy of his reasons can arise in that respect. 77 The respondent relies on this cessation of work by the Union to ground, in any event, its liability under s 178 of the Act. While that section does not have application to Mr Powell or Mr Molina, it is an alternative basis of liability and therefore support for the reasoning of his Honour. 78 The last of the grounds under this head raises the additional contention that the Industrial Magistrate erred in finding that the Employees withdrew their labour in breach of the Agreement when he should have found that the Employer breached the Agreement by not complying with the steps. For the reasons given in the preceding paragraph, there is no substance in this ground. 80 Clause 6.1 of the Agreement provided a procedure for steps to be taken for dealing with and resolving safety issues. The first of the grounds in this group asserts that 'to the extent' that the Industrial Magistrate found that the appellants breached cl 6.1 of the Agreement he erred in certain respects in fact and law, including denying procedural fairness. The second asserts that procedural fairness was denied when the Industrial Magistrate relied on evidence relating to rights of entry which was expressly conceded by the respondent as being irrelevant. The third ground has been addressed above in dealing with the grounds relating to alleged lack of reasons. 81 The remaining two grounds do not appear to have been further pursued either in oral or written argument. In any event, they are entirely peripheral to the foundations of the principle conclusion of the Industrial Magistrate in respect of liability under s 170MN of the Act. Ground 17 asserts that the Industrial Magistrate erred in fact in finding that the Employees withdrew their labour on 9 July 2004 for the sole purpose of pursuing the Issues. There was evidence upon which that inference was open to be made. In that circumstance the respondent's notice of contention does not arise for consideration. I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson. | appeal from industrial magistrate charge alleging withdrawal of labour on three occasions alleged failure to comply with certified agreement finding of contravention of union and its officers engaged in industrial action for the purpose of supporting or advancing claims against the employer in respect of the employment of employees while agreement in place no duality in juristic existence of union and members conduct of members is conduct of union alleged preventative action by union officials not therefore exonerating reasons for industrial magistrate's decision not inadequate no failure to apply briginshaw standard no erroneous interpretation of dispute settlement procedure no denials of procedural fairness workplace relations |
The Appellant has been identified for the purposes of these proceedings as SZEJU. In a statement provided to the Department of Immigration and Multicultural Affairs on 3 December 2002 the Appellant indicated that when he lived in Afghanistan his village was 'Aqdad, in the city of Basoud, in the Province of Maidan'. His original visa application referred to Haqdad village as being in Behsood town, Maidan Province. 2 The Refugee Review Tribunal ('the Tribunal') located Haqdad on a map of Afghanistan as being situated almost centrally in the Markazi Behsud district of Wardak Province. According to the Tribunal there are two districts within the Wardak Province which include the word 'Behsud' in the name. These are sometimes referred to as 'Behsud 1' and 'Behsud 2' or sometimes as 'Hisa-i-Awali Behsud' and 'Markazi Behsud'. There appear to be numerous ways in which the word 'Behsud' is spelt. The Markazi Behsud district is also referred to as Behsud 2. Behsud 2 lies to the south of Behsud 1. The two districts when taken together were formerly known as 'Maidan'. 3 The population of the two Behsud districts is exclusively or almost exclusively people of Hazara ethnicity who, like the Appellant, are Shi'a. 4 The Markazi Behsud district has 920 villages and sub-villages with an estimated population of 113,295 individuals. The Behsud 1 district has 520 villages with an estimated population of 56,129 individuals. 5 The Appellant is of Hazara ethnicity and an adherent of the Shi'a religion. 6 The Markazi Behsud district of the Wardak Province and the neighbouring Behsud 1 district to the north are administered by politicians of the Khalili faction of the Wahdat Party, a party under whose control the Appellant lived, without any specific or particular problems other than having to pay taxes, prior to his departure from Afghanistan in or about 1999. 7 As of July 2004 there were no reports of malicious skirmishes or attacks on Hazara and/or Shi'a people emanating from the Appellant's region. To the contrary, the United Nations High Commissioner for Refugees ('UNHCR') described the situation as relatively stable and safe noting that there had been no reports of conflicts between Hazaras and other groups since the end of the Taliban era. 8 The Tribunal was satisfied as at July 2004 that the situation in the Appellant's home district of Markazi Behsud was, as the UNHCR described it, 'relatively safe, with district authorities and security/police apparatus in place' (UNHCR, Advice on the situation in Uruzgan and Wardak provinces of Afghanistan provided by the UNHCR to the RRT in response to RRT Questions, 21 November 2003). The district had a homogenous ethnic Hazara population where the Appellant was not at risk of persecution for reason of his race or religion. The district had not suffered from guerrilla attacks or other fighting by resurgent Taliban forces or other militias. 9 Furthermore, the Tribunal accepted UNHCR advice that travel from Kabul to the Behsud districts was not a problem for the local population (UNHCR, Wardak Province: Information on Behsud and Quli Kheish districts, 11 March 2004). 10 A March 2004 UNHCR report indicated that the two Behsud districts only had small incidents of theft reported. 11 The Tribunal accepted that there was always a risk that robberies would occur in a country as poor as Afghanistan was in 2004, but was not satisfied that such robberies constituted Convention-related harm, within the 1951 Convention Relating to the Status of Refugees as amended by the 1967 Protocol relating to the Status of Refugees ('the Convention'). 12 The Tribunal found that the Taliban had been removed from power in Afghanistan by mid November 2001. 13 An article in The Observer of 16 November 2003 declared 'The Taliban are back' ('Stronger and more deadly, the terror of the Taliban is back', The Observer (UK), 16 November 2003). However, the Tribunal found that the Taliban militia were not able to forcibly conscript men as they formerly did, nor terrorise citizens, especially from minority groups, on a broad scale. Its actions had become guerrilla tactics which, according to the Department of Foreign Affairs and Trade ('DFAT'), did not pose a direct threat to the civilian population as their targets were currently coalition and government security forces and international aid workers (DFAT, Country Information Report No. 127/03 , 2003, Cisnet CX86321). 14 The Tribunal observed that Wardak Province was made up of a number of districts pointing out that the available independent country information indicated that the parts which were more volatile and dangerous were the eastern parts which were close to Kabul where there were mainly Pashtun and Tajik populations. It was in such areas that there was evidence of recent Taliban activity. However, the instability in that region was not going unchecked. The Afghan government backed by US forces were engaged in ongoing activities to capture anti-government militia leaders in the Taliban. A news report of 18 July 2004 recorded the capture of a former Taliban leader in Maydan Shahr, the provincial capital of Wardak Province, located in the most eastern part of the province. 15 The Tribunal found that there was nothing more than a remote chance of the Taliban re-emerging as a viable national political movement in Afghanistan in the reasonably foreseeable future such as to constitute a general threat to particular minority groups. 16 The Appellant arrived in Australia on 8 October 1999. He was then aged about 30. He says that he was smuggled out of Afghanistan into Pakistan and, after flying from Karachi to Jakarta, was taken to Bali from which he travelled to Australia by a boat which was intercepted by the Australian Navy. 17 On 17 November 1999 the Appellant applied for a Protection Visa (866). I have a Wahdat Party Identity Card because they controlled our area and they issued cards. We supported them because they were Hazara and against the Taliban. I was not a fighter for Wahdat. My brother fought for Wahdat and he lost his leg fighting. The young men in our village fled the area when the Taliban came. ... Whenever it was safe we used to return to our home. The second time they went to the houses to arrest members of Wahdat. The third time they searched the houses they wanted all young Hazara men to send them to fight for the Taliban. ... The Taliban ask where the men are when they come into the houses. My wife told them that she didn't know where I was. I was hiding at this time in Jangalak mountain area. ... The Taliban came to my home more than twenty or thirty times. Their aim was to find young Hazara men. ... I spent most of the year before I fled in the mountains hiding from the Taliban. ... My life was in danger. I could not return to my village and I could not continue to survive in the mountains. I decided to flee the country. The Taliban were searching for young Hazara Shi'a men. I had no choice but to flee the country. He is of the Hazara ethnic group and is a Shi'ite Muslim. The delegate was satisfied that the Appellant was a person to whom Australia owed protection obligations under the Convention. The temporary visa permitted the Appellant to remain in Australia for a period of three years or until an application made by him for a permanent visa was finally determined, whichever happened sooner. 20 By letter dated 3 April 2000 South Brisbane Immigration & Community Legal Service Inc. submitted a further application for a Protection Visa (866) to the Department of Immigration and Multicultural Affairs on behalf of the Appellant. On 8 May 2000 the Department wrote to the Appellant advising that he could not be granted a Subclass 866 (Protection) visa unless he had held the temporary visa for a continuous period of 30 months or a shorter period specified in writing by the Minister in relation to him. 21 On 4 September 2002 the then Department of Immigration and Multicultural and Indigenous Affairs wrote to the Appellant advising that his 'Protection (Class XA) visa application is being processed in this office'. If you have any more information relevant to your application, or if there has been any change in the information you have already provided to the Department as part of your application, including any changes to your claims, family composition or address, you must inform the Department as soon as possible. Any information that you wish to be taken into account in deciding your application should be provided to the Department in writing. I have a wife and 4 children (1 son and 3 daughters). To the best of my knowledge they are still in Afghanistan. They did not come with me when I fled Afghanistan and I have not heard from them since. I also have 1 brother and 3 sisters who were living in Afghanistan when I fled but I have also not heard from them since I left Afghanistan. When I lived in Afghanistan, my village was Aqdad, in the city of Basoud, in the province of Maidan. Where relevant these are addressed later in these reasons. 24 On 27 February 2004 the Minister's delegate refused to grant the Appellant a permanent Protection (Class XA) Visa. 25 Thereupon the Appellant applied to the Tribunal for review of the Minister's delegate's decision. I feel unsafe in Afghanistan in every part of the country. Afghanistan still lacks security, and lacks the infrastructure to protect me. Accordingly, the Appellant was invited to attend a hearing before the Tribunal on 12 May 2004. The Appellant appeared before the Tribunal and gave evidence to it on that date. Before he appeared he lodged a 'Statement in support on my application for review of the DIMIA decision ...' with the Tribunal on 8 April 2004. That statement indicated a number of reasons why the Appellant said that he feared returning to his country, Afghanistan. 27 Later, he informed the Tribunal that he had a general ongoing fear about being a Hazara and a Shi'a Muslim in the face of a resurgent Taliban. 28 On 23 July 2004 the Tribunal decided to affirm the decision of the Minister's delegate not to grant the Appellant a protection visa in response to his application dated 3 April 2000. On 17 August 2004 the Tribunal advised the Appellant of its decision, said that it had decided that he was not entitled to a protection visa and forwarded a copy of the Tribunal's decision and reasons to him. 29 On 13 September 2004 the Appellant filed an application in the Federal Magistrates Court of Australia seeking constitutional writ relief in respect of the decision of the Tribunal. On 3 May 2005 the Appellant filed an amended application in the Federal Magistrates Court. That application was considered at a hearing on 9 May 2005. On 1 July 2005 the learned Federal Magistrate handed down his reasons for decision ordering that the application be dismissed and that the Appellant pay the Respondent's costs and disbursements of and incidental to the application. 30 From that decision the Appellant has appealed to this Court by Notice of Appeal filed 20 July 2005. 31 On the hearing of the appeal the Appellant was represented by Mr B M Zipser of counsel and the respondent Minister was represented by Ms D J Watson of the Australian Government Solicitor's office. 32 At the commencement of the hearing leave was granted to the Appellant to file in Court an Amended Notice of Appeal dated 14 March 2006 raising a new ground of appeal 1 in relation to the application of Article 1C(5) of the Convention. That ground had not been the subject of argument in the Federal Magistrates Court. Those circumstances were his well-founded fear, because of his race and religion, of being conscripted as a young Hazara male to fight for the Taliban or being killed by them. The circumstances in connexion with which the applicant was recognised as a refugee were that, as a Hazara, the applicant had a well-founded fear of being persecuted by the Taliban, who were effectively the government of Afghanistan at the time the assessment of the applicant's refugee status was made. This is not to say that there are not remnants of the Taliban and that these are not dangerous. ... However, the Taliban militia is not able to forcibly conscript men as it formerly did, nor terrorise citizens (especially those from minority groups) on a broad scale. I find that the Taliban have been removed from power in Afghanistan. I do not accept that there is more than a remote chance of the Taliban re-emerging as a viable national political movement in Afghanistan in the reasonably foreseeable future, such as to constitute a general threat to particular minority groups . On the basis of all the material before me I find that the circumstances in connexion with which the applicant was recognised as a refugee have ceased to exist for the purposes of Article 1C(5). He has also restated his original claims: that is, that he is at risk of persecution because of his Hazara ethnicity and his Shi'a religion. Although the Tribunal has found that the circumstances that grounded his previous claims of persecution as a Hazara Shi'a have ceased, it is not contradictory to reconsider these claims in relation not to the de facto Taliban government of the time, but to resurgent groups of Taliban militants or other groups who might hold the same antipathies. The Tribunal also found that the Taliban militia were not able to forcibly conscript men as it formerly did, nor terrorise citizens, especially those from minority groups, on a broad scale. 39 When the Tribunal Member said 'Although the Tribunal has found that the circumstances that grounded his previous claims of persecution as a Hazara Shi'a have ceased' she was plainly considering the circumstances which originally provided the Appellant with a well-founded fear of persecution within the meaning of the Convention, namely his fear that as an Hazara he would be conscripted by the Taliban to fight for them and that if he then returned to Afghanistan he would be at risk of being killed by the Taliban. 40 The Appellant submitted that the case was on all fours with QAAH v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 136 ; (2005) 145 FCR 363 (' QAAH '). In that case the majority of the Court found that whilst the Tribunal had adverted to Article 1C(5), it failed to apply it. Accordingly, in that case the matter was remitted to the Tribunal for further hearing and determination according to law. 41 QAAH may be readily distinguished from the present case. In QAAH the Appellant based his claim of a well-founded fear of persecution merely on a fear 'that the Taliban will kill him because he is of Hazara ethnicity'. However, in that case, the Tribunal's focus had been upon the Taliban's position as the government of Afghanistan, or at least that part of Afghanistan in which the appellant in QAAH had resided. It determined that there was not, in May 2004 'any real chance of the Taliban re-emerging as a governing authority in Afghanistan in the reasonably foreseeable future, or otherwise be in a position to exercise control in the manner it did at the time the applicant left Afghanistan'. 42 As Wilcox J pointed out in his reasons for judgment at [73] the circumstances that underlay the March 2000 recognition of the Appellant, in that case, as a refugee were not dependant upon the Taliban's status as a governing authority in Afghanistan. The Tribunal failed to address whether the circumstances which led to his fear that the Taliban would kill him because of his Hazaran ethnicity have ceased to exist. 43 The present case is quite different. Plainly, the Tribunal addressed its Article 1C(5) finding on the Appellant's claim to refugee status because of his fear that as a Hazara he would be conscripted by the Taliban to fight for them or, were he to return to Afghanistan in March 2000, be at risk of being killed. The Tribunal did not misdirect itself. 46 The findings of the Tribunal in the present case, referred to above, clearly demonstrate that it properly addressed this issue. The applicant is returning to a part of Afghanistan where the population is Hazara and Shi'a, like himself. It is administered by politicians of the Wahdat Party (Khalili faction), a party under whose control the applicant has lived before, without any specific or particular problems (other than having to pay taxes). There are no reports of militia skirmishes, or attacks on Hazara and/or Shi'a people, emanating from his region. To the contrary, the UNHCR has recently described the situation as relatively stable and safe and noted that there have been no reports of conflicts between Hazaras and other groups since the end of the Taliban era. The applicant has not claimed any distinguishing characteristics about himself which may make him a target of adverse treatment, but rather has relied on his ethnicity and his religion, and other characteristics (such as being a returnee from a western country, and being apolitical) which he shares with many others. This of course does not mean that shared characteristics cannot ground refugee claims --- but in this case, the Tribunal is not satisfied that there is a real chance that harm amounting to persecution will befall the applicant, in the reasonably foreseeable future. He would be expected to join the WP, and the applicant does not wish to do so, and he predicts that he will be forced to do so "at gunpoint". As a member of the WP, he would then be forced to join its militia or alternatively, pay off the commanders (which he cannot afford to do). The Appellant asserted that in pre-Taliban days there were problems with political parties: people were either pressured to join or alternatively to pay 'taxes' for a 'defence fund'. The Appellant, pre-Taliban, elected to pay 'taxes'. His view was that such a requirement would be continuing. Like other villagers, he resented having to pay "taxes" demanded of him by the party, and did not volunteer to join its militia (unlike his brother, who was badly wounded in its service). He made no claims, nor does the evidence suggest, that he suffered any adverse treatment for reason of his political views (or lack of them) or that he was singled out in any way from any other like-minded villagers. The same people appear to have resumed power in the applicant's village as were in control prior to the Taliban. If they treat the applicant in the same way as they did previously --- and there is no reason to suggest otherwise --- then the applicant need not fear Convention-related persecution. He has not had any direct communication from any family or friends since his departure: his one piece of indirect news, passed by a relative in Iran, is that his family stayed in its village during the Taliban years and is still there in the post-Taliban era. The applicant is not literate in Farsi and hence his information comes from radio broadcasts in his own language (as provided by SBS) and through information shared by members of the Hazara community in Sydney. The Tribunal was not satisfied that there was a real chance that harm amounting to persecution would befall the Appellant in the reasonably foreseeable future were he to return to the Markazi Behsud district. 54 Ground of appeal 3 fails. The Tribunal accepted the UNHCR advice that 'travel from Kabul to the [Behsud] districts is not a problem for the local population' and noted that the UNHCR in Kabul and other locations gave specific advice to returnees to ensure their safety on their journeys to their home villages. 56 The Appellant drew the attention of the Tribunal to reports of widespread extortion and robbery particularly against returnees from the West who may be perceived as having money. However, according to the Tribunal, he stressed that the major threat to his life was not from robbers or extortionists, but was on the grounds that he was a Hazara and a Shi'a. 57 The Tribunal accepted 'that there is always a risk that robberies will occur in a country as poor as Afghanistan currently is, but is not satisfied that such robberies constitute Convention-related harm'. 58 When considering whether extortion has been practised upon a person for a Convention reason one needs to proceed with caution. 59 Extortionate demands may be placed upon a person simply because of his or her perceived personal capacity to provide the particular advantage sought and for no other reason or purpose. In the usual case of extortion the extorting party will be acting for a self-interested reason, that is, to gain an advantage for himself or herself or for another. In this sense his or her interest in the person extorted can be said to be personal. 60 Nevertheless, it needs to be recognised that the reason why an extorting party has an interest in another may or may not have foundation in a Convention reason. A person upon whom extortionate demands may have been placed may have become the subject of extortion because he or she belongs to a social group identified by a Convention criterion. 61 Any inquiry concerning causation arising in an extortion case must allow for the possibility that the extortive activity has a dual character --- it may be motivated by a personal interest on the perpetrator's part but may also be Convention-related (see Rajaratnam v Minister for Immigration and Multicultural Affairs (2000) 62 ALD 73 per Finn and Dowsett JJ at [46]-[48]). 62 It is clear that the Tribunal was not satisfied in the present case that exposure to risk of robbery due to perceived wealth would constitute Convention-related harm. It is also implicit in the Tribunal's findings that returnees from the West who may be perceived to be wealthy did not constitute 'a particular social group' within the meaning of the Convention. The Appellant's submission that the Tribunal failed to consider this issue is unsustainable. Ground 4 also fails. 63 In the foregoing circumstances no case of jurisdictional error on the part of the Tribunal has been made out. The appeal should be dismissed with costs. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham . | whether the circumstances in connexion with which the holder of a temporary protection visa has been recognized as a refugee have ceased to exist whether refugee review tribunal committed jurisdictional error in not being satisfied that the appellant as an applicant for a permanent protection visa had a well-founded fear of persecution for a convention reason migration |
Fortron says that, between 1993 and 2005, it had in place exclusive distribution agreements in relation to its product with a company in Thailand called Gammar Groups (Thailand) Co Ltd (Gammar). Fortron alleges that, while its distributorship arrangements with Gammar were still in place, that company imported competing products supplied to it by another company, Treblex Automotive Products Pty Ltd (Treblex) controlled by a former executive of Fortron. Fortron alleges that Gammar has marketed Treblex products under Fortron labels in pursuit of a Substituted Product Scheme through its sub-distributors in Thailand. It has commenced proceedings against a variety of respondents in connection with the scheme and alleged breaches by Gammar of its distributorship obligations. Fortron now seeks leave to serve these proceedings on Gammar in Thailand. For the reasons that follow, I am satisfied that leave should be granted. The company markets its products under the name 'Fortron' in both Australia and internationally. One of the countries in which its products are marketed is Thailand. It has registered 'Fortron' as a trade mark in Australia and Thailand, among other countries. Gammar is a company incorporated in Thailand. It was Fortron's sole distributor in that country for its automotive treatment products from 1993 until February 2005. Gammar operated under written distribution agreements with Fortron, the first of which was entered into on 20 August 1993 and the second, on 31 August 1998. The second agreement expired in August 2003. There has been no written distribution agreement in place since then. According to one of Fortron's directors, Breck Hoffman, who swore an affidavit in support of the application for leave to serve these proceedings on Gammar, the distribution agreement was continued on a month to month basis on the same terms and conditions as the written agreement that preceded it. Phanu Changlor is a director and senior manager of Gammar. He is also a senior manager of the tenth respondent, Gold Leaf Products Co Ltd (Gold Leaf). Kenneth Jones, who is the first respondent, was employed by Fortron from 1998 to 17 April 2003 in various senior sales and managerial capacities. He had full responsibility for the supply, marketing and distribution of Fortron's products in Thailand in the early part of 1993 until April 2003. From 18 April 2003 to January 2004 he was relegated to a lesser position in another company within the Fortron Group, namely Fortron Insurance Agency Limited. From 1 July 2000 to 29 January 2001 and from 2 January 2002 to 5 September 2002, Mr Jones was a director of Fortron. Since 17 October 2003 he has been a director and shareholder of Treblex, which is the second respondent. Trebex is the company which he set up with Mr Changlor and with another Fortron employee, Mr Tully, and which now supplies automotive products to Gammar. In its operations within Australia, Fortron obtained certain products such as anti-freeze, anti-boil and solvent degreaser from a company formerly known as Gold Leaf Enterprises Pty Ltd (Gold Leaf Enterprises) and now known as Versalife Pty Ltd (Versalife) (the sixth respondent). This product was distributed by Fortron as Fortron product within Australia. However, it did not distribute any of the Gold Leaf Enterprises product in Thailand. The product it distributed in Thailand was manufactured by Fortron or by entities other than Gold Leaf Enterprises under Fortron's direction. Until 18 February 2005 Gold Leaf Enterprises carried on business formulating and manufacturing specialty chemicals including a broad range of detergent concentrates, corrosion treatments and automotive maintenance products. It supplied chemicals to Fortron. Peter Matthews, who is the seventh respondent is a director and shareholder of Gold Leaf Enterprises. Donna Matthews, the eighth respondent, is also a director. Mr Jones, in the course of his duties as an employee of Fortron, visited Thailand at least once a year. Mr Tully, who is named as the fourth respondent, was employed by Fortron from 17 April 1989 to 26 October 2004 as its senior accountant and company secretary. He was also during that period group accountant for the Fortron Group and between October 2003 and 31 May 2004 was a director and secretary of Treblex. Mr Jones was said, by Mr Hoffman, to have had a close working relationship with Mr Tully, whose responsibilities with Fortron in 2000 included the development and management of a stock control system for the Fortron product, including product for export to Gammar under the distribution agreement, responsibility for quality assurance management of Fortron and for the preparation of monthly management reports, including profit and loss reports. Mr Jones was also said to have had a close business relationship with Gold Leaf Enterprises and with its manager, Mr Matthews, as a result of sourcing product for and on behalf of Fortron from Gold Leaf Enterprises for sale in Australia. Mr Jones was dismissed from the employment of Fortron in April 2003. He was effectively demoted by being offered a position, which he accepted, with Fortron Insurance Agency. He resigned from that position by in 8 December 2003. Mr Hoffman assumed some of Mr Jones' work duties in April 2003. According to his affidavit, the relationship with Gammar did not require him to play a particularly active role. Orders were made by either Mr Changlor or his wife, Srikijkul, by telephone to Jane Hyland at Fortron. Ms Hyland was the contact for Gammar. Mr Hoffman had met Mr Changlor two or three times in Thailand between 1994 and 2004 and two or three times in Perth. When Mr Hoffman visited Thailand in 2004 Mr Changlor told him he was not happy that Mr Jones was no longer employed with Fortron. Unlike previous occasions, Mr Changlor would not take him to visit sub-distributors or dealerships. Mr Hoffman noticed that monthly sales of Fortron product to Gammar in Thailand dropped significantly in 2004. He discussed the drop off with Mr Changlor. Mr Changlor told him there were more competitors and that he had lost sub-distributors to other companies and that business was difficult for him. Mr Hoffman suggested various strategies. He said he subsequently came to learn that Mr Changlor's business was flourishing and that he and his wife had both bought themselves Mercedes motor vehicles at about that time. How he learned these things was not explained. Mr Hoffman said he discovered in October 2004 that Treblex had been set up by Messrs Jones and Tully, while Mr Tully was still employed with Fortron as an accountant and company secretary. They were both directors and shareholders of Treblex. On discovering that they had established Treblex and following the termination of the Gammar distributorship, Mr Hoffman went to Thailand. He claimed to have found that Gammar sub-distributorships and dealerships in Thailand were selling Fortron products. He only located a Treblex product at one distributor. In March 2005 he purchased samples of Gammar's Fortron labelled products and shipped them back to Australia where they were tested. Mr Hoffman exhibited to his affidavit a report from Geotechnical Services Pty Ltd of four samples of product which he had obtained from Thailand and two samples of Treblex products which he purchased there. The analysis was of the density of the products and of their elements by a form of spectrometry. It does not appear from the test results how he concluded that the Fortron labelled products he purchased in Thailand did not contain genuine Fortron product. Following receipt of the test results Mr Hoffman caused investigations to be carried out into the activities of Messrs Jones, Tully, Changlor, Treblex, Gammar, Gold Leaf Enterprises and Matthews and their possible involvement in what he 'suspected was a Fortron product substitution scheme in Thailand'. (b) In 1999, Mr Jones asked Peter Matthews of Gold Leaf Enterprises to supply him with a price list for Gold Leaf products. Mr Matthews sent him a facsimile setting out those prices. A copy of the facsimile was exhibited. (c) On 17 June 1999, Jane Hyland of Fortron, at Mr Jones' request, asked Mr Matthews to provide Gold Leaf's ISO certificate so that it could be passed to Changlor. A copy of the facsimile from Ms Hyland to Mr Matthews dated 17 June 1999 was exhibited to Mr Hoffman's affidavit. (d) Ms Hyland received the ISO certificate from Gold Leaf Enterprises and passed the document on to Mr Jones. The certificate was dated 17 January 1997. (e) Treblex was incorporated on 15 October 2003. (f) In March 2004 and within weeks of Mr Jones having resigned from Fortron Insurance Agency, he instructed Mr Changlor to purchase automotive treatment product from Gold Leaf Enterprises instead of from Fortron. He notified Mr Matthews of Gold Leaf Enterprises of that development. I have explained to him and he understands the difficulty we have in shipping aerosols from here or Thailand. Peter what I would first of all like to get would be pricing on WD Lube, Carby Cleaner, Brake Cleaner, Degreaser and Throttle Body Cleaner all in 200lt containers. The memorandum referred to Mr Tully's involvement as accountant and company secretary for the Fortron Group. It referred to the company's distributor in Thailand and how Parnu (evidently a reference to Phanu Changlor) had been buying product from the company for more than ten years and became a very close friend and confidante of Mr Jones. Mr Tully described in his memorandum the circumstances in which Mr Hoffman, a son of Ivan Hoffman, the owner of the Fortron Group, was initially introduced into the group as Mr Jones' apprentice and thereafter became his boss. According to Mr Tully's memorandum he turned out to be 'a tragically lazy and incompetent boss' and after a long period they came to more and more grief to the point where, as Fortron could not dismiss Mr Jones, they demoted him to another company in the Group where he was to have no contact with Mr Changlor or any other export clients. Mr Tully described Mr Changlor's adverse reaction to this development as he had a low opinion of Mr Hoffman. Although Mr Changlor had complained on a number of occasions about Mr Breck Hoffman to Mr Hoffman Snr, he was told that he would have to learn to take advice and deal with his son. Mr Tully found the situation intolerable and approached Mr Jones personally to see what could be done as he always needed help with his business and could not continue the current distribution arrangement under the new conditions. The agreement with Fortron had expired and had not been renewed. Opportunities he could not follow up while with Fortron. Parnu was determined to get another supplier no matter what! He was to carry out, in lieu of any payment for that interest, the compliance and accounting work, deal with Austrade, arrange export documentation and be available to assist where necessary. He was made a director in case anything needed to be arranged while the two of them were in Thailand. He said he agreed to this and justified it to himself on the basis that, although Treblex was dealing with a Fortron distributor, it was to create business that Fortron was not capable of servicing with a client who was severely disaffected. According to Mr Tully, the business that was already being done had continued as normal so Fortron had not suffered any loss. At the end of May 2004 Mr Tully resigned as a director of Treblex and transferred his shares to Mr Jones' wife as he had become increasingly uneasy about his association with it. He said that although he had been accused of being part of a company attempting to compete with Fortron in Australia, Treblex had never sold anything in competition with Fortron. Mr Tully said in his memorandum that he was dismissed by Mr Ivan Hoffman on 26 October 2004 following the discovery of his name on the Australian Securities and Investments Commission records of Treblex. (h) In October 2004 Treblex was exporting quantities of automotive treatment products to Gold Leaf Products. A copy of the relevant commercial invoice was exhibited. (i) In November 2004 Treblex was using the Gold Leaf Enterprises name and logo locally. (j) Documents obtained under subpoena from the Australian Customs Service showed that from December 2003 to February 2005 Treblex exported automotive treatment products to Gammar in Thailand to the value of $336,436. A copy of documents obtained from the Australian Customs Services was exhibited. (k) A customer of Gammar, one Thanandorn Wacharothayangkool, (known as Tony) informed Mr Hoffman that during 2004 he was purchasing on average 8,000 to 9,000 units of Fortron labelled products per month from Gammar. Based on his experience and knowledge of the sub-distributors of Gammar who distributed Fortron products, Tony said his business represented about 25% to 30% of all of Gammar's business. Tony told him that Gammar had about another 20 sub-distributors around Thailand selling Fortron products. At the same time, according to Mr Hoffman, Fortron was only supplying Gammar with 8,000 units per month. (l) Treblex was sourcing lubricant oil from United Oil in Singapore in March 2004 for delivery to Gold Leaf Products. This was evidenced by a Treblex order form exhibited to the affidavit. (m) In August 2004 Gammar had in place a proposal to move its customers away from Fortron products to Treblex product as evidenced by a draft letter located on Mr Tully's CD-Rom following the termination of his employment with Fortron in October 2004. (m) In February 2005 Treblex did not have any of its own labels for the product it was storing at Gammar's premises in Bangkok. This was said to appear from a report prepared by Mr Tully of a visit to Thailand between 22 January and 1 February 2005. It pleads also the fact that it is the registered proprietor of the trade mark 'Fortron' in both Australia and Thailand. The date of registration of the trade mark in Thailand was 7 October 1996. Fortron alleges against Gammar that it breached conditions of the distributorship agreement under which: Gammar was obliged not to sell, distribute, manufacture or market in any manner in Thailand on its own account or otherwise any products that could be used in substitution for, or in competition with, the Fortron product without prior knowledge and discussion. Gammar was authorised to use Fortron's trade mark solely in connection with the sale of products in Thailand during the term of the agreement. Gammar would not alter or substitute anything for the Fortron products furnished under the agreement or labels fixed to them or modify the trade marks in any way or do anything that would infringe, impeach or lessen the value or integrity of the trade marks or the goodwill associated with them. Gammar would undertake to use its best endeavours to maximise the sales of the product in Thailand from time to time. Gammar's conduct is said to be have been in breach of the terms of the distribution agreement already referred to, found in cl 3.1, 10.1, 10.2 and 11.3. Fortron says that as a result of the breach of the distribution agreement it has suffered loss and damage. Costs. Further or alternative relief. Fortron submitted that its claims, other than Fair Trading Act claims against Gold Leaf Products, Srikijkul and Changlor, fall within the accrued jurisdiction of the Court as they are part of the 'matter' in respect of which the Court has original jurisdiction. It was submitted that the claim against Gammar is that it breached the distribution agreement by involving itself in the implementation of the Substituted Product Scheme. The implementation of the scheme was said to be at the heart of the justiciable controversy over which this Court has original jurisdiction, namely the claims for relief under the provisions of the Act against Treblex, Mr Jones, Gold Leaf Enterprises and Peter and Donna Matthews. I am satisfied, on the basis of Fortron's submissions, that the claim for relief against Gammar falls within the accrued jurisdiction of the Court and that the Court therefore has jurisdiction to deal with it. I am satisfied therefore that O 8 r 1 applies to the proceeding. See also Bray v F Hoffmann-La Roche Ltd (2003) 130 CR 317. In relation to the claims for breach of contract against Gammar I am satisfied that a prima facie case has been made out at least in respect of alleged breaches of the exclusivity clause (3.1) and the best endeavours clause (11.3). It is not clear that the evidence set out in Mr Hoffman's affidavit demonstrates that the material being sold under the Fortron label was in fact a substituted product although there is some indirect support for that inference based upon the volume of apparent Fortron products being sold as against that being supplied. It is sufficient however that one or more of the causes of action be supported by a prima facie case. It is not necessary that all should be so supported. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | service of originating process out of jurisdiction cause of action based on breach of contract governed by the laws of western australia breach in thailand contract claim associated with claims against other parties for misleading or deceptive conduct in contravention of the trade practices act 1974 (cth) claims based on accessorial liability in relation to such contraventions contract claim within accrued jurisdiction order 8 applicable prima facie case made out leave to serve out of the jurisdiction practice and procedure |
2 The provisions of the Corporations Act 2001 (Cth) (the Act) require, in effect, that an application for official quotation on the Australian Stock Exchange (ASX) be lodged with the ASX within seven days of the date of issue of a prospectus. Because of a failure by the company secretary to appreciate the seriousness of this requirement, the application was lodged a day late. The company applied to this Court for an extension of time under s 1322 of the Act. I made an order extending time on 9 May 2007. I now publish my reasons for so doing. It is not yet admitted to the Official List of the ASX nor are its securities quoted on the ASX. Since its incorporation the company has acquired shares in three companies that have interests in mining tenements in Peru, the Northern Territory and Western Australia. It has also lodged a prospectus with the Australian Securities and Investments Commission (ASIC) with a view to raising funds to conduct an exploration programme on its uranium resource projects, to advance the commercial prospects of its resource projects and to seek additional uranium mining opportunities in Australia and overseas. 4 The current directors of the company are Peter Wallace, Robert J Foti and David C Foti. According to the company records held by ASIC, the company currently has two secretaries, Robert Foti and Victor Poh Hong Ho. The company does not yet have its own premises. Its registered office is at care of Charles Foti Business Services in Osborne Park in Western Australia. Upon completion of the various share sale agreements and the share issue for which the prospectus has been lodged the existing directors of the company intend to resign. The prospectus invites applications for a total of 24 million shares at an issue price of 25 cents per share with a view to raising $6 million. All shares issued pursuant to the prospectus are to be issued as fully paid ordinary shares and to rank equally in all respects with shares already on issue. The company reserves the right under the prospectus to accept over-subscriptions of up to $4 million through the issue of up to a further 16 million shares at an issue price of 25 cents per share. On that basis the maximum amount which may be raised under the prospectus is $10 million through the issue of a total of 40 million shares. The minimum subscription is 16 million shares to raise $4 million. The subscription list opened on 11 April 2007 and was to remain open until 5 pm WST on 8 May 2007. The directors of the company extended the closing time by 24 hours. 6 Mr Victor Ho, a co-secretary of the company, caused a copy of the prospectus to be lodged with ASIC on 3 April 2007. He also provided ASIC with a signed copy of the Offer Information Sheet signed by Mr Robert Foti and a cheque for $2,010 in payment of ASIC's fees. By an email of 3 April 2007 to Mr Ben Donovan, an ASX adviser, Mr Ho forwarded to him an internet link to the prospectus and a link to the company's "Offer List Entry" document lodged with ASIC. The company proposes to issue shares pursuant to the prospectus on Wednesday, 16 May 2007. 7 The current board of the company and the proposed directors delegated to Mr Ho responsibility for the finalisation, lodgment and processing of the prospectus and the application to the ASX for Official Quotation of the securities with the company on the ASX and the admission of the company to the Official List of the ASX. According to the prospectus the application for the Official Quotation of new shares being offered pursuant to the prospectus would be made to the ASX within seven days after the date of the prospectus. 8 In the event, Mr Ho was a day late in lodging the application for Official Quotation. In his affidavit, sworn on 26 April 2007, he said that this was the first occasion that he had responsibility for the preparation of an application for the quotation of securities and the admission of a company to the Official List of the ASX. He had previously prepared an application for quotation of shares issued under a prospectus in circumstances where a company had asked for its securities to be readmitted to quotation on the ASX after a change of activities and a period of ASX suspension. He was aware that the quotation application had to be lodged within seven days of the date of the prospectus. He said, however, that he was not aware of the severe consequences, arising under ss 723 and 724 of the Act, from failing to lodge a quotation application within seven days of lodgment of a prospectus. He says that had he known of the consequences of non-compliance he would have ensured that he had obtained the approval of the directors necessary for a quotation application to be lodged at the ASX prior to the close of business on Tuesday, 10 April 2007. 9 Mr Ho began preparation of the quotation application on 5 April 2007 together with supporting information in the form of annexures. He was aware on 5 April that the director and co-company secretary, Mr Robert Foti would be on leave until Tuesday 10 April. Friday 6 April 2007 and Monday 9 April 2007 were public holidays, being part of the Easter break. He did not work during the Easter holiday long weekend. In the weeks leading up to the lodgment of the prospectus on 3 April 2007 he had worked very long hours to complete all matters relating to the prospectus and ensuring its lodgment on 3 April 2007. In the days immediately after the lodgment of the prospectus his priority was coordinating its timely printing and despatch to approximately 1,500 "Eligible Strike Shareholders" and despatch of a letter of notice of the prospectus to approximately 1,600 "Strike Shareholders" who were not "Eligible Strike Shareholders". 10 On Tuesday, 10 April 2007 Mr Ho recommenced work on the quotation application. He circulated a draft by email to the directors. He completed the application and assembled all the necessary annexures on Wednesday, 11 April 2007. On the same day he emailed a circulatory resolution of directors to seek their approval of the draft quotation application. On Wednesday, 11 April 2007, he sent the signed quotation application by email to the ASX. On the same day he sent by courier, a hard copy of the application and the annexures. The hard copy documents were delivered at 4.10 pm. 11 Mr Ho said that because of his inadvertence and lack of knowledge of the strict consequences of the Act, Alara failed to make the quotation application to the ASX within seven days and did not do so until 11 April 2007, one day after the due date. He said that his failure to file a quotation application within time was "... not in any way a deliberate disregard of the statutory requirements". He otherwise endeavoured to lodge the quotation application as promptly as possible given that the Easter public holidays fell during the seven day period after the lodgment of the prospectus. 12 By email on 19 April 2007, Mr Donovan at the ASX advised Mr Ho that the prospectus was dated 3 April 2007 but was not lodged with the ASX until 11 April 2007. He informed Mr Ho that the ASX Rules required a quotation application to be lodged within seven days of the date of the prospectus. 13 On 4 April 2007 Mr Ho had received a letter bearing that date from ASIC to the company extending the exposure period for the prospectus from seven to nine days because of the Easter holiday. Mr Donovan pointed out to Mr Ho, on 20 April 2007, that ASIC's letter of extension was not relevant to, and had no impact on, the time for lodgment of a quotation application under s 723(3) of the Act. Mr Ho immediately contacted a partner in the firm of Blakiston & Crabb, Solicitors, to obtain advice and assistance in relation to whether ASIC would grant relief. He was informed on the same day by a Mr Cardaci, that the ASX Listing Rules required the quotation application to be lodged within seven days of the date of lodgment of the prospectus. On 23 April 2007, Mr Ho gave detailed instructions to Blakiston & Crabb who brought on this application. 14 As at 7 May 2007 1,899 applications for shares under the prospectus had been received. The total number of shares applied for was 69,656,133. The total application monies received was $17,414,033.25. The proposed issue is therefore substantially oversubscribed. 15 The company seeks an extension of time under s 1322 of the Act for the lodgment of the application for quotation. Strictly speaking, read with s 724, it simply attaches certain consequences to the failure to do so. Nevertheless, s 1322(4)(d) has been construed as authorising an extension of the seven day period specified in s 723(3)(b): Re Insurance Australia Group Ltd [2003] FCA 581 ; (2003) 128 FCR 581 at [26] - [29] ; Re Wave Capital Ltd (2003) 47 ACSR 418 at [30]; Re Tony Barlow Australia Ltd (2005) 53 ACSR 1 at [20]-[21]; In the Matter of Geopacific Resources NL (2007) 25 ACLC 226 [16]. 21 Section 1322 confers a power which is to be exercised having regard to the purposes of the Act and any other relevant statutes. It is a remedial power to be given a liberal construction. It expresses a legislative policy that the law should not impose unnecessary liability or inconvenience nor invalidate transactions because of failure to comply with procedural requirements when such failure is the result of honest error or inadvertence which can be remedied by an extension of time without prejudice to third parties. It is of course necessary to bear in mind in exercising the discretion under s 1322 that there is a public interest in compliance with the procedural requirements of the Act. Reckless or deliberate disregard of its provisions or treatment of them as mere guidelines, will attract an unsympathetic response when application is made to avoid the consequences of non-compliance. 22 In this case the delay was very short. The quotation application was lodged one day late. There appears to have been no prejudice to any actual or potential investor. The time limited by s 723(3)(b) for the admission of the company's securities to quotation which is three months after the date of the prospectus, would not be affected by the proposed extension. The adverse impact on the company by refusing the extension would include wasted and additional costs. It would, in my opinion, be out of all proportion to the relatively minor delay which has occurred in this case. 23 It is a matter of some concern that Mr Ho was aware of the seven day time limit but did not seem to think another day would really matter. His approach was not so much a case of inadvertence as a kind of "she'll be right" approach. Ordinarily non-compliance based on a risk assessment that the company could somehow avoid its consequences, would be a factor weighing heavily in the balance against an extension. I have no doubt that Mr Ho and his fellow officers in the company have learnt a useful lesson from what has occurred. 24 Both ASIC and the ASX were given notice by the plaintiff of the application. Both indicated that they would not be attending at the hearing of the application. 25 Having regard to the circumstances outlined above, I consider it appropriate to grant the extension. However, I do not consider that the company's funds should be diminished to any extent, however small, by the costs of the application. I will direct that the costs of the application are not to be met out of company funds. There will, however, be liberty to apply for a variation or revocation of that order as the plaintiff has not had an opportunity to be heard on that question. 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. | extension of time for compliance with requirements of corporations act 2001 (cth) failure to lodge application for admission to quotation for securities on the australian stock exchange ltd- non- compliance with requirements of s 723 of the corporations act application under s 1322 for an extension of time to lodge the application minor delay no prejudice application granted corporations |
These reasons for judgment should be read together with my earlier reasons for judgment. 2 The history and subject matter of this proceeding is summarised in Wenkart v Pantzer [2007] FCA 1589 at [2] - [35] . As I noted in Wenkart v Pantzer [2008] FCA 478 at [1] - [8] , no agreement was reached between the parties as to the orders appropriate to be made to give effect to my reasons for judgment of 16 October 2007. Indeed, after hearing further from the parties, I accepted that I had not dealt with all outstanding issues between the parties. Those outstanding issues were dealt with in Wenkart v Pantzer [2008] FCA 478. When publishing those reasons for judgment I stood the proceeding over to a date to be fixed for the purpose of the making of orders giving effect to the reasons, including orders as to costs. 3 Orders giving effect to my reasons for judgment have still not been made. On 2 June 2008 Dr Wenkart applied by notice of motion for orders that the Court reconsider [32(e)] and [92] of the reasons for judgment published on 11 April 2008 and make final orders disposing of the proceeding. On 5 June 2008 Mr Pantzer applied by notice of motion for orders that the Court withdraw and reconsider [56]-[91] of the reasons for judgment published on 11 April 2008 and that Mr Pantzer be given leave to re-open his case to tender further evidence in support of his claim. 4 For the reasons set out below the applications made by each of Dr Wenkart and Mr Pantzer by their respective notices of motion will be dismissed. No final orders have as yet been pronounced, let alone entered, on Mr Pantzer's cross-claim. The case is thus distinguishable from Autodesk Inc v Dyason (No 2) [1993] HCA 6 ; (1993) 176 CLR 300 where the High Court had pronounced orders although they had not been formally entered. By and large, this is a salutary and wise course, given the complexities of many intellectual property cases, including patent cases, and the possibility of complex multi-claimed specifications and patents not being adequately, or fully, dealt with by substantive reasons. With skilled counsel, the quickest and most efficient way of dealing with orders is to provide reasons with or without draft orders and for counsel to attend to the appropriate form of orders to be brought to Court. The danger that lurks in that salutary practice is that, without orders being made, it might be seen that the case has not finished and if parties win or lose, for reasons that may or may not be such as to be helped by further evidence, there may be a temptation to add to evidence and/or submissions to remedy what are perceived as errors or lack of attention in the reasons. The balance between obtaining the correct orders with the assistance of counsel and dealing with matters truly overlooked and simply having another go may at times be difficult to assess. However, I think it is necessary to be vigilant to ensure that the hearing of the matter and the provision of reasons with a call for the bringing in of short minutes is not viewed as the first stage of the debate, to be continued by ever reducing iterations of analysis and evidence. This is especially so in relation to appeals from the Office and the Commissioner which, for the reasons I expressed in paragraphs [5] and following of my reasons of 7 February 2007, should be understood as not ultimate final hearings as to the validity of the patent. These hearings should be, as far as the complexity of a matter allows, dealt with as expeditiously as possible. I have had regard to the careful submissions of the applicant filed on 10 May 2007 and, in particular, [15] through [44]. The principles governing re-opening are set out in the cases there identified and I have had particular regard to what was said by Hill J in Hyster Australia Proprietary Limited v Anti-Dumping Authority (1993) 41 FCR 259 ; Wentworth v Rogers [2002] NSWSC 921 ; Twenty-First Australia Inc v Shade NSWSC (unreported, New South Wales Supreme Court, Equity Division, Young J, 31 July 1998), AB v Federal Commissioner of Taxation (1998) 157 ALR 510 , and Smith v New South Wales Bar Association (1992) 176 CLR 256. The questioning of re-opening is, as Hill J said in Hyster 41 FCR 259 , a question of a general judicial discretion which has bearing down on it various considerations: s 22 of the Federal Court of Australia Act 1976 (Cth), the interests of justice in all the circumstances of the case between the parties, the importance of finality of litigation, the importance of the public register kept by the Commissioner for Patents being correct and public confidence in the prompt despatch of the business of this Court. 7 Although Aristocrat was an intellectual property case and I am here concerned with the administration of a bankrupt estate and related matters, I consider that the principles outlined by Allsop J provide appropriate general guidance as to the approach to be taken on the present motions. In particular I proceed on the basis that a party who seeks an order that I withdraw and reconsider any part of the reasons for judgment earlier published by me must demonstrate why the interests of justice suggest that this would be an appropriate course for me to adopt. Mere discontent with an aspect of my published reasons for judgment is not sufficient to override the public interest in the finality of litigation. It is, however, a power that must be exercised sparingly, having regard to the public interest in maintaining the finality of litigation. Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 , 265. Still, there are occasions in which it is both appropriate and fair to allow further argument and even further evidence in a case before it is finally disposed of. For example, if it turns out that a court finds that the unsuccessful party has not had the clear and adequate opportunity to argue its case, there might be a denial of procedural fairness if the case were not reopened: Autodesk Inc v Dyason (No 2) [1993] HCA 6 ; (1993) 176 CLR 300 , 309. It would also be appropriate to reopen if it were clear that the court had proceeded "on a misapprehension as to the facts or the law", especially where the misapprehension was the result of accident or oversight and not the fault of the party seeking to reopen the case: De L v Director-General, NSW Department of Community Services (No 2) [1997] HCA 14 ; (1997) 190 CLR 207. At [32] I recorded my conclusions concerning the proper construction of those resolutions. Those conclusions included, at [32(e)], my conclusions that at the final meeting of Dr Wenkart's creditors, which was held on 15 March 2002, the creditors purportedly approved the payment to Mr Pantzer of $105,000 in accordance with paragraph (a)(i) of Dr Wenkart's s 73 proposal. 9 Dr Wenkart submitted that the conclusion in [32(e)] of my reasons for judgment of 11 April 2008 was not supported by any evidence before the Court and should be withdrawn. It is appropriate therefore to turn to the evidence touching on the relevant resolution. Mr Tolcher put the following motion to the meeting: "That the payment of $105,000.00 to Warren Pantzer be approved, this being consistent with paragraph (a)(i) of the Bankrupt's Section 73 proposal as amended. " Moved by: Ray Tolcher (Trustee's Representative) Seconded by: Noone Not carried. After some discussion the following motion was put to the meeting: "That Warren Pantzer be paid $105,000.00 in accordance with paragraph (a)(i) of the Bankrupt's Section 73 proposal as amended. " Moved by: Dermot Maxwell (Gadens/Solomon Garland) Seconded by: Geoff Holden (Hapday Holdings, Throvena) The President abstained from voting. Carried on the voices. Mr Tolcher tabled an account of the Trustee's outstanding and unpaid remuneration, costs and expenses and advised creditors that an inspection was available. He noted that there were outstanding and unpaid remuneration, costs and expenses not accounted for by the Bankrupt's proposal. He also noted that on 11 March 2002 consent orders were entered into by the Bankrupt and Hapday Holdings Pty Ltd (in proceedings to which Throvena Pty Ltd and Macquarie Health Limited were parties) to secure Trustee's remuneration, costs and expenses not provided for by the Bankrupt's proposal. The following motion was put to the meeting: "That the remuneration of the Trustee and that of his partners and staff to 15 March 2002, additional to the amount of $105,000.00 provided for by the Bankrupt's proposal, be approved on a time basis in accordance with rates of Lawler partners, being those rates formerly recommended by the Insolvency Practitioners' Association of Australia, in the sum of $115,406.07 including GST. " Moved by: Dermot Maxwell (Gadens/Solomon Garland) Seconded by: Noone The President abstained from voting. Not carried on the voices. Mr Tolcher stated that the Trustee would therefore claim 85% of the IPAA Guide to Hourly Rates pursuant to Section 162(4) and Reg 8.08 of the Bankruptcy Act . Mr Holden stated that it was his understanding that the Trustee could obtain the approval or payment of remuneration in three ways: by creditor approval, by claiming 85% pursuant to Section 162(4) and Reg 8.08 of the Bankruptcy Act , and on court approval. 12 Later in the same minutes it is recorded that the motion that the bankrupt's proposal for a composition be accepted pursuant to s 73 of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act ") was carried unanimously on the voices. The minutes also record that the President thereafter noted that it was not appropriate for another meeting of creditors to be held in view of the annulment of Dr Wenkart's bankruptcy. Mr Geoffrey Holden, a director of Hapday Holdings Pty Limited and Throvena Pty Limited, gave both affidavit and oral evidence in the proceeding. During his oral evidence in chief, which I had some difficulty understanding, Mr Holden was questioned about the resolution that was moved at the final creditors' meeting to approve the trustee's remuneration in the sum of $105,000 as provided for by the bankrupt's proposal. He agreed that the resolution eventually passed because the revised version of the resolution "put the linkages in and tied everything up". 14 I considered the evidence now identified by Dr Wenkart as demonstrating that [32(e)] of my reasons for judgment of 11 April 2008 finds no support in any evidence before the Court before I published those reasons for judgment. I have considered it again in the context of Dr Wenkart's motion. I accept that an appeal court may find that my conclusion is erroneous. However, I am not persuaded that it would be appropriate for me to withdraw [32(e)] of my reasons for judgment. The subparagraph reflects my considered view as at 11 April 2008 as to the effect of the evidence before me. I am not persuaded that I proceeded under a clear misapprehension as to the facts. Indeed Dr Wenkart has not persuaded me that the conclusion reflected in [32(e)] of my reasons for judgment of 11 April 2008 is plainly erroneous. Having regard to the approach of the Full Court in Pantzer v Wenkart [2006] FCAFC 140 ; (2006) 153 FCR 466 , it seems that order 1 must be understood distributively; that is, as recording an agreement that upon the quantum of any claim by Mr Pantzer for remuneration, costs, charges and expenses being determined, Dr Wenkart agreed to pay the same within 28 days. I conclude that as at the date that the cross-claim was filed, Mr Pantzer, in his capacity as trustee of Dr Wenkart's bankrupt estate, had received a larger amount by way of receipts than the determined quantum of the remuneration, costs, charges and expenses to which he was lawfully entitled. Mr Pantzer has therefore failed to demonstrate that, as at the date of the filing of his cross-claim, he was entitled to "orders in aid" of the consent orders made on 11 March 2002. Nonetheless, I do not accept the submission of Dr Wenkart that it would be appropriate simply to dismiss the cross-claim with costs. Were this course adopted Mr Pantzer could simply institute a fresh application seeking to enforce the charge over the Paddington property. The regrettably long and complex history of this matter renders such an outcome even more undesirable than might ordinarily be the case. The appropriate way to deal with the premature filing of Mr Pantzer's cross-claim is, in my view, by the making of appropriate costs orders. This will require, as a first step, the identification of the date, if any, on which 28 days had passed from the determination of the quantum of an amount by way of remuneration, costs, charges and expenses to which Mr Pantzer is lawfully entitled that resulted in the aggregate of such determinations exceeding $769,191.66 (ie the total amount received by Mr Pantzer as trustee of Dr Wenkart's estate). If the parties are unable to reach agreement on this question, I propose to make an order for the making of an inquiry by a Registrar (O 39 r 2 and r 9 of the Federal Court Rules ). 16 Dr Wenkart contended that the Court should withdraw the reasons set out in [92] and reconsider its holding in the light of the other findings made. He submitted that "the only available course is to simply dismiss the cross-claim with costs". 17 It is not entirely clear whether Dr Wenkart contended that the Court did not have power to do other than dismiss the cross-claim or whether he contended simply that it would be inappropriate for the Court to do otherwise. An exchange between me and senior counsel for Dr Wenkart, Mr Sheahan SC, on 12 November 2007 indicates that, at least at that time, Dr Wenkart was not challenging the power of the Court to find that Mr Pantzer's entitlement to relief was established by reference to events that occurred after the date of the filing of his cross-claim. HER HONOUR: I expressed once a view about what the order of Beaumont J was intended to achieve and therefore how it should be constructed and I erred in doing that and I therefore had to have a second thought about that and I think the view reflected in the judgment I've most recently published is that it must have been intended to be a charge to secure the amounts owing from time to time. MR SHEAHAN: Yes. HER HONOUR: Therefore even if certain amounts were [not] due at the time the proceedings were commenced but they became due thereafter one can now rely on evidence that arises after the institution of a proceeding, can't one? MR SHEAHAN: Yes. HER HONOUR: Even though the cause of action, I think, needs to have existed. What would the significance of all of that be? MR SHEAHAN: Your Honour, since the Judicature Act it's been possible to add causes of action based upon events that arose since the commencement of the proceedings. So there's no issue as to the possibility of raising such claims. The question is really as to the propriety of the commencement of such claims. 18 The above exchange caused me to believe that Dr Wenkart accepted that, in determining Mr Pantzer's cross-claim, the Court could take into account amounts to which Mr Pantzer became "legally entitled" from Dr Wenkart within the meaning of the consent orders made by Beaumont J on 11 March 2002 after the date on which the cross-claim was filed --- albeit that he contended that the preferable course would be not to do so. I indicated in my reasons for judgment of 11 April 2008 at [92] why I regarded the option of simply dismissing Mr Pantzer's cross-claim on the basis that it had been instituted prematurely to be undesirable. It seemed to me to be a course likely to result in the institution of yet further litigation between the parties. This did not seem to me to be in the public interest or in the interests of the parties, particularly having regard to the Court's wide powers to formulate orders for costs. It may be that I would have taken a different view had Dr Wenkart, at an early stage in this regrettable litigious saga, identified, perhaps as a preliminary point for the Court's determination, his claim that Mr Pantzer's cross-claim was bound to fail as it had been filed prematurely. He did not do so. Rather, as it seems to me, he utilised the proceeding as a vehicle to obtain judicial review of virtually every aspect of Mr Pantzer's claim for remuneration as trustee of his estate. 21 Having regard to the way in which this proceeding has been conducted, I remain of the view that this Court has the power to proceed in the way foreshadowed by me at [92] of the reasons for judgment of 11 April 2008. I see no reason to reconsider my conclusion that this power should be exercised. I do not consider it appropriate to reconsider [92] of the reasons for judgment of 11 April 2008. At [83] of those reasons for judgment I gave consideration to Mr Pantzer's liability to pay other legal costs. At [84]-[89] I gave consideration to whether, as at the date of the filing of Mr Pantzer's cross-claim, there was any amount to which Mr Pantzer was "lawfully entitled" from Dr Wenkart within the meaning of the consent order made by Beaumont J on 11 March 2002. 23 At [90]-[91], having regard to the approach of the Full Court in Pantzer v Wenkart [2006] FCAFC 140 ; (2006) 153 FCR 466 , I found that as at the date of the filing of the cross-claim Mr Pantzer, in his capacity as trustee, had received a larger amount by way of receipts than the amount of the remuneration, costs, charges and expenses to which he was then "lawfully entitled" from Dr Wenkart. I therefore concluded that Mr Pantzer had failed to demonstrate that, as at the date of the filing of his cross-claim, he was entitled to "orders in aid" of the consent orders made on 11 March 2002. 24 Mr Pantzer has now submitted that [82]-[83] of the reasons for judgment of 11 April 2008 determined an issue on a basis which either had not been contended for by Dr Wenkart or which ought not to have been entertained without Mr Pantzer being given an opportunity to respond including by leading additional evidence. The issue identified by Mr Pantzer is whether, as at the date of the filing of his cross-claim, he had a lawful entitlement to be reimbursed from the bankrupt estate in respect of monies paid to the legal firm of Cutler Hughes & Harris. 25 I reject the above submission. By agreement of the parties I assumed responsibility to complete the hearing and determination of the matter "standing in the shoes" of both Beaumont and Lindgren JJ. As [56]-[82] of the reasons for judgment of 11 April 2008 record, the issue of Mr Pantzer's entitlement to be reimbursed from the bankrupt estate in respect of monies paid to Cutler Hughes & Harris was a live issue before each of Beaumont and Lindgren JJ. Moreover, paras 121-126 of Dr Wenkart's written submissions dated 29 June 2005 include the submission that the certificate of taxation in the amount of $268,477.54 issued on 17 February 2003 followed a taxation by Ms Sexton of the entirety of the work relevantly performed by Cutler Hughes & Harris. That submission was consistent with evidence given by Ms Sexton before Beaumont J, the accuracy of which was accepted before me by Mr Pantzer, that she was appointed "to tax the solicitor-client bills of costs of Cutler Hughes & Harris in relation to work ... done in the estate of Dr Wenkart". Additionally, by written submission dated 3 December 2007 Dr Wenkart disputed a schedule of receipts and payments provided to the Court by Mr Pantzer pursuant to an order of the Court dated 12 November 2007. Thus, the total amount to which Mr Pantzer was entitled to reimbursement from the estate was $268,477.54 (being the amount of the certificate of taxation issued by Ms Sexton). It appears that Mr Pantzer paid out more than this money to third party providers. None of these providers have (sic) challenged the taxation of the amounts which led to an entitlement which was less than the amounts they received. No evidence was led by Mr Pantzer other than to confirm the opposite. Whether Mr Pantzer seeks the recovery of the amounts overpaid to Cutler Hughes and Harris and others is a matter for him. Mr Pantzer proceeded to have all of the legal costs (including costs of Counsel and associated disbursements) which had been sought from him (both paid and unpaid) until that time taxed. This taxation process commenced some time after the annulment. It was a necessary precondition to the proof by Mr Pantzer of his entitlement to have these disbursements paid from the estate. The evidence given by Ms Sexton was that she was not presented with any bills and that she received all of the legal files from Cutler Hughes and Harris and proceeded to in effect prepare bills which she then taxed. Mr Johnson conceded this point before Lindgren J (in the presence of Mr Pantzer); namely, that all these costs had been assessed. That is why the 21 October 2003 orders were framed this way. 27 It is unnecessary for me to determine whether Mr Pantzer would require the leave of the Supreme Court of NSW to use Mr Holden's affidavit in this proceeding. Even were I satisfied that Mr Pantzer should have leave to re-open his case for the purpose of adducing further evidence (which I am not), I am not satisfied that the additional evidence that he wishes to adduce relevantly bears on the only issue to which it is claimed to be relevant. That issue is whether this proceeding has been conducted by the parties on the basis of an agreement by Mr Pantzer to have the bills of costs of Cutler Hughes & Harris taxed and, if so whether that agreement is reflected in the orders made by Lindgren J on 21 October 2003. 28 I discussed the above issue in the reasons for judgment of 11 April 2008 at [59]-[82]. As is there made plain, I am satisfied that Lindgren J made the orders dated 21 October 2003 in the terms that he did in the belief that certain advice given to him by Mr Pantzer's then counsel was accurate (see [80]-[81] of the reasons for judgment of 11 April 2008). Evidence tending to establish that the advice given to Lindgren J was inaccurate might provide a basis for the variation of the orders made by Lindgren J. In earlier reasons for judgment I have drawn attention to the importance in this proceeding of the effect of the orders made by Lindgren J and to the possibility of an application being made for those orders to be varied (see, for example, Wenkart v Pantzer [2007] FCA 1589 at [27] -28]). No such application has been made. Evidence of the kind that Mr Pantzer now seeks leave to adduce would not impact on the proper construction of the orders made by his Honour. The true meaning of the orders made by his Honour is to be determined by reference to the meaning that his Honour intended the orders to have. His Honour's intention can be ascertained by reference to the transcript of the hearing before him. 29 For the above reasons I do not consider it appropriate to withdraw and reconsider [56]-[91] of the reasons for judgment of 11 April 2008 or to give Mr Pantzer leave to re-open his case to tender further evidence. On the approach that I have considered, and continue to consider, it appropriate to adopt, before final orders can be made on Mr Pantzer's cross-claim it is necessary to know when, if at all, Mr Pantzer became entitled to enforce the charge over Dr Wenkart's Paddington property reflected in order 2 of the consent orders made by Beaumont J on 11 March 2002. It will therefore be ordered that a Registrar conduct an inquiry to determine that date. When that date has been identified it will be necessary for the parties to have the opportunity of making further submissions as to orders, including orders for costs, appropriate to be made on Mr Pantzer's cross-claim. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. | applications to re-open case after reasons for decision given and prior to entry of orders whether re-opening in the interests of justice importance of finality of litigation mere discontent with reasons insufficient to justify re-opening not clear that court proceeded on a misapprehension as to the facts or law bankruptcy |
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